The #1 Wealth Killer Hiding in Plain Sight - Andy Tanner

welcome to another episode of richdad stock cast the podcast for people that are serious about improving their financial education I'm your host delny and today we're tackling one of the biggest threats to your financial future one that's quietly stealing your wealth every single day inflation now before we dive in I want to make sure that you have access to something special if you want free tools and resources to help you invest smarter and protect your money from inflation head over to Stockon us. com right now that's where you'll find exclusive content to help you stay ahead of the game now most most people don't realize this but inflation is eroding their purchasing power every year your savings are shrinking your paycheck doesn't go as far and traditional Financial advice won't save you but today we're going to fix that joining me today is Rich Dad expert Andy Tanner Andy is one of the smartest investors I know he specializes in helping people build build wealth Andy welcome back to the show Dell thanks for uh thanks for that topic I'm excited to to dive into that um it's something I actually think about a lot and I think uh I think people might leave this podcast thinking about things a different way and you mentioned uh stock cast bonus uh that really is a perfect way to introduce yourself on how to beat inflation so I hope people uh start with those free resources because when you learn how to arrange your own financial statement and how to be agile with it uh everything can be good news so we'll we'll actually Dive In and talk about that but great topic I'm excited to to discuss it very good well let's start with the basics you know inflation is one of the the biggest Financial threats yet most people don't even realize it's happening and or maybe they're starting to realize it's happening why is inflation such a silent wealth killer well I mean there's if you go to a basic economics class like we took in college you know econ 101 we do a a price based on supply and demand right and so if you make money plentiful if money is is plentiful uh that creates demand uh for example and it doesn't even need to be your money it just needs to be available uh what if we took mortgages and outlawed them said you can only pay cash for house it's against a lot of going to debt well then the access to money would would just plummet and housing prices would just I mean the whole Market would collapse uh you know when you started pushing student loans and gave people access to money for student loans tuition began to Skyrocket right because now they can finance that education without having to work their way through school your know money became uh plentiful or access to it became plentiful and boom up go the prices so if the Federal Reserve uh through any of the levers they can pull uh if they increase the money supply and and money is plentiful plentiful either by you know writing a covid check to everybody and giving them cash or dropping interest rates and giving people access to cash either way buying power um increases demand you know if people have the ability to buy things uh it increases demand and you know UPG go prices you're also having to you know pay more dollars because the money is worth less and so it is a it is a a drag on savings and and if you go back to 1971 where they took the dollar off the gold standard where it was no longer backed by you know something you had to dig out of the ground something that put a constraint on how fast you could dig it out refine it and get it to back a dollar once the dollar just became debt uh you know an obligation full faith in credit of the United States uh obviously we're going to have inflation massively after 1971 so it the the reason it's a silent killer that's kind of a long-winded answer your question the reason it's a silent killer is if you put a $100 in the bank it's always going to show $100 uh you're not going to have 99 or 98 or 97 it's always going to be 100 if you put it in the bank but you can't fill your tank with gas you can't you know go to dinner anymore because that money is worth less than it used to be so while the the the the dollar amount is the same what you can do with it is drastically reduced and there's a lot of different things we we could talk about you know inflation asset prices too well the government says inflation is 2 to 3% that's what they say but experts believe that the real number is much higher what what's your take on that well the the this is important because the government wants 2 to 3% they want two is is the Federal Reserve says we like to have a little bit of inflation we like it at two and they haven't been able to get down to that number yet uh it's been as high as nine and 10 the reason there's a debate over it is there's there's several indexes that that the that you can use consumer price index is one but it it doesn't count certain things and uh you can do you know producer price index Consumer Price Index there's there's three or four metrics that they can use and so they argue it's like