The Personal Finance Podcast - The Great Wealth Transfer Has STARTED (Here is How to Take Advantage of It)

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Starting point is 00:01:09 What's up everybody and welcome to the personal finance podcast. I'm your host, Andrew, founder of mastermoney.com. And today on the personal finance podcast, we are going to be talking about the massive generational transfer that has just started. If you guys have any questions, hit me up on Instagram or TikTok. at Master Money Co and follow us on Spotify, Apple Podcasts, or whatever podcast player, you love listening to this podcast to. And if you want to help out the show, leave a five-star rating and review on Apple Podcasts.

Starting point is 00:01:58 And if you want your question answered as fast as possible, the fastest way to do that is to get on the Master Money newsletter. We send you content once every single week, original content that you can read. And in addition, you can reply to that email and send me an email directly. So on the Master Money newsletter, you can go ahead and do that. Some of the questions we may even read on the podcast. And so this is something that you can absolutely do on the Master Money newsletter. In addition, if you're on the Master Money newsletter, we want to be able to help you out.

Starting point is 00:02:27 So you're going to get discount codes to Index Fund Pro when it releases and a bunch of other stuff as well. And don't forget to leave again that five-star rating and review because it helps the show so much grow so we can teach other people how to build wealth. And in addition, we're going to be running contests when coaching launches and things, like that so that you can go out there and you'll be able to get free coaching sessions that we're going to be offering and all this other good stuff that we're getting away. So I'm so excited for you guys. I'm so excited to jump into some of this stuff when the website releases at the end of the month. It's been a long journey, but we're finally getting it ready. And I am very

Starting point is 00:03:00 particular about certain things on the website. So that is exactly why it is taking a little bit longer. So today we are talking about one of the most important things that you need to understand when it comes to your wealth building. And it's the generational wealth. that's actually happening right now. Now, if you've never heard of the generational wealth transfer, this is something you absolutely need to be paying attention to because the Great Wealth Transfer has already started. And this is something where I've seen a lot more people talking about it. Maybe they don't have all the data that we're going to be talking about today because

Starting point is 00:03:29 today we're going to be using a lot of data. We're going to be using a lot of statistics out there because this is a statistic driven event that is happening right now. And it's something that you definitely want to make sure that you understand. So if you're unfamiliar with what the Great Wealth Transfer is, here, is the lowdown. So baby boomers are the wealthiest generation of our time. They are the wealthiest people actually in the world. It's the wealthiest generation in the world right now. They actually have one third of the wealth in the U.S. right now. So this is a massive wealth transfer that's happening.

Starting point is 00:04:00 What is happening is the baby boomers are born from 1946 to 1964, which means they are of the age of 58 to 76 at the time that I'm recording this. And in fact, this generation, The baby boomer generation is actually 10 times wealthier than the millennial generation. Now, we'll get into why that is. A lot of you probably know why that is, but they are 10 times more wealthy than the millennial generation. This is absolutely astounding, especially because there are more millennials than there are baby boomers. Now, obviously, they've had more time for their money to compound.

Starting point is 00:04:33 They've had more time to do other things. But at the same time, they have wealth that is absolutely amazing. So understanding this and understanding how much wealth is going to be. going to be transferred within the next 20 years is something that you absolutely want to know. Now, one interesting thing to note, and we'll talk about this, is if you look at historic data, baby boomers actually have more wealth than the millennial generation did at the same age right now. Now, a number of factors come to play that we'll talk about later. Obviously, student loans, the debt crisis, the housing crisis. There's a bunch of things that are going on where things are

Starting point is 00:05:07 much more expensive now, obviously, than they used to be. But this is something to note is that the baby movement generation does have more wealth than the millennial generation does right now. And over the next 20 years, it is estimated that in 2042, $70 trillion plus will be transferred from older generations to the millennial generation. So the millennial generation, if you don't know what a millennial is, it's defined as people born from 1981 to 1996. And we have a large number of millennial investors who listen to this podcast. I personally am a millennial. So this is something where it's going to impact a lot of people. In addition, there's a large portion of Gen Z this will impact as well.

Starting point is 00:05:48 Because with this wealth transfer, it is something you definitely want to understand. Now, if you are a baby boomer or if you are a different generation, that's going to be handing down this wealth, we also are going to be having episodes coming up that are going to teach you exactly the best way and most tax-efficient way to hand down this wealth down. If you haven't heard our episode, we're talking about a will and we are talking about how to set up a will,

Starting point is 00:06:09 that is the first step that you need to be looking at. And if you have over a million dollars net worth or more, then you want to be looking at setting up trusts or things like that. And a large portion of what's going to be handed down are things like cash, things like stocks. Maybe it's index funds and ETFs. Maybe it's things like dividend stock portfolios. But large portfolios of stocks are going to be there. And we'll talk about how much baby boomers hold in stocks, but they hold the majority of stocks right now. In addition, bonds, a lot of baby boomers hold bonds because in the 80s and 90s bonds were a better investment than they have been the last 25 years.

