The economy is rough today, but it is not as bad as it could be. But how will inflation affect us? In today’s episode, Scott Carson talks with financial advisor and investor Kirk Chisholm from the Innovative Advisory Group about the current markets, inflation, and how it is affecting the United States market. Kirk also shares his insights on investing using self-directed IRA’s and how he is working to hedge his bets from the chaos of the market.
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Inflation And The United States Market With Kirk Chisholm
We have got a very special guest. I guarantee he’s probably going to answer some questions and maybe even spring a few in your mind with the crazy world that we are living in these days. We love to bring the best. This guy is a Wealth Manager and Principal at Innovative Advisory Group. He’s also the host of the popular podcast Money Tree Investing, which I was a guest on. You’d want to go out and listen to it on any place that you listen to podcasts.
This guy is an interesting guy. His own words even say that, which is good, but he’s not an outside-the-box thinker. He provides a different perspective on many commonly held beliefs in personal finance. He has expertise in alternative investment in self-directed IRAs, which is what we’d love to have him on here for. He was recognized as one of the top 100 Most Influential Financial Advisors in the US by Investopedia. We are honored to have the man, the myth, and the legend, Mr. Kirk Chisholm, here on the show. Kirk, how are you doing?
Thanks for having this show, Scott. It’s going to be a real pleasure. I enjoyed our conversation last time on the podcast, and I know this will be no different, so I’m looking forward to it.
We had a great time talking about a variety of things, and we had to continue the conversation on here. I have been binging your podcast and, everybody, go out and check it out. I love one of the episodes you had talking about where inflation was going, but we’ll get to that in a second. Talk a little bit about your background and what your focus is for those out there that are reading.
I will talk a little bit about my background. I went to college, it was late ’90s, and everyone was investing in internet stocks. You could do no wrong at that time. You could throw darts at a board. They were doing that on CNBC. They were having birds poop on the paper on the stock charts and saying, “This is going to be a winner.” That kind of craziness went on there. It was loopy. I decided, “I want to get into the stock business.”
I started at Paine Webber back when they were Paine Webber before they were acquired by UBS. I got a job there and I started in the business in December of ‘99. That was my first month in the business. A great time to start. I missed all of the upside of the last twenty years prior to that. Pretty much when I started, the markets went down for three straight years.
You look at that and say, “That sounds terrible.” It was, but one of the values I learned from that was the value of risk management. I didn’t know what the upside was. I did when I was investing my own money, but working with clients, the markets went down. I learned quickly how to manage money in terms of risk management.
Fast forward a little bit, I worked at a few other firms. We started a firm in 2006 and then merged it with my current firm around 2008. The first time I learned risk management was the market was crashing after the tech bubble. The next bubble we hit was in 2008. The funny thing was, I was a little bit more prepared for that. The first time around, I learned from other people, but nobody understood. We outperformed the markets in the early 2000s by not losing as much, but it was still down and I hated that. I was like, “The market’s down 40 and we are only down 20. That’s not a win. That’s still a loss. That’s terrible.”
We did a lot of research and we came up with some strategies that helped for 2008. We were entirely in cash for all of 2008. We got out in the summer of 2007. The market’s cratered, and then slowly, they got put back together, but still, I didn’t like our risk management techniques because the market could have kept climbing.
All sorts of things could have happened because you can’t predict the future. Fast forward to the last few years and we have done things very differently in terms of risk management. Everything in my whole career was colored by the first few years, which is risk management first, which has been our philosophy at our firm for many years. If you don’t get that right, everything else doesn’t matter.
This is the funny thing. I was reading some old quotes way back from some of the earlier writers about the financial markets. It’s funny because we all try to predict the future. We all think, “This is a great return.” What can you lose? Nobody talks about that. One of the things you can’t do is you can’t predict the future. When you are trying to predict performance, you can’t predict performance because you can’t tell the future. If you can, you should give me a call because I want to learn from you.
What you can do is you can manage risk. I can’t tell you what the stock market’s going to do next year because I don’t know. Nobody does, but I can manage risk. I can tell you that if we do things this way, we won’t lose more than X, or if we do things this way, this is the most we could lose or here’s how we are going to lose. Those are things that I can manage, but I can’t manage performance, but everyone tries to focus on the performance. Nobody manages on risk. That’s a lot of the ways that we are very different is we think about the equation of investing in the risk-to-reward trade-off very differently than most others.
