Episode 60: How to generate tax-free income for retirement with Blake Brogan

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Who is the Guest?

Blake is the Senior Wealth Strategist at Money Insights, a strategic wealth-building firm, dedicated to helping people to go from high income to high net worth.

He has been in the financial services industry for seven years and specializes in helping clients optimize their wealth-building strategies by utilizing life insurance.

Blake is passionate about helping wealth creators build financial freedom with cash flow and alternative investment strategies.

Visit Him at:  

Linkedin: https://www.linkedin.com/in/blake-brogan-78380a10b/

Website: https://moneyinsightsgroup.com/

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Transcript

Axel Meierhoefer: 0:02

Are you one of those people who have a really good job, you're making good money. And you know that you have some money left over at the end of each month or each pay period, who are out of your business operations from profits. And you're wondering what will be a way to really organize your finances when you have so little time to do it. And we have a guest today Blake program, who is actually helping us to understand what capital avalanche is, and how you can organize your finances, when you don't have a whole lot of time to manage things, but how you can also make your money work multiple times for you. And then when you have arranged it all correctly, I hope you will come back to us an idea let's go and have us help you invest in real estate. So let's listen in and see what the capital avalanche actually is. Hello, and welcome to another episode of The IDEAL Investor Show and where we bring in great guests to talk about things that have to do with investing in real estate and passive income and so forth. And today, we have a great guest, Blake Brogan from money insights, and welcome Blake to the show.

Blake Brogan: 1:26

Hey, Axel. Thanks so much for having me.

Axel Meierhoefer: 1:28

Yeah, awesome. Thanks for making the time. So let's talk first a little bit about, you know, how did you come to be with money inside? What is it? And how did you even get involved in the whole investing world? So to speak?

Blake Brogan: 1:41

Yeah, yeah, sure. So I've always been interested in business, I mean, even dating back to college, I studied entrepreneurship as a major. So I've always been interested in, in business and investing, I probably think a little bit outside the box too, as well. So kind of carving our own path always was interesting to me. So then I got started in the financial world, pretty fresh out of college, had the opportunity to sit in quite a few meetings and kind of, you know, learn from some older, wiser people above me. And I really started to find that a lot of the traditional kind of retirement methods either weren't working great, or people just weren't excited when they got kind of towards the end of the road, maybe they were hitting age 65. And looking to retire, they didn't love some of the things that they were doing. Or maybe it just didn't work out the way that they had envisioned. So I started down more of an alternative route, teaching some alternative financial strategies, helping high income earners, create cash flow, do some of the things that you're doing as well. And that's what led me to money insights, which is a firm that's been around for about a decade, a little over that. And I think they're one of the best in the space. And so partnering up with them and doing the same kind of things that I was passionate about just made sense. And that's how I, I ended up with them.

Axel Meierhoefer: 2:51

Okay, yeah, that's very cool. Now, when you said you started out right out of college, basically, in the financial industry? Can you be a little more specific? Was that like with a bank or investment broker? Or what kind of financial industry part did you get into?

Blake Brogan: 3:05

Yeah, sure. So my family actually has been in the insurance financial world really, all the way back to my great grandfather started a firm here in Lansing, Michigan at the moment, he started a firm back in the 1930s. And so I actually work in an office with my grandfather, uncle's cousin as well. So there's a lot of us here. So yeah, I started working with them was trying to kind of figure out, we all do a little bit different things, but trying to figure out, you know, what, I was kind of passionate about what I thought I could bring the most value to. And, you know, just having the benefit of being around a generation older than me, they had clients who were in their 50s 60s 70s. And I was, you know, for the first couple years, just kind of shadowing a lot of what they were doing sitting in meetings, learning about people's situations. What did they like, what they about what they were doing financially, what did they not like, but having that experience of being able to see, you know, what, what was happening on the back end of the planning that they had been doing for decades was fairly eye opening to me.

Axel Meierhoefer: 4:03

Oh, yeah. So that is kind of like Rogen clan that yeah, there's a lot of us added for 100 years, almost every now and please take this a little bit. These next few questions, maybe with a little bit of a cheeky smile on I bet. You said that while you were sitting in these meetings and listening, when they were conversations with people who had been investing or had gotten closer or maybe even into retirement, they were not as excited as one might expect or didn't see in the end the results that they were hoping I wonder where the taxes that they were expecting to pay really lower than than what they were told when they put this tax deferred money into accounts.

