≡ Menu

Long Term Investing with Kate Holmes, Belmore Financial

Today’s discussion is with Kate Holmes CFP, the founder of Belmore Financial and an experienced expert in the industry who takes a different approach to the client and advisor relationship.

Kate emphasizes the importance of building a relationship with her clients so that they are like friends who can discuss not only the more important things in life, but in identifying those things and aligning your finances to reach those goals. In a world where everyone seems to be so willing to “follow the leader” and copy generations past, Kate finds what makes her clients happiest and works towards that.

Each individual is different, and so each conversation and financial plan is different as well. Working for the same employer your whole life and hoarding cash for retirement isn’t always the best plan for everyone, and so traditional advice oftentimes doesn’t apply.

kate holmes, belmore financial

Our conversations segways a bit into one of my other great passions, entrepreneurship, and we talk about why that path might not be as risky as you think.

We talk about the different mindsets that Millennials have towards the world, as well as the unique challenges we face, and the lessons we can learn from previous generations. With this fast paced world of the new internet age, this part of our conversation is can’t miss.

Finally we discuss the differences between a Roth and a Traditional 401k, a recommendation for the minimum that you should be investing, company match, active vs. passive funds, and the essential long term mindset.

I really enjoyed our discussion about long term investing, as I think it encompasses everything you need to know in a short few minutes. It’s easy to get lost in technicalities, but your success will depend on you sticking with a long term strategy. You can find that discussion in part 2. [click to continue…]

Real Estate Investing Without Debt

Sorry Donald Trump, this post isn’t for you. It’s widely unknown that you can start real estate investing without a ton of money and without getting into debt. Heck, you can even get started with as little as $100. I’ll show you how.

But first, let’s understand why real estate investing is important. An important metaphor will put you in the right mindset before you jump in, which will help shape your success. Allow me the time to explain how these things will contribute to your success, and soon you’ll see why.

Monopoly Mindset

When I was a kid, I naturally found the concept of investing to be fascinating. Let’s be clear, I never knew the term, or understood what it meant in the slightest. However, I gravitated towards a game called Monopoly. I found it deeply fascinating. I could play it for days on end without getting bored, if only I could find someone with the patience to play along.

Of course, I found Monopoly fascinating because I understood it. Like fitting pieces in a puzzle, the strategy behind Monopoly quickly became clear to me. I quickly and intuitively learned best and worst practices, and was able to anticipate future scenarios based on my experiences to be able to adapt on the fly.

For example, I understood that owning the coveted Boardwalk property was essentially meaningless unless you also owned Park Place to complete the monopoly.

Even at such a young age, I was unknowingly learning essential concepts to investing such as overvalued and undervalued. It didn’t take long for me to understand that holding the “orange” and “purple” properties would be the key to my success. They were extremely undervalued by most average players, and they were relatively cheap when you wanted to add houses and hotels.

The price to reward ratio on this row of properties was substantial.

real estate investing

Looking back with 20-20 hindsight, I see that I quickly understood and mastered this game. In fact, if you go to Google and look up the best Monopoly strategy, you’ll see that owning a monopoly of the “orange” properties is the highest mathematical probability of you eventually winning the game.

Yet I learned this before Google, because it just made sense. This valuable skill carries on to the world of investing, and I feel it’s a big reason why I’ve been successful and now find success teaching others with this blog.

Real Estate Investing: Income

There was one other thing about Monopoly that hooked me since my first taste of victory. I LOVED the idea of getting paid a passive income.

If you’ve ever played a full game of Monopoly, you’ll realize that the players who quickly grab as many properties as they can usually end up winning. The reason behind this is that when opponents land on your properties, they have to pay the owner of the property “rent” as a consequence.

Therefore, the players with the most properties stand the greatest chance of winning. They have time on their side, as it’s only a matter of time as rent payments continue to come in. As these payments come in, smart players reinvest their excess cash into “upgrading” the properties with houses and hotels, which raises the rent each time players re-land on them.

I don’t know what it was that was so gratifying about receiving the rent checks from players. Like a true capitalist, I fell in love with this feeling. You could argue I’ve never fallen out. But that’s for a different time.

Anyway, it took just a couple games of winning for me to understand how to play this game. It’s not won in the beginning, but at the end. With the right plotting, buying, and trading, I could usually position myself to be the first or second person with a “monopoly”. After that, the power of compounding takes care of the rest naturally.

