Financial Freedom - Part 5

Part 5 - Private banking, and the resultant money on autopilot.

Make sure you read Part 1, Part 2, Part 3, and Part 4 before continuing. 

Let's assume you have found financial freedom, and that you are sitting on 6 million in the professionally managed fund discussed here, providing a nice sub-par $600k/yr. at 10% annualized returns. No need to work anymore! Exciting stuff.

Does it mean one stops working? Probably not. Anyway, we will assume one can stop working.

Out of the +10 million made, 6 million is sitting in that professionally managed fund creating passive income. This leaves 4 million.

If a professionally managed fund worth their name work with the 4 million quarterly dividends are normally paid out. The dividends paid on a $4 million dollar position are pretty hefty. So hefty, that it outdoes what? The interest rate one would use to borrow money.

Why do I say that? Because welcome to private banking. When a person enters a certain level of net worth, money and production of loans become easier. Why? The client is a sure thing for them. 

Why is this important to grasp?

Now one can take 4 million out in the form of a loan at a prime rate. So long as the rate of return in our passive income portfolio is greater than Prime Rate, there exists a net profit. 

Example: 

$4M Loan at 6% Interest = $240k interest 

2% quarterly dividends = $80k per quarter / $320k per year

10% annualized returns = $400k per year

Dividend + Annualized Return - Interest = Profit

$320,000 + $400,000 - $240,000 = $528,000 in passive income profits.

Is it truly true that debt is bad? Looks like not only our $4M in debt made us money... it paid for the interest too.

What I like to call money, on autopilot.

I’ll ask you again. What’s the goal?

In my opinion, finding the best way to the first $10M sustainably.

Because the rest tends to get easier from there.

Obviously these are examples, and every person caters to what they want or need, and determine the risks associated with getting there.

So, I ask you again, is it worth mastering your psychological hardening, education, and financial literacy to one day be able to put money on autopilot? 

I won't make the assumption for you... but I certainly thought so.

That game planning call is an option for you now. It's meant for those people who want to learn how to begin trading and respect that it's a skill that will take sometime to learn... but once learned can be a powerful tool in the grand scheme of this game called financial literacy.

 For those ready to book their call, click here and find out if working with me is going to be a good fit for you.