Starting point is 00:06:41 They hold real estate, and they hold a majority of real estate. So real estate is going to be handed down as well. In addition, collectibles, things that have value that they've held for a very long time. And businesses. There's a lot of businesses, small businesses, which run the U.S. right now, and a lot of small businesses are owned by Baby Boomers. So this is wild. This is a lot of things that are going to be happening within the next 20 years.

Starting point is 00:07:03 A lot of money is going to be changing hands. So today, what I'm going to do is I'm going to share with you how to take advantage of this massive generational wealth. transfer. In addition, if you are not going to get money handed down to you, and the average person's actually not going to get that much handed down to you, the really wealthy people skew this data a lot, where the average person is probably getting somewhere between $10,000 to $75,000 handed down to them. But in addition, the really wealthy people out there, what you'll see, if that data is not skewed, they're going to be getting a lot of wealth and not understanding how to utilize that wealth can absolutely destroy your financial life. So I'm also going to talk about in this episode,

Starting point is 00:07:41 how you can take advantage of this if you're not getting anything handed down to you. Maybe you're not in a place of privilege, and that's what it is. It's a privilege when you get money handed down to you, but maybe you're not in a place of privilege and you are not getting money handed down to you. I'm going to show you how to take advantage of this

Starting point is 00:07:55 because there's a lot of things that are going to be exchanging hands where you can be taking advantage of opportunities so that you can build wealth over time. So if that's something you're interested, let's get into it. All right, so the first question we have to be asking is who has all this wealth and who are they giving?

Starting point is 00:08:11 it to. So we address that shortly beforehand, but I want to give you some statistics here because 21.9% of all people living in the U.S. are millennials. Over 20% of people who live in the U.S. are millennials. And they only control 4.6% of the nation's wealth. This is a problem that I'm trying to solve. I want to teach every single person in this world how they can build well. That's part of the mission of this podcast because I truly believe that you can. Small amounts of money can grow to very large amounts of money over time. So this is something we definitely want to be a big part of. But in addition, when baby boomers were at the same age, they control 21.4% of the nation's wealth. This is a massive difference. And obviously, there is a ton of reasons for this. Today, baby boomers

Starting point is 00:08:53 control 53% of the nation's wealth. And here it is broken down. We're going to go through each thing. And this is right off the Federal Reserve's website. So if you want to go find this information, it's on the Federal Reserve's website, we'll link it up down below as well. But this is something you definitely want to understand. So let's get into real estate first. Millennials own 12.5% of real estate. Baby boomers own 43.2% of real estate. There's a ton of reasons why for this. And a lot of us know what's been happening as of late at the time of recording this. Real estate is still at a very high price point. And so it is not affordable for a lot of millennials to be able to go out and buy properties. This is something that over time potentially could change. It may not change. We're not here

Starting point is 00:09:35 to predict the future. What we're here to do is figure out what can you do about it? What can you do to acquire a property if you want to buy a house? Now, if you haven't heard our episode, we talk about buy versus rent, a house really isn't that great of an asset. Now, there's other reasons to buy a house outside of it being a good financial decision because it's really not a good financial decision. But there are other reasons. Maybe you want to put roots down with your family. You have pride of ownership. You just want to own a house. If it's something you want, guess what? Money is there to bring you value. It's there to do the things that you want it to do. So if you want a house, no problem. I've owned my house ever since I was the age of 25. So this is something

Starting point is 00:10:09 where you definitely want to make sure that you understand that you don't have to own a house, but at the same time, if you want to own a house because you want to put roots down somewhere, then that's something you absolutely want to do. But baby boomers own 43.2% of real estate. There's an opportunity there that we'll talk about later. The next one, this is a major one, and this is crazy to me, is stocks. So millennials own 2.5% of the U.S. best stocks, baby boomers own 54.6% of the U.S. stock market. This is absolutely astounding. And you could think of things like, for example, Mark Zuckerberg is a millennial. Mark Zuckerberg owns a crazy amount of investment in Facebook and meta, which is a major

