Wealth Formula by Buck Joffrey

Latest Episodes:

422: Avoiding Ponzi Schemes and Bad Actors Apr 14, 2024

Show notes

The notion of moving wealth away from Wall Street into the hands of small private operators sounds great. However, it’s important to acknowledge some of the challenges of navigating these waters; challenges that many have witnessed first-hand in the podcast ecosystem over the past two years.

First and foremost, let’s talk about vetting. Investing is hard. With the ideal operator and business plan, you still have economic cycles, inflation and interest rates to worry about. And sometimes, projects just fail. These are investment realities that are always there even before you choose an operator.

Of course, not all operators are created equal and the vetting process becomes paramount. How do you ensure that these operators have the acumen, integrity, and diligence to manage your wealth responsibly?

You can do background checks, look at resumes and track records. You can ask all the right questions and even get all the right answers. All of this is certainly helpful, but limited to historical data. As the old saying goes, past performance does not indicate future results.

So far, all of this applies equally to Wall Street and Main Street. But I would argue that the one variable that is much harder to control on Main Street is the bad actor.

You would be correct in pointing out that the most famous of modern-day Ponzi schemes was perpetrated by Bernie Madoff, Wall Street’s Godfather. But that just doesn’t happen that often with the big boys. Too much red tape, regulation and heavy-hitting due diligence by sophisticated investors to make an outright fraudulent investment work.

And the bad actors know that too so they set their sites on easier targets like retail investors. They lurk at our events and make the podcast circuit. It is for these various reasons that I no longer will interview anyone from outside of my own circle actively raising capital. It’s also the reason that we now use an SEC-registered broker-dealer to conduct independent due diligence on most of our offerings in Investor Club.

How do you identify a bad actor anyway? Sometimes it’s quite easy. For example, one fund that was circulating in the podcast ecosystem had a founder and CEO who I couldn’t even locate on a Google search despite the fact that he was sold as a major player in the oil and gas industry doing business with some of the world’s top companies.

Sometimes it’s less obvious and you have to know how to look for clues. My guest this week on Wealth Formula Podcast is an expert in identifying fraud, in part, because he once ran a Ponzi scheme himself.

Show Notes:

08:45 From Fraudster to Fraud Prevention

17:10 Do Frauds Generally Start with Intention?

19:36 5 Major Red Flags of Fraud

37:40 James’ Business

421: Turn Your Empty Space into a Self-Storage Business Apr 07, 2024

Show notes

As soon as I finished training, I opened up a cosmetic surgery business. When I say business, I mean a business not practice.

From day one, it was my intention to create a brand that I could hand off or sell someday rather than to create a job for myself. I was also focused on cosmetics. Unlike the traditional way of growing a cosmetic practice, I wasn’t going to see insurance-based patients for 10 years and slowly build a referral base. Nope. I hit the airwaves and pounded the internet any true entrepreneurial business would do to make itself known.

It worked and though I didn’t make much money that first few months, within a year I was pulling in six figures per month. It was my first entrepreneurial success.

And while I rode that wave I felt invincible. It lasted for two years— right before the 2012 presidential election. At that time, I had just decided to buy a building for my business. That was shortly after buying a $2 million house which was a big deal for me just a couple of years out of training.

In short, I was suddenly cash-poor. However, things had been going great so I wasn’t worried about the short-term cash crunch. I assumed I would make it back in short order.

But something happened the October before that election. People stopped buying cosmetic surgery. It was weird—one day they just stopped.

I learned later that this phenomenon often occurs in the luxury sector right before elections. People don’t like to make big decisions when they feel like there is uncertainty of any kind in the air.

Whatever it was, it was killing me. Suddenly I had all these bills and mortgages and for a moment there, I was scared that I was going to lose it all.

Luckily the election came and went and things normalized but I promised myself that I would never let that happen to me again. From that day forward, I would never rely on a single source of income.

And since that time… I have not. In fact, I don’t feel comfortable unless I have at least three solid sources of income. I think of my income sources like a three-legged stool. If there is a problem with one of them, I feel very unstable.

