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Real Estate is Forgiving

One of the reasons I laugh at all the crowdfunding regulations is that most of the people seeking crowdfunding are looking to fund an idea not a hard asset. These people want you to fund their pipe dream concept with millions of dollars. Money that will be spent on salaries and marketing and a bunch of other things that aren’t tangible and cannot be sold to recover principal if the deal blows up.

Real estate is not like this. An investment in real estate gives you cashflow and a return but its not actually destruction of your principal. This is why so many people prefer real estate to stocks. Stocks, venture capital and many other things can go to zero, real estate does not go to zero. Any money spent on a real estate deal can be recovered.

This is why the crowdfunding regulations in my opinion are overbroad and are meant to regulate the issue of securities of a pipe dream not a tangible hard asset.

I love real estate because it is solid, tangible and it has a strong salvage value even if you have to firesafe it to a wholesaler. I also like it because it is forgiving.

What do I mean when I say forgiving? Well lets say you buy a wholesale deal with the goal of fixing and flipping it. You go over budget and now are at break even. The beauty of this is that since the property will cashflow from rental income you can gradually make your money back WHILE the property also appreciates in value. Here is an example with real numbers.

You find a property with an ARV of $100k. You buy it for $65k with a $20k rehab budget. Potential profit less fees is $10k. Unfortunately your contractor runs over budget $10k and now you are at break even. This sucks. What you are then forced to do is refinance the property and rent it for $1200/mo with a mortgage payment of $600. Over the course of that year you make $7200 in gross profit (since this is a new rehab any repairs or maintenance should be minimal, since it has a mortgage the property tax and insurance are included in the PITI payment). Over two years you made $14,400. After three years you have made $21,600 gross, but the property is now worth $125k. This is a $50k profit. What looked like a loss or break even STILL made money. Just remember this is worst case scenario. Best case you profit $15k and move on to the next deal OR profit 15k via refinance and continue to collect rental income while the property appreciates, WIN WIN WIN (word to Jay Rock).

It blows my mind how forgiving real estate is. You can make mistakes, you can boggle the deal, you can miss fire on the budget and still turn out ok.

On an earlier episode of my podcast with Asia Denson she talked about a flip she did where she bought the property and then rehabbed it with money she found from a private investor. When she finished the property and put it on the market she had a buyer but the buyer walked out. She was stuck trying to find a new buyer which ultimately took several months. All while this was happening she didn’t have the money to pay the lender so she wasn’t making the monthly interest payments. Ultimately she was able to find a buyer and she made good on all the missed interest payments.

This is important because a lot of people don’t do deals because they are afraid of things like not being able to make payments. They are afraid of things like not finding a buyer immediately. Well like Hood Estates says, if you rehab it they will rent or buy it. Because real estate is forgiving and the lender knew he would eventually get paid he wasn’t pressed for the interest payments which gave her time to find a buyer while not making the money. This flawed deal ended up netting her big money.

Family, you are going to make mistakes. Especially if you are new, especially if you don’t come from a family of developers. Your job isn’t to execute a mistake free deal, your job is to do deals and make mistakes. The beauty of business ownership is that mistakes aren’t fatal. You can make money WHILE making mistakes and getting the learning that comes from making mistakes.

This completely flips the employee and student thinking on its head. In those environments they reward perfection (which doesn’t exist so you spend a bunch of time being berated for inevitable flaws). Real life, business ownership and real estate investing reward the bold risk taker who is willing to make mistakes while moving forward.

The beauty of real estate is that even though you are making mistakes, real estate will save you. This isn’t a crowdfunding where it is money that is gone, this is a tangible asset that if worst comes to worst can be sold for a slight loss but never a total loss.

If you are interested in learning how to invest long distance email charles@capitaltodd.com

I encourage you to invest with us and join our partnership.  We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.  We are also going to buy a truck by midyear.  If you want to form your own contact us for a consultation and we will walk you through the process.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

We have an amazing course that will teach you all you need to know about how the stock market works and you can find that here: https://www.udemy.com/what-they-didnt-teach-you-about-money/

Thanks for reading!