That’s one of the big things that we emphasize here because we are buying distressed debt. There are all sorts of risks. The bar is going to pay or what’s going to happen in the market. I love that you always have to look at the worst-case scenario first and then build on that foundation. Here’s where the risk lies. How many of these potholes or minefields can we avoid in buying this asset or working through it and building wealth from there? It might sound very similar on your side.
When we started our firm which we started in 2008, one of the things that we wanted to focus on was investing retirement accounts into alternatives. This is why you and I get along so well because one of our biggest assets that we focus on is private notes or mortgages. That’s where we started as a firm because we love the investment dynamics. There certainly is a risk, but you can manage it.
You talk about this a lot on your show and help your readers with this, but you can manage what that risk is because you can lay it out and say, “Here’s what it is. Here’s how we are going to deal with it, and here’s how we are going to price it to be able to make sure that we are going to be okay.” There’s a saying we always talk about, which is, “There are no good or bad assets. There are only good or bad prices.” There’s a price for everything, no matter what it is.
Good or bad management if you are not paying attention. You’ve seen that in the business as well and on all sides of things out there for you. What are some of the things that you are focused on right now with the market being an unstable aspect class? For years, people have been talking about, “The market is going to crash. It’s going to be Armageddon.” I have been like, “It’s going to be 2008 all over again.” There are going to be some issues. It’s a different issue aspect of what’s going on the market, but there’s a lot of folks out there worried about things. There’s a lot of bad information rolling out there in a lot of cases. What do you think?
I think most of it is and most of the bad information is out there because of what we call this cognitive bias, we call recency bias, which is you look at the most recent thing and we think everything else is going to be like that. One of the problems is, for the last twenty years, let’s take twenty years as an example. Most people who are investing in the market have not been doing it for twenty years. Most people in the financial markets and my side of it haven’t been doing it for the last fourteen.
2008 or 2009 technically, early 2009 was the bottom of the market. Most people in the market have only been around since then. They have only seen a bull market. They haven’t seen bad times. I go back for twenty years and I have seen multiple bad markets, but I have not personally seen what is going on right now.
If you look out there, you look at a lot of the information, it might show back like 5, 10, or 20 years but no one is showing you 50, 60, or 70 years. That’s the data you want to look at because we are at a point where we are looking at the last 50 years. If you go back 50 years, you are going to start to see a lot of similarities to what we are seeing now.
The mid to late-’60s until around ‘81 is the period you want to look at because while we are not going to repeat that, it will be very similar. As they say, history doesn’t repeat, but it does rhyme. That’s a lot of what we are going to see. You could say the 1970s was a very tough time for a lot of people in many ways. You could look back and you could say the Cold War. You could point to all these things.
We don’t have that. I don’t know. Do we? Russia is attacking Ukraine. It’s a Cold War. You got similarities. It’s not the same thing, but you have similarities. You have high commodity prices. You have inflation and interest rates, which are creeping up. All of those same similarities lead to the same outcomes.
Think of it this way, right now, the markets aren’t good, but they are not terrible. If you look at them closely, they are not as bad as they should be. The economy’s it’s rough, but it’s not as bad as it could be. The Federal Reserve has this pretty much free lunch to go out and do whatever they want with the markets. Right now, what they are saying is interest rates are climbing and that’s going to affect everything. As interest rates go up, bond prices go down, which is, “safe bonds are no longer safe.” They haven’t been for the last months, but they were for 40 years, but they are not now.
Everything you think you know about finance is flipped on its head. I hate to say that because you are not going to understand. Most people are not going to understand what that means. That means every assumption you are making about investing in finance is going to change. I’m not saying it’s the opposite or it’s wrong. I’m saying it’s going to change.
I will give you a few quick examples here so that you understand what I mean. For the last 40 years, bond prices have gone up and bond yields have gone down. What that means is no matter what, you are pretty much making money in bonds or, worst case, you are losing very little, but bonds have been a great investment. Here’s a quick question, Scott. Do you know what the best-performing securitized asset was in many years?
Something to do with bonds, I’d imagine.
Yes. Thirty-year zero coupon bonds treasuries. These are the safest of the safe. They outperform the stock market by almost double. It’s not even close. If you think about 1981, interest rates are 15%. Are you getting that in your stock portfolio? No, you are not. If you think about the paradigm for the last many years, bonds are safe. They are not safe. Depending on the bonds you own, they are down between 15% and 30% so far. That’s crazy. That’s not safe.
Buy and hold is another one. Buy and hold worked well in the bull market period where the stocks pretty much go up for many years. They hit a few speed bumps, but they pretty much go up consistently. Buy and hold works. Did it work from 2000 to 2013? No. You lost money for several years. Pretty much the ’70s, you were flat. The market went to a lot of places, but it didn’t go up consistently for that ten-year period.