unemployment rate you know what do you count you count how do you how do you come up with that index but what you really need to just understand I think is just go to the groc grocery store and try to get out of the grocery store for under 100 bucks can't do it h you know fill up your fill up your car with gas is tough to do so so you can feel it you don't need a consumer price index to go to the grocery store and and you know have people feel that crunch yeah just going seeing the the the price of eggs it makes me want to bang my head against the wall right now but yeah my wife loves eggs right good source of protein there what now thinking about inflation and just savings you know many PE many people still believe you know many people outside of this podcast believe you should save your way to wealth why is that a dangerous myth well you know Benjamin Franklin said a penny saved is a penny earned um there's there's a lot of uh you know moral undertones of it's it's just good habits of discipline and self-control and restraint all that's really important um save rainy day is is important right and so yeah I I understand frugality and I understand saving for rainy day but saving for rainy day is different than investing in in cash uh certainly everyone should have a a access to cash for some type of emergency or you know you need cash to live you your cash pays your bills and you ought to have enough to to see yourself through a tough time I suppose but as investment there there's probably not many Investments that are worse than a than you know a currency a dollar or a Euro or you know you know any any printed fiat currency uh because you're investing in something that can just be invented out of nothing and so the the idea that you could outpace inflation um by Saving just think about that for a moment if you are going to go 2% of year compounded because it is a percent compounded over 30 years you know that savings is going to be worth less you know make close to worthless and uh I just I just don't see the the wisdom at all in the the Battle Cry by some people save money save money I understand that if you spend it on duads you're going to be more poor but I don't think saving is the answer I think investing uh at a rate that is higher than inflation is is really a key and there's some things you can do to actually let benefit you know maybe when we get back from break we can talk about a little bit but we can delve into you mentioned stock cast bonus. com if if you understand the six numbers on the first two parts of a financial statement a financial statement has three parts it has uh excuse me the income statement the balance sheet and the statement of cash flow and if you take the first two-thirds of that you know your income statement particularly particularly your balance sheet um if you if you understand the six numbers related to those those documents you can position yourself to benefit from inflation or deflation to where it's less about what happens in the economy whether you inflate or deflate and more about how you've positioned yourself so there's a huge amount of control in learning those six numbers and uh and that's why we always encourage people to go check that out start learning how to use those six numbers it's a huge deal that the idea that that income and expenses are good and bad or that assets and liabilities are good and bad it isn't the way I think anymore I used to think income good expenses bad asset good liability bad it it really doesn't uh it really doesn't work that way uh from a from a uh balance sheet standpoint uh if you buy an asset like uh a dollar and that dollar goes down in value that's bad you know that's a t you know when when when we had problems in in the subprime Meltdown the FED had this program called the toxic or troubled they changed it from toxic to troubled the the toxic Asset Protection Program where Banks were getting killed by their asset column they were getting crushed by assets that were Bad Assets um and there is good debt and bad debt both there are good assets and toxic assets both so it isn't like asset good liability bad you can have fabulous liabilities and you can have horrible assets um and and so learning those six numbers is key and learning the direction um so you know when we come back from break you know I I'll tell you a story uh I think I'll tell you about the best speech I ever heard Robert kosaki give it it changed the way I thought ever since it I think it's the best speech he's ever given it had to do with inflation but it's a longer story than we have before break time so maybe we'll te we'll tease that and and uh do it after the break there we good so let's do this Andy you know we've just broken down how inflation is silently robbing you but let's let's talk about Solutions when we get back let's let's hear that story when we get back uh and Andy's going to reveal some more ways how smart investors are are fighting back against inflation um don't forget if you want the free tools and resources to help you invest smarter and stay ahead of inflation head over to stock Caston us.