Be great, invest well,

Todd Millionaire

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I quit my job

I really suck at being an employee. I just don’t value the exchange of time for money. This is in part because I have seen people who work their whole lives and retire broke while I have seen business owners who work really hard for a few years and live the life of their dreams forever and then leave that life for their kids. To me, working a day job has never been the wave.

My quest for employment was ruined when I read the book the Cashflow Quadrant and was exposed to the concept of business owners, investors, self employed and employees. Employees never get rich.

From there I read and read and read. So much so that I became too intelligent for full time employment as a means to create wealth. I started to see the game they were playing one me. The work really hard for us while we drive what we want and live how we want to live while you struggle. No thanks.

The concept of working for a weekend, working somewhere where you can’t hire or bring on your friends or family, working somewhere that you can’t pass on to your children is not the wave. So today, I quit my job.

The problem with me is that I know too much to work a day job. I don’t mean that in a way that is insulting to those that work a day job. I mean that in a way of knowing what I want out of life in the grand scheme of things. This has made me look bad because I don’t put my all into my job but I put my all into my business. I work for them but I don’t see them as my path so I don’t give it the honor that they might feel it deserves. I don’t value or honor jobs.

A large part of this is because growing up I was always attracted to the finer things. Boats, Rolls Royce, beach front property. I think that most of us feel this way. What I did though was I then looked at the people that owned those things and reverse engineered their life to mine. These people were business owners and investors. Therefore I must become a business owner and investor. Back to the topic of reading.

I read a lot and I am grateful for that. I appreciate it because it allows me to layer concepts on top of each other. This part of my life is called Choose Yourself, mixed with of course some Rich Dad Poor Dad. I also incorporate a ton of Grant Cardone (take a lot of action) and Gary V (product a lot of content) concepts into all those self choosing. You are the bag, secure your self.

We sell ourself short at jobs by selling our time to them at wholesale (in bulk and for low) so they can then resell our time at retail and keep the profit for themselves. This isn’t just unfair to you, it is unfair to your heirs, and your immediate family. That successful business that is deep inside of you that you are trading for $50k/ year is a billion dollar enterprise that feeds families. This is especially true if you have a skill or a trade. Yes there are a lot failed businesses but I think this applies to those with pipe dreams not real trades. A business backed by a skill or trade will succeed.

Last year I told the good folks over at XYZ, LLC that I needed a raise. I didn’t get that raise on the spot but this prompted me to choose myself. From there I put together the real estate platform, the tax platform, the consulting platform and gave myself a raise. That raise actually doubled my salary (which is now on track to double that double in 2019) and allows me to now work for myself as opposed to working for THEM. I told people that the success you achieve in business will then grow exponentially. The more work I do for me the more I build me the more I make. There are no limits on your income when you work for your own brand and then that work compounds. The great thing about business ownership is the work you do in year one can still pay you in year 25. An example is that we went from on client per week in year one to one client per day. Success breeds success.

Now that I work for Todd Capital exclusively my mission is to help as many people as I can, 24/7, 365. This means that I can now serve MY community not the community of Orange County, CA. This means that I can produce more content and change more lives. This means that my community will be further elevated through our work. That alone is amazing. Our people are starving for good folks with skills to bring them back to their community as opposed to forcing other communities to validate them. I am off that. IT won’t ever happen.

Quitting my job allows me to focus more on us and less on them. Quitting my job allows me to elevate to the level I decide to not the level they keep me on. I am excited for what is to come and I am excited about all the people we are going to help in the process. Black business, especially black big business (which is what Todd Capital is) is a quid pro quo. As we elevate so does our staff and so does our employees. This is a monumental moment and I look forward to see what is to come.