I may sound paranoid, But, the funny thing is that I don’t think most people realize how tenuous their financial circumstance is. If you have a job and you lose it, would you be ok? I don’t care if you are a doctor or a small business person. No one source of income is bulletproof. So you have to have a plan B.

If you listen to this podcast, you might already have this kind of mindset and you might already be looking for opportunities.

And I have to say that this week’s episode of Wealth Formula Podcast really got my wheels turning. If you have any extra space in your house or an empty lot somewhere, you could be sitting on a goldmine.

Find out how you might be able to turn some useless space into some serious cash by listening to my interview with the co-founder and CEO of neighbor.com

Show Notes:

11:18 How to Make Money with Your Empty Space

15:51 How They Mitigate the Risks and Liabilities

22.43 Limitations and Law Restrictions

26:01 How Far Has neighbor.com Gone?

27:54 Have Multifamily Investors Tap Into This Space?

420: Realtors Make Legal Settlement: Changes Made to What YOU Pay! Mar 31, 2024

Show notes

The cost of real estate transactions affects everyone regardless of whether you invest in real estate or not. Why? Because the cost of the transaction will ultimately be included in the price of the real estate.

One of the biggest costs in a real estate transaction is the commission paid by the seller. In the last several years, the way that commissions have worked at the residential level is that the seller’s broker collects the commissions and shares them with the buyer’s broker.

However, that paradigm is about to change as part of a massive settlement between home sellers and the National Association of Realtors (NAR).

The issue at hand: sellers don’t think they should be paying for brokers who are not working for them. The courts have agreed and in order to avoid massive ongoing litigation the NAR has decided to change the way it does business.

These changes will affect real estate investors and homeowners alike. Tune in to this week’s Wealth Formula Podcast to get all of the juicy details on how!

Show Notes:

04:17 The Conspiracy

07:14 The Lawsuits

10:49 The Changes

19:31 The Implications on Real Estate Prices

23:35 The Result?

24:36 The Opportunities

29:16 Will there be less realtors?

418: Using Math to Your Advantage Mar 17, 2024

Show notes

In the long run, math is pretty much always right. That’s why insurance companies are so profitable. They make predictions using the law of big numbers.

Math can predict pretty much anything. Even Sports! I just re-watched the movie Moneyball about how the Oakland A’s made an improbable run in major league baseball in 2002 by leaning less on star players and heavily on analytics generated by a nerdy Yale economics major.

The genius of applying mathematical principles isn’t confined to the boardroom or the baseball field; it seeps into our everyday lives in ways we might not initially recognize. Beyond the high-stakes world of sports and finance, mathematics offers tools that can help us navigate daily decisions and challenges, often without us even realizing we’re employing them.

Math doesn’t just predict outcomes; it helps us make more informed decisions, maximize our resources, and enhance our daily lives. Math isn’t just about numbers and equations; it’s a vital tool that, when applied, can solve practical problems and make everyday tasks easier and more efficient.

And of course, math can and should be used in your investment choices. This week’s guest on the Wealth Formula Podcast explains how to do this and more.

Show Notes:

06:04 Are people bad at predicting the future?
09:10 Can technology help us predict the future better?
11:46 Why is it so hard to predict the future?
14:16 How do Psychics know about your life?
16:42 Base rule
21:02 When should you avoid using math?
22:39 Math for medicine

417: Market Update from a Former Sovereign Wealth Fund Manager Mar 09, 2024

Show notes

I feel like I am going through another major transition in my life. I turned 50 last September—a fact that I deliberately chose not to publicize.

I hate to admit it, but much of my behavior is stereotypical divorced midlife crisis stuff. I got a Ferrari, I’ve been working out incessantly and…I’ve been considering adding publicly traded equities to my portfolio.

The last one might be the biggest surprise to you and to me. For the last decade, Wealth Formula has consistently bashed the stock market. What changed?

Well…the last two years have not been particularly kind to me financially and it is because of my 80% real estate investment portfolio.

Rising interest rates disproportionately affect the real estate markets because they are so heavily dependent on debt. That’s why economists keep talking about how the economy continues to fare well while we real estate investors feel like it’s 2009.