com right now we've got some incredible resources waiting for you we'll be right back so far it's been great I needed a source where I could really enrich my education through stocks I didn't really have an Avenue for it and it's helped me a lot the Simplicity has really gotten me on the track to where I enjoy the learning as well as it's really solidifying in my mind like they're not just trying to sell you something they really care about the people that are in the course and they really do care about you and your personal goals and what you want to do is to help you and your family and whatever your goals are in life through that so it's really been great welcome back to richdad stast I'm your host delny and today we're exposing how inflation is quietly robbing you and more importantly how you can fight back now before we dive in a quick reminder if you haven't yet go to to stock cast bonus. com for free exclusive free tools that will help you invest smarter in any market now Andy you you teased us about a story about Robert kosaki just the floor is yours I'm dying to hear this okay it was interesting there's these wonderful guys you know um they're called the real estate guys and it's Robert Helms and Russ gray and and every year they have a they have a cruise where you can go and they call it the some of the see and and one year they had asked uh I I was there Robert was there and and G Edward Griffin was there and G Edward Griffin for those who don't know he wrote a book called The Creature From Jackal Island it's the creation of the fed you know off the coast of Georgia in the Atlantic and it's where the FED it's you know it's got Intrigue and you know behind the behind the curtain type of stuff and and I love Ed Griffin he's he reminds me of my grandpa a little bit kind of a gold bug and and Ed gave a speech called abolish the fed and he talked about the evils of printing money and how kind of what we've been talking about the the inflation that it causes and the the robbing of people savings you know people put a dollar in there and then they print more of them and so now what you've saved is abundant you really haven't saved anything special you know you save more of it and they just print more of what you have already and and so he he's Jus says you abolish the FED we should go back to gold and the next day Robert best speech I've ever heard him give I mean it was Dynamic it was like watching a movie it was like a cartoon he just got in the zone he talked about when he was in Vietnam and uh you know he stole a helicopter or something and and uh he he was in Vietnam and they knew the price of gold you know he found this woman in a village that you know Grass Hut type place and and she she knew that I mean you knew the price of gold everywhere but anyway he he said don't abolish the FED be the fed and this is financial Jiu-Jitsu this is financial Judo where you're taking someone's energy and just going with it and and defeating defeating your opponent by using their own momentum against them and he said really if and and it changed really how how I mean I knew this before but it just hit me so strongly that if you have a balance sheet and you have an asset that goes up your net worth goes up but if you have a liability that goes down your net worth goes up think about that for a minute you know asset minus liability is net worth and if you have a liability that goes down in value uh your wealth increase so that gives you two ways to increase your wealth your net worth and if saving money in an inflationary environment is bad then borrowing money in an inflationary environment is good and it you know I've always known that that you know Real Estate Investors I've been at real estate conferences and investing conferences where people in real estate don't even know what they're doing uh they think they're buying real estate but they're really shorting the dollar uh they're not really buying real estate because they don't have any money to buy it the banks buying the real estate and they're borrowing the money to do it so you know it's really not their money uh that they're getting the real estate with so they're they're in a short position they're in a debt position and I gotta tell you I I'm not like I love I I'm not a real estate specialist so I don't want to talk out of term but I think anyone can learn this I mean you don't have to be you know have a have 8,000 doors underneath you to to get this I mean you can have less real estate like I have and still understand it is that is that if you if you borrow money to buy real estate you're in that short position think about this for a minute I don't know where Apple's going to go tomorrow I don't know where uh you know Nvidia is going to go tomorrow I don't know where the S&P will go tomorrow in fact I don't even know where it will be in five years but I will tell you this the dollar will lose value over 30 years for sure I mean of all the bets I could place and all the crystal balls that I could look into the FED is trying to take down the dollar at 2% a year compounded over 30 years that would be their ideal scenario and they're going to work towards that and and if they have less than 2% inflation they're going to adjust monetary policy to get it up to 2% if it falls to one they're going to print money to get it up to two and so if you if you take that reality of that policy and if they go faster than that even better then you're borrowing money when it's worth a lot you're trading it for a house you're getting that money back via rent and you're returning it to the bank so there's four steps borrow exchange exchange back and return borrow the money exchange for a house exchange back money money for rent you know by rent and then you make a house payment so borrow trade trade back return those are the four steps in order of a short position and so the the best thing you could have happen is if you have a lot of debt and the value of the dollar goes down the value of that debt goes down and yet the value of the house goes up and the rent you'll charge goes up so you have this fixed payment uh and I've watched this happen in my own life uh over and over again I I look at the you know I have a smaller real estate portfolio than than some because I'm more of a stock guy but I wish I had more real estate because I've watched myself Bor borrow money uh and that number doesn't change it sits on that balance sheet and so it's a silent wealth Gainer you mentioned why is inflation a silent wealth killer well if you have a $100 on your on your asset column it's worth less uh if the dollar goes down well if you have $100 on your liability column you owe less because