Blake Brogan: 4:48

Yeah, I mean, you hit the nail on the head is exactly that. They, you know, the people who are primarily banking on these qualified plans, 401 K's 403, B's IRAs, whatever name they go by. they, when they got towards those retirement years or you know, and they've accumulated large sums of money, seven figures of capital in these accounts, but as they started to realize, okay, what's the cash flow, the actual distribution that I can get into my pocket after taxes, I mean, that was pretty eye opening, because the taxes were significantly more than maybe they were planning on, they didn't find themselves in a much lower tax bracket than they, you know, then they may have been told that they were going to be when they got to those retirement years for various factors. So what I noticed is that really, it's not that the stock market is bad in and of itself. I mean, a lot of the people that we work with today still use it in some capacity. But what I found is the people who had cash flowing assets, that would weather them through whatever, you know, kind of market cycle they were in, if they had that consistent cash flow that they could predictably rely on from a month to month standpoint, during the later years of their life, you know, they were in a significantly better spot than people who were only, you know, relying on a certain nest egg or dollar amounts in these qualified plans. And so that, you know, kind of leading to what you're going, that's what really led me down this road of okay, what other strategies are out there? How can we help people maybe shift their mindset a little bit, I'm this pure just accumulation than distribution strategy, what other things are out there, that could be a more effective way to create a dependable financial future?

Axel Meierhoefer: 6:22

me, and the audience knows this, I retired from the military after 22 years eligible for a pension, which, if I had served like maybe 30, or closer to 40 years, it would be enough to potentially live off. But obviously, it was 20 years, even though I qualified. The amount, even if you project it forward, when the starting amount is limited, then, you know, incremental, smaller changes don't really turn it into a huge amount. So it was always clear, something else has to happen, right? And that's how I basically got into real estate investing, and now helping other people do the same, because I realized, okay, this alone is not going to cut it. So where do I then put any kind of profits that we making, because I started a business, you know, like, good intrapreneurship and started thinking, okay, so you know, if I want to find actually a way to not have to do this for the rest of my life, how do I do it and you know, passive income generating assets were the way to go. So we are very aligned with that. Now, the second cheeky question in that same direction is, what's the Brogan clans prediction of Texas going to be for somebody who has, let's say, 10,15 years ahead of them 20 years until they get to retirement age?

Blake Brogan: 7:44

Yeah, I mean, it's probably not too far off of what your I can already see you smiling? I haven't even started answering the question. Yes, sir. So I mean, I think the most fundamental question that we would ask someone is, you know, do you think it's going to cost more money to run the government going forward? or less money, right. And so as you ask people that question, and you look at, you know, just getting through COVID, which created all the stimulus, which, you know, is leading to potentially towards a recession, either soon, or maybe down the road, and you look at where our government's going, it's only expanding their needs. You know, we certainly believe taxes are going up. And I think if you asked most people that if they really stopped to think about it, they're gonna realize you have the government is getting bigger, there's more funds that are going to be necessary to do that. And the reality is, I'm not going to be able to defer tax into an account and pay a substantially lower rate, you know, 15 years later than I would be in today's world.

Axel Meierhoefer: 8:41

Exactly. And I appreciate you pointing that out. I mean, I asked the question slightly different. But I asked a similar question. And that is, have you ever seen the government, whether it's the US government or other governments in Western countries ever substantially take on an approach to reduce the national debt? Seriously, not just a little once a year in 100 years, but seriously, with that goal in mind? And obviously, everybody says no, well, and then the next question is, okay, so what happens to Texas? We're in let's just be modest. And say we go with today, the federal funds rate is 3% to 3.25%. Today, as of last week's increase, while on 30 trillion debt, which is what we have, that's a trillion dollars, just in interest. Yeah,$1 trillion dollars just in interest. Right now, we're still adding every day to those 30, almost 31 trillion. And we just got last week notice that the Fed currently says by the end of 2020 to early 2023, we are seeing ourselves between 4.2 and 4.5. So that is increasing, interest is increasing. Now. Is this going to be forever? Are we ever gonna see interest rates down to maybe 2% or 3%? Again on the Fed funds rate? I think so because we have to But ultimately, it's not going to disappear. And this notion, in my opinion that people say, Well, we inflate it away, yes, you can make that argument that the value of those $30 trillion are going to go away. But as long as interest rates are 234 percent, that is a very, very substantial amount of money, that has to be served, even if everything else wouldn't be touched, every other service remains the same, and so forth. And now, and I'm really want to ask you your opinion about that. Next thing, there is a guy named Elon Musk, who says one of the biggest issues that people don't really address is the demographic development in the Western world. So how would you say is he right? Is he wrong? Is that really something to be concerned about? Or not?

Blake Brogan: 10:46

Yeah, I have heard him say that I happen to be the oldest of 10 children. So my family didn't they're certainly contributing to why he's hoarding numbers. Yeah, exactly. So I haven't looked into that specifically. I mean, I would tend to agree with him, you know, I mean, probably comes from a mentality of are people going to continue to produce? So no, I would certainly think that that's a something that needs to be taken into consideration. And hopefully, you know, we can start trending towards that direction, because it looks like if you look at trends, that it's going the opposite of what he's advocating for at the moment, right?