The market has periods where it goes down a lot and then it goes up and pretty much goes sideways if you look at it from a big scale, but do you want to make no return on your money for thirteen years or longer? Probably not. What are you going to do? We are going to talk a little bit about that on the show, but that’s the paradigm change that’s going to change.
You are not thinking about that because you’ve built this into your psyche that buy and hold is the best strategy. Low fees is the best strategy and bonds are safe. All of these simple rules of thumb that Wall Street has beaten into your head for many years. You now have to change. You have to go back and re-look at the whole set of tools that you are using to invest and reassess everything. If you are not doing that, that’s where you are going to get yourself into trouble and this is why we talk about this so much.
You are not going to change your mind on this one episode. I wish you would, but this concept is so large, it’s going to take you time. It took me six months to try to figure out how to explain this to everybody. That’s why we are talking about this in the show with your readers, Scott, because you understand this stuff. This is important stuff and your readers need to understand it as well.
You cannot apply basic, I won’t say miss, but I won’t say rules or things have been passed down because the market’s always changing and our situations are always changing. Our priorities and focus are always changing. I won’t say it’s fuzzy math, but you’ve got to figure out where you land in the situation and then looking at what’s going on around you in different markets.
You remember the 2008 mark to magic accounting. Those are the days.
We can all judge a company like how Enron did.
That’s the marker for success.
We’ll go ahead and plan goals for potential future sales and we’ll throw them on the books. We see so much uproar out there right now with folks worried about inflation and things going up and prices. I study a lot of stuff, but you on your episodes probably gave the best definition of how people need to identify inflation, and now you can’t take what the market says as one rate is a true rate of what the inflationary rate is going to be. Can you recap that a little bit or touch base on that?
Let’s look at four asset classes. The first asset class is stocks. You look at stocks. They are basically companies and you are investing in the growth of the company. Sometimes they go up, sometimes they go down, but the risk you are taking is that there’s volatility and that if you invest right like Warren Buffett obviously did well for many years. You invest. You can make a lot of money over time. That’s the thesis of stock.
A bond is basically you are loaning somebody else money in exchange for interest. You talk about this a lot in your show, Scott. You are basically loaning money to people and they are paying you interest plus the principal back. In normal times, if everything is equal, you should be making an interest rate of whatever you get when you buy the bond, and that’s your expected interest.
Then you have cash which cash is self-explanatory. You are pretty much sitting on cash. You can stick it under your mattress. You can throw a pile on your table and dive on it, whatever you want to do, but that it’s cash. It doesn’t do much. You’ve got real estate. Real estate is another asset class. You understand real estate. You are investing in a property. You get rent. That’s your “income.” It’s basically a business, but it’s an inflation-proof way of investing in assets and hard assets.
In normal times, let’s look at the last several years. We have had very low inflation. That has done wonders for every asset class across the board except for cash. Stocks went up, obviously went up a lot in the last several years. Bonds did well because as interest rates have gone down, prices have gone up. Bonds, you are getting your interest and you are getting appreciation. The bond cash has pretty much been static and real estate has done well.
What if you have a situation like this? We hit an episode on this. If you look at assets across the globe, it’s a bloodbath. Everything was red except for oil and natural gas. Pretty much everything else was in the red. They were in the green. If you look at what’s happened, no matter what you are invested in is pretty much down. Commodity prices were doing well now. Unless you are in oil, you are pretty much losing money.
It doesn’t matter whether you are in stocks, bonds, or real estate, everything virtually is losing money, which is fine. That happens. You don’t expect it to happen often but it does happen. How do you look at that? Let’s say hypothetically because I’m going off the top of my head. Let’s say stocks and bonds are down 20%. Let’s say real estate is down 10%. That’s what you’ve lost.
You also have this impact of what we call inflation. Inflation means that the value of your assets is going down by that percentage every year. Let’s say inflation is at 5% just for hypothetical. That means that every year you have inflation at 5%, your stocks are declining in value 5%. I will explain this in a minute. Your bonds are going down 5%, your real estate and cash. Everything is declining by 5% a year.
What that means is they are not technically going down 5%. It means that everything else is going up 5%. Technically in relation, you are not going up, but that means the price of goods in the store is going up, but your assets are not, so technically, you are losing money in relation to these other things that you are buying. That’s how we calculate inflation.
