Truth In Lending Disclosure Statement Form 2012: Fill & Download for Free

This is not an answer to the question per se but a clarification of the attitude that must be adopted towards such a question.You are talking about the Government of India here, not the ‘Knights Templar’ or the ‘Illuminati’. Governments are a morass of bureaucracy and paperwork. Proposals are drafted, checked up the chain, amended, noted, minuted, re-amended, re-noted and re—minuted before approval and then put up for public notice. Things don’t get done in a dark room attended by people who present the ‘nine pieces of eights’ for entry. When the PM or even a public servant like a Secretary or Under Secretary makes a statement, his words are pre-drafted, verified, noted for approval, approved and then and only then spoken. These guys do not shoot from their hips. All this is tedious work involving many bureaucratic staffers and records and thus when the Government makes a statement, it is rarely different from what they have planned or thought. There are no secret or hidden agendas. For the most part the work is boring and unspectacular. Where discretion is required, the government will seldom speak. Government will rarely make a statement that is not on record, for it can be held seriously accountable for the statement.Here one must distinguish between the word of the Government and the Politicians. When PM Modi or Shri Shaktikantha Das makes a statement on TV, it is the government speaking, whereas when PM Modi is addressing a rallly, it is the politician speaking. While both may be termed as being on record, the first is official while the second is personal/political though one may include official matters there too, but not political matters in an official statement.So the answer to your question is, the main objective of the government in implementing demonetisation are just as stated by the government:-- To neutralise black money.- To neutralise Fake Indian Currency Notes.- To bring illegally stashed money back into circulation.-To make the society more tax compliant by putting the fear of god into them, capturing data and pursuing suspect evaders.Much that movies and doomsday prophets would like to imagine conspiring governments, the truth be that no government is in reality an enemy of its people (unless we have a totalitarian regime in a banana republic where the only thing the government or whatever passes for it is trying to do is survive and keep its hold over the governed. In such a case it is not a government in the first place). Ours is a democratically elected government answerable to the parliament and to the people. So stop conjuring conspiracies in your mind. The government means what it says and nothing else.The real question is whether the government has achieved what it meant to? In other words what has been the outcome of demonetisation?You do not need to ask others. Look for yourself.Here are the RBIs weekly statistical supplement for the period from 04 Nov 16 - 24 Feb 17https://rbidocs.rbi.org.in/rdocs/Wss/PDFs/0WSSF79CF44F3D36C4393B9419541D84E3D62.PDFhttps://rbidocs.rbi.org.in/rdocs/Wss/PDFs/WSS2511163BF0FFA91AFD4F87BBB03AF3C66ADC21.PDFhttps://rbidocs.rbi.org.in/rdocs/Wss/PDFs/WSSF720D1BEE61E34B419C514CB9ED01131E.PDFhttps://rbidocs.rbi.org.in/rdocs/Wss/PDFs/0WSS270117_F5F478710B3A7436ABD250897B2121C53.PDFhttps://rbidocs.rbi.org.in/rdocs/Wss/PDFs/0WSS5F25B8B223684958B9959A018EDC063A.PDFPlease notice line 1.1 that gives out the total notes in circulation in the country. Notice how much it was at the beginning of Nov 16 (17.578 lakh crores) and to how much it has decreased by the end of Dec 16 and the current state by end Feb 17 (11.061 lakh crores). Remember the figures are in Billions of Rs. As of this date about 4.95 lakh crores are off the market.This will give you the state of Demonetisation and the Re—monetisation. You do not have to listen to stupid theories from other people. Keep following this space and you will know the progress of the Re—monetisation process.Notice simultaneously the line of Total Liabilities/ Assets and you will notice that very little has changed. How come? when such a large quantum of money has been sucked out of the market the total liabilities have remained the same. Please notice line 2.2, Market Stabilisation Scheme (MSS) which has increased significantly to about 5.9 lakh crores and has since decreased to 1.48 lakh crores with concurrent increase in ‘other liabilities’. The MSS is a means available to the RBI to control the liquidity in the market by sucking out cash from the economy. So there lies your surplus cash. Essentially, all that cash is now held in the government coffers, albiet in the form of non cash liabilities.We do know that the daily economy is back to normal ie we are not seeing any long queues in banks/ ATMs and businesses are back to the usual. If you have been an investor in the market, you may have noticed that the stocks, after taking a fall in November and December have recovered and surpassed their pre Nov 16 position. So what does that indicate? That the economy is running fine even without such a large amount of Cash in the market. This means that the essential cash market has remained what was always actually in use. The remaining cash in the market was money that was not in use ie hoarded, stashed away and not participating in the market. This is the excess cash that is now being seen in the formal banking system.The RBI will take time to account for the multiple deposits & withdrawals that have taken place during the demonetisation period to eliminate double accounting of the money. Only then will the RBI know how many notes have actually come back into the system post demonetisation.Whether, some liabilities will get extinguished or not, is not presently indicated in the data. This is because, it is a long and tedious process to go after every bit of money that has returned to the banks to determine legal or illegal deposits. The process is in progress with the IT department issuing thousands of notices to people. The outcome will be known only after a year or so.Keep watching RBI statistics on its website to see the changing dynamics of the money distribution between the various liabilities. There are other tables below that give us other details, but I will not go into them for now.There is no doubt that a large part of the illegally stashed money has come into the banking system. It is too early to tell whether this money has been laundered or is under the purview of the tax authorities at this moment. We will know for sure in the coming months.Another thing that is palpable is that the notes in circulation is not going to reach the same level as its early Nov 16 position of 17.578 lakh crores. So most of it is likely to be available to the government and the banks either in the form of MSS, demand or time deposits. While the former may not be readily usable by the banks, the latter can definitely be used by it for lending and investments in projects. This will definitely have a beneficial effect on the economy as a whole.Now I shall share another important metric that indicates positive outcomes:-Tax collection figures for the period April -December 2016 show a positive trend as Direct Taxes grow by 12.01% and Indirect Taxes grow by 25% over the corresponding period last year i.e. April-December 2015Please note the amount of growth in revenue collections registered from Apr - Dec 16:-- Direct Taxes - 12.01% year on year for the same period (Corporate Income Tax 10.7% (4.1% after refunds), Personal Income Tax 21.7 (24.6% post refunds).