Starting point is 00:10:49 portion of the stock market. So that data could even be skewed even higher than what it needs to be. But understanding this, stocks are a fantastic way to build wealth. We've talked about that on a number of times on this podcast, how amazing stocks are building wealth. So owning stocks, especially index funds, ETFs, passive investments are what we like here. We also like dividend stocks as well here, where you can have dividend aristocrats that grow over time. These are amazing investments over time that help you build wealth. And the fact that only 2.5% of millennials actually own stocks is something that really is alarming that we want to help change here at the Personal Finance Podcast and master money. Now, this does not include

Starting point is 00:11:28 401ks. So they included 401Ks in pensions, which a pension and a 401K are two completely opposite things. I don't know why the Fed is doing that. They should know better because these are two completely opposite things. So pensions fall into where the 401ks are actually going to lie, which I think a lot more millennials probably have 401ks than they do just holding standard stocks out there. But pensions, millennials have 8.8% of the U.S. pensions and boomers have 49.8% of U.S. pensions. So a pension is something where you work for a company for a certain period of time, you become vested in that and then they compensate you based on how long you've worked there. So a lot of times you can think of old blue collar jobs where you would work for a union,

Starting point is 00:12:11 for example, and at a union you would get a pension. So say, for example, you work 30 years at a painter's union. And if you worked at that painter's union for 30 years, then when you retire, they promise to pay you $2,000, $4,000. The thing about pensions is they can change it at any times. Now, there are still companies out there that offer pensions. Last I heard Johnson and Johnson was one of those companies that still offers a pension. but these are very rare now. And so they put 401Ks in there,

Starting point is 00:12:35 which are very different things. A 401K is a retirement account that is tax deferred. So these are two very different things, but I think lumped in, probably my guess is a large portion of the millennial 8.8% there is probably within 401Ks.

Starting point is 00:12:49 Business ownership. Now, a lot of people you'll see on TikTok are saying they're grinding or building out businesses or this is what they want to do. They're an entrepreneur that are millennials. Guess what? They own a very small portion

Starting point is 00:13:00 of the nation's businesses. And small businesses, if you actually look at the numbers, we're on the world. We're going to get into some of those numbers later on in this podcast episode. But within business ownership, millennials own 8.3% of the businesses in the U.S. And baby boomers own 46.4%.

Starting point is 00:13:19 I smell another opportunity there that we're going to be talking about. So this is massive gap. Now, not everybody's made up to own a business. You don't have to own a business to build wealth. A business will help accelerate your path to wealth. but business ownership is horror. And so this is something you absolutely do not have to own to be able to build well.

Starting point is 00:13:35 But just thinking through, there's a major gap there. How can I take advantage of this opportunity if businesses are going to be handed down to people who may not want the business or do not want to run the business? We're going to talk about that here shortly as well. Now let's talk about debt because these are the assets that millennials and baby boomers own. But let's talk about debt because if you have a lot of debt, obviously your net worth is going to be much lower than it would be if you just had the asset. So the first one, let's talk about real estate debt. So within real estate debt, actually the largest generation that owns the most real estate debt is generation X.

Starting point is 00:14:09 And they own 41% of the U.S. real estate debt. Now, this makes a lot of sense because this is folks who are between the baby boomer generation and the millennial generation. So these are folks who are, you know, at the peak of their careers or heading towards retirement. So they own the most real estate debt. Millennials and boomers actually only own 27.1% of that debt. Then consumer durable goods. So this is something like cars, appliances, furniture. So this is how much of this is owned.

Starting point is 00:14:41 So millennials, 18.6%. Boomers, 36%. So this is actually fully owned ownership of these consumer durable goods. Now consumer credit. This is the stuff on credit. So auto loans on credit, student loans, credit card debt. You can already think when the word student loan comes in there, you know millennials are not going to be doing well in this category.

Starting point is 00:15:01 And so we own 40.5% of consumer credit. So anything that's financed from auto loans to student loans to credit card debt. And boomers have 23.2%. So this is something where, again, millennials are losing in this category as well. We have much more debt. A lot of it is because of student loan debt, which causes a lot of millennials to go out and have to do a lot of other things.

Starting point is 00:15:23 But to put it simply, boomers have a lot more. wealth and owe a lot less. But they've had time to compound. That's the major difference here, is that we know compound interest over time accelerates as time goes on. I've talked about Warren Buffett a number of times and how his wealth has grown, but it's something like 99% of his wealth, which he's worth well over $100 billion. 99% of his wealth came after the age of 57. This is something that's astounding because he had so much time to compound. He's in his 90s now. And then another major factor is millennials have also faced the worst financial The older millennials had to deal with the worst financial crisis that we've had since the Great Depression.