The problem is that most people are looking at inflation and they are saying, “I can’t invest in cash because my cash is going to lose 8%.” Right now, it’s 8.3% inflation. Let’s stick with 8% to make the numbers easy. Inflation’s at 8%, which means your cash is declining at 8%. I have lost 8% on my cash. Let’s say I’m 100% in cash. I have lost 8% on my cash. Let’s look at the other assets.
My stocks are down 20% on top of the 8%. That means you are down 28% in your stocks. Your bonds, how are they doing? They are down 20%. They are also down 20% plus the 8%. They are down 28%. Your real estate is down ten plus the 8%, so you are down 18%. What’s the best-performing asset class this year? Cash because you are only down 8%. It’s not a great return, but it’s better than everything else. When we look at our calculations of inflation, you could pretty much take inflation, ball it all up and throw it in the trash because it affects everything equally. It doesn’t matter what you are investing in, it’s going to affect it equally.
You always want to look at things relative to other things, not relative to inflation. Inflation is a static metric and because it affects everything equally, it doesn’t matter. It’s across the board. We don’t look at inflation in that way. When we look at what we are going to invest in, we are looking at the best risk-reward performance that we will get.
Right now, stocks are not high on our list because we think they are going to continue to go down. We think they are way overpriced even now, which we can get to in a minute. We think bonds are also overpriced, even though they have been hammered. Cash is static. It’s going to keep you safe. Real estate is also overvalued, and we can also talk about that.
This does not mean you should stick in cash because there will be people out there saying, “Cash over 100 years lost 97% of its value.” Yes. If you are sitting in cash for 100 years, you are probably going to lose 97% of its value. I’m not suggesting that. I’m seeing suggesting cash might be a good alternative. Months or years from now, I might decide, “There might be a better alternative out there. Maybe the stock market goes down 40% or 50%.” Now things are looking different. The scenario is different. What relative to other assets, makes the most sense? If real estate drops 50%, which is highly possible given interest rates, maybe even more, then real estate could be a bargain.
Is it now? Absolutely not, in my opinion, not certainly in the northeast. You have to look at things relative to what your opportunity set is and sometimes cash is the best opportunity and sometimes it’s not. If you looked at it in 2009, cash was probably not your best opportunity set. Equities were. A lot of assets were back then, and so was real estate.
You have to understand how things are relative to the valuation and relative to where they are. Inflation. As we have high inflation for a long period of time, like if this stays where it is and I don’t think it will. I think it’ll fluctuate, but if it stays where it is, you have to look at the best opportunities given the inflation where it is. We’ll talk about the ’70s again, but that’s a marker that everybody should look at to contextualize where things could go based on human nature and how our politicians will react to what’s happening in the world. All of that is why history repeats itself is because people are still people.
I love how you break that down and share that philosophy because you are right. When you mention that most people, especially most of Wall Street, have only been around for several years, you date back to 2008, when all the folks in charge left. They got their golden parachutes retired and the folks underneath them or the newbies hired are now in that spot looking for alternative investments or returns that you give their investors. I always make the joke that what we do, we are like the big short part, too, in a lot of cases.
We are seeing the distressed debt and stuff that’s like that. What are some of the things that you guys are doing over there, especially on the alternative asset class side? I love that you think a little bit differently, but how are you leveraging self-directed IRAs or how are you advising your clients to take advantage of those?
We started in 2008 looking at alternatives because prior to that, we saw tons of opportunities in real estate even though it was expensive, we are still seeing it in other ways. It’s like what you do when you find opportunities. No matter the prices, you can always find opportunities if you price it right and we saw the same way.
We got into the self-directed IRA space because you could see the opportunity set. Some of the stuff that our clients were doing, like they were taking properties and they were flipping contracts. You put down $1,000 to wrap up a contract and then you flip the contract for a $40,000 profit. You take $1,000, turn it into $40,000, do that in your Roth IRA, you do that a few times a year and roll that over and you are going to be a millionaire quickly.
If you think about if you were to do that with a $250 million property and then you flip it. The stuff you can do inside of IRA is, look at Peter Thiel and Mitt Romney. Mitt Romney had like $110 million IRA. Peter Thiel has over $1 billion in his Roth IRA tax-free. You’ve got tons of these things going on and we saw that opportunity and we wanted to be a part of it. One of the easiest ways we got into it was through notes is real estate in itself is, by far, my favorite asset class. I’d say tax liens may be a little bit ahead because it’s based on real estate, but real estate itself, as a core, is my favorite asset class for so many different reasons.
