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     I love the self-directing of a 401(k). Many of you, because of this bathroom wall called the Internet, have misinformation about what you can and can’t do with your 401(k). Whether you should have one, stay with your employer, create one on your own for your own company. So, three things we’re going to talk about. Just understanding the importance of diversifying your 401(k), and the amount of control you truly have. Number two, the power of compounding interest, and just constantly putting money into that 401(k) contribution. And when I say 401(k), I’m going to be adding other things into the conversation, like a Roth IRA, like a Solo. There are a lot of varieties that you’ll be doing out there, including an HSA (health savings account). There are so many variations, I can’t wait to share. Last thing we’re going to talk about, though, are the mistakes that I see in the allocation, even the transfer of the documents and the investments.

     The importance of diversifying your 401(k). Well, first of all, if your 401(k) is with your employer and you’re still working. The only thing you can really do with it outside of pick their choices of whoever they were with, I still have a trickling 401(k). It’s a long story from Chevron, for example and it came out of litigation from some welders and offshore welders but doesn’t matter they gave us a bunch of shares. So inside of that Fidelity runs it all but you only get like this little, tiny box of choices and it’s only Fidelity products. And as an employee, the only thing you could do is borrow up to $50,000 if their plan allows it. So that’s the limitation of just having a 401(k) with an employer. Now you can live corporate life. And if you don’t know what I’m talking about, I want to invite you to our Millionaire Intensive We do it every three, four weeks and it goes from 10 o’clock AM Pacific until six. There’s a marketplace where you can make money. You’re going to work on offers. There’s fast cash in there. You’re going to learn so much in one day. It’ll be like, “Why haven’t I been living this life before?” and inside of that we’re going to talk about corporate life. When you have your own company, your company can have its own 401(k) its own solo 401(k), own Roth solo 401(k). There are lots of choices when you live independent as an entrepreneur, and when we talk about self-directing, there are a few companies in the world, only in the United States specifically, other parts of the world there’s maybe one or two choices, there’s probably a really good I say five to seven choices here, where you can self-direct. So self-directed are words. You can buy real estate, you can do notes, you can buy land, you can buy water rights, mineral rights, cattle, horses.

     I mean, in one situation, you could buy up to 50 different asset classes, cryptocurrency, gold. When you’re self-directing at a Schwab or a Fidelity or traditional house, all you’ve got to do in their self-directing model, and they will say they’re self-directing, but you only get to buy their products. There are no alternatives in the products. All they are stock bonds, municipal funds, EFTs, and things like that. So if you really want to live in the alternatives, which is all that I write about, which is where wealthy people live, right? We start companies and we invest in other companies, and we buy alternative assets. So yes, do we have some money in the market? But we want to self-direct and control our 401(k)s. And we want to have the diversity choices of a lot of different things.

     So a few things just to be aware of, like you need to get investor knowledge. Inside my Millionaire Maker series, there’s obviously the Millionaire Maker book. There’s my Cash Machine: How to Build a Seven-Figure Business, and there’s a Wealth Cycle book. So I need you to get the first few chapters of the Wealth Cycle book. And start understanding what are your money rules? What are your risk tolerances? Do you even understand how to do due diligence? Due diligence is not running around the internet looking people up in Wikipedia and Yelp. That’s not due diligence at all. That’s just like what social media people do. That is not how due diligence works. It starts with the private eye, starts with the background checks, it starts with a whole thorough list of data analysis and true data analysis. And a lot of you have no idea even how to begin those things. When you self-direct your IRA, like you, get to decide to do you want to do real estate? Do you want to, again, pick choices that are going to benefit you? The few things that I’m going to caution you on, again, because there has to be a tax strategist on the team next to it, and I have all these people on our team, is things like gas and oil and real estate. If there’s a depreciation schedule inside of an IRA, you lose it. You don’t get to take that through to your tax return because it’s qualified money. So be careful in your investing choices on what your overall goals are. So that’s where someone like us, me as a mentor, a facilitator, helps guide you, help you understand, help you learn. You’re reading the right information. You’re talking to the right people, so you’re starting to gain the plan of what do you want to do with your 401k and how do you want it to grow.

     Number two let’s talk about the power of compounding interest. So I just want you to get a compounding calculator out and start playing. Here’s how most of you think. You think, how much money do I need to pay my bills every month? That’s your driving factor. Doesn’t even occur to people who have money and are entrepreneurs. It’s how much money do I want to make? How much money do I want to keep? Meaning put away into new investments. So let’s just say with that compounding calculator you have the ability through your business because you’re making $20,000 a month now or even $10,000 a month. You can put half of it away because you’re not used to living on it. So instead of buying a lifestyle, buy assets. So let’s just say for the math I want to do, it’s $20,000 a month is what you’re making in your company. And you put $10,000 a month into new assets. What do you want to do with that? I mean, 10,000 per month and then put that out just 10 years, right? So every month you’re going to contribute 10,000 a month for the next 10 years at an average 12% interest.