Starting point is 00:16:01 They've had overpriced colleges. Colleges has gone up 1,200 percent. They've had overpriced housing that we've had to deal with because of that financial crisis. There's been less houses produced. And in addition, hedge funds are scooping up all the other available houses. There's another issue there. And oh yeah, there's also been a pandemic. So between all of these things, it's understandable why this generation is behind.

Starting point is 00:16:23 We're working on fixing it. We will recover. and I do believe that by the end of this generation, when we get to the age where boomers are now, I think the millennial generation could be much more wealthy than that generation once we get this debt down. Why? I think there's more opportunity now. I think there's a ton of opportunity

Starting point is 00:16:37 that's going to be available going forward because we have the internet and you create businesses off of the internet. There's a lot more things that are happening. So I believe millennials will catch up, watch. Now, by 2030, one of the big reasons why this will happen is because by 2030, millennials are on pace to increase their net worth by 5x because of this wealth transfer.

Starting point is 00:16:57 Five times increased net worth because of this wealth transfer. So for example, the average millennium, if they had $100,000, by 2030, it is averaging out that they would have $500,000 because of this wealth transfer. This is why having this financial education is so important right now. Because guess what? 2030 is not that far away, and time flies when you're having fun. So making sure that you know how to handle big chunks of money is going to be something that's incredibly important. Now we have episodes if you have a big chunk of money coming

Starting point is 00:17:26 to you like should you invest the entire amount or should you dollar cost average over a certain period of time. We've talked about that before. We have episodes like that. And the reason why we're creating these episodes is for you to be able to understand how to handle large lump sums of money. But like we said, if you're not going to get a large lump sum of money, I got your back. Don't you worry. And why it's so important to have this financial education is that I've talked about these stats in the past. But 70% of families that inherit wealth lose it by the second generation. This is an astounding stat that if you just prioritize a financial education, this will not happen. Why? Because then you can teach your kids and your future family exactly how

Starting point is 00:18:03 to handle money. Because once you know how to handle money, then you can teach your family how to handle money. In addition, 90% lose it by the third generation. The Rockefeller family is one of the most wealthy families of all time. In fact, at the time he was alive, I think he was the wealthiest personal life. And they have preserved their wealth over time through generations. And guess what they attributed to? Mr. Rockefeller, the original, John D. Rockefeller made his children keep a budget when they got their allowance. And if they could not tell him where their money went the next month, then they did not get their allowance that month. And all he was doing was passing down a financial education of understanding where your money's going. And you don't have to have a line by line at a budget,

Starting point is 00:18:44 but you do have to understand where your dollars are going every month and have a half. And have a way to track that. And here's the other amazing stat. And for you, if you're not getting that money handed down to you, you're not in a place of privilege where you're going to get a large lump sum at some point in time, 79% of millionaires are self-made. So this is another reason why a lot of people lose it by the second and third generation. But in addition, it's another reason that gives you hope if you're not going to get

Starting point is 00:19:10 this generational wealth transfer up front. 79% of millionaires are self-made. They made it themselves. They understand how hard it is to make money in this world. and so they figured out how to make it themselves, and they preserved that wealth for themselves. Became frugal, they saved more money, they invested it in their businesses,

Starting point is 00:19:25 they invested it in the market, they invested it in real estate. There's so many different things that you can do, but they made it themselves. So now, let's jump into two ways to prepare yourself now for the Great Wealth Transfer. All right, so lately, I've been noticing how fast things are changing at home.

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Starting point is 00:22:45 So how do we prepare ourselves for the great wealth transfer now? Well, number one, the first thing you have to do is you have to talk about money with your family. You have to have family financial conversations because they are crucial now more than ever. You need to talk about money, period. The old taboo way is to not talk about money. And you may have family members or you may have parents or people in your life who do not want to talk about money. But understand this. The less you talk about money, the less transparent you can be about money, the less we can all build wealth out together. Money needs to be talked about. And it's something that is absolutely should not be taboo. And it's very weird that it's taboo. And it seems like somebody was trying to suppress it.

Starting point is 00:23:24 But it is BS if someone says it's taboo to talk about money. You need to have these conversations now. The less we talk about money, the worse we get with money. Because all of a sudden, what's going to happen is these conversations are going to help you figure out what you need to do next and what the best thing is to do next. So making sure that you're talking about money with people and your family and how you're handling, how they're handling it, what their plans are,

Starting point is 00:23:46 all of those different things are incredibly important. Now, this needs to be out of love. This needs to come from a place of love. A lot of people have financial frictions when they talk about money with family members. This should not be that way. If somebody has built wealth for themselves, it is their decision what's going to happen.