- Indirect taxes - 25% year on year for the same period (customs -6.1%, Central Excise +31.6%, Service Tax +12.4%).This significant growth is on account of increased direct tax compliances both on account of the Income disclosure scheme as also the fear of god instilled by the demonetisation. Further, significant compliances have also been reported in various indirect taxes on account of people using their black money to at least clear out their various past dues to the government. This trend will be clearly discernible when you see the state governments’ revenue collections because people who feared loosing their black money pulled it out and used as much as possible to clear out their long pending revenue dues, be it property taxes, water taxes or electricity bills.You may also notice that there has been a 46% decrease in Volume of gold imports that has also reflected itself in the reduced de-growth in the customs revenue. This is an outcome of the gold monetisation and gold bond issue schemes of the government and is by itself a positive sign.This positive trend is likely to reflect also in the upcoming financial years. Thus the government, which has already surpassed its revenue collection budget estimates in FY 2014 - 15 is all set to make its coffers healthier, which will definitely give it the will and teeth to invest in development and welfare.These programs, schemes and projects will necessarily be of a capital nature with long gestation periods and thus their impact may not be readily visible, but will definitely fructify sooner or later. We must be patient.As far as the growth of the economy is concerned, the Central Statistical Organisation (CSO) has indicated a 7.1% that many detractors are doubting. But the revenue collection figures cannot lie. If there has been a 31.6% increase in central excise it cannot be without corresponding growth in the manufacturing sector. So let us leave the naysayers behind for now.In the end I wish to tell you that India is a stable country even after allowing for the occasional tensions in our continuing experiments with democracy. Our economy has been growing since independence albeit at a niggardly pace till the 90s. So do not worry, there are enough sensible people in the government.Every government (even the Indira Gandhi government that imposed emergency upon the nation), has invariably a prudential motive and implements policies with their own perceived best interests of the state. In the long run most government schemes, projects and programs do have both direct and associated benefits even after allowing for inefficiency, corruption, misappropriation and systemic leakages. The green revolution was initiated in 1947 tentatively and formally in 1960 and yielded record grain production only by 1978 and went on to make India a net food exporter only by the late eighties and early nineties. The Golden Quadrilateral was launched in 2001 and completed by 2012. In the history of a nation these are very small timelines. Things only pan out in the long run.The present government is perceived to be much better than the previous one on account of one singular reason - dynamic and decisive leadership. While some may perceive evanescent insecurities in this, I prefer a decisive but occasionally wrong leadership to an indecisive and indifferent one.We will always continue to grow and progress irrespective of the political dispensation at the centre. Governments may come and go but the nation must go on forever.May the force be with you!

Saving rate versus investment returnsAlbert Einstein supposedly once said that compound interest is the eighth wonder of the world. But Einstein was an employee never understood leverage in government subsidized real estate loans x compound interest.What matters more: your saving rate or your investment returns?Accumulating Wealth in the Early YearsIf your goal is to achieve a net worth of $1 million (bad goal since it should be more a cashflow per month number) and you invest $10,000 every year and earn a 7% annual return on your investments — which is a reasonable assumption for long-term stock market returns — you’ll accumulate $1 million in about 30.7 years.The pixelated chart below shows exactly how long it would take to reach every $100,000 net worth milestone, using the assumptions of a $10,000 annual investment earning a 7% annual return:Notice how each $100,000 net worth milestone takes less time to reach than the last.This is Captain Obvious Stuff of course!Take away 1: We are told the normal stock market stuff grows at 8-10% a year. But what happens if you direct invest in deals and make 25-35% a year? What about a conservative 15%?You might find these charts discouraging if you’re someone who has yet to save their first $100,000.The numbers don’t lie: The first $100,000 takes the longest to accumulate. Warren Buffett’s longtime business partner Charlie Munger even once said, “The first $100,000 is a bitch!”I’m not a rocket scientist (did go to Space Camp) but it takes a large portion of the fuel to get the Space Shuttle off the ground a few inches. The rest is just momentum. In a real estate investor’s progression we call this the law of the first deal where its not going to be that great but as you stick to it you learn and more importantly your network grows (or join these others on the journey) and your ability to attract better deals improves.Have you ever tried to court a cat? You need to attract it! That’s how good deals are… they come to you.SimplePassiveCashflow.com is meant for high(er) net-worth, wait correct that… not-broke people who are responsible with their money and hard working professionals. We are real estate investors and you need money to invest.If you are aiming for financial independence (especially while working a full-time job) focus on variables you can control. Those ingrained in the the FIRE (Financial Freedom Retirement Extreme) movement focus on saving money. Never having a $5 Simple Passive Cashflow Latte. We astute investor responsible use debt to maximize returns (and be smart with how we spend money).Personally I live by the Fat FIRE life style which consist of:I don’t buy anything I don’t really needFocus on experiences and get out of trading time for moneyAnd BTW I drive a Mercedes (only after my cashflow allowed me to do so)Roth vs Traditional Pretax 401k?Both are retirement accounts where you don’t get taxes on the gains while the money is in the program.Both get taxed at some point and you get to elect when you get taxed, either putting the money in (401K) or when you take it out (Roth).Question is when?Conventional wisdom says that generally, you want to pay taxes on it later because taxes will likely go up to pay of Quantitative Easing (ie paying out all the 2008 bailouts).#ConventionalWisdom engineered to keep you working foreverBut its a bit more complicated than just that and takes into account if you are going to make more money now or when you are old and taking the money out. Here at Simple Passive Cashflow, we are growing our money at 15-30%every year that we will likely be in a much higher tax bracket when we retire (cough cough… in our 40’s).Let me be clear… if you are investing in hard assets that produce income and employing safe prudent leverage then stay away for any sort of 401K or Roth plans.401Ks are for suckers. Plain and simple. You get stuck with bad investment options and getting killed by the fees. It’s such as shame that everyone is getting robbed blind by this.I am very against the Roth or any retirement account (other than 401k in some situations).You will pay taxes now or later and you will likely to pay more taxes in the future… so pay it now.And 10% penalty is nothing to be in retail type investments. You can recoup that in 12-14 months.QRPs or qualified retirement plans (Roth-IRA, Solo 401ks, etc) if you are an active real estate investor. If you are conservatively using prudent leverage and finding decent deals there is no reason you should not be able to retire in 10 years or less and thus negating the very reason for these accounts.When you have money in these accounts it sounds good that you are not taxed on gains but you are restricted from getting a Fannie Mae loan. Using the QRP loans get you the second tier financing options, for example, a Roth IRA can buy real estate on leverage, however, will need a non-recourse loan which is often a fraction high-interest rate and lower LTV. No Bueno!Caveat: If you are late to the game and already have a fat 401k then you should convert it to a solo401k. At that point, you should think about putting it into syndications since you are restricted on how you can leverage it.Anyway, let me know you would like a referral to my checkbook ira contact. You