Don’t get me wrong. I am not going full-on stocks, bonds, and mutual funds. I have made my money in real estate and that will continue to be my alpha. And despite a down market, I am WAY ahead of where I would be, had I been a traditional investor using a money manager. No doubt about it, real estate has made me wealthy over the last 15 years despite the recent hiccup.

I’m just thinking about taking lessons from institutional investors. Perhaps it’s middle age, but the idea of a more balanced, less volatile portfolio sounds appealing. Right now, I have nearly zero exposure to publicly traded stocks. Maybe that number should be closer to 25%? Maybe I should be in some kind of “all-weather portfolio?”

Remember, personal finance should be personal. You’ve got to think about your goals and where you are in life. You have to treat your investment portfolio like you are deploying money for your own family office.

Zulfe Ali knows a lot about risk and managing portfolios. He does that for family offices and high-net-worth individuals like you. He’s different from your usual financial advisor because he recognizes the importance of alternative assets in a portfolio—something he learned from running a multi-billion dollar sovereign wealth fund in the Middle East.

On this week’s episode of Wealth Formula Podcast, I speak to Zulfe not only about investment strategy but also get his take on the current economy. Having a guy with his credentials giving us a market update is extremely valuable so make sure to tune in!

Show Notes:

13:39 What’s been going on with the economy?

16:15 Why the interest rate increase did not result in a recession

19:02 Outlook for interest rate

26:35 The inverted curve

35:11 Wealth preservation

41:58 How does Zulfe approach high-level portfolios?

416: Artificial Intelligence: The Mother of All Technologies Mar 03, 2024

Show notes

In the latest surge of technological evolution, one titan stands out, reshaping our landscape with the silent swiftness of a revolution: Artificial Intelligence, or AI. It’s a term that sparks a spectrum of emotions, from exhilaration at the dawn of a new era to trepidation about the unknowns it brings along.

As we stand on the precipice of this bold new world, it’s impossible not to marvel at how AI has already begun to weave its threads into the fabric of our daily lives. From the simplicity of asking Siri for the weather forecast to the complexity of algorithms that predict stock market trends, AI’s footprint is undeniable.

Yet, what truly fascinates me is the myriad of opportunities it unfurls for us as investors. It’s not just about the automation of tasks or the efficiency of operations; it’s about the doors it opens to new markets, the insights into consumer behaviour, and the predictive power that can guide our investment strategies with unprecedented precision.

Reflecting on this, I’m reminded of a story that perfectly encapsulates the transformative power of AI. Just a few years ago, a startup leveraged AI to analyze satellite images, predicting crop yields with such accuracy that it revolutionised the agricultural commodities market.

Investors who could once only rely on historical data and often inaccurate forecasts found themselves with a crystal ball, giving them insights that were previously unimaginable. This is the power of AI – turning the opaque into the transparent, the unpredictable into the foreseeable.

And yet, as we chart our courses through these uncharted waters, questions loom large. How do we navigate the ethical quandaries that AI presents? What does the future hold for jobs, and how do we ensure that this technological boon does not become a societal bane? How do we, as investors, harness AI’s potential responsibly and effectively?

To delve into these questions and more, I’m thrilled to welcome Professor Russell Neuman, a leading mind from NYU, specializing in media technology and its profound impacts on society. Russell’s deep understanding of the digital age and the evolutionary path of media, coupled with his insights into AI, makes him the ideal navigator as we explore the intersections of technology, media, and investment in the AI epoch.

So, join us as we embark on this journey, decoding the complexities of AI and uncovering the golden opportunities it presents to the astute investor. Welcome to a conversation that promises not just to enlighten but to illuminate pathways to prosperity in the age of Artificial Intelligence.

P.S. I asked ChatGPT to use my “voice” to write this email. Do you think it sounds like me? Curious what you think.

Show Notes:

03:40 How does AI work?
09:23 The dangers of AI
14:10 The benefits of AI
19:27 The future of AI
21:48 Singularity

415: Tax and Return: Judge Glock Feb 25, 2024

Show notes

“I’m from the government and I’m here to help.” Ronald Reagan described those as the most dangerous words in the English language.