Starting point is 00:24:00 This needs to come out of love, but the conversations need to be had so that you can understand how you need to handle your future financial situation. Number two, you need to understand the investment opportunities that are coming up. Now, we've talked about the fact that millennials are less likely to invest than baby boomers are. This is a problem. This is something we are working on fixing. Financial education will help you fix that because if you see how wealth is built and you can see

Starting point is 00:24:24 how money is invested. For example, if you invest in something like the S&P 500, which has historically gotten over a 10% rate of return. I don't want to hear what the returns are this year because that's only a short-term investor thought process. You want to think long term because if you pull out a chart right now and look at the S&P 500 over its entire history, which direction does that chart go? It only goes in one direction and it goes up. So thinking about short term problems is something that no long term investor should ever be doing. And if you're thinking about those short term problems, you need to change your mindset and listen to some of our episodes where we talk about how to change that mindset because a long term investing mindset is

Starting point is 00:25:02 how wealth is built. There is no get rich quick scheme out there. There is no get rich quick way to invest your dollars. It doesn't exist. There's faster ways to get there by building businesses, by investing in real estate, but there's no fast, get rich, quick way to invest in the stock market or to invest in real estate or to build wealth. True wealth is built over time. Understanding that now is going to absolutely change your life. I have people on TikTok all the time in the younger generation saying to me, 30 years is way too long to invest your money and be able to build wealth. If I say something like $500 a month, in 30 years, you'll be able to be a millionaire. And they say, that's way too long.

Starting point is 00:25:39 I say, okay, we'll invest $1,500 a month. They said, that's way too much money. So what that means is there's nothing that you can do in between there. There's no way to get rich quick, and you have to either invest more money or you have to be able to invest that money over time. But guess what? Small amounts of money over time can grow to very large amounts of money, and that's the amazing thing about investing.

Starting point is 00:25:57 So one thing I want you to note with this financial awareness is investing opportunities are incredibly powerful. But in addition, if you're going to get a large amount, lump sum of money. Here's a rule that will absolutely change your life once you understand it. Do not treat something like a million dollars as a million dollars. What you want to treat that money as is that the amount of money that you can actually draw down every year. And there's something called a 4% rule. And what the 4% rule is, it was a study done, but this is the amount of money that you can draw down from a portfolio and be able to preserve your wealth throughout your life. Now,

Starting point is 00:26:28 some people say it's a little aggressive. Some people say it's too conservative. But 4% is right in the middle. Now, if you're under the age of 30, I would go maybe to three and a half percent. But the 4% rule means every million dollars that you have, you can draw down 4% or $40,000. So if you get a million bucks, then you can draw down $40,000 a year. That's how you should look at it. It's $40,000 a year. Or you can let it compound over time if you're young, continue working, and it will grow very quickly because it's a million dollars. You've got past that first 100K, that half a million dollar point. And at a million dollars, it's really going to compound. And then you can see where it lands. And at the time you're ready to retire, if it's $2 million, you can draw down

Starting point is 00:27:05 80. If it's $3 million, you can draw down $120. So there's so many different things that you can look at here and ensure you understand that's 4% rule because a million dollars is not something where you can draw down $100,000 a year. You will run out of money. So you need to make sure that you understand how this 4% rule works. Now, let's talk about the opportunities available, even if your parents aren't rich. All right. So let's get into the opportunity. opportunities that are available with this great wealth transfer, even if your parents aren't rich or you're not in a privileged place to be able to have money handed down to you. The first one, and this is one that you really want to be studying if you're interested in this, is real estate.

Starting point is 00:27:44 Obviously, the majority of the real estate owned in this country that we just talked about is owned by baby boomers. That means a lot of real estate is going to be handed down to a younger generation, depending on how old that generation is. A lot of people have no idea what real estate is worth, and a lot of people have no idea how to handle real estate, particularly when it comes to investment properties. Now, a lot of houses will be handled down and people are going to either keep the houses or they'll figure out what to do with them.