Axel Meierhoefer: 11:19

I mean, the thing about it is that I see, and there is obviously an opportunity, in a way to change this at least a little bit. And I am going to get to but fundamentally, if you go and say, Okay, what are the actual numbers of the birth rate in the United States are the last 20 years up, let's say until the end of 2021. We know this, these babies have been born. I mean, that's just so we have statistically those numbers. Now, the one thing I always say as a caveat is, I don't believe it any more. I'm an immigrant myself. But I don't believe that I've lived here literally for 27 years. And even before we came here, there was always talk in the US political discussion that immigration needs to be addressed. But in 27 years, it hasn't been addressed. And if you were to ask me, Do you think it's going to be more or less likely that it's going to be addressed, I think it's less likely, as long as the division between the two major parties keeps getting deeper. And even if it weren't, even if it were to stay where it is right now, or where it was four years ago, I have a really, really hard time seeing them agreeing on that when the one side is saying close the borders and everybody back make all the illegals leave the country and the other day where we have sanctuary. And I'm not even saying right or wrong, good or bad. I'm just saying that one thing that could basically change this birth rate pyramid is some solution to immigration to say, there is a high desire of a lot of people coming here. And that would add young people in the majority, especially for them getting the benefit of becoming a citizen, if somebody is born here, to maybe dampen the blow that the Europeans and the Asians in very, very severe numbers can see already. On the one hand, it's kind of cool in Japanese life expectancy is above 85. Now, right, so they must be doing something right about your food, and then healthcare and stuff like that, and the way they live their life. But that only takes you for a little bit, their birth rate is like so minut, that they literally have started to reduce population now. And it's accelerating. I mean, the data is all available, like I said, So why am I even bringing this up is one of the slogans that we use that idea where to grow is a path to early retirement, right, and I want to pivot a little bit to the capital avalanche that money insights has on its website, and that you have, I'm assuming I'm making an assumption here, like that you are very familiar with. So my opinion is and obviously, as somebody who advises other people to invest in value assets, real estate and passive income opportunities. My opinion is this Horch fear that dozens and dozens and dozens of millions of people working and putting money into 401 K plans is a huge deception, because like you said, number one, the taxes are not going to go down to just serve this 1 trillion plus a year in interest, we'll be lucky if they don't go up. And the stupid thing too, we want to tax the billionaires as if these billionaires are Indian enough to stay around if we went taxing them, right. So anyways, so that means it's not going to go down. If we're lucky, it might stay where it is, if we're unlucky, it's gonna go up. And there are less people to actually pay anything in meaning paying taxes to serve for those who Social Security, Medicare, Medicaid and other recipients of what they put into the system. So with that being said, you said her income and on your website you say we're serving high income individuals kind of funny I had to check a little because all the examples of these high income people seem to be doctors. Ya know if that's your Just coincidentally,

Blake Brogan: 15:00

yeah, we do happen to work with a lot of doctors, physicians, that certainly not everybody. That's kind of been, in a way the people who have been pretty attracted to what we do some of the

Axel Meierhoefer: 15:14

enterpreneur to stay with your degree who's doing well, you would accept them, right?

Blake Brogan: 15:18

Oh, absolutely. Absolutely. And so on top of that, we do work with a lot of business owners, that would kind of be the other category, it's kind of hard to I guess, maybe just to have a picture of a business owner, they could look like anything. But certainly the people who kind of fall into our kind of niche market, our high income earners, people who are looking to generate cash flow, either in today's market down the road, looking for alternative strategies that are beyond just parking money, as you said, Excellent in the 401k, z IRAs, where can we position dollars to create the largest amount of tax free retirement income places that aren't going to be, you know, hit from the government, strategies like that strategies to help people enhance what they're doing kind of on the turnkey real estate side or other real estate investing? Those are other strategies that we teach as well?

Axel Meierhoefer: 16:04

Yeah, absolutely. And we're very aligned in that, because that's what we recommend, as well. And the whole I went to the video with a capital avalanche and immediately sent Yep, totally aligned with what Blake is saying. Now, people probably why they're listening to us, not necessarily going to the website right now. So tell us a little bit. And I think it would be nice if you could emphasize a little bit how the capital avalanche actually helps to make once money work more than one, so to speak.