Every other alternative we have is pretty much based on real estate, whether it’s notes or taxings. The point is real estate is a phenomenal asset for tax reasons, appreciation, hard asset reasons, and everything. We got started with real estate in notes in part because the real estate market was a mess and we had opportunities with people that were basically jumping on these opportunities and we were lending them money through hard money. They were fixing flipping properties and then they’d sell it and then we’d get paid back and we’d do another deal.
For us, it was a no-brainer. We were making at the time 13% to 15% yields for many years and it was awesome. The risk was low because the way we calculated our risk was we only worked with a handful of people and we were not taking anything. Our model is different from yours. I love your model, Scott, but I don’t know how we could scale it at our level. I’m sure you’ve got plenty of tips you could give me, but at the time, we were focused on conservative income because that’s what our clients wanted. They wanted the income. They didn’t want to play around with foreclosing and all that other stuff because they were simple people. They want us to focus on getting them consistent income. That’s the model we chose.
There are so many ways you can play with notes. You don’t need to do them all. You pick one that you are good at and you do that and that’s what we did. We picked that and we love the asset and that’s our main core alternative asset that we provide for clients. Right now, we don’t have as many because we are still peeking into the market with real estate. Everyone said maybe in mid-2023, we’ll start to see a tidal wave, but we are mindful. We are not buying notes to buy notes. It has to make sense as you well know and what you teach your audience. That’s where we started.
We have clients who come to us for all sorts of random miscellaneous stuff. We have people buying dressage horses. They are buying minor league basketball teams. They are buying airspace rights, water rights, fishing rights, and private companies stock. You have some people doing farmland. You name it, we have seen it and probably done it. It’s amazing some of the stuff that people do and the returns they get, a lot of it is not scalable, like fishing rights. Corporations can’t buy. It has to be done through individuals.
I know people are making 80% a year on their fishing rights and their perpetual rights. It’s crazy. I wish I could box that up and sell that to people because the opportunities are amazing. Most times, the opportunities are amazing because you can’t get a lot of people in there. Motion picture film tax credits are a great alternative asset, but you don’t know anybody who can do that.
Everybody who gets it are these insurance companies that buy them in bulk. There’s one accountant in our state that does our whole state. If you don’t know them or are not inside, you are not getting a part of it. There are a lot of those assets that I love that I can’t personally be a part of, but I would love to. If we could do that, it would absolutely be amazing.
I love the fact that every day we see opportunities in amazing assets that most normal people don’t see. To me, it’s like this huge opportunity set that people don’t realize they have their blinders on in their world and they say, “I only see this. This is my opportunity.” Opportunity is everywhere, and until you experience it, you don’t know that opportunity is everywhere.
Most of the readers, you have something you do for work or a hobby that you could take and turn into an investment and you could make a killing on it, but you don’t see it that way because that’s not how you are wired. Most people are wired that way, so I can’t blame you. Until you see how many people take advantage of certain things, I love this. To me, this is like Christmas every day.
That’s the beautiful thing is when you have an open mindset, things come across your desk and inbox or you see things a little bit different. We were watching a movie about Brad Pitt and Tom Cruise Interview with the Vampire. That morning after Brad Pitt or Louis becomes a vampire. He wakes up and he sees the world in a different shade and sees different things.
It’s like that for investors if you approach life a little bit differently and start evaluating things, being open to opportunities, or being educated at understanding things. There are so many people we talk with, they have such a closed mindset or, “I’m not able to do that.” I’m like, “Yes, you can if you will be open to it.” A lot of times, you can figure out who to talk to or who can reach out and touch somebody because a lot of folks are willing to give up their information and help people succeed because there’s enough opportunity out there.
It’s a good touch. Not bad touch if you can go out and touch somebody. I love the way you are putting it because we talk about that a lot with our clients and with the advisors we work with. It’s like a fixed first growth mindset, and we all have our own version of a fixed first growth mindset. There’s a great book by Carol Dweck. It’s called Mindset. We all see the world in different ways. There are parts of the world we see with abundance. Growth mindset. It’s like there are tons of opportunities over here. I can see it all. I love it. I’m going to spend all my time here.
We have other parts of our life, which are fixed mindsets, which you are not going to change. Let’s say you are religious, you are Catholic. You are never going to change. You are always going to be Catholic. That’s the way you think of things. Let’s say some other religion came up and they were able to prove that they were the right religion. You would still say, “No. I’m fixed here.” That’s the fixed mindset. We all have that in parts of our life. I have it.
I work hard at getting growth mindset in all parts of my life, but I also know there are things that I grew up with. My parents raised me with certain principles. I grew up with certain money scripts that I look at the world through a lens of money that are probably not going to change easily. I would love to change them, but I’m okay with them being fixed. We all have these fixed first growths.