Looking back, I can see why some people can get really turned off by this idea. For starters, once you are behind it is almost impossible to come back. Similar to how those stuck in the poverty cycle feel, the Monopoly system is just designed to reward the owners only. This is why so many people give up on investing.

So with this post, I’m going to solve your pain twofold.

Number 1, I’m going to show you how you can start real estate investing today, with little money and absolutely no debt obligation on your part.

Number 2, I’m going to give you some hope if you’ve given up on the idea of investing. Maybe you feel like the losers of Monopoly, but with your life. Maybe you have friends or family who feel this way. Send them this link. They need to hear it. It may just change their life for the better.

The Importance of Cash

Let’s look again at the Monopoly metaphor, because it helps us understand the world of real estate investing even further. Earlier in the post, I shared with you how I was able to uncover the best strategy for winning Monopoly. And really it applies to investing as well.

However, both investors and Monopoly players get too eager and fall into the same trap. In Monopoly, yes you must absolutely buy as many properties as you can, especially in the beginning. It really is a land grab race.

BUT, you have to do this while still keeping enough cash in your hands. If you don’t, then one bad dice roll can leave you with a larger obligation than you are able to pay, which will lead you to having to mortgage one of your properties. (Again, monopoly term. This simply means you sell out of the property at a very low price compared to its value)

Investing, and especially real estate investing, is exactly the same way. Ask most real estate investors, and they are focused on cash flow. They don’t mind the debt, especially if other people are paying for it… i.e. renters. During optimal conditions, this type of strategy is fine. But leave it up to just one bad “dice roll”– recession, lay off, natural disaster, you name it– and suddenly cash flow doesn’t matter as much. It’s those type of worst case scenarios that wipe out real estate investors and leave them bankrupt and broken.

Take the story of Dave Ramsey, for example. He once was a reckless real estate investor, and he paid the price dearly. Back when he was in his mid 20′s, Dave had an impressive portfolio of properties totaling over a million dollars. However, his total debt liability on these properties was also over a million dollars.

Dave was a smart guy, and according to traditional real estate wisdom, was doing all the right things. They’ll always tell you to use other people’s money, and leverage yourself up as long as you have a healthy spread. He knew all the tricks, and he had the market knowledge. But he was foolishly planning for happy sails, and didn’t consider the worst case scenario.

One day, it all collapsed for Dave. He went bankrupt, lost his portfolio, and almost lost his marriage and family. All because he was all too eager to get into debt.

Nowadays, he coaches people on getting out of debt. He once again has a multi-million dollar real estate portfolio, but this one is built on a solid foundation. With plenty of cash reserves and no debt in sight, Dave Ramsey can just sit back and collect rent checks for the rest of his life, just like a Monopoly master would.

Hope for Economic Losers

Maybe now you understand the importance of debt free real estate investing, but still feel like you can’t win. After all, you never were the “winner” in Monopoly. Maybe you’re “losing” right now. Surely there’s no hope in this “rich get richer, poor get poorer” society, right?

WRONG. You do have hope. Economics doesn’t work like Monopoly in this regard: we aren’t all racing for #1.

In the game of monopoly, there’s a fixed amount of properties. As the game plays out, there can only be one winner because of this single fact. However, we live in a world of INFINITE resources.

Yes, material things such as land and oil are finite. BUT, the internet has unlocked a whole new kind of money, and it’s the money of ideas. Never before could somebody with a simple idea and a few dollars for an internet connection create something greater than himself. Yet I’ve done just that in 17 short months, and many others have done it before me! [click to continue…]

Investing Quotes with Warren Buffett – WW #69

Sometimes, some guys just say it better than me. Here’s some great investing quotes from one of the world’s best investor himself, Warren Buffett.

  • “Rule No. 1: never lose money; rule No. 2: don’t forget rule No. 1″
  • “Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
  • “Time is the friend of the wonderful business, the enemy of the mediocre.”

investing quotes
(Insider Monkey)

  • “Never give up searching for the job that you’re passionate about. Try to find the job you’d have if you were independently rich. Forget about the pay. When you’re associating with the people that you love, doing what you love, it doesn’t get any better than that.”
  • “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
  • “Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway.”