Blake Brogan: 16:34

Sure. Yeah. So the capital avalanche, really the idea of it. And if you want to learn more, you can go to money, insights. group.com is the place where you can we have a lot of educational videos there. But the idea of the capital avalanche, a lot of people are saying, Okay, I'm making good money. But where do I put it? Where can I, you know, where can I park these dollars to create maximum benefit for me down the road. So what the capital avalanche allows you to do is create a predictable double digit return on your capital over the long term, which I know sounds aggressive, but with our strategies, were able to do that. And then kind of one of the big benefits is we're taking capital that we're putting away and creating just a maximum tax free retirement income stream from those dollars, you have liquidity over those dollars. So it's not something like a 401k, where you're parking money in a place where you can't access it, at least without paying penalties and taxes until age 60. This is money that you might not have 100% liquidity of, but you have access to be able to tap it if need. So it can provide you liquidity for your state for your business. A lot of business owners love this strategy, if they have business reserves that they need to have liquid. But also, they want their money to be doing something a little more productive than sitting in a bank account earning, you know, a quarter percent at best taxable, this can be a good solution. So the way that it works, is really we're taking very special types of insurance contracts. So they're insurance type of policies that aren't necessarily focused on the protection side, but more growing cash value. And so what we like about those is they're able to create a very steady consistent rate of return. So it's not volatile, like you would have in the market. So there's nothing really magical about these insurance policies, other than that guaranteed consistent growth that we're able to generate. Plus, then what we do is use leverage outside of that. So for someone who's saying, okay, I can put some money away, and I want that to be able to grow, you know, if you're only using your own funds setting in an account, you know, in a strategy like this, you may be able to generate, you know, up to about a 5% return. So that 5% return, obviously, it's not going to blow anyone's socks off, it's conservative, safe, we know, it's dependable, we know what's going to happen. But then when we're using outside leverage, as opposed to just putting our own money in, we're able to leverage outside money from banks, to they'll contribute to the plan and in essence for us. And so because of that guaranteed growth that we're able to generate, plus the bank coming in and providing that leverage and providing more capital more dollars working on our behalf, we're just able to create some very significant returns over the long term by earning more in our policies than what we're paying on the loan side as well.

Axel Meierhoefer: 19:13

Okay, yeah, that's very good. And thank you for kind of summarizing that. So one thing that I found oftentimes can help, let's just if you're okay with it, take my example. And I'm basically going to present it real quick. And then you can tell me that we do it right, or we do it wrong, where could we do it better? Right? So check number one, obviously, ideal way to grow is a business like, you know, and I'm talking to a studied intrapreneur experts, so we're good. And the business has things that it's responsible for, right? Like, for example, the investment properties of mortgages that need to be served regardless whether tenants pay rent or not, and so forth and so forth. So one thing that I always realized an entrepreneur and business owner is I want to protect my family or anybody who's working within the company. From if I get run over by a bus to be suddenly standing in front of a situation where it's not so clear Where is money, so what I did, and following your example is to say, Okay, for the fact that I couldn't run, be run over by a bus, I want to have a life insurance policy, but I want to have the kind where the money that goes in, regardless whether it's in one lump sum right at the beginning or every month is not just providing, I don't know, a million, or two or three, or whatever the number is in term life, meaning like when they would pay if I'm no longer around, but where they actually use the money that is being put into, together with hundreds of 1000s, or maybe millions of others, bundle it together, and then invest it. And let me participate me, as long as I'm still around, participate in the returns from those investments. So that's in you know, I think it's called a whole life insurance policy that we created. And we're putting a certain amount every month, and we had an initial amount that we put in now then we went with experts, like you like to say, Okay, well, so if this money is sitting there, and it's absolutely secured, because if I get run over then the policy pays should not be able to borrow against. And the bank said, Yeah, sure. I mean, it's one of the most secure assets you can have, because it's covered by an insurance policy, right. And we know that these insurers that have Whole Life policies have been around forever. And they have to follow very specific rules, which I want to ask you about, because I've never understood what those are really. And so they said, Yeah, shall we give you I think they gave me 85% of what the actual value at the time in the policy was. So I got that into basically a checking account, I got basically my money that I just put in there and keep putting in there right back out. So while it was insert keeps accumulating, for whatever good investments the insurance company makes, I have it back in my hand, and I can use it the second time, for example, as a down payment for an investment property. And that investment property, I wouldn't do it and none of our members in either wet or whatever do it if it wouldn't move by positive cash flow from day one. Now, if we keep doing this in the right way, the positive cash flow will ultimately be enough to serve the policy, let's say the policy gets 1500 or $2,000 a month. Well, if we buy real estate with it, and it generates $2,000 passive income, it pays the policy by itself. And then we actually have it set up every two years to look at it again. And let's just say we were putting $50,000 in over the two years plus the insurance company obviously did some good stuff with their money, then we have maybe something like $60,000 that we can use two years later, again, as a down payment for two more houses and keep going that way. So that's basically in a nutshell how I've done it and how I have been suggested to our clients. Now the one thing I've always been curious, and I hope you can help our audience understand, you said earlier, the insurance companies have certain rules that they have to follow what to do with the money so that it's kept relatively secure? Can you talk a little bit about what those rules are in, if that makes them returns bad? How does that work?