I generally agree with the Gipper who I have fond memories of extending back to the 1980 presidential election that I watched with interest as a kindergartener.

When the government gets too big, it gets dangerous and sloppy, and it costs too much. And like other monsters, it’s got to eat. It does this through taxation.

Now if that monster was lean, mean and efficient, it would be less scary. But this one is fat and keeps growing. Government begets more government which creates more cost and inefficiency.

What’s a better answer? Well, ideally, you would break the whole thing apart and put it back together in a way that makes sense.

Instead, a lot of the benefits that we get from those taxes are taxed themselves making you wonder what the point was in the first place.

When you take a step back and see what’s going on, it’s pure insanity. And to make you crazy, this week’s guest on the Wealth Formula Podcast exposes this problem with gory details.

Show Notes:

08:03 Robbing Peter to pay Peter

12:33 Where is the inefficiency coming from?

15:54 The origin of the tax and return scheme

17:51 How does this affect behavior?

19:48 How can we fix it?

21:45 The origin of the mortgage market

414: The Safest Double Digit Returning Investment in History? Feb 18, 2024

Show notes

When I was fresh out of surgical residency and started to make some money, I started looking for advice on what to do with it.

One of the questions I had was about life insurance. I was a newlywed and had a baby on the way (now she’s in high school by the way). So, I started asking the guys I was working with if I should buy term or permanent life insurance.

One of the younger surgeons was a bit of a know-it-all. He had a lot of advice about everything and most of it was not good. His facelifts weren’t good either as I started revising them just a few months later.

Nevertheless, I listened to what he had to say and he told me quite confidently to “buy term and invest the difference”. In other words, don’t buy permanent life insurance. Stick to term life insurance and, with the money you don’t spend on permanent life insurance, throw it into the stock market.

The older guy had very different advice. It was 2009 and he was planning to retire until the financial meltdown kicked his butt. He told me he wished he had bought more permanent life insurance because that was pretty much all he had left.

And while his viewpoint was thought-provoking, I felt like I needed to do the opposite of whatever this guy suggested because I didn’t want to end up like him. So, I ended up buying term and didn’t think about it again until a couple of years later when I had started my own practice and was making a lot of money.

At that time, I was part of a mastermind with a bunch of high-net-worth business people. At some point, life insurance came up and several of them talked about premium-financed permanent life insurance policies.

It occurred to me that a lot of high-net-worth people actually were buying permanent life insurance despite what that know-it-all young surgeon told me.

So, I decided to look back into my options. What I discovered was that both of those doctors who were giving me advice viewed permanent life insurance as something that it did not need to be: a poor-yielding but stable investment.

The reason for that was that most professionals only get to see poorly designed policies that are primarily created to maximize commissions for those who sell insurance.

What they think of as permanent life insurance is not the permanent life insurance used by the rich. PERMANENT LIFE INSURANCE MEANS DIFFERENT THINGS FOR THE MIDDLE CLASS THAN IT DOES THE RICH.

The policies that the high net worth group had were designed very differently and optimized for investment purposes. In fact, in the high net worth world, these policies have a special name: LIRPs. That stands for life insurance retirement plan.

Permanent life insurance in this world plays a role in not only risk mitigation and estate planning but also retirement income and asset protection. The more I learned about these strategies, the more they became no-brainers for me.

The guys who taught me the most about this stuff are Rod Zabriskie and Christian Allen. They designed all my policies and now design policies for many of you as our Wealth Formula Banking partners.

I especially appreciate these guys because they approach these concepts with an open mind. Where some Life Insurance Producers push one product or another for various reasons, these guys have all sorts of options that fit different types of people with different goals and objectives.

Recently, they have seen a significant uptake in interest in life insurance products. Why? Well, the markets have been hurt by rapidly rising interest rates and people are looking for safe harbors. All you need to do is look at the Great Depression to see that permanent life insurance has been seen as a major safe harbor throughout history.

Given the uptick in interest in these products, I decided to have Rod on to remind people of what these products are and why various permutations of these strategies are right for different types of people.

As always, I found this to be a very interesting conversation and it left me wondering why I’m not doing more of this stuff right now.