Starting point is 00:28:09 And there may be opportunity there, but the real opportunity is investment property. So a lot of baby boomers own things like commercial buildings where they have buildings that they are going to be handing down and a lot of people don't want to handle commercial buildings because you have to deal with tenants and all these other things. They own apartment buildings. They own small duplexes, triplexes, quadplexes,

Starting point is 00:28:27 Maybe they tried their hand into real estate. They have a couple of different properties. And a lot of times, if they do not teach the younger generation how to handle this, then this is something where you can come in, help people, be able to help these folks who do not want to deal with this financial burden of having this property and be able to take over the property over time and be able to invest in real estate and get properties at a great value as well. So this is a win-win situation for everybody, and it's something that you definitely want

Starting point is 00:28:52 to look into. And this is how you can find really good properties. One way to find these properties coming up is you can do some research on this as well is probate lists. And when we do some of our new real estate episodes coming out, we're going to talk about ways to find properties. But probate lists are lists where someone has passed away and their assets and their real estate is going through probate. I mean, it's going through probate so that when it's willed down to the right person, it's going to go to those people. A lot of people just want somebody to take it off their hands because they don't want to own a 15 unit apartment building if they have no idea how to manage it. And if they have no idea how to actually operate that property.

Starting point is 00:29:25 So this is a spot where you could be the person who helps them with the knowledge, with the expertise, and you can walk in there and you can say, hey, I would love to take this property off your hands. What kind of deal can we put together? And you guys work together to find the perfect deal that works for this. So real estate is a great option if you're looking to invest in real estate because you can help them understand what it's worth by looking at market values. You can help them understand how you can take this over and manage it for them.

Starting point is 00:29:50 You can look at all these other different opportunities as well, like acquiring the property and be able to put it in your portfolio to build wealth over time. And also, if you're going to inherit real estate, one thing you want to do is you need to understand four things. It is in your financial best interest to understand these things because this is hundreds of thousands of dollars, if not millions of dollars that you were trying to figure out how to manage. And you do not want to lose a million dollars

Starting point is 00:30:13 because you had no idea how this works. So the four things you want to understand are, you have to first know that this is your responsibility to understand how this property works is in your financial best interest. Number two, you want to get help to know what it's worth. Ask for help. Anytime you don't know what's going on, you need to ask for help.

Starting point is 00:30:32 You can get an appraiser in there. You can get a real estate agent to get a couple of ideas of what they think it's worth in the market as well. Understand what this property is worth. Look on Zillow. Get comps out there. Figure out what the property is worth it is. In your best interest to find out what the highest value of this property is.

Starting point is 00:30:48 And if you want to sell it, it may be worth it to invest a little money in a little time to bring the value up. Say for example, you inherited something from your uncle and your uncle didn't take great care of the property. Well, if you maybe renovate a couple of things, you could bring the value up threefold of what your investment is. So looking at that and figuring out what you can do by talking to contractors, by talking to those real estate agents when they're doing those comps, what can bring this value up that it's worth the investment? And then fourth of all, can you rent it out or cash flow? Can you figure out, hey, maybe I want to start investing in rentals or maybe I just want to have a couple properties to supplement my income in retirement.

Starting point is 00:31:23 so that I have that extra safety net. This is a fantastic thing to do as well, figure out what the rents are worth and how this works. And the best way to do that is learning how to run your numbers on a rental property. We have an episode talking about

Starting point is 00:31:34 exactly how to run the numbers on a rental property. So I would definitely advise that you listen to that episode. We'll link it up down below. But in addition, I want to make sure that you understand how to do that.

Starting point is 00:31:44 There's some bunch of great videos out there as well on YouTube. So looking to see how can I run the numbers on a rental property. And then if you're buying a property, If you're looking to buy properties to take advantage of this, looking on those probate lists is number one that we just talked about.

Starting point is 00:31:58 Number two, you can help struggling landlords. So I have done this a number of times where there are landlords out there who just cannot manage properties. Maybe they're new landlords and they are getting take advantage of by tenants who are just living there for years and years without paying rent or they're destroying the property. And they don't know what to do. You can help struggling landlords with your expertise and being able to take over the property and you can say, hey, I'll buy this from you. I'll take over the property and be able to help you with these tenants. as well. So I take this problem and stress off of your hands and now it is my problem I'm going to buy it from you. So a lot of times you can find properties undervalue by doing that.

Starting point is 00:32:31 Then you also might be able to find properties off market because if you go to those probate lists, you contact some of those sellers or the people who are inheriting those properties. Maybe you can find properties off market, which means you don't pay as many fees to agents or other transaction fees or things like that. So finding properties off market is a much cheaper way to be able to buy real estate. And then lastly, buying off the emotional, last that fair prices. They're going to be a larger influx of inventory because in the last five, six years, there's been an inventory problem, but also baby boomers are not selling houses. You can look at the data and they are not willing to sell their house because where are they

Starting point is 00:33:04 going to go is what a lot of them will say. If you talk to someone who is in an older generation, you'll ask them, hey, why aren't you selling your house? And they say, where am I going to go? I can't buy another house at a fair price. So I'm just keeping the house that I've been building up equity in over time. So if you look at the numbers, a lot of baby boomers are not selling their houses either. So there is going to be a larger inventory out there, which has been the largest problem overall since we started this whole housing crisis. So those are some things to consider on the real estate side. Now, I think there is an even bigger opportunity that we need to be talking about, and that is businesses. So there is a massive opportunity with businesses.