can get a free book on QRPs here.What should I be doing now?At some point, you are going to start moving through the wealth progression but for now you need to get your finances in order to save $5,000 a year then work to accumulate a $20,000 minimum downpayment on your first rental property and get on the escalator of true wealth.When you’re young or a drone of society conditioning, you tend to think more in the moment. The long-term consequences of our actions and decisions are an after-thought to instant gratification. Many of you will read this page and get motivated but only a fraction to take incremental action and build the support system around you. All the resources are around you and most of which are free… if nothing comes of this then its an execution problem.Here are the steps:1) Stop sabotaging yourselfYou hear it in personal development a lot that we often are our worst enemy. In our financial health, this is even more so the case whether you can’t hold a job or a doctor making $400,000 a year yet spending every single penny. Simple Passive Cashflow - Simple Passive Cashflow has never been about mindset that often employed by scammy Multi-Level Marketing ploys or get rich quick schemes. We are about tactics and putting your head down and driving toward a goal. That said there are things you need to stop.a) Stop listening to people who are NOT financially free. This includes commission based financial planners, family members, and co-workers. There are a lot of well written financial blogs and podcasts (PF Blog-o-sphere) following the FIRE (Financial independence retire early) philosophy (refrain from wasteful things like your $5 Coffee) but many of which are misguided and dogmatic in their approach. We are pretty dogmatic too but the results speak for themselves (see asset list)b) Stop investing in a 401k where you are limited to investments where there are hidden fees or so-called low expense ratios. Sorry to break it to you if you still believe in the Easter Bunny or Santa Clause but mutual funds are robbing Americans blind often taking the lions share of returns from asset management fees and leaving you all the risk of the market. At the very least stop contributing to 401ks or other retirement plans over the company match threshold. You should also start paying the minimums on your low-interest rate student loans.c) Spend less than you make to build up a surplus yes. But let’s have a goal and plan in mind. Many times this is a simple plan to save $20,000 to purchase that first asset that puts money into your bank every month instead of something that you don’t need. Once we have the cashflowing by all needs let loose and enjoy. Likely once you have a plan and see positive feedback you will be hooked and you will tighten the belt on your personal spending.d) Be conscious of what information (propaganda) you are taking in. If you want to be like everyone else (broke and working forever) then do what everyone else does. Trade your morning commute listening to the radio to filling your mind with new ideas via podcasts. Instead of mindlessly consuming YouTube videos on the toilet or coming home to decompress on the couch with Netflix try to open up a book or better yet connect with someone who is where you want to be or like-minded in the journey.e) Stop giving a Buck – Read this… Too many people are afraid of doing something different! Taking money out of your 401K/retirement is considered a sin or naughty even if it is to direct to safer investments. The system has got us trained like “Sheep-o” and we are being taken to the slaughterhouse if we keep on the linear path we were all programmed to do. Do the math and the numbers will tell you what to do. Even if you are not an engineer its pretty simple. Wall-Street wants to make it complicated so you just go with them and they fee you to death. Numbers don’t lie, brokers do!2) Get a credit cardYou need to build credit to qualify and build your credit score to eventually take advantage of Government subsidized Fannie Mae/Freddie Mac loans.Captain obvious warning: Avoid credit card debt. While you want a credit card to build credit, you don’t want to use it when you don’t need to. Pay it off immediately and don’t let a balance sit on your account.3) Find ways to make moneyFind ways to make money by selling the crap you don’t need. Facebook Marketplace and Craigslist is a great place to start.If you have a lot of credit cards try this little trick out.Find a side-gig that you enjoy. As some point, you will want to grow this as an excuse to take business deductions to lower your tax rate.Shouldn’t I have a Financial Planner?The truth is no one built substantial wealth with the aid of a traditional financial planner. As we say here in our SPC tribe… never take financial advice who is not on the path or made it to financial freedom. Financial Planners get rich off the fees they tack on to what investments they sell you. Read the rest of the story here.The following are some legal and made up terms in the money management world:Financial advisor is one of the most common titles used by licensed financial professions. This title was commonly given to Paine Webber representatives on their business cards and marketing materials when I was at the firm in the early 2000s. This title has no legal or regulatory meaning. It is strictly used for marketing purposes. While it is commonly used by most Brokers and Advisors, anyone could legally use this to describe themselves, including attorneys, insurance agents, brokers, investment advisors, financial planners, accountants, even dentists. This is one of the most confusing terms as it does little to determine a person’s qualifications.Financial Consultant was commonly given to Smith Barney representatives on their business cards and marketing materials. Again this has no legal or regulatory meaning and is strictly used for marketing purposes. Anyone could legally use this to describe themselves and does not help you determine a person’s qualifications.Financial planner is one of the more commonly used and misused titles in the financial advisory industry. Many professionals use this title to describe their holistic services of providing individuals and families with a financial plan. Constructing a financial plan is the first step in any financial advisory relationship. Unfortunately, there is no legal or regulatory standard for calling oneself a financial planner. This has allowed people to use the title in order to project a professional image that the person is providing unbiased financial planning services, when in fact, they may not be. Some insurance agents who use this title to brand themselves as a financial planner in order to sell more insurance products to unsuspecting clients – not the Infinite Banking type. If someone calls themselves a financial planner, be sure to check their licenses and certifications to make sure you know what you are getting from that person as a professional. Do not confuse a Financial Planner with a Certified Financial Planner®.