Show Notes:

09:12 Wealth Formula Banking

19:03 The Wealth Accelerator

26:55 Battle of the Two Tribes

34:41 Rule of 72

42:20 Does life insurance get more expensive as you get older?

413: Social Security Scams and “Retirement” Planning Feb 11, 2024

Show notes

Retirement means “ceasing to work”. In my case, retirement will describe me when I’ve died.

I understand retiring from a particular activity. Like how I retired from the practice of surgery about eight years ago. But global retirement sounds dire.

It is like admitting that you are of no real value to the world anymore. That your contributions are no longer of benefit to humanity.

I’ve always believed that the universe ultimately pays you what you deserve. If all you’re doing is playing golf, you aren’t worth a dime.

And imagine all of that knowledge, expertise and wisdom you accumulate over the years. You’re just going to waste that?

You’ve got to figure out a way to use it and keep going. At least that’s my philosophy.

As you may know, I have a podcast on health and longevity called Sapio with Buck Joffrey. I want us all to feel like 50 is just the beginning and I don’t mean the beginning of the end lol.

Get inspired. Dreams are not just for the young. As Bill Gates says, people grossly overestimate what they can accomplish in a year and grossly underestimate what they can accomplish in five.

Ok…that’s my rant for today. Let’s get back to reality. I know people need money when they get older and social security is one of the sources.

To be honest, I don’t know much about social security so I thought I would interview someone on the topic. My guest this week on Wealth Formula Podcast was on the “60 Minutes” show recently uncovering social security scams so I thought he might be a good person to listen to.

So… if you’re interested in the money the government owes you when you get older and may or may not get it, make sure to tune into the show.

Show Notes:

04:52 How exactly does social security work?

10:56 Social security: a scam?

20:02 Will social security disappear?

21:36 Clawbacks of social security

29:05 Money Magic

412: Dual Citizenship: Plan B? Feb 04, 2024

Show notes

The two most powerful motivations for behavior are fear and greed. If you haven’t thought about that before paying attention to the kinds of messaging you hear especially in the alternative asset podcast ecosystem?

At the risk of offending gold bugs, how many times have you heard someone who sells precious metals on a podcast talking about the demise of the United States and the inevitability of the Zombie apocalypse? Think that’s just a coincidence?

A couple of weeks ago, I had on a gentleman who wrote a book on Ray Dalio, the legendary hedge fund manager whose fund has not beaten the S&P 500 in years.

Turns out that Mr. Dalio has been predicting the collapse of the American economy for three decades now. Maybe he believes it. I don’t know. But one thing’s for sure, it works very well for Ray Dalio’s company.

Ultra Wealthy families don’t care about big returns. They care about not losing money. Beating the market is just an added plus. If Ray is telling people that the world is going to hell and he manages money then maybe he knows how to best protect it? That’s the logical conclusion, right?

There are also people out there talking about the need for a second passport in case the US implodes. After all, we have a divisive political system and enormous amounts of debt.

Again, maybe I’m missing something, but the US is still the biggest economy in the world with by far the highest GDP. We have the best Universities in the world and the strongest military. And if we can get through 1968, we can get through 2024.

So, in my humble opinion, a plan B is not going to get you out of harm’s way. Because if the US goes down, there will be no place to hide.

But, there are certainly other reasons to get a second passport. Maybe you just want to make it easier to travel to certain countries. Maybe you want to benefit from the low cost of healthcare. Or, maybe you just want to diversify your wealth and mitigate currency risk. If you’re willing to move to Puerto Rico (which I am not), there is even a huge potential tax play.

My advice…whatever you do, just don’t get scared into it. It certainly sounds kind of fun to be a Jetsetter and maybe there is sound financial reason to do it as well. Consider it, but for rational reasons.

With all that being said, check out this week’s episode of Wealth Formula Podcast and learn the ins and outs of foreign citizenship. Let me know if you decide to do it!

Show Notes:

08:24 Why consider dual citizenship?

11:17 Benefits of an EU passport

12:48 A second passport for retirement and healthcare

13:54 Financial benefits of dual citizenship

17:10 The challenges

19:17 Dual citizenship by relationship