The ideal is to have more growth mindset because that’s where opportunity is. There’s always this story about the diamonds. The guy who finds diamonds. He sells his property and he goes around the world looking for diamonds. This other guy buys his property and he finds them 10 feet from where he is digging.
I love that story, but it’s about where is the opportunity? If you look at the world as, “It’s all great,” but you don’t see the opportunity for what it is, you are fixed in your mindset that you are going to miss all of this great stuff over here. I love the way you explain it because it plays into investing. If you look at investing and say, “I’m only an index investor because that’s what I know. It has to be low fees.”
Let me tell you another paradigm shift that people need to understand which talks about fees. I’m all for the lowest fees. I get paid by fees. I’m telling you lower fees is better than higher fees. That’s a mathematical certainty. However, let me give you an example. If you were to invest in the Vanguard S&P 500 index and they charge you eight basis points now. It’s something ridiculously small. Let’s say it’s five basis points. Let’s give them the benefit of the doubt. They are charging five base points a year.
Let’s say for the sake of example because I don’t want to get myself into trouble. Let’s say they are going to get 10% a year return for five basis points. That’s great. That’s an awesome return, and if you want, that’s probably better than anything else you are going to find because it’s the lowest fees. All else being equal, if they are lowest fees, you should go with them.
If you are comparing them to another S&P 500 index and they are the lowest, that’s your choice. Let me give you another choice. Let’s say you are investing in one of the notes that Scott invests in. Let’s say you are getting a 20% return, but you got to pay somebody 5% a year to get that 20% of return. That’s 5% a year. “Why would I invest in that? That’s too much.”
What’s your net return? Your net return is 15%. You are getting 20%. You have to pay 5%. Your net is 15%. Would you rather have 15% or 10%? Which one would you choose? Oddly enough, a lot of people would choose the 10% because the fees are five basis points. I don’t know, maybe they are not teaching math in school anymore, but for certainty, if all is being equal, I will take the 15% every day of the week and twice on Sundays. If you want to take the 10%, that’s fine. You go do that. My point is that people get the fixed and they’re thinking that fees are the most important thing. I will agree all else being equal, that’s true, but rarely is all else equal.
You have to decide what the fees are going to be worth to you, all else being equal. These are dynamics you have to think through. If you are in a fixed mindset, you are going to miss a ton of opportunities because you think the fees are too high. We have these conversations every day and it’s mind-boggling. People get it. They get it quickly, but no one’s explained this. There are vanguards pumping your head full of low fee, which is true, but it’s what we call a half-truth. My favorite term that nobody talks about is half-truth. Once you understand them, you are going to see the world through a totally different lens.
You get what you pay for in a lot of cases too. Quality and experience come with a price in a lot of cases. People ask me all the time, “How can I learn note investing the fastest?” I said, “Sign up for a coaching.” “I don’t want to pay that.” “You can spend six months trying to figure it out through podcasts, YouTube University, or something like that. It’s one of the most important things to realize. Experience comes with a price in a lot of cases.
I want to take you up on that because what you are saying is important. For your audience, I’m going to reinforce this and blow some sunshine up your skirt because you probably do it yourself, but people need to hear it is you always need to reinvest in yourself always. You should put aside a certain amount of money every year and reinvest in yourself. If you want to get better at notes and learn this stuff, invest in Scott’s course. Scott and I just met and I’m looking at his course, I’m thinking, “This would have saved me a ton of time,” and I look at anything I do.
I’m learning new stuff every day because of what we do in our business for marketing and whatever, and I buy courses. When I started in this business, I did a lot with SEO with my marketing. It took me three years to get great traction. It took me about a year to get any traction. If I had paid somebody a good amount of money, and there were some smart people at the time and I paid them to do it for me, I could have done it in three months.
I decided I was going to save some money and learn it. It took me years to get good at it. I could have paid somebody some money for a course or could have hired somebody and would have cut down years of time. Do you know the best commodity is out there, the one that you can’t make more of? Time. I can make more money. I can’t make more time. I recommend if you folks are interested in learning more about notes or anything for that matter. Spend money on a course and education. Educate yourself every single year if you want to get smarter and better. That’s what you have to do or else figure it out yourself, but it’ll take you longer.
You got to dive in. It’s great to learn. If it brings somebody along or hire somebody to help you, they will expedite that learning curve so much faster, and like you said, save you time and often a lot of money and heartbreak when you end up stepping on a landmine. In a lot of cases, we see that happen across the board. When you are talking with clients, can you describe your ideal client or customers that you are working with on a regular basis and what you are looking for?
