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Investing in real assets only

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  • Avatar llessac15 
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    Status: Physician
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    Joined: 01/17/2016

    ENT Doc, I understand your point, but I never said that a drop in your net worth means you’re not on the right track. There are many variables for that to happen. However, I do believe that for most anyone who improved their net worth for the year, they made a positive step in their finances. People on this forum can definitely critique things down to the minutiae to try to obtain the perfect investment strategy and will likely be very wealthy because of that. But that’s not the usual guy/gal I speak with in the doctor’s lounge. They’re doing good just to know what their net worth is. I like to keep things as simple (but effective) as I can.

    #187654 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4545
    Joined: 05/13/2011

    I like to listen to different podcasts while exercising. I came across the “Wealth Formula” podcast a while back. The guy , Buck Joffrey MD, seems to hate investing in paper assets like stocks and bonds. He’s all about “real assets” such as rental property, land, etc… His main focus is passive income production through these items. I recently listened to him interview Dave Denniston with “The Freedom Formula…” Buck was fairly aggressive in his assault of Dave’s more Bogleheaddish approach and even trashed WCI during the interview. It’s was very interesting to hear. He interviewed WCI a while back also. I haven’t had a chance to listen to that podcast yet.

    I understand we all have our personal opinions, but this guy seems to be very set on there only being one “road to Dublin” and index investing is definitely not it. I personally believe that as long as your net worth is improving each year, you are likely doing things right. Saying that only one of these (real assets vs paper assets vs paying down debt) is right seems very narrow minded. We can debate all day about which of the 3 are better, because they all have their pros and cons. None are completely wrong or completely right. All 3 will put you on a track to improving your financial self over time, which is our ultimate goal with our money.

    Thoughts?

    Click to expand…

    It is so easy to broadly diversify a stock investment at very low cost and take advantage of the tax and asset protection advantages of retirement accounts at the same time, it seems silly to me to avoid stock investing completely no matter how much you like investing in real estate. I don’t think anyone should have less than 20-25% of their portfolio in stocks. But if you want a portfolio that is 80% real estate and 20% stocks, I think that’s fine.

    I agree with those who pointed that the people who denigrate “paper assets” are missing something. The title to a house is on a piece of paper just like a share of stock. In reality, most of our money is all just a bunch of electronic 0s and 1s anyway. I own lots of real estate, and it is just as much of a paper asset as my ownership of Wal-mart and Apple and US treasuries. It’s a silly argument.

    I haven’t heard Buck’s interview of Dave, but our discussion wasn’t particularly comfortable for either one of us due to his dogmatism. For those who aren’t aware, Buck’s business is not a podcast. He is essentially functioning as a broker for two investments- a life settlement fund and syndicated multi-family real estate. While I don’t know any details about the specific deals he is offering, I’m a fan of both types of investments so I really don’t have a problem with him plugging them. Given that is his only source of revenue, however, it’s easy to see the conflict of interest there against other investments like stocks, bonds, REITs etc.

    One thing I really don’t like about Buck’s recommended methods, however, is his recommendation of whole life insurance. He has really swallowed the Bank on Yourself/Infinite Banking stuff hook, line, and sinker. I’m not even terribly against that, so long as people really understand what they are buying and the policy they bought to do BOY/IB is actually designed to do that.

    Hope that helps.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #187710 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
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    Joined: 05/13/2011

    The other issue with this age old stocks/bonds/retirement accounts vs real estate argument is that this particular debate has little to do with success, i.e. reaching your financial goals. If you’ve got enough income/savings that you can afford to invest in Buck’s investments, you’ve either already won the game or will soon have won it. It’s just not a big factor. The big factors are getting your income up, getting your savings rate up, taking care of business with student loans and mortgages relatively early in life, having an adequate insurance/estate/asset protection plan etc. Whether you invest 80% stocks and 20% real estate or 20% real estate and 80% stocks really has a very minor impact on the end game- reaching your own goals.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #187711 Reply
    Avatar Larry Ragman 
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    Status: Other Professional
    Posts: 617
    Joined: 08/30/2018

    Owning bitcoin is as tangible than any share ownership hard asset.   As an individual shareholder (or bondholder at that) to get your hands on that said hard asset.  There’s a distinction separate in direct real estate ownership — which is the point — along with folk defending owning their house free and clear.

    Doesn’t matter unless we go back to gold standard only.  USD/Money is fungible until then.