“Stockbroker”, is used to describe someone who buys and sell securities on behalf of their clients in exchange for commissions. This person works at a broker-dealer or “wirehouse” and most likely would have a license such as a series 7, series 66, series 63 or others. Many brokers don’t like the term “broker” and consider it a pejorative term.Investment Advisor Representative (IAR) has legal and regulatory meaning. This title is conferred to someone who has passed the series 65. This person would be required to use a fiduciary standard of care with their clients. A fiduciary standard of care is one of the highest standards of care from a legal and regulatory sense. This is one of the highest standards of care. Clients should seek to work with professionals who are bound to high standards of care. An IAR is either regulated by the SEC or the state’s securities agency. This license and title do not allow the professional to buy or sell securities for commissions. This is a fee-only license, where the professional can only get compensated directly by the client directly and cannot obtain commissions from product providers, or other related sources without disclosure to the client. This is the most transparent forms of compensation. Clients should consider an advisor who has this distinction if they want transparency. This title is not commonly used by advisors in marketing materials due to its length and better substitutes such as financial advisor, or even investment advisor which is a shorter version of this title. This license can be combined with the next one, Registered Representative, if the person has passed both certification tests.Registered Representative has legal and regulatory meaning. This title is conferred to someone who has been licensed by passing the series 7 test. The Registered Representative or “Rep” would be able to use the license at a broker-dealer to buy and sell securities for clients in exchange for commissions and would be regulated by FINRA. The standard of care for RRs in recommending securities is that they are “suitable” at the time of the transaction. The rep is not responsible for any of the securities sold to the client after the purchase or sale of them. There is no “fiduciary standard” of care requirement with this designation. This title is almost never used in any public or marketing manner. Trends in the financial service industry have shifted away from using this title in favor of titles such as financial advisor.Wealth manager does not have any legal or regulatory meaning. It is not a commonly used title. It is used to confer a holistic approach to working with clients inclusive of financial planning, investment management, and specialized services such as legal, tax or estate planning advice. It is frequently used in single or multi-family offices, Registered Investment Advisory (RIA) firms, or private client groups at large firms. This is the title I choose to use to describe my services over the other alternatives.Insurance agent is a state-licensed professional who is licensed to sell insurance products in different lines of insurance. These products typically consist of life insurance, long-term care insurance, health insurance, property and casualty insurance, and annuities. This profession is closely related to financial advisors. Unfortunately, there is a lot of overlap from both financial advisors selling insurance products and insurance agents promoting themselves as financial advisors. This has obfuscated the line between the two professions. Some financial advisors are licensed to sell insurance, and some insurance agents have become licensed to sell financial service products through a broker-dealer. What is important to note is that while both professions are important in the financial planning process, it is more important to understand what value each can provide to you. I am planning on writing a future post to help differentiate the two and give you a better understanding of each profession when you work through the financial planning process.I Don’t Understand the Economy?The financial sharks are counting on this and make money when you are confused and just investing the garbage they are peddling.Truth is the economy is not that complicated…The 2008 financial crisis was a mortgage industry issue which then impacted real estate crushed housing values and equity markets (stock market prices).Real estate was not the issue.This is one of the reasons we like real estate because:An ever-increasing population in the USA need a place to live. Te demand for housing remained stable while inventory stock remains lagging.A hard asset that is made up of multiple commodities (lumbar, fasteners, equipment, roofing, concrete).Rental real estate which produces income. This is why we are not advocates for owning your home unless you are in an area where the Rent-to-Value Ratios are more than 1%. You find the Rent-to-Value Ratio by taking the monthly rent dividing by the purchase price. For example, a $100,000 home that rents for 1,000 a month would have a Rent-to-Value Ratio of 1%. Most people I work with live in primary markets (as opposed to Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other secondary or tertiary markets) where the Rent-to-Value Ratios are under 1%.Watch as I break down how you can make 30%+ annual returns with simple rental property.I digress… obviously I am super passionate about rental real estate and you can get started here.In 2008 it was the credit markets that failed. In a credit-based economy, everything stops when credit markets seize up … including home loans.Conventional wisdom from so-call financial gurus (Suzie Orman or Dave Ramsey) will tell you debt is bad. They might be bad for most people because most people are unable to control their impulses and purchase things that they don’t Need and too much of what they Want.AAA You can read more about this controversial topic of the use of debt here. Oh by the way, without an influx of fresh debt to fund demand, prices collapsed… including Stocks too. Mortgage and real estate is just where it started in 2008 and likely with all the changes the 1) appraisal regulatory changes to minimize off the wall appraisals by random people, 2) lending standard to not allow people with no money, no job, no income, no assets (NINJAs) to get a loan, 3) no overbuilding of inventory to decrease the demand for housing stock.If you recall back in the 2004-2006 era, George Bush said that everyone should own their own home. This is where the government got involved to incentivize home ownership by only the (clumsy) government can… “Let’s commission the hell out of lending brokers to give every warm body a loan to go buy a home!”The double-whammy of teaser rate resets … and the resulting big monthly payment hikes which sunk a lot of homeowners …After 2009, the Federal Reserve got involved to “bailout” these big banks that commissioned the heck out of their minions to give these loans to unqualified people (sub-prime loans).It seems unfair that the banks get relief from realizing their losses on their financial statements but the government knows that property values are the collateral for all those mortgages. And when values drop, borrowers are underwater on their mortgages and will start to strategically default and just go into bankruptcy and start over again (unlike student loans). The government was like “crap we don’t want that to happen”.Basically, the banks were like a little puppy crapping all over the floor and the government realizes that the banks were incompetent to go outside and help themselves so they went to Petco and bought the puppy some potty-pads so they could salvage the day.This was not cheap and the government needed to pay for it but in a super-spy way. You can google the term Quantitative Easing (QE) as a fancy way of saying that the Government printed a lot of fake money to bail out banks and make sure the stock market did not collapse.Here is how…They just go into a lot of debt with today’s money, say $1 dollar. And just inflate the heck out of the money supply and payback that $1 IOU with $5 dollars that they created.In the meantime to pay back some of the QE and to get some dry powder in case of a market cycle downturn (normal 8-12 intervals) the government is employing Quantitative Tightening.About 2012, Warren Buffett … “I’d buy up ‘a couple hundred thousand’ single-family homes if I could.”Me personally this was about the time I had started looking outside of my local area and started picking up turnkey rentals remotely.I think too many people idol Warren Buffet as a stock guru but in reality, he is buying businesses with good management in place. As an investor that’s what you are doing by buying a rental granted its small potatoes but this whole thing is not a get rich quick scheme. It’s a proven way to get rich slowly where mitigating your risks with insider trading is allowed. This why joining masterminds and getting an edge is so important but hey if you want to learn by making costly mistakes on the way that’s cool too… that’s what I did. After all my ego at the time told me that I was an engineer and I did not need to get help from anyone after all I had all the YouTube Videos, podcasts, and blog articles out there at my disposalWhat is appealing about rental real estate is that you are actually creating value.Too many kids these days just want to get rich by buying something low and selling high whether it is bitcoin, stocks, or selling products on Amazon.