Blake Brogan: 23:12

Yeah, that's a good question. And to kind of follow up on your thoughts, those are strategies that we teach and we help our clients implement all the time is really utilizing these specially designed life insurance policies built in the way that you're talking about as an opportunity fund, we refer to it as for cash flowing investments. So we're right in line with that. So the companies that we tend to work with who are best for these type of strategies are what are known as Mutual Life Insurance Company. So there's in the life insurance world, there's stock companies and then mutual companies. We like to work with mutual companies, because their primary focus is delivering benefit for policyholders people who actually own these dividend paying whole life insurance policies are actually the ones who are getting benefits. As you said, we those typically come in the form of a guaranteed interest plus dividends, you probably get dividends on your policy every year, which helps grow the cash value in them. So what they're doing is they're just accepting, you know, huge amounts of premium dollars, they have billions of dollars that they're managing. And they can invest those because they're not beholden to a stock holder, right. They don't care whether their shares are going up or down on a quarterly basis, they're able to take a very long term approach with that money. So if they have billions of dollars under management, they're investing in very conservative bond, like type of assets. They know, you know, CDs, things like that, that they know over a certain period of time are going to generate a significant rate of return. But they're not out there going to hit homeruns. So these are very conservative companies. You know, one of the companies will really all of them have been around for well over 100 years. One of the companies I'm thinking of specifically has paid a dividend to their policyholders every year since 1859. So that's through World Wars, Great Depression, you name it recessions. Not only have the company's been profitable, They've had profits to distribute to their policyholders every year for 170 years in a row, essentially at this point. So the way that they invest is very conservative. They're taking a long term approach, and they're able to pass those along to you know, policyholders like you and I.

Axel Meierhoefer: 25:14

Yeah, absolutely. Now, one thing, and to me, if I see this correctly, you mentioned that some of them have paid dividends, I'm not sure if it's really called dividends, but dividends or something equal to a dividend for a very, very long time, which also means most people if you know, obviously, ideally, would start your life insurance policy, you know, entering college, or maybe their parents should actually set one up, I actually am one of those weird people, I set one up and my daughter was one and a half. Okay, and then has a initial one I put in is until she's 65. Now she can extend it beyond that. When I first talked to her about it when she was like 1819. She's like they had 65. That's so far away. Are you talking about right? So, yeah, but the point that I wanted to get back to is this long term component. In life insurance money, if you just look at it from a money perspective, I think, if we really lean back for a moment and think about and we should realize that even though their investments are what most people would call conservative, I would actually differ with you a little bit when it comes to they typically don't hit a home run. It's just not the instantaneous home run that you would see in a necessarily in a baseball game. But I would definitely say, if you look, for example, at the real estate investments that some of the larger insurance companies have made, because they have ventured in that market as well. Anything that they did between, let's say 2012 and 2018, early 2019, was basically a homeroom in the last three or four years, sure, from an asset value increase. And we both probably agree that they have bought bonds, and they are buying bonds more probably than real estate, right. And I just looked it up yesterday, you can get MGM bonds, which is a very reputable casino operator for the last 100 years or something like that for about 6%. And if you go a little bit more risk, you can go even into eight or 9%. I don't know if insurance companies are allowed that. But there's typically a spread, right? So if the Fed is at three and a half corporate bonds, like in the 678, if the Fed keeps going towards the end of the year, in the fours, you might see eight 9% bonds, right. And obviously right now, the shorter bonds pay more than the longer ones. But the insurance companies have whole departments from what I understand that do nothing else then basically run the money of their policyholders like an investment banking operation, even though they're obviously an insurance company. So I think this is, you know, another tribute to if you have a long term perspective, and these companies, I think their long term perspective is the lifetime of the insurance company, not necessarily the length of the policy that any individual holder has. Right. So I think that should give us pause that how safe is the money to put it there. Right? How likely is it to get a return out of it? And how cool is it that you can then right away, turn around, get it back and do some cool stuff, whether that is generating passive income. Now, we talked about just briefly about the developments, whether you see these current developments about the economy, inflation Fed rate increases in stuff, where do you and your organization see that going?

Blake Brogan: 28:39

Yeah, I mean, certainly I think we probably, you know, knowing a little bit about your company and the type of people who are in your audience would probably be very aligned that, you know, you look at where our country is and where inflation is. I don't really see it getting trampled down too much here, it seems to be kind of off and running. So especially if you're someone who's sitting there thinking, okay, so what am I doing? How can I get my money to work harder for me, or how can I position it in the right place to take advantage of cashflow, appreciation, depreciation, I think some of the strategies that you're teaching with turnkey real estate investments, I mean, we have many clients who are turnkey investors. In fact, we just had a lady who was looking at getting a turnkey short term rental up and going and she used some of the same strategies that you were just talking about where what she would do, or what she did was as opposed to she was about to put$100,000 down onto this, the short term rental and so as opposed to just taking dollars that she had in a checking account, and then using that for the downpayment, get financing for the rest and create the cash flow off that property. She did the strategy of over funding a whole life insurance policy. And then why would she do that? Well, because now the dollars are in the policy, so they're gonna grow by a significantly larger rate than she was getting in her bank account. You know? upwards of 5%, she could do that on a tax free basis, she also had that protection that if something were to happen to her, you know, if she were to pass away unexpectedly, her family would have a large windfall. So things like that. So she's got the money in the policy, but she wants to use it for investing. Well, as soon as she funds the policy, she can turn around right away and take a loan against that which it sounds like you've done you encourage your clients or your people in your community to do as well. So when she takes that loan against it, and again, she did this a couple of weeks later, after funding the policy, she turned right around and took a loan against that policy. Well, when she receives that money, you know, that's actually money coming from the insurance company, so she didn't have to withdraw the funds from her policy. So what does that mean? Well, that means all of her money, that $100,000 is still in the policy, it's growing, it's earning uninterrupted compounding interests, growing tax free, all those benefits I mentioned. And now she can then she leveraged that took the$100,000 of the loan that she was able to take, go buy the same short term, turnkey rental property that she was planning on purchasing originally, and just use the cash flow to repay the loan. So the end result of why she wanted to do that was as opposed to just having her money working for her in the short term rental. Now she had it working for her in the policy earning a rate of return there. And she had the money working in the turnkey rental, short term rental business as well. So just by layering in that kind of strategy, she now has her money working for her in two places at the same time.