    Click to expand…

    I think your bitcoin analogy does not work relative to a stocks. Bitcoin is a store of value with no supporting intrinsic assets (even if you mine bitcoin, you cannot tie the value of the servers to the value of the bitcoin). This is closer to a derivative, which is a bet on the direction of movement of some underlying asset but represents no ownership of whatever asset is being hedged. The stock represents ownership of the business, as does title to a rental property.

    Aren’t you really arguing about the value of control? There is certainly value in direct ownership over publically traded.

    #187736 Reply
    Liked by Zaphod
    wonka31 wonka31 
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    Status: Physician
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    Joined: 03/24/2018

    I always have felt and continue to feel that the ‘this or that’ argument that Bogleheads/index funders and real estate people have is silly. I’m a Boglehead with my equity investing and a ‘real estate guy’ with my real estate investing. It’s just weird and I don’t get it. It’s like politics these days, you have to choose one side of the aisle and must hate all the ideas on the other side. It’s both foolish as well as short-sighted.

     

    The dogmatic approach that some people have on this is almost laughable. You may prefer or feel more comfortable with one asset class over the other, but the data shows over and over again that both are profitable. Go on the real estate forum and they’ll show you a favorable real estate graph, go to Bogleheads and they’ll show you the favorable index fund graph.

    Here’s what a lot of people (including myself) like: making money and having a good ROI. Luckily, we don’t have to choose one way.

     

    There are many ways to skin a cat, I think more people should have at least two cats.

    #187746 Reply
    wonka31 wonka31 
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    Status: Physician
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    Also, I don’t really mind Buck’s podcasts. I get exposure to a lot of things I’m oftentimes unfamiliar with. Some I further educate myself on, some simply isn’t for me. I can’t say that I’ve acted on a ton of his advice as I have with WCI’s, but I’ve learned a lot (both good and bad) in listening to his podcast.

    #187748 Reply
    Avatar G 
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    Status: Physician, Small Business Owner
    Posts: 1799
    Joined: 01/08/2016

    Buck participated on this forum awhile ago.  I’m wondering if he’ll get an alert due to this thread and return to posting here.  “Dogmatic” would be a fair summary of his contributions, if I recall correctly.  Not that I’m any different…I was all excited about getting to the bottom of this thread so that I could tout firearms and whisky as tangible, non-paper assets!

     

    #187757 Reply
    Zaphod Zaphod 
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    Status: Physician, Small Business Owner
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    I dont know Buck, but as someone said, its much easier to find an audience and cultivate it with an extreme view. Your positions are easy to remember and require little thought to defend since you have an ideological position. Its a great marketing strategy.

    #187817 Reply
    Avatar rdo 
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    Status: Physician
    Posts: 182
    Joined: 03/12/2017

    i don’t know the guy.  i have known people who are very successful just by building their own businesses.  it is something they can control, not reliant on the market.  when you have a business, you can sell it depending on multiples of the profit.  i have also known people who did this and still had to work in their 70s since all their money is in the business.  wci is not all bogleheads.  he has a profitable business that he can possibly sell so it does not matter if market tanks.  maybe same way as this guy.  some wealthy people also have nothing in the public markets besides their retirement account- some in real estate or private equity.  choose your own way to build wealth.

    #187848 Reply
    Liked by Roentgen
    Avatar Scopemonkey 
    Participant
    Status: Physician
    Posts: 92
    Joined: 12/28/2017

    I always have felt and continue to feel that the ‘this or that’ argument that Bogleheads/index funders and real estate people have is silly. I’m a Boglehead with my equity investing and a ‘real estate guy’ with my real estate investing. It’s just weird and I don’t get it. It’s like politics these days, you have to choose one side of the aisle and must hate all the ideas on the other side. It’s both foolish as well as short-sighted.

     

    The dogmatic approach that some people have on this is almost laughable. You may prefer or feel more comfortable with one asset class over the other, but the data shows over and over again that both are profitable. Go on the real estate forum and they’ll show you a favorable real estate graph, go to Bogleheads and they’ll show you the favorable index fund graph.

    Here’s what a lot of people (including myself) like: making money and having a good ROI. Luckily, we don’t have to choose one way.

     

    There are many ways to skin a cat, I think more people should have at least two cats.

    Click to expand…

    Agree completely; I listened to Buck as well, but when contacted him and had a bit of back and forth about his offerings, he was very dogmatic in asserting there’s no other smart way to invest.  Obviously, the things he promotes on his site including the insurance products make him money, so a conflict there.

    I choose to diversify, as do many others here with both stocks/bonds, and RE investments producing cash flow, and at about 60:40 currently.