We look at clients in a different way than most of the industry. Most of our industry looks at clients and say, “We only take people with this amount of assets. We only take people that fill this niche.” I think that’s shallow, personally. I don’t care how much you have in assets. I look at this as a long-term relationship. Is this going to be a relationship that I’m going to enjoy? Am I going to be able to make this person’s life better and am I going to enjoy talking with them? For me, there has to be something that I can do there. I have turned down clients with hundreds of millions of dollars because they are A-holes.
We have this policy that we call a NAP policy, a No A-hole Policy. I don’t work with jerks. Life’s too short and there’s no need to. If you are a jerk, then please do not apply, but I like helping people and we work well beyond the core work. I could sit here and say we are the best financial advisor, but everyone says that.
That part is the easy part. What I can tell you that we are different and that other people don’t do is we’ll make your life better. We’ll focus on other aspects of your life that people in my industry don’t look at. Let’s give you an example. Let’s look at retirement. We are all trying to invest so we have a good retirement.
Probably all of your readers here are, either. Looking to retire at some point or retired now and they are looking for income. The one thing that people look at when they retire is they look, “Am I going to have enough money? Am I going to run out of money? I don’t want you eating cat food in retirement.” I don’t know if you’ve ever bought cat food before but it is not cheap, so I don’t know who came up with that.
Inflation and cat foods are going up higher than a lot of commodities. We have got a couple of cats, so yeah.
It’s hilarious, but if you think about it, nobody wants to be poor in retirement because you can’t make more money at that point. You’ve lost. I shouldn’t say that. That’s a fixed mindset, but you can’t go back and get a W-2 job like you could before. You have to find a different way to making money. My point is that most people look at the financials and what they don’t realize and what nobody talks about and this part boggles my mind is that nobody talks about this. There are five other things that you need to focus on in retirement and if you are not prepared for these, you are going to be hugely stressed out.
There’s a reason people die within a few years of retiring and it has nothing to do with them running out of money. I will run through them quickly because this will take me hours to get through. The things you have to worry about in retirement, the first one is purpose. When you are working, you have a purpose. You are providing for your family and you are saving for retirement. You love what you do. You have a reason to get out of bed in the morning.
When you retire, you lose that purpose, all of it. That’s a huge problem, especially for men. Men identify as providers. Women have different issues but men have the bigger problem here because they identify as providers. If they are not providing, then they think, “What good am I?” This gets into the second point, which is identity. When you retire, you have to find a new identity.
Most people, especially men, identify as their profession. Women do too, but like I said, men have a bigger problem with this. People identify with their profession like, “I’m a notes seller, financial advisor, engineer,” whatever it is that’s your identity. When you retire, you lose that, so you need to find your new identity, which is another problem.
You certainly have mental and physical health, and then you have social. When you retire, you lose your social circles. It’s like when you become a parent. You lose social circles with all your single friends and friends without kids because you are not hanging out with them anymore because you are hanging out with them.
All these aspects are important aspects in life, and the financial stuff, that’s easy. That’s numbers, but this stuff is the hard stuff and this is what nobody helps you with. We focus on making your life better. It includes the financial stuff and all of this other stuff that’s important because we want our li we want our clients’ lives to be better. That’s how I mark my success. It’s not whether you make a little bit more or less in the portfolio. It’s whether am I making your life better? That’s the sign of success for me.
I love it and that is why you are one of the top 100 out there, Kirk. I love our conversations and the pre and post-conversations, it comes across that you’ve got a big heart and you do want more from your clients versus a flat bottom line. That’s such a huge need, especially over the last couple of years, that mental health, the identity, and people going through a lot of struggles out there, no matter what age group or what they identify is, we have all had to pivot little in a lot of cases.
It’s not the numbers. It’s the intangibles that do help us make happy. You could have all the money in the world save, but if you are an unhappy person and have no focus and no identity, retirement is not going to last longer and fade away. People like Bear Bryant, who suddenly passed after coaching and other things like that. The world is littered with those folks out there.
It’s a great point you make because we talk about this all the time. Baby Boomers especially have this problem. They worked hard to save a lot of money and they got very fortunate that the markets were in their favor. For 40 years, you are working hard and saving money and then one day you are going to stop working and start spending. That’s a big habit change. That’s not easy for people.
A lot of people think, “I need to keep working. I need more money.” No matter who I talk to, whether they have $100,000 to $100 million. If I say, “If you had a certain amount of money, how much money would that be for you to feel like I’m going to be okay?” No matter who it is, even the $100 million people, it’s 30%.