Axel Meierhoefer: 31:30

Yeah, absolutely. And I think this is also interesting, because we always discussing flexibility, like how can you if you have created this kind of structure, gain some flexibility when it comes to decision making, right. And so in this case, using your example, this client, she can basically say, okay, the positive cash flow that comes out of the investment, which I'm assuming you would advise them to do, either I can put it into the insurance company as payment for the premium, I can also use it as extra principal payment to the mortgage that I have in the investment, which means the mortgage gets paid off faster than the original 30 years, or whatever the mortgage was for. Which means ultimately, I get to the full cash flow, rather than the depress cash flow sooner, and can then put that into the insurance policy, if I want to, or buy something else, you know, about half a property free and clear, sooner than going all the way through 360 months, or whatever the term of the loan may be. So that flexibility to decide, oh, I can say I buy something else with it, right? So I have three or four different things I can do when I have these vehicles in place. Now, there's one thing when it comes to inflation that people say, well, the buying power of our dollars is losing right now at 8.3%, or stuff like that. How do you basically explain what that actually means to your customers?

Blake Brogan: 32:53

Well, it's yeah, the value of the dollar is going down every day. The question that I often get asked is, okay, what options are out there for me to do something about that, and a lot of times it's looking at that long term fixed rate debt, that can actually be a benefit. So for you know, and I'm sure a lot of your, you know, this isn't breaking news to a lot of your listeners. But if you think about, okay, if if I can lock in a 30 year fixed mortgage, right? What's also happening with inflation is the cost of servicing that loan is going down each and every year, as well. So it goes back to what you were saying Axel, about having options, right. So as she's starting to create cash flow from this, yes, she's not restricted to doing one separate, you know, one specific thing with the money, if she wants to service the debt with it, that she took the lien to go get the short term rental, she can do that she can use it to fund back into her policy, a lot of it has to do with with what she has access or what she wants to have access to. So yeah, we just, you know, I mean, inflation is real again, that's why a lot of the strategies that we teach resonate with people because of the fact that they want to have some safety, they want to have liquidity over their money, they don't want to put it in a 401k and just lose access to it. But they want to have that money doing something for them. Right.

Axel Meierhoefer: 34:11

So I totally agree. And we basically say the same thing. One thing that you know, maybe you want to use that as an alternative explanation to that question that I've been using lately is and I've gotten a little bit of flack because I cited Miko sailor who is currently not in favor of people because of his Bitcoin investments. But what he said really resonated with me not has nothing to do with Bitcoin. He said I live in a house that I bought when I got basically into some money because of being an entrepreneur and starting our company and being paid well somewhere in the Miami area and Florida right by the water. And he said this house and he didn't buy it himself and was in the family kinda like in your family probably might have some assets that have been in the family for a long time. And he said when that house was first bid, the building costs for this house was $33,000 in 1910, or 12, or something like that, when he bought it, it was $300,000. Right now, it's probably somewhere in the three to $5 million. And what I thought was a striking argument that I have been using lately is when you think about what is a house for it is to provide the space for a family to live and grow and enjoy and have barbecues and thanksgivings, and stuff like that. But from the service, the thing that it actually does is it provides shelter to the owner, right, Maslow's pyramid and stuff like that. And so why is it then that increases both in value over the time and in rent, if you were to rent it over the time is not because that value of providing shelter is somehow less than the value of the shelter in 1960 and 2010. And now, it's pretty much the same, but the value of the money has collapsed massively 99%. So if you want that same value at the beach in Miami, in that same house, you have to probably pay$5,000, if you were renting it in 1910, when it was bid was maybe $150. But those $150 were so much more that they were equal to the value that the House provided. And now you have to put in 5000, because this individual thing or dollars have basically very little value. And that's what inflation does, right? Like they basically reduced the value of right now with eight point something percent per year. So you have to give more and more of these less and less valuable pieces of paper to get the same service, like rent, or the shelter in the house, or anything that has any kind of equal value over time. So I think that is helpful, even though it comes from Microsoft law as kind of like putting it in perspective, what do we really mean when we say the buying power of our dollars goes down with inflation? It's you need more of them to get the same thing, basically. Right. But from an investor perspective, obviously awesome, because we pay one price, and we have a fixed mortgage. And we can reasonably expect that rent will have to increase, if for no other reason that the value of these dollars that the tenants are giving us is less than this value. So do you resonate with that?