[click to continue…]

Keys to Financial Success with Eric Roberge, Beyond Your Hammock

For today’s interview I’m happy to introduce our guest, Eric Roberge CFP from beyondyourhammock.com. Eric takes a unique approach to money and personal finances by concentrating on designing the life you want, and not letting the traditional wisdom dictate where your money goes.

Right off the bat we discuss Eric’s interesting perspective, as well as the idea behind his website Beyond your Hammock. I felt as though this interview was the perfect fit for my audience, especially those who aren’t afraid to buck the traditional ideas of money and how it should be used.

keys to financial success

I really enjoyed the mindset shift, as well as the metaphor between personal finance and personal fitness. In this interview we share practical techniques to manage cash flow, as well as uncover 3 myths about buying your first home.

If you are someone in their 20’s or 30’s, you must watch this interview. If you are not, you should really share this with someone who is.

The reality of the situation is that we make choices during our 20’s and 30’s that determine how we live in our 40’s and 50’s and beyond, and many of these choices are permanent once made. Before jumping in to these choices headfirst, we should take the time to consider any and all other possibilities and ideas, and find the ones that best fit what we believe in.

That’s why you must watch or share this video. Is there a worse feeling than the one of regret, and to think it could be possibly avoided from an idea shared today… Watch the interview.

I enjoyed this conversation with Eric and I know you will too. [click to continue…]

Caution for 52 Week Low Stocks (Reader Emails)

Time to answer reader questions. These were submitted by email, and you can do the same if you are subscribed to my newsletter. All you have to do is reply to my emails, it goes straight to my personal inbox. Today’s questions come from confusion about ROI (return on investment) and uncertainty with 52 week low stocks… are they a buy?

Thank you so much for that video, it was extremely helpful! Funny how simple it is when explained. Lol

I received your email asking your subscribers about a question they may have that they are struggling with. I thank you again for the video as it was one of my questions I was going to ask again.

With the formula explained, it seems that the ROI is not affected by how many shares you have / how long you’ve had the certain holding for, right? Would an investor calculate the ROI on a monthly bases, as you do on your website, just to have an idea about how their purchases are performing? Then again on a yearly bases to see how it’s performing at that level?

Shifting subjects, I am still trying to understand how dividends work; where does the return money go ? To your account on trade king for example? And then one can take that money and add it to future share purchases? Do dividends affect the ROI percent number?

I personally check my ROI monthly, and yearly as well. I think that’s a good thing for anyone to do. Not that you’d buy/sell every month, but it’s important to know at least a little bit of what’s going on with the portfolio. Too much checking, like everyday, can be a drain on your mental state though.

Yes, for dividends they go back to your account. I should make a blog post or video about this, but you have to call TradeKing if you want your stocks to automatically reinvest the dividends. I did this myself, unfortunately they don’t have an online option yet. It’s called dividend reinvestment (or DRIPs).

You can call just once, and set it for all future transactions. Takes less than 5 minutes, and is definitely worth it. To get the kind of compounding returns that you see talked about (like my email newsletter about Grace Goner) your stocks must DRIP.

Dividends and ROI

Dividends do affect ROI, and it depends how you calculate ROI. For me, I calculate just on a per-share basis to show on my website. So, when I add dividends to my ROI, I am only adding one share worth instead of how many I might actually buy.

In the end, it doesn’t make a difference whether you calculate per-share or with total amounts. This is because ROI is a percentage, and so as long as you do your math right you’ll get the same percentage. The ROI on TradeKing will be slightly different because it includes transaction fees like we discussed earlier.

52 week low stocks

Lately has been an extremely strong bull market, and from learning about value investing, I am wondering when the next crash will be ..

Since my job is seasonal, I’ve been working about 10-12 hour days, and haven’t had much time to tinker on the ADVFN and finviz sites, and still trying to gain an understanding of searching for undervalued companies. I think I am also nervous / unconfident to purchase into a company that is on a low on the graph, because It seems counter intuitive , not knowing if it will go back up or not. Sodastream is one example that just appeared on the 52 week low chart. Same as coach , and bed bath beyond , lulu lemon, etc

Great point about 52 week low stocks. Your intuition is treating you well, it’s signaling danger. Some of the biggest gains but also biggest losses can come when trying to catch a falling knife. It is the Achilles’s Heel of value investing. It’s why I’m so passionate about value traps, because one bad investment can wipe out all the other over performance of a value investing strategy.