What does that get you? That grows so quickly when you learn to compound interest, when you learn to compound your investing strategy. So inside your 401(k), you’ll be given a portal where you can start looking at your investments and your different investment choices. Now they can’t tell you, those who house is called custodian, your money in a self-directed, true self-directed, our way entity. Which is why you need a community like us to talk about your choices and investment. Because you don’t have a Schwab financial planner, fidelity financial planner, telling you you only have these 10 choices of their products to buy. Because you’re going to bring products to the party. Like you get to do all sorts of things. You can do hard money inside of it. I’ve seen so many people become multi-millionaires doing notes just inside their 401(k)s and IRAs. And you start compounding a note where you’re making $1,000, $1,200, $2,000 and you get 10 notes, that adds up very quickly. I want you to take a compounded calculator, build a spreadsheet if you really want to be more analytical. Just see how fast your wealth can grow by putting it in. The only risk to a 401(k), which you need to be mindful of in this environment, in political environments specifically, is when you take your money out, in a certain age you will be four to 70, you have to start taking minimum distributions. And so you take them out at the tax rate, which is why early on you may want to consider converting it to a Roth. So again, there’s usually four people that should be in that meeting. Me, you, the tax strategist, and the self-directed IRA company to decide, is it a smart choice?

     Do you have the cash now at a younger age to actually pay to convert it to a Roth so when you take it out later, there’s no tax? Because then all of that will grow tax-free, tax deferred. So there’s some choices and some education that we’ve got to give you along the way, but it’s really important. You make them sooner than later. The later you wait, the less choices you have. The last thing I just want to say is the consistency of investing. And I’ve said it over and over. I want you to start allocating a certain amount. I don’t care for some of you if it’s 50 bucks a month, 100 bucks a month, 1,000 bucks a month. Start putting money into what will become your compounding wealth for the rest of your life. And that actually then creates a generational wealth move because now your kids can inherit it and your kids can inherit a self-directed IRA so if you’ve been told otherwise that’s not the truth either. So before I continue on big mistakes that I see people make I want you to subscribe to my YouTube channel, click that notification button I want you here five days a week and I want you to have a strategy session come to our Millionaire Intensive read that Wealth Cycle the first three chapters and if you really like it, go to our website, go grab the entire book and consume it as fast as you can. We are having version two of a lot of our books coming out where we’re adding in new 2023, just education principles and new laws, given the amount that’s changing in our world in the last, say, probably three to five years.

     So back to mistakes. What are the biggest? Number one is the lack of consistency. As you contribute, you don’t contribute. You contribute, you don’t contribute. You want to mark your calendar if you’re going to contribute once a year, which is typically what I do for ease. I just contribute once a year. I do it typically in Q1 where I contribute to my solo 401ks, my Ross, my kids Ross, all that gets done beginning of the year, so it’s handled for that tax year. And there are limits so again you need a tax team combined with the self-directed team because they can give you more insight. I can give you more insight. Our coaches can give you insight because the custodian holding your money cannot tell you what to do and if they are telling you what to do or giving you offerings, they’re breaking the law. And we’ve seen people go to jail for that. So be very careful custodian cannot give you investment advice at all. They can’t even have that in a broker dealer or any of that. So just be cautious of that. And that is a big mistake. The other mistake is you’re not mindful of the rules and don’t ask enough questions, which means you break the custodian relationship. If you’re moving money from, I see this a lot from an old employer to a new self-directed company you might have learned about through our community, you cannot take that check. It has to go from this 401(k), this custodian, to this custodian. You personally cannot take that money. It breaks the chain of custodianship and now your qualified plan becomes taxable. You just cash the whole thing out. So be very, very cautious. I don’t want to freak you out about it. We know how to guide you and make sure that you don’t do that. The last thing I want to say is the mistake is checkbook IRAs. So I’m not opposed to them, but boy you better be responsible and have a plan because I’ve seen people completely blow up their 401(k)s because they are now at checkbook control, which you can get legally, but there’s a lot of regulation and structure around it. So you just have to be very knowledgeable about how to use that, so you stay in a qualified corporate compliant plan.

     So with all that said, you’ve got to have a lot of questions. Go to ask questions, make a request. Most of you live with inherited behaviors. Live with the behaviors and choices that you want. Make 2024 as we walk into it. We’re recording this at the end of 2023. Make 2024 your year. And if you’re here really before the end of the year, make sure you call our office and get that.

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