Starting point is 00:33:42 And Cody Sanchez, who was on this podcast, who talked about how to buy boring businesses, and we'll talk about that a second, did a thread on Twitter. And this thread is absolutely amazing. I think it nails down exactly what's going to happen. And so we'll link up that thread down below and I'm going to kind of talk through some of this and summarize this because I think this is the biggest opportunity of all. I love businesses and small businesses because the investment of a business is something that is incredibly interesting. One of which is you think about this, there is no such piece of real estate that I can buy where I can go out and buy that real estate and in year two, it doubles. But businesses, because of the revenue coming in, you can double that

Starting point is 00:34:17 revenue in one year, two years, three years, and you can 10x that revenue over the course of just a few years. There's no property where I can get 10x returns on rent within a very short period of time. That's why I like businesses because you can really accelerate your path to wealth by buying businesses. Particularly what we're talking about here though is small businesses because baby boomers almost hold up to 50% of privately held businesses. And what that means is they own about $5.1 trillion in small businesses. And the thing about baby boomers is a lot of them, they own small businesses like I'm talking about plumbing companies I'm talking about electric companies I'm talking about companies that have been around for a very long time maybe

Starting point is 00:34:54 pool cleaning companies cleaning companies there's all different types of boring businesses that are out there and there's a huge plethora of them we've talked about a lot of them on here in the episode with Cody that we had but a lot of people don't realize they can sell their business and a lot of people who have been doing it for a very long time they do it the old school way they don't understand they could sell their business you can come in and give them a large lump sum they don't even know that they could get so this is something which is something which is a major opportunity. But if you break this down on a daily basis of how many baby boomers are starting to retire and you look at the retirement numbers, that means that 10,000 boomers retire

Starting point is 00:35:25 every single day. And if 8 to 10% of boomers own no small businesses, that means 2.4 million boring or small businesses will be for sale. This is something where there are a ton of new websites every single day that are popping up, trying to connect baby boomers to the younger generation and who wants to buy businesses. There's a bunch of them out there. We'll link up a couple of them down in the show notes below. But the real thing is small businesses, a large portion of the economy is small businesses. It actually counts for 44% of the U.S. economic activity.

Starting point is 00:35:56 So you need to ask yourself a bunch of questions here. And Cody talks about this in the thread as well. But what happens if these businesses start shutting down? What can you do to prevent that happening and how can you acquire these businesses? And what happens if you could be the solution to take them over? Now, one thing that you can do is you can set up funds or things like that where you invest in some of these small businesses

Starting point is 00:36:14 and you can find operators to run those small businesses so that you can just manage trying to find more small businesses. That is one model. Or you can find a small business that you want to really grow and you want to put in your sweat equity in. You want to be in there day to day. And you can go acquire that business. You could take it over that way.

Starting point is 00:36:31 But what we're seeing is, like I talked about, millennials don't own a very large portion of businesses. It is declining every single day. And so there is going to be an opportunity that if you want to own one of these small businesses, if you want to take advantage of this, you can go out there and buy these small businesses with less competition than a lot of other people.

Starting point is 00:36:46 In addition, a lot of people who are in the younger generation, they want to be in tech. They want to have cool businesses. They want to have businesses that are really interesting, maybe marketing, all those different types of things. Boring businesses are something that is not on their radar. So it's less on their radar, and there are way more boring businesses

Starting point is 00:37:01 than there are exciting businesses out there. Let's get real. The world runs on boring businesses. So this is something where you really want to consider this and think through all of this stuff. Now, I've heard Cody talk about this in this podcast as well, but the best boring businesses are the ones where they're still be running by like a fax or a traditional phone. They don't even have a website, but they have fantastic reviews on Yelp. Those are some situations where these are all amazing signs.

Starting point is 00:37:27 So there's a couple things to look out for. The first one is like minimum innovation. So you can think about the local business in your area that has raving reviews but still uses a fax machine who doesn't even have a social media account or a website is from the 1980s. This is a great sign because it's something where you can acquire this. And the reason why it's a good sign is you can acquire this business once they're ready to sell. And then you can add all of these things in and be able to grow the revenue significantly. So say you buy a business at 2x earnings. So say you buy $100,000 business at 2x earnings, meaning you buy $100,000 of your business for $200,000.