For me, I use my Value Trap Indicator to make sure a stock on the 52 week low isn’t a value trap. You can find free access to this in the subscriber’s zone. Also it’s important to understand why a stock is trading that low. Is the market just nervous, or does it have good reason to be?

A look at the financials and history of the balance and income sheets may help you decide this. You still want to see general earnings growth (long term) and a generally growing shareholder’s equity, among other things. [click to continue…]

Stock Market Crash 2008 will Repeat (Here’s why)

Marketing is designed to take money from you. Let me repeat that. Marketing is designed to TAKE money from you.

Think about all the products you see on TV. Nobody advertises housing, or grocery essentials. Note the word essentials. Things such as food and shelter will always be bought by people, and so those industries don’t need much advertising to survive. (Unless you’re talking about the fast food industry, which of course are convincing you to pay premium prices for garbage food)

No, chances are that if you see a product on TV, it’s not something you need. Basic food and shelter is always in demand, a luxury not many products have. Instead, it’s the job of a marketer to make you believe that you need their product. Really you end up justifying something you want.

Why am I telling you this? Because I want you to wake up and open your eyes. Most of these marketers don’t care about you and your well being. They just do their best at what they do. Convincing you to let them TAKE your money. The money you slaved away for. To buy things you don’t need to impress people you don’t know.

stock market crash 2008

This may seem harsh but it could just save someone from a world of hurt. The thing is, people look back at the stock market crash 2008 as if all was so easily preventable. Remember that scary crash that had people running for the exits. In hindsight everything looks 20/20. But really the victims were just as helpless as the victims of today. [click to continue…]

26 Things You don’t Understand about Millennials and our Money

1. Paying for music is stupid
We grew up in the age of Limewire and Napster. Buying albums was so yesterday. If we want to support our favorite artist, we will go to their show. They will see more of that money anyways.

2. I have a Netflix account, but I’m not paying for it myself
Again see point #1. It doesn’t make sense to pay-to-watch as much as pay-to-listen. That’s just how it is now when you can easily torrent a series, if we weren’t too lazy. Besides, our parents don’t use their Netflix account much anyways.

3. When it comes to clothes, we KNOW how to find a good deal
There’s a reason why Macklemore’s “Thrift Shop” song got so popular. We are the generation that is getting shafted moneywise (more on this later). We learn these skills out of necessity.

4. Vacations are a damn luxury
And we are grateful as hell when we get to go on one. While older folk might be as bored with a vacation as they are with their marriage, we appreciate every moment of our vacations. Between juggling outrageous student loan payments and ridiculous rent prices, vacations become a big deal.


5. You don’t understand my student loan payment
I listened when you said that you paid your way through school. And how you walked uphill in the snow both ways. It’s commendable. But you really don’t understand the state of college tuition, especially in the last 30 years.

From 1982 – 2007, the average college tuition has jumped 450%, while median family incomes have only grown 150%, and the CPI has only grown 100%. It hurts.

6. Don’t underestimate the return on investment of a set of ping pong balls and cups
For less than $5 you can turn a boring kickback into an exciting rager (well, somewhat). Anyways, there’s nothing worse than getting a party together and then realize someone forgot beer pong materials. It’s a Millennial thing.

7. We pinch pennies so we can splurge at EDC or Coachella
You can choose to spend your money on things or experiences, and many of my wise peers pick the latter. While I’m personally getting too old for this kind of thing, I’ve been in that scene before… and you’d have to be there to get it.

8. We’d rather split the check in 4’s than have one person pick it up
We’re young and poor damnit! Sure it isn’t the quote “right way” to do things, but until we become moneybags like the Boomers you’re gonna have to deal with this one.

9. Your lack of tipping is classless
Sure you didn’t like the way that server dressed, looked, or spoke. But they still served you, and they are struggling to get by. Remember how big our student loan payments are? Try to understand that the Millennial you just stiffed with no tip is struggling harder than you know.

10. Coinstar is awesome
Finally a way to get ahead in life. Enough said. [click to continue…]

Stoic Financial Discipline (SFD)

Do you know what the biggest problem in the financial sector is? It’s not taxes, the Fed, inequality, or the government. Our country’s biggest financial problem is that not enough people are investing.