“True wealth comes to those who create value for others… Everything else is just a gimick that will not be sustainable in the long term because there is an endless supply of Cheap, Easy, Free people who just want to make a buck” – Lane KawaokaSingle-family property management requires you to provide good stable living conditions for customers.Breakdown of what happen in 2008The most high profile fallout from the Financial Crisis of 2008 was the bankruptcy of Lehman Brothers, the fourth largest investment bank in the U.S. at the time. Lehman Brothers had been around since 1850 and was assumed to be too big to fail – so we thought.Lehman’s financial meltdown was the direct result of its heavy involvement in subprime mortgages or loans out to people who were “subprime” or non qualified borrowers.This is what generally kicking off the Global Financial Crisis.The movie “The Big Short” actually does a good job as explaining it. But they had to get Selena Gomez to get us to pay attention…The public equity markets are based on public securities (stock, derivatives and hybrid securities). Equity derivatives including futures, options, and warrants facilitate hedging transactions. Hybrid equity securities include convertible bonds and bonds with equity warrants.Besides the various classes of equity, derivatives, and hybrids directly issued by Lehman that became worthless, the effects on the general public equities market were far-reaching.Lehman’s failure shook Wall Street to its core and the Dow plummeted 504 points, the equivalent of 1,300 points today in 2019. Some $700 billion vanished from retirement plans and other investment funds. Credit markets dried up, affecting cash-strapped companies like G.M. who couldn’t even get short-term funding.In 2009, General Motors and the Chrysler Corporation declared bankruptcy. In March of that year, the Dow Jones plummeted to its lowest level of 6,594, a decline of more than 50 percent since 2007, and the unemployment rate hit 10 percent. Retirement accounts tied to financial markets fell sharply.Lehman is not the only recent high-profile bankruptcy. Before Lehman, there were Enron and Worldcom. What the stockholders received in those cases was the same thing Lehman stockholders received – nothing – not even an apology from the CEOs and CFOs that ran those businesses into the ground. Those guys went prison. But more importantly a lot of people who put faith in insituational investments lost big time when they were looking for “security.”Mutual Funds must be the answer?Mutual funds, which are professionally managed investment funds including open-end funds (e.g., ETFs), unit investment trusts, and closed-end funds, pool money from many investors to purchase securities and are therefore directly tied to the public equity markets. 401(k)s and public pension funds heavily invested in public equities mirrored the downward spiral of the public markets.Many people generally accept the fact that this kinda of debacle can happen to individual companies but one way to protect against that is to diversify amongst dozens and hundreds of companies in a Mutual Fund.If you hold mutual funds invested in a failed company, the value of the mutual fund will undoubtedly plummet. That is why in the case of 401(k)s and pension funds invested in mutual funds that were in turn invested in failed companies like Lehman, Enron, and Worldcom, employees took a steep hit to their retirement._Stop…. Everything below this line…._…Is only to preserve wealth…. meaning unless you already have $1 million dollars in the bank it is not for you. Sorry its like playing a conservative game when you are down by 14 touchdowns in the fourth quarter.AnnuitiesDespite being touted by the insurance industry as a secure investment, annuities are not immune from economic meltdowns. Variable annuities are tied to market indexes, and during the Great Recession, these annuities were pummeled by the markets. Even fixed annuities, which offer guaranteed rates of return are only as good as the insurance company issuing them. The guaranteed returns are worthless if there is no insurance company around to pay them.If not for a government bailout just weeks after the Lehman bankruptcy, AIG, one of the nation’s largest insurers, would have certainly followed in Lehman’s footsteps. In the worst case scenario, you would receive nothing if the insurance company behind the annuity went bankrupt.Certificates of DepositSimilar to savings accounts, CD’s are insured “money in the bank,” and thus virtually risk-free up, but only up to the maximum FDIC insured amount of $250,000. Like annuities and commercial paper, CDs are only as good as the bank offering them.Did you know Lehman Brothers operated Lehman Bank that offered CDs? With the collapse of Lehman, any CDs over $100,000 (the FDIC limit at the time) were paid pennies on the dollar in bankruptcy. Today, in the worst case scenario, if a bank failed, the most you would recoup is the $250,000 insured amount.Money Market AccountsMoney market accounts offered by banks for interest-earning savings accounts are often used as safe havens during a recession. Money market accounts have a high rate of interest with a higher minimum balance ranging from $1,000 to $25,000. Like CDs, money market accounts are FDIC-insured and are generally considered safe investments up to the FDIC-insured limit. In the worst case scenario, you would be able to recoup $250,000, the FDIC insured amount.Money Market FundsUnlike money market accounts, money market funds are not FDIC insured. A money market fund is a kind of mutual fund which invests only in highly liquid cash and cash equivalent securities that have high credit ratings. Also called a money market mutual fund, these funds invest primarily in debt-based securities which have a short-term maturity of less than 13 months, and offer high liquidity with a very low level of risk.Although they sound relatively safe, money market funds are not immune to crisis. A money market fund aims to maintain a net asset value (NAV) of $1 per share. Any excess earnings that get generated by way of interest received on the portfolio holdings are distributed to the investors in the form of dividend payments.Occasionally, a money market fund may fall below the $1 NAV, a condition which is described by the term “breaking the buck.” The situation occurs when the investment income of a money market fund fails to exceed its operating expenses or investment losses (if any).In the history of the money market, dating back to 1971, less than a handful of funds broke the buck until the 2008 financial crisis. In 2008 however, the day after Lehman Brothers filed for bankruptcy, one money market fund, the $62 billion Reserve Primary Fund, fell to 97 cents after writing off the debt it owned that was issued by Lehman. This created the potential for a bank run in money markets as there was fear that more funds would break the buck.If not for government intervention, the financial pressures from the Great Recession would have caused a run on the financial markets. There is no guarantee that absent government intervention, a run will be prevented in the future, causing money market funds to lose value. Because money market funds are not insured, in the worst case scenario, you could lose all your money.Savings AccountsFDIC-insured, savings accounts are considered one of the safest investment options to consumers. In the case of a bank failure, in the worst case scenario, like CDs and money market accounts, you would recoup the FDIC-insured amount of $250,000.An investor can get an idea of their level of protection from future financial meltdowns by comparing the type of financial instruments they’re invested in and how these instruments fared in the last financial crisis.Public equities and the various institutions invested in public equities like 401(k)s and pension plans are the most exposed and offer the least amount of protection