Blake Brogan: 37:19

Oh, absolutely. And I think even just I mean, using piece of property, Miami is probably the best explanation for that, because the prices did just exactly what you said in your example. And the reason that resonates with me, as you think about, again, some of the more traditional wealth building strategies are the opposite, right? We're we're contributing our most value, if dollars are more valuable today, than they are going to be in the future. And we're contributing today's dollars into accounts that we can't take out for 10 years, 20 years for up to 40 years, depending on how old you are. Right, the value of those dollars are going down. Where if we look in the alternative space and real estate, using your example, you're paying a price today, you're putting capital in as an investment. And then just naturally, the value of that investment is going up because of how inflation works. So you think about the two separate kind of ways of thinking about how to grow dollars for the future. And they're just the opposite.

Axel Meierhoefer: 38:14

Yeah, absolutely. And I mean, I want to also address me and get your opinion about it. There's a lot of people say why. But you know, when I look at the stock market, and if I were to invest in the stock market, which is basically where a lot of 401 K investments go in mutual funds and index funds and stuff like that, then I have on average 678 percent. And what I have been seeing is I don't even want to argue about the stock market, I want to basically make people aware that there is no promise amount of truths in the statement, nothing is forever. And what I mean by that in the context of investing in the stock market is there are things that are maybe not forever, but building a house is probably something that you can reasonably expect to be around for 100 plus years. Now let's look at your phone. Your smartphone has the capability of making awesome pictures, because it has a digital camera. And they keep charging you more and more because supposedly the pictures get better. But when you go back and say who came up with this, the amazing story is the people who came up with this first were the people that were running a company named Kodak. But they were so stupid not to believe that digital cameras would be the thing of the future. And so they insisted that the old cameras where you needed to put a film in it or you bought a little cardboard box for the wedding. That that is and will always be how pictures are taken. Others saw that they had come up with a digital camera but didn't believe in it. And so they ran with it. And Kodak is I don't even though if they're still there. And you can go into many, many other companies like that, right? Like, for example HP, right? Were the absolute leaders in inkjet printing. But that only really makes sense as long as you all and everybody in the whole world is using paper that you want to print on. Now, that doesn't mean we don't print anything anymore. But the amount of stuff that needs to be printed is massively less than it used to be. And I can say, at least for my daughter, when I look at her office, she runs her own business, I look at her office, he barely has any paper. And when I say how do you do this, she says, I do everything digital, in triple protected with different storage and backups and what have you, but no paper. But if you look at what HP was, and what they are now, the little pieces that are left of it, it's the same kind of story not quite as bad as Kodak. And you can go down the list and say, Okay, what were things that we used to do people used to do in our lifetime, in my lifetime, at least. And, you know, like, I remember we watch Star Trek, when Spock went to a new world, and he had that little thing on his arm that he typed on to say, you know, okay, what's the temperature? And what's the humidity and stuff like that? What, we're not quite strapping it to our arms yet, but our phones are completely capable of the tricorder things that they did in Star Trek. Right? And, and probably more like, I have never heard Spock play music on the tricorder or anything like that, or take pictures, whether it's pictures, sure. Watch videos, you name it. So that's just in one lifetime between what somebody thought would be possible and what we're actually living every day. So why am I bringing this up? I want people to really think about what are the things that have a reasonable expectation to be around you mentioned, you know, like more than 100 years in the life insurance industry, I mentioned more than 100 years reasonable expectation, with real estate and the physicality of the building, while other things come and go, right. And even in the cycle of 25 to 30 years, what used to be normal, like, you know, Netflix, send out little DVDs in envelopes. It's unimaginable. If you look at the stream streaming industry today, it's an on and on and on. So I think it's important to really take a look at that. Now, with all that being in mind when we talk about high income earners, like you say, on your website, like can you give our audience maybe to finish up our content for today, a little bit of who would be the right kind of other typical kind of clients, other than maybe doctors that we mentioned already? That wouldn't really benefit from working with you.