Everyone thinks, “If I only had 30% more, I’d be okay.” It doesn’t matter. It’s always going to be 30%. What good is money if your life stinks? If you are a workaholic working 24 hours a day and never sleeping, never seeing your family and kids, and your life stinks, what good is money? A lot of people do a great job at saving and investing, but then at the end of the day, if you are dying with all the toys, who cares?
Here’s something to put into perspective because we talk about legacy too and I don’t want to go down this rabbit hole, but we do a lot with estate planning and legacy. Here’s a shocker. When people do estate planning, what’s the one thing they focus on? Where’s the money going? Where are the assets going? What do they never talk about? They never talk about your legacy. They never talk about how you are going to be remembered.
When you are in the obituaries, what do they say? “This guy had a lot of money.” When do you ever see that? Never. You see, “How did this person contribute? Who they left behind for family? What did they do to change the world?” These are the things people talk about. They never talk about money, but this is the one thing that people focus on is money. They never focus on how they want to be remembered.
Let me give you an example. We did this with one guy. We had this older client who was a World War II vet. If you never meet anyone when it was in World War II, they never talk about their experience. They never brought it home. Their family has no idea what went on. No idea about the challenges and tribulations they had to go through when they were over there. They boxed it all up and kept it in.
A lot of them suffered for that throughout their whole life because they had to box it up and they are hurting, but they didn’t have anyone to talk about. What we talked about was you have all this experience that you don’t want to share with your family because you don’t want them to ever experience what you experience. That’s exactly what you have to do because they are never going to know who you were and what you went through. You are a hero. What you went through was heroic and no one else experienced that. You need to share that with your family. This is how you are going to be remembered.
We sat down and videotaped this guy telling story upon story upon story of his life and his family got to keep that. They got to remember him through those stories. My dad had more stories than Mother Goose. He would never. If you ever see the movie Big Fish. I love that movie. That was my dad. You would never believe the stories that he told you like, “That couldn’t be true.” The only reason I know they were true is I met half these people, but you would never believe it if he told you the story.
My wife and I begged him to get these stories on tape. He wouldn’t do it. The only stories that are remembered are in my head. My kids never heard those stories and I could share them, but it’s not the same. You have to think about your life and legacy in terms of more than money. As I said, we do the money. The money is the easy part. We can do that. Everyone else can do it. We do it better than most, but who are you going to believe? You are never going to know who’s better. What I can tell you is the experience will be unique, and it’s going to be something that you will value because we go to the areas that are important and money is not as important as you think it is. What’s important is the quality of your life.
What’s the best way for our audience out there to connect with you?
I’m hard to miss. I’m pretty much everywhere. You can find me on my website at a company website. It’s InnovativeWealth.com. I have written all the content there, so if you want to get to know me, read the blog posts. I wrote them all. You can also go to MoneyTreePodcast.com. That’s the show we do every week. We do two episodes a week.
We have Scott’s episode out, so you want to tune into that episode. It was a phenomenal interview with Scott. That’s a great way to get to know me if you are interested in what we do. We talk all the time. I give my opinions. Like me or don’t. If you like me, then give me a call. If you don’t, I’m cool with that. I don’t want to work with everybody. I want people that we have a good fit with, so that’s the best way to find me.
This has been a great episode. We could go on. We got to have you back on for a 2nd episode or maybe even a 3rd as this crazy world continues to evolve out there for you. Thanks so much for coming on and sharing your knowledge, opinions, and expertise. I appreciate it.
I’m happy to come on. Thanks again for having me on your show.
No problem. That’s going to wrap it up for this episode of the show. Check out the Money Tree Podcast to hear Kirk’s opinions and expertise. It’s a great way to not only understand what he’s thinking but also to see somebody you want to work with. I’m a big believer in the no PITA zone, No Pain In The Asses. It’s an important thing for mental stability as a professional. Go out, take some action, and we’ll see you off the top.
- Kirk Chisholm
- Innovative Advisory Group
- Money Tree Investing
- Scott’s episode – Money Tree Podcast episode with Scott Carson
About Kirk Chisholm
Kirk Chisholm is a wealth manager and principal at Innovative Advisory Group, Host of the popular Money Tree Investing Podcast and all around interesting guy. He is an outside the box thinker who provides a different perspective on many commonly held beliefs in personal finance. He has a rare expertise with alternative investments held in self-directed IRAs which has helped many investors invest in their passion. Kirk was recently recognized as one of the top 100 most influential financial advisors in the US by Investopedia.
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