in a meltdown. In the worst scenario, you can lose everything.At the other end of the spectrum of protection are government debt instruments like treasuries that are considered the safest form of investment backed by the full faith and credit of the United States government. In the unlikely scenario that the government goes bankrupt, your government treasuries are safe.Next to government treasuries are FDIC-insured bank products, which offer a fair amount of security but not 100% security as these instruments are insured only up to $250,000. In the worst-case scenario, you lose everything but $250,000.Then there’s everything else in between including commercial bonds, annuities and money market funds. The bottom line is without the backing of the full faith and credit of the federal government or government-backed insurance, every other financial product has full exposure, and you risk losing everything in the worst case scenario.To prepare for the next financial meltdown, look no further than the most recent disaster.InflationAcademically we have been taught that inflation is a measure of the incremental increase in the “cost of things” and a “cost of living” framework. Or a dollar today can buy a lot less 30 years ago. In the end everything sort of remains relative. For example a home today costs $500,000 and a home in our grandparents time might have costed $50,000. Might sound unfair but we forget that our salary today might be $100,000 and grandpa’s annual salary as he rode 10 mile per gallon car was $10,000.Inflation is a bit of a political controversy. Politicians and monetary policymakers (Federal reserve bank) feel public backlash when inflation is too high but small inflation (under 5% a year) can typically be pawned off as a conscience and therefore politicians can keep their jobs. In other words, inflation is not a key performance indicator to most American like unemployment or taxes are, party because the concept is confusing. But inflation is an insidious way of decaying wealth and taking value away from citizens as opposed to taxing people (most obvious).Shouldn’t I buy my home to live in?First off never take financial advice from someone who is not on their way to financial freedom! This includes many of our family and close friend who may seem like they are doing well but could be another victim of American consumerism.Join the movement of high-income earners who are renters cause they did the math and did what made sense. Numbers don’t lie.Learn more about renting in primary markets here.General thoughts of having balanceOne thing I have always preached is “Live where you want and invest where the number make sense.” So you live in a cool place like Hawaii, California, Seattle, or New York and you worked hard to get to where you are now. Well good for you!Keeping Up With The JonesesWe are the average of the five people we are in proximity (or media we unconsciously consume).Its very typical that our spending habits mimic that of our their neighbors. If your peer group have their kids in private school, you’re probably going to put your kids in private school. If your friends like to go on fancy vacation you will likely too. Look at the cars we drive in comparison to those around us. [This is one of the reasons I chose to move to Hawaii where most people drive Toyotas as opposed to where I lived in Seattle where everyone was talking about their freaking Tesla]. A constant story we tell ourselves as parents is to spare no expense when it comes to our kids… so we send them to music lessons, play on a traveling sports team, or have a cell phone when all their friends are doing it. Look I get it you want to give them every advantage possible but nothing great came out of lack of hardship.I used to do an exercise where every 6-12 months I would brainstorm what I would need to be next level happy from a materialistic point of view. Many of these things – no judgment on myself was what kinds of cars I would have, not having a commute to work, or having that next cool computer. The takeaway after writing this stuff down over the years was that this perverbial bar aways went higher and higher. The lesson learned is to take all this money talk in moderation. You need to build some wealth and financial security. You also never know when you’re going to die or be able to take that vacation not in a wheelchair or confined to the hotel tourist trap bar. It’s okay to spend money on stuff you want but you need to make conscious decisions and live as best you can with the consequences.Why real estate is the answerWhy is it that real estate is a large part of the wealthy’s portfolio?Real estate (not particularly your primary residence) is I.D.E.A.L.I Stands for IncomeThe property produces income after it pays for expenses. This is called Cashflow and it is what puts food on the table. This is a concept that most investors and regular people never understand… because most invest for appreciation or capital gain which is sort of like gambling. Forget terms of “compounding interest,” “investment fees,” “risk” and “interest rate.” Cash flow is the focus of most everything you work for in your plan – its the endgame that retirees live by and you start with the end in mind – not building a pile of money like traditional wealth building – build streams of income today. Without cash flow nothing happens.Rule 1 of investing is don’t lost money and don’t invest for appreciation (but its nice when it happens)!D Stands for DepreciationProperty depreciation can shelter the property income that is distributed to investors. The government engineers certain interests through the tax code, in order to encourage us to put our money in particular spaces. By creating ways to write off a portion of their investment cost through depreciation, they encourage people to invest in real estate. House flippers don’t understand this as they make big sums of money (taking large amounts of risk in the process) but pay taxes at the highest rate.E Stands for Equity GrowthEquity comes from the fact that a portion of your mortgage is being paid down by a tenant or someone using the property. How nice of them. You can download a mortgage calculator to know exactly how much money are are making in equity growth based on the amortization schedule by signing up for the Hui Deal Pipeline Club.A Stands for AppreciationHere is the investing for appreciation/capital gain part of the equation. One myth that people don’t realize is that Appreciation is concerned with keeping the value at or above the rate of inflation, and can come from two sources: a natural increase in property value over time (market appreciation), or value-added activities (forced appreciation) such as remodeling, expanding or improving the property in some way. Here at Simple Passive Cashflow - Simple Passive Cashflow appreciation is the icing on to of the cake and we focus on cashflow cause that is what we can control. We also don’t see our primary residence as an investment since it barely keeps up with inflation.L Stands for LeverageLeverage is available via funds from institutions and raise capital from investors. Positive leverage is when the after tax unleveraged yield of the property exceeds the aftertax cost of funds. Taking on more debt is seen by most as irresponsible, almost a sin. But most (of those people) are broke. The truth is that debt is a tool.For a dive into the numbers go here.I peeked at other SPC content and I feel like I need to buy rentals! But how do that?As an engineer out of college, I made pretty good money was able to save for a few years for a conventional 20% downpayment on a non-owner occupied rental.There are a million ways you can earn more money. Sell drugs, sell things on eBay or Etsy, start a wedding emcee business, get a raise at your day job. But they are all trading time for dollars.Something that I am consciously aware not to do but in the beginning that’s you have to do. Trust me as the rockstar Sting says… “There is nothing more satisfying than earning your wealth”.This part is going to suck…You may need to start a budget because you might be your worse enemy with your out of control spending. Regardless, you