Blake Brogan: 42:24

Yeah, so it's probably in line with a lot of what your people are already doing. But it's those who are looking for alternative ways of building wealth. And so what we do is because we don't want people just to take our word for it, you know, we have videos and other information really available on our website. Again, that's money, insights, group.com. So feel free to go check that out and see if some of the things resonate with you. But yeah, for those who are actively investing into turnkey real estate, I would look at the investment optimizer, it's the strategy that we've talked about. And really all we're doing is taking what you're good at in the investment world, and just adding an additional layer of profitability to what you're doing. So if you're someone who's building up money in a bank account, liquidating that to go invest, and as that cash flow is kicked off of that investment, it goes back into the bank accounts building up, you may love what you're doing on the on the investment side. But you may say, hey, is there more I could be doing with my money in between deals, is there a way for me to add a layer of efficiency. And that's really what we specialize in. Or if you're someone who's saying, Hey, I have money that I want to set aside for the future, I want it to, you know, be able to create significant rates of return over the long time, I like the idea that I can put my money in a place and I can take it out tax free, I can have liquidity. Then again, the capital avalanche, which we talked about, we have more resources there as well. But that would be something that you would take a look at. So really, at the end of the day, it's anyone who's who's interested in building wealth wants to know what type of ideas are out there, maybe outside the mainstream, feel free to take a look and let us know if it's something that's of interest to you.

Axel Meierhoefer: 44:01

Okay, yeah, very good. And thanks for the summary. One quick thing as a follow up, do people need to be accredited? Or do you basically allow others to be invested with you as well?

Blake Brogan: 44:11

Yeah, with our strategies, you do not need to be accredited. So that's not a prerequisite a lot of the people that we work with tend to be accredited just because they're investing in things that do require a, you know, to be accredited to invest. That being said, No, all of these are available, and they can be done on any scale, regardless of whether you're accredited or not.

Axel Meierhoefer: 44:29

So if somebody makes 199,000 a year still okay.

Blake Brogan: 44:32

Yes, yes, they can still call. Yeah. We'll be happy to connect and see if we can help you out.

Axel Meierhoefer: 44:37

All right, cool. Well, that's very good. And I always recommend it. I mean, obviously, we like to help our clients or anybody who's interested in our approach, but you know, we're happy to share in the mindset of abundance. There's plenty out there for all of us now, to come to my last question, totally unrelated to investing at least normally and that is, and we mentioned spoken Star Trek already. So a little bit If you had the option to have a time machine, you know what, you know, you can go forward or backwards, you're not allowed to change the time space continuum. But you can go and look either direction, where would you go in wind?

Blake Brogan: 45:13

I think I would go back, I think I would go back just to experience, the things that I've read about in history books. So specifically, I'm a big golfer, I enjoy golf in the history of golf. And so I think I would travel back to the origins of golf back in the mid 1500s. Back to

Axel Meierhoefer: 45:31

you would go to Scotland and see them play golf without having a golf course, basically,

Blake Brogan: 45:35

yeah, it's when the first ones were being built. And just to see where we've come in that way, the ways our bodies have changed the way that the whole sport has changed. That would be super fascinating for me to see where it all started, and, and how it's made it through, you know, none of the 500 years.

Axel Meierhoefer: 45:50

So maybe if you can find an app that gives you the chance to do an avatar that looks like a Scottish 1500-1600 scope was

Blake Brogan: 46:00

they looked a little different than Tiger Woods, and all the guys on tour look like now,

Axel Meierhoefer: 46:04

I don't know what it is. But they all had this kind of weird hat on other pictures I've ever seen. If the

Blake Brogan: 46:09

weird hat, they were wearing, like shoots, like we had the highest around there. Now he's like, Well, how did you think that that was gonna be the best outfit for your performance today? But..

Axel Meierhoefer: 46:21

Yeah, I think they look more at standing in society than as we do, I know, associating an outfit with a particular activity. Right? If you were high enough up in the food chain, that you could even consider playing golf and not kind of digging around in the fields. Then you probably had a certain standing that came with a certain a certain, you know, if outfit or stuff like that. That would be my assumption. You know, I think you're right there. Although, I mean, they switched outfits between golf and hunting, you know, so not much. They said the same kind of weird pants.

Blake Brogan: 46:53

Yeah, the pants were a problem.

Axel Meierhoefer: 46:56

Right? Well, I mean, you never know, you might want to try and they have maybe some things that we don't know that makes them good. You know? So, all right. Cool. Why, Blake, thank you so much. You mentioned a few times, but one last time, how can people get in touch?

Blake Brogan: 47:08

Yeah, money insights, group.com. A lot of free resources there for you to browse. And then there's opportunities on the website to reach out if you have any questions.

Axel Meierhoefer: 47:17

Okay, awesome. Well, thank you for making the time telling us a little bit how the capital avalanche works and how you serve clients, even if they're not accredited. And I think we're very aligned. So thank you, and let's stay in touch.

Blake Brogan: 47:29

Yes, it's been fun. Axel. Have a good one. All right. Cool. Thanks.

Axel Meierhoefer: 47:34

Thanks for listening. And I hope you enjoyed today's episode of The IDEAL Investor Show more info and the links we mentioned during the show in the show notes or you can go to our website at IDEO redcross.com and sign up for the Apple podcast link. And if you'd like to talk to me sign up for a strategy call. Hopefully you want to share what you learned with your network and bring more people in we are really eager to hear your comments and until next time, be well stay safe and job