Starting point is 00:38:00 Then what you can do is implement some of these growth strategies and be able to grow that business significantly over time where maybe you're three or four, all of a sudden you're at 6, 7, 8,000, $800,000 revenue or even million dollar revenue just because you made tweaks and were able to find more customers based on using the internet. The internet's a very powerful tool and it's a very cool tool that you can utilize to find more customers, especially in some of these boring businesses. Another great sign is that there are longstanding businesses. Buying new businesses really doesn't help. You want a longstanding business that a lot of customers have known for a long time that's been around in the neighborhood, been around the local environment. This is something

Starting point is 00:38:38 you definitely want to be looking for. You don't want to buy brand new businesses that are two or three years old. Save that for the people who are interested in tech or interested in companies that may have a much higher risk. Your risk goes up if it's a brand new business. Another great sign is if they have weak or no competition whatsoever. Think of the local businesses in your area that really do not have competition. For example, there's a business in my town. What they do is they make manholes. I mean, the manholes that are in the ground is that's what they create. And there's not a lot of people who are going through college thinking, I'm going to start a manhole business. That's what I want to do is start a manhole business so that I can have, you know, the things

Starting point is 00:39:14 that the teenage mutant ninja turtles used to come out of. That's what a manhole is. So this is something where finding little to no competition is absolutely amazing. And then number four is having a simple business model. If the business model is simple, that means you can teach anybody how to do this. You don't want something that's crazy like biotech or something that's way out there that you don't understand. You want to be able to understand your business. Warren Buffett said this best. I never. in something if I don't understand the business. And so he wants very simple investments that he can buy the business. And think about this for a second. What Warren Buffett did was he bought

Starting point is 00:39:48 boring businesses. He bought things like railroads, candy companies, varying boring businesses that people may not be interested in getting into. And so he started a fund and was able to do that. And that's how he built the majority of his wealth was buying boring businesses, finding amazing managers to run those businesses, and then creating wealth over time. Now, how do you finance these businesses, do you have to pay cash for these businesses? No, you don't have to pay cash for them at all. What you can do is either get seller financing, which is your number one goal, which means you can create a retirement plan for those small business owners. So what this is is the business owner becomes the bank. So say, for example, it's the $100,000 business. We'll use

Starting point is 00:40:23 the same example. So you put $20,000 down to own the business. And then over the next 15 years, you're paying that owner a certain amount every single month. What this does is they get to earn interest on their money, so they make more on the business. And then what you get to do, is you get to preserve your capital and pay them back with the business profits. So you're putting down minimal to no money if you really can create a good deal here. And the business profits will be paying them back in addition to the interest. So you get write-offs on it, all that other good stuff as well. The second way is you can get an SBA loan, which is a government loan,

Starting point is 00:40:55 that you can actually get basically on 90% of the business. So a million-dollar business, you can buy for $100,000. So SBA loans are absolutely amazing. It's a lot more paperwork out there. And if you're in the UK or Canada, there's also similar. programs in your area as well. Just Google government business loans and it'll come up for you as well. But this is the fastest way to get to a million dollars in revenue every single year is utilizing a business and buying some of these boring businesses. Amazing opportunity here.

Starting point is 00:41:21 Amazing way that you can get into really making a lot of money pretty quickly because if you buy a couple of these over the course of a decade, you can be making well over a million dollars a year just by buying these boring businesses. So absolutely love this option as well. Listen, I hope you you guys learned a ton about the great wealth transfer. I hope you guys are excited about this, not only so that you can just teach other people how to build wealth and make sure you're teaching your friends some of this stuff that you're learning because this is something that's going to be incredibly powerful. We do not want people going broke or bankrupt because they acquired money, didn't know how to handle it and then the money went away. If you got value of this episode,

Starting point is 00:41:53 make sure you share this with your family and friends as well. This is going to be something where I definitely want people to hear this so they understand what's happening because this is coming in the next 20 years, this transfer will be complete. So this is something you definitely want to help out your friends. You want to help out your family so they understand how this works and how they can do this. In addition, we'll be having episodes coming out teaching you the best way to hand down wealth to your family if you're going to be handing down wealth. Or in addition, protecting your wealth if you're going to be acquiring some of this stuff as well. So excited for you guys to see what the future holds and what you will be doing. I want to see who's taking

Starting point is 00:42:24 advantage of some of these opportunities as well so that you can start to build generational wealth for you and your family. Listen, thank you guys so much for listening to this episode. We will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play Ojo.

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The Personal Finance Podcast - The Great Wealth Transfer Has STARTED (Here is How to Take Advantage of It)

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