it's worth less and and so the the value of that house doesn't diminish it's still you know 3,400 square feet or whatever it is it still has five bedrooms or whatever it has um and so rent goes up because the dollar loses value the price of the home goes up because the dollar loses value but the liability that number stays the same and it's worth less because those dollars are easy to get they're easy to get through rent they're easier to get through rent than before because they got to pay more for them so I think you know people talk about gold and I like gold but it doesn't count cash flow it's a great insurance policy against the falling dollar but I'll tell you the best investment in the whole world is the opposite of what Dave Rams he says is he says stay out of debt I'm like you out of your freaking mind it is a sure bet to have the dollar go down in value sure thing uh as sure as anything I know uh they won't do a 1929 again uh they from Green span on they criticize the they say the FED could have stopped the depression by printing money they could have stopped the and so that's their view now so Robert's great talk was don't fight the FED be the FED Go With It borrow the money trade it for an asset and let them print them themselves into Oblivion because all it does is reduce the obligation that you truly have uh in your liability column that's profound that's why go get that power six special we have it at stock cast bonus. com and you'll start to see how those numbers work and how to manipulate your positioning um you know it isn't about just buying the assets it's about the utility of the liability column that's another reason I hate 401ks is the 401K doesn't use the liability column to your advantage there's no utility there and that column exists for reason it's to be used um is it like fire yeah it could burn you but it can also heat your home and light your way and keep you warm and cook your food and protect you against predators fire not a bad thing so when when someone like Ramsay says you know stay out of debt that just is a huge sign that they they don't understand investing at all anyone can wag wag their finger at you say no don't you spend and you should save that's that's not creative uh that's that's disciplinarian it's parental uh but it certainly isn't a way to create wealth saving wealth and creating wealth are not the same investors create wealth um but you don't you don't save your way to to wealth you invest your way to wealth and to me that's like way obvious but that's just my opinion well that brings up a good point you know there's a lot of people that save their way to wealth I'm going to put that in air quotes uh they focus on their net worth but that doesn't really help when prices are skyrocketing why is why is cash flow the key to surviving inflation yeah that's the other nice thing about you know you could and by the way it isn't like stocks can't do this either because you can use debt uh many ways and more importantly leverage uh is just as important and you know let's say I have a i benefit from inflation if I own Exxon Mobile and I see gas prices go higher I'm making more money as an owner and my dividend is going to go up and that dividend is is so consistent people worry about stock prices up and down all over the place let me tell you nothing has been more consistent over the past 35 years the Nexon mobile dividend it's gone up every year it's never had a down year it's gone up every year for 35 years in a row and and I expect that and that is a function of inflation it's the same thing and so cash flow is is very important because cash flow funds your debt and if you have cash flow to pay that and someone else's is you know the the best debt in the world is debt that someone else pays off and that won't work with gold and that won't work with Bitcoin but it will work with real estate and it'll work with other assets that you borrow money that produce cash flow because the cash flow service is the debt and so you have this figure in real estate called net operating income that shows you you know how much it brings in before you service the debt and as long as that noi is high enough now that tells the bank how much debt can be serviced and that's how they manage their risk they say what's the net operating income oh okay well we'll loan you this much money because we believe you can service that debt in in a safe way and we don't have to foreclose on you and have headaches so cash flow is is so important to have and to have that increase with inflation for example rent is is a fabulous uh cash flow Source because if the if you have inflation the rent's going to go up and the uh the payment will stay the same and so your your cash flow will increase with inflation and so then when you go to grocery store well the price of the grocery store went up well so did your rent and and so did your dividend um you know in stocks so it's you can't you can't breathe without cash flow and that interplay between the asset column the liability column the income and the expense is critical and and of course you look at your bank account that's your statement of cash flow right how is the cash flow coming from operations is the cash flow coming from investment or is the cash flow coming from borrowing or finance and that statement of cash flows tells you where that money is coming from or going to and the direction which it's going in and out of your account absolutely critical to to learn that basic you know basic Financial Education buy the cash flow game you know that that's the best way to learn that stuff is is go by uh the cash flow game and play the cash flow game with as a family and you'll start seeing it pretty quick it changed the way you think about money for sure there we go fantastic well Andy we're out of time I love that last bit of advice by the C game and play it with your family like that is such a a great piece of advice yeah don't don't fear inflation leverage inflation benefit from inflation don't be afraid of it uh inflation makes asset prices go up so where a dollar goes down a stock will go up a real estate investment will go up a rent will go up a dividend will go up inflation benefits the those of us who have assets it's that simple not cash there we go all right well that's a wrap for today's episode of stock cast inflation is a silent Thief but you don't have to let it Rob your financial future uh huge thank you to Andy Tanner for dropping so much wisdom on us today if if you take nothing else from this episode remember this you can't save your way to wealth you have to outpace inflation by investing wisely now before you go don't forget to visit stock cbon us.