The numbers are heartbreaking. 6 out of 10 Baby Boomers have plans to work after age 65. Some of them are unfortunate, sure. But the majority of them have just plain given up on money.

financial discipline

Lately, I’ve been considering myself an obese consumer of knowledge. It’s getting addicting, and I’ve been experienced positive fruits from this pursuit. Something I’ve noticed along the way has to do with how people act, behave, and learn. After all, my life’s passion behind this blog is to make you money in the stock market, mad to do this you have to learn.

I’ve noticed that there’s a subtle difference between the people who quit and the people that don’t. The people who don’t quit got “quick wins”, especially in the beginning of their learning process. The people who did quit didn’t get these quick wins and instead got discouraged, which led them to quit. This applies to all aspects of life, whether you are talking about learning skills or even a new way of living.

Do you see the problem with this?

The stock market is totally random and completely out of our control. Good people, smart people, all get burned the same when a recession hits. Trying to change the reality of the market is like trying to change the weather, it ain’t gonna happen.

So beginners who are trying to learn about investing are thrown into the fray, with their results often at the market’s whim.

Still wondering why so many boomers gave up on money? Look no further than the year 2008 and people all around the country are still licking their wounds.

No, we need something better. Your financial future can’t depend on whether the market decides to give you some quick wins or not. What we need instead is a change in philosophy. A change in mindset. Something that doesn’t depend on the whims of the market. Enter Stoic Financial Discipline.

The Idea behind SFD

SFD is a completely different way of evaluating your success in the stock market. Instead of doing what the masses do, which is to obsess about their account balances, you will take a matured approach. An approach that manifests out of wisdom. The only approach that will ever keep you sane, and frankly, the only one that will ever work long term.

The Stoics had a way of persevering during tough times. Their philosophy was born out of necessity due to dire circumstances. It was the Stoics who believed that the only thing you can control is how you react to situations. It was this philosophy that helped POWs, prisoners, and other unfortunate people when they had but little hope. Sure not many of them may have ultimately survived, but sometimes you just must play the hand you are dealt. And Stoicism is all about accepting that hand.

A Stoic Financial Discipline approach also is about persevering during tough times. When fear grips the market, investment bankers are committing suicide and companies are downsizing, that is when SFD will serve you the most. Instead of succumbing to the carnage like blind sheep, you will have a calming serenity and peace. And isn’t that the main goal in the first place?

So what is Stoic Financial Discipline? [click to continue…]

Outstanding Stocks Should be Avoided!!

The stock market is irrational. What is great for business is often bad for stocks. And vice versa. So maybe you are surprised when you read my headline that outstanding stocks ought to be avoided. But I’m going to blow your mind and show you otherwise.

outstanding stocks

Now the whole stock market isn’t victim to this. In cases where things are rational, a company with a solid business should always perform well in the stock market.

But that’s exactly where book theory ends and real life slaps you in the face. How many arm chair economists do you know that are wealthy? If they were so wealthy would they still be teaching in schools?

The problem with theory, especially when it comes to the stock market, is that it always relies on poor assumptions. And the assumption that the stock market is rational is perhaps the worst of them all. It’s also one of the most common. [click to continue…]

Investing in Assets with Nick Kraakman from Value Spreadsheet

I’m happy to announce that I’ve got another great new interview for you today. Our guest is Nick Kraakman from ValueSpreadsheet.com, and he takes his 10+ years of investing experience along with us.

In the interview, Nick talks about some of the first stock purchases he made, and how they didn’t go his way. More importantly, Nick shares what he learned from this experience, and how he has completely changed his mindset and strategy to find success today.

investing in assets

If you’ve been waiting for an interview that thoroughly explains a successful investing process this is the interview for you.

Be sure to check out what Nick is doing both on his podcast, Value Investing Bootcamp, and his website. He’s a self proclaimed serial entrepreneur with a lot of passion for what he does, and a lot of exciting things coming down the pipeline.

Not only do we talk investing, but we also talk money and finance. Some of the advice definitely goes “against the grain”, and it’s counter to what you’ve probably mostly heard. But it’s this mindset shift that needs to happen if you are to find wealth in your life.

As we discuss these topics and more, the first part of the interview includes:

  • Why the “go to school” and “get a job” advice is misguided
  • Spending money on cash producing assets vs. liabilities
  • Differences between buying a company’s products vs. buying their stock
  • How Nick lost half his savings in a few weeks
  • A breakdown of Warren Buffett’s investing strategy
  • How to avoid companies that are about to be bankrupt or in trouble financially

[click to continue…]