need a savings plan in order to be aware of how much you’ll need to set aside in order to make that down payment.Again you are going to need a 650 credit score, 50% Debt to income ratio, and 20% down payment for a rental. You can listen to this podcast and this podcast on the details. That means if you are buying a $100,000 home that rents for $1,000 a month you will need $20,000 for the downpayment and at least $5,000 for closing costs and some cash reserves in case some issues come up.You can house-hack which is where you live in the property and get away with a 1-10% downpayment via a FHA loan but this is a little ghetto and its lame living with your tenants. But hey beggars can’t be picky if you don’t have the cash. And as the saying goes successful people do things most people are unwilling to do.4 Percent RuleTraditional financial advisors had a rule of thumb where you should aim to build a portfolio in order to comfortable withdrawal at 4% a year to live off of. This means that a $1 million portfolio would allow you to withdraw $40,000 in Year One, and $40,000 adjusted for inflation every future year.Unfortunately with rate of inflation, which is 3 percent (we will debunk this much later in this article).How to Save for a Down Payment1. Create a BudgetThis may seem pretty lame but you may be surprised of the holes you have in your wallet. I’ll be honest even after having 2,000 units of my own I am amazed on how much I spend on dumb things. I2. Sell Your CrapIf you make $30,000 a year and spend $29,000 of it you are dealing with a very fine margin. Something happens and you are screwed. I work with a lot of high net worth clients and one of the first things we do look for low hanging fruit. I should not tell you this because it will make you sad but its reality that many of these guys will have 300-600k in their 401k just making less than 5% or have a lot of equity in real estate making under 3% a year. Read more about this here.If your net worth is $2M or $200 you need to look for low hanging fruit to get the equity working (harder than you).One of those ways to get that momentum is to sell items that you no longer need or want.Watches and jewelry are obvious choices. When I got out of college and was a cheapo I went to my parents house and sold all my old Nintendo and Super Nintendo games.Keep in mind when you buy things especially tech which things have good salvage value. Which is why I try to buy the best which have a good resell value.If you are using Craigslist or Facebook Marketplace be safe by meeting people in a public place but if you don’t like doing it and your net worth is under $100,000 you need to suck it up.3. Set Aside Unexpected MoneyAnytime you receive money unexpectedly like a gifts, tax refunds, work bonuses, or stock dividends, put it into your down payment savings account.*If you are looking forward to getting a tax refund you need to stop thinking like the average broke American. Increase you W9 witholdings so you owe the IRS money after you do your taxes so you don’t give your government a tax-free loan. I have typically claimed 19 exemptions. Also consider to extend your taxes each year…. you are not filing late…. you are just decreating the IRS window to audit you by 6 months.4. Take on Extra WorkFind a part-time job or side hustle to bring in some extra money? Better yet find something you are passionate about. In the future (once you are financially free) you will look to do things not of the money but something you are passionate about. In addition, in the process you can use this side gig as a means to change your tax situation and allow you to be creative in what you write off for taxes.*Magic – when you start to get more cashflow success will breed success. Your motivation will go up as you see a direct relationship between “tightening the belt” to building streams of cashflow. Your next step is to start going through the rest of the investing knowledge so you can effective grow your wealth.Paying Down DebtA strategy people use to pay down their overall debt is using low interest debt like HELOCs (home equity lines of credit which require equity in a home you own).I don’t think this is a good strategy unless you are in capital preservation mode (net worth of over $1M).Here is the tutorial page on how to do it.Warning – If you have been following the holistic wealth building strategies at SPC you understand that debt is a tooland you need to use said tool to acquire more and more assets that produce more income, more tax write offs, and build your net worth.MindsetThe Seven Deadly Sins framework is a great way to think about personal finance. Humans are funny we avoid what is good for us and we are super smart in ways we trick ourselves to find comfort in the now even though it hurts our future self.As a refresher the 7 Deadly Sins are:Vanity (or Pride). An inflated belief in your own abilities. When you are more concerned with what others think about you it is a sign that you do not have a mission of your own. You need to learn The Subtle Art of Not Giving a F*uck.Envy. The desire to have what others have. This is the classic keeping up with the Joneses (cars, clothing, TVs, boats, private schools for our kids)Gluttony. Consuming more than you need, especially with regards to food and drink. I constantly deal with what we call “lifestyle creep or inflation” where you get used to nicer and more expensive things and you are never being satisfied with what you already have. So many of our clients feel they don’t have enough even with a household income of over $300,000 yet they are unable to save more than $10,000 a year. This can also mean not taking care of your possessions. Replacing the things you own before they need to be replaced.Lust. A passion or longing for bodily pleasure. This sort of goes hand in hand with Gluttony. This can also mean focusing on small, easy things that make no real difference (clipping coupons, walking 1,000 steps a day, putting our loose change in our piggy bank) that do little to move the needle in terms of our goal yet give us a warm and fuzzy accomplished feeling.Wrath (or Anger). The tendency toward indignation and the desire for vengeance. Hatred toward others. I saw this a lot when I was working at my JOB where people in all rungs of the company had a victim mentality toward’s the system whatever that maybe.Greed. The desire for material wealth or gain. This sort of goes hand in hand with Gluttony.Sloth. The avoidance of work. Laziness. It can also mean a failure to act or make use of your talents or step out of your $100,000 a year job to do something meaningful. This can also be mean an avoidance to stepping our of your comfort zone to buying a remote rental. This can lead to aimlessness without purpose or direction and thus spending money mindlessly. When I purchased my second rental I was locked in on my goals and my ability to save money intensified because I wanted financial freedom – I used good or bad energy but it worked to get to my goal. Ignorance is another form of Sloth as we put blind faith in outside advisors — or the news. Question everything!When starting out on a journey and being “newbie” status often times we are our worst enemy. We go through life with our handbrake on. Once these limiters are addressed can we focus on what is next.