If you are interested in learning how to invest long distance email charles@capitaltodd.com

I encourage you to invest with us and join our partnership.  We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.  We are also going to buy a truck by midyear.  If you want to form your own contact us for a consultation and we will walk you through the process.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

We have an amazing course that will teach you all you need to know about how the stock market works and you can find that here: https://www.udemy.com/what-they-didnt-teach-you-about-money/

Thanks for reading!

Be great, invest well,

Todd Millionaire

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Stop Being Scared of Ghosts: Jay Morrison’s Jay Walk episode 2

On the second episode of Jay Morrison’s Jay Walk YouTube series he advises everyone to “Stop Being Scared of Ghosts” (see video here).

This is really good advice that almost everyone needs to hear. What he was talking about is the tendency of people to be afraid of things that might happen. Too many of us stress over potential bad news or negative outcomes.

Don’t be afraid of things before they actually happen

This is the main point of the video and relates closely to the first episode of his Jay Walk series.

Continue reading “Stop Being Scared of Ghosts: Jay Morrison’s Jay Walk episode 2”

Wear a suit even if they don’t wear one

Growing up I was always told to present myself well at all times. When I say at all times I mean “all times”. What this meant for us growing up is you can’t just walk out the house wearing whatever you want on the basis that you are JUST going to the grocery store. This meant that you didn’t wear duwrags out the house. You put your best foot forward at all times.

The funny thing about all of this is that I pushed back against this as soon as I was able to. My first year in college I rebelled against all the things I was taught. I would wear pajamas to my early college classes. I would wear taz house shoes to class. I would wear duwrags to events and to class with tall tees. I dressed like a stereotype, everything that I was not allowed to do growing up.

In doing this I realized that the reaction I got from people wasn’t a reaction that I cared for. People were afraid of me. People would watch me in stores. I looked like a thug and I was treated like a thug by everyone I came in contact with, even black grad advisers and grad chapter members in the fraternity.

This experience in year one of college pushed me to start caring about how I dressed and presented myself for myself. Not because my parents required it. While they were right, I had to experience the reactions for myself to appreciate the lessons they were teaching me.

At that point in life I started taking my attire very seriously. I became obsessed with GQ and all things fly. I read the Fonzworth Book and I just started trying to not show up but stand out. I wanted to look like money (I was a finance major), not like a rapper or the hoodlums on the street. I wanted to look like I owned the building not that I was looking for a job in the building.

At that point in my life I started drifting toward preppy and timeliness attire. I went to the store and bought a bunch of Ralph Lauren polo shirts (some that I still own ten years later), I bought a few pair of Seven for All Mankind jeans, I cut out the sneakers and started wearing boat shoes and loafers. I started dressing well for myself and the reactions from those around me were great. People on campus saw that I was about something so they looked out for me and made things happen on my behalf. The only thing that changed was the clothes I was wearing which then changed how people treated me and also changed how I thought.

As I got through college and into the professional work space I was then challenged again at Edward Jones. EJ has a policy of dark suits, and no facial hair. This was weird for me as I was used to wearing a goatee or a chinstrap beard as the last few things I held on to in my cool guy phase. I adopted both, not by choice, but these are things I still carry on to this day.

These days I work in a casual office. They don’t wear suits or ties and they embrace a casual Friday. This is uncomfortable for a lot of reasons.

Wearing a suit elevates you

It elevates your standing in society and it elevates your mentality. People talk to you different when you are in a suit. You go from Charles to Mr. Oglesby. Your thoughts go from worker to owner. I like this.

Wearing suits opens doors

Another thing that happens when you wear suits is that opportunities come to you. When you wear a suit people wonder what you do, they are interested in what you do.

Wearing suits destroys stereotypes and bias

One thing I dislike about Orange County is that it is very judgmental. People look at you and make an assumption about you based on things outside of your control. What I like to do is take my power back. I do that by dressing well, speaking well and being polite. This flips their thinking on its head. You have to do what you have to do to get what you want. For me, a piece of this is suits.