     

    #187857 Reply
    Liked by llessac15, wonka31
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6186
    Joined: 01/12/2016

    I always have felt and continue to feel that the ‘this or that’ argument that Bogleheads/index funders and real estate people have is silly. I’m a Boglehead with my equity investing and a ‘real estate guy’ with my real estate investing. It’s just weird and I don’t get it. It’s like politics these days, you have to choose one side of the aisle and must hate all the ideas on the other side. It’s both foolish as well as short-sighted.

     

    The dogmatic approach that some people have on this is almost laughable. You may prefer or feel more comfortable with one asset class over the other, but the data shows over and over again that both are profitable. Go on the real estate forum and they’ll show you a favorable real estate graph, go to Bogleheads and they’ll show you the favorable index fund graph.

    Here’s what a lot of people (including myself) like: making money and having a good ROI. Luckily, we don’t have to choose one way.

     

    There are many ways to skin a cat, I think more people should have at least two cats.

    Click to expand…

    Agree completely; I listened to Buck as well, but when contacted him and had a bit of back and forth about his offerings, he was very dogmatic in asserting there’s no other smart way to invest.  Obviously, the things he promotes on his site including the insurance products make him money, so a conflict there.

    I choose to diversify, as do many others here with both stocks/bonds, and RE investments producing cash flow, and at about 60:40 currently.

     

    Click to expand…

    He may be right. The smartest way for him to have you invest is the way that makes him the most money.

    #187877 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 955
    Joined: 11/21/2017

    I haven’t heard Buck’s interview of Dave, but our discussion wasn’t particularly comfortable for either one of us due to his dogmatism.

    Click to expand…

    My day job sound easier. WCI sounds like he has a tough job sometimes. I think I’ll stick to being a member of the peanut gallery.

    #187925 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 955
    Joined: 11/21/2017

    ENT Doc, I understand your point, but I never said that a drop in your net worth means you’re not on the right track. There are many variables for that to happen. However, I do believe that for most anyone who improved their net worth for the year, they made a positive step in their finances. People on this forum can definitely critique things down to the minutiae to try to obtain the perfect investment strategy and will likely be very wealthy because of that. But that’s not the usual guy/gal I speak with in the doctor’s lounge. They’re doing good just to know what their net worth is. I like to keep things as simple (but effective) as I can.

    Click to expand…

    ENT is right. A drop in your net worth doesn’t mean your strategy is wrong and an increase in your net worth doesn’t mean your strategy is right. Due to the effect of chance, from just the result, it is very hard to tell if you were right and unlucky or wrong and lucky.

    I don’t know if you can ever tell if you were right or lucky.

    An increasing equity curve over years can still be luck.

    And a flat equity curve may indicate a viable strategy that has had a few unlucky years.

     

    #187927 Reply
    Liked by Zaphod, Roentgen
    Avatar racelari 
    Participant
    Status: Physician
    Posts: 25
    Joined: 03/10/2019

    Hey guys, I also just started binge listening to Dave Denniston podcasts (as I already binged listened WCI podcasts like twice!) and came across Buck’s interview.  Having been screwed on whole life in the past, I am definitely dead set against buying his products though I did sign up to listen to his webinar Wealth Formula Banking vs Velocity Plus!  Just interested and I’m going to make sure I shield myself from being tempted to buy any of his crap as I have my financial plan in place.

    funny thing I downloaded Buck’s book “7 Secrets to Eternal Wealth” and he quotes Jack Bogle at the beginning of chapter 1 . . . kind of hypocritical . . .

    #244094 Reply
    Avatar burritos 
    Participant
    Status: Physician
    Posts: 494
    Joined: 04/23/2018

    We did all three, invest in paper assets, invest in real estate, and pay down debt.  And all of those things worked out well.

    Our highest returns were on real estate.  But those investments required extra work.  Higher risk, higher reward, more work.

    The paper assets also did well, but not as well as the real estate.  However, there is almost no work involved in investments in paper asssets. Easy peasy.

    Paying down debt also contributed to a growing net worth, but this gave us the lowest yield financially over the years.  However, the psychological yield on zero debt is very high.  So for the peace of mind, also highly recommended.  Lower risk, lower reward (financially speaking), but so worth it.

    If you want to develop extreme wealth, real estate can lead you down that path. But you can lose it all if you don’t know what you are doing.  Like most aspects of investing, the risks tend to balance out with the rewards.

    Click to expand…

    How aggressively did you pay down RE mortgages? Where did it rank above your regular mortgage vs paper assets vs saving for college?

    #244248 Reply

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