Those who put those thought in your head are liars, seeking to defend a system of oppression. Here is the truth of the matter: she wants to transform a corrupt system into a system based on equality and justice. If racism is the American way of life, then I suppose it fair to say she wants to dismantle it.Here is what I found when I tried to understand why the far right, which has been taught by a racist President, to hate Omar, uses only one word she actually said, which is “dismantle” and then tack onto it a host of words she did not use.Here is what I wrote when I checked out a dozen headlines about what she was dismantling:I just read a dozen articles, all by far right publications, that present the following:Omar is calling for “dismantling:”“our way of life”“the core of of the United States”“our political and economic system.”“ America’s system”“ the US”“the US economy”“America”She of course used none of those terms since the only word in all those perversions of her actual words came after the one correct term “dismantle” was closed off my quote marks.Here is what she actually said: she called for “dismantling the Minneapolis police” so that a public safety agency could be rebuilt that serves the community. And she called later for “the system of oppression.”Those who equate oppression to the US political and economy system, America, or the core of the US, or “our way of life” are saying something far worse than Omar…they are saying we ARE a racist nation, corrupt and rotten to to the core, and this horrible person wants to change that.Her actual words were: ““We can’t stop at criminal justice reform or policing reform,” she said during an outdoor press conference. “We are not merely fighting to tear down the systems of oppression in the criminal justice system. We are fighting to tear down systems of oppression that exist in housing, in education, in health care, in employment, [and] in the air we breathe.”It is indisputable that there is discrimation in housing, education, healthcare, employment, and in the kind of toxic environments that poor blacks endure.TAP : The American Prospect summarizes: “More than 50 years after passage of the Fair Housing Act, black-white segregation remains strikingly high and imposes unfair burdens on black people even when they have the same income or education levels as whites. Indeed, housing segregation, which government officials engineered as a tool of white supremacy, poses one of the largest threats to racial equality in America today.Typically, higher levels of education and income translate into access to high-opportunity neighborhoods and the possibility of accumulating greater wealth. In the case of African Americans, however, residential segregation impedes access to middle-class neighborhoods with strong schools and strongly appreciating home values.In fact, black-white residential segregation helps explain two astonishing facts: Middle-class blacks live in neighborhoods with higher poverty rates than low-income whites; and African American households headed by an individual with a bachelor's degree have less wealth, on average, than white households headed by an individual who lacks a high school degree.”In education, most blacks attend schools with much lower funding and, as reported by the New York Times: “Racial segregation in public education has been illegal for 65 years in the United States. Yet American public schools remain largely separate and unequal — with profound consequences for students, especially students of color.Today’s teachers and students should know that the Supreme Court declared racial segregation in schools to be unconstitutional in the landmark 1954 ruling Brown v. Board of Education. Perhaps less well known is the extent to which American schools are still segregated. According to a recent Times article, “More than half of the nation’s schoolchildren are in racially concentrated districts, where over 75 percent of students are either white or nonwhite.” In addition, school districts are often segregated by income. The nexus of racial and economic segregation has intensified educational gaps between rich and poor students, and between white students and students of color.”As for healthcare, the fact is that lack of access to healthcare for many African Americans, in a addition to their disproportionate poverty, means, according to Health Affairs: “When race and education are combined, the disparity is even more striking. In 2008 white US men and women with 16 years or more of schooling had life expectancies far greater than black Americans with fewer than 12 years of education—14.2 years more for white men than black men, and 10.3 years more for white women than black women. These gaps have widened over time and have led to at least two “Americas……We found that on average, blacks and Hispanics with sixteen or more years of education lived 7.5 years and 13.6 years longer, respectively, than whites with less than twelve years of education. This is a clear demonstration of the profound influence that education and its correlates have on length of life. Yet disparities within racial and ethnic groups persist even at the highest level of education. The same highly educated black men and women who live longer than less educated whites still live about 4.2 years less than comparably educated whites”Differences In Life Expectancy Due To Race And Educational Differences Are Widening, And Many May Not Catch Up“Disease-causing air pollution remains high in pockets of America -- particularly those where many low-income and African-American people live, a disparity highlighted in research presented at the annual meeting of the American Sociological Association in New York.The nation's air on the whole has become cleaner in the past 70 years, but those benefits are seen primarily in whiter, higher-income areas,” ScienceDaily: Your source for the latest research news“(The) pattern of racial segregation isn’t random. These neighborhoods have been defined by a dark history of redlining (the systemic denial of benefits, like loans, to individuals, usually along racial lines) and decades of housing discrimination and unequal resource allocation.” Blacks are pushed into more polluted environments.This discrimination is not ancient history:“Wells Fargo to pay $175 million in race discrimination probe ...www.reuters.com › article › us-wells-lending-settlement July 12, 2012Bank of America fined $335m for minority discrimination - BBC ...www.bbc.com › news › business-16296146 Dec 21, 2011”Fifty years after the federal Fair Housing Act banned racial discrimination in lending, African Americans and Latinos continue to be routinely denied conventional mortgage loans at rates far higher than their white counterparts.This modern-day redlining persisted in 61 metro areas even when controlling for applicants' income, loan amount and neighborhood, according to millions of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative Reporting.The yearlong analysis, based on 31 million records, relied on techniques used by leading academics, the Federal Reserve and Department of Justice to identify lending disparities.It found a pattern of troubling denials for people of color across the country, including in major metropolitan areas such as Atlanta, Detroit, Philadelphia, Rockford, Ill., St. Louis and San Antonio. African Americans faced the most resistance in Southern cities - Mobile, Alabama; Greenville, North Carolina; and Gainesville, Florida - and Latinos in Iowa City, Iowa.” Chicagotribune/Feb 2018Criminal justice is also rotten with systemic racism:“Black male offenders continued to receive longer sentences than similarly situated White male offenders. Black male offenders received sentences on average 19.1 percent longer than similarly situated White male offenders during the Post-Report period (fiscal years 2012-2016), as they had for the prior four periods studied.”Demographic Differences in SentencingEverything Omar said is true…….she wants us to “dismantle the system of oppression”in the police (blacks are killed 2.8 times more than whites (per capita) and are in are unarmed in 50% more cases than whites who are killed; she wants us to dismantle an economic system that relegates blacks to inferior neighborhoods and schools, and thought this, to inferior healthcare, leading to shorter lives. And to top it off, they are forced to live, by bank criminality and impoverishment, in the most polluted and unhealthy neighborhoods.I find it hard to think that an decent, informed person would disagree with her, and it is clear that ending these systems of oppression will make America much better, even great.I welcome dialogue with reliable sources to back up claims with evidence, as I have done. Hating Omar, which Trump has promoted, has led to twisting her words into thoughts she has never uttered or entertained. She wants to rescue America from the cancer of systemic racism…..and who doesn’t except the neo-nazis, the white suprematcists, and the race haters?