This is why I will require all my staff to wear suits. This is why I will require my children as they grow up to wear collared shirts. Appearance matters. Appearance impacts how you think about yourself. Appearance determines the opportunities that come your way. I choose the suit life even if those in my office aren’t about that suit life. I dress for where I am going not for where I am. Don’t let your environment dictate how you carry yourself.

If you are interested in learning how to invest long distance email charles@capitaltodd.com

I encourage you to invest with us and join our partnership.  We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.  We are also going to buy a truck by midyear.  If you want to form your own contact us for a consultation and we will walk you through the process.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

We have an amazing course that will teach you all you need to know about how the stock market works and you can find that here: https://www.udemy.com/what-they-didnt-teach-you-about-money/

Thanks for reading!

Be great, invest well,

Todd Millionaire

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How to invest in real estate from long distance – Part 2, Property management is a customer service job

If you don’t know how to treat tenants they will teach you how to treat them.

This is something I have experienced in dealing with multiple tenants who always have issues and aren’t the best at presenting those issues.

Every single month, at the end of the month I know I will get repair requests as people seek to offset their rent or put a dent in our pocket. For the most part we have allocated these into our budget but sometimes we have a heavier repair like a roof repair or a furnace issue. The repairs are usually nothing more than a few hundred bucks here or there.

One particular tenant likes to accumulate a bunch of items and then throw them all at us at the same time. She will get quiet for a while and then send a long text with multiple things to repair. There is now way that all of these occurred simultaneously.

The crazy part is that even though she pays the rent late every month, when the text for repairs comes in she wants those repairs done promptly.

A few months ago we had a repair issue and I gradually took care of the problem. Apparently this wasn’t sufficient for her so she contacted the state to get money for the repair. The state then called me and proceeded to have words with me acting as though we had neglected the property and created an “unsafe” environment for her kids.

After that call I immediately got someone out there to handle it the same day, brushing off the many other tasks on my plate. When tenants say jump sometimes you have to ask how high.

This was a hard lesson to learn. I had to humble myself in the face of a low income, low paying, late paying tenant and do right even though they do wrong. They do wrong in paying rent late and for paying late without paying the late fee. They do wrong by making it difficult to access the property. They do wrong by moving in people who aren’t on the lease. They do wrong by loading up repairs to the point that it is tough to handle and then launching them at us in bulk.

Despite all of these things you still have to be the proper landlord and do right. I learned that there is a reason why WE own the property and they are renters. We don’t see a bunch of repairs and complain about how hard it is, we chop the wood and get it done promptly.

I had to humble myself in the face of the tenant because I was focused on the prize of rental property ownership. I had to learn to serve the tenant, to show concern for their situation, to get moving on their problems rapidly.

It can be difficult to have a tenant, someone who you believe is not on your level as the landlord to talk to you as if you work for them or as if you serve them but in the role of the manager you do. The best thing you can do is give them white glove, five star customer service. This reflects on your brand and it also prevents the authorities from coming out looking for problems.

If you are in the property management business, if you self manage, if you keep the fact that you are the owner of the building a secret, you must humble yourself and work FOR the tenant. It sucks but the pros outweigh the cons. The long game is well worth it.

If you are interested in learning how to invest long distance email charles@capitaltodd.com

I encourage you to invest with us and join our partnership.  We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.  We are also going to buy a truck by midyear.  If you want to form your own contact us for a consultation and we will walk you through the process.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

We have an amazing course that will teach you all you need to know about how the stock market works and you can find that here: https://www.udemy.com/what-they-didnt-teach-you-about-money/

Thanks for reading!

Be great, invest well,

Todd Millionaire

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Y’all gambling or investing?

This morning I saw an interesting tweet. The tweet was a challenge to see who could turn $20 into $100 the fastest. While I admired what they were aspiring to do I had to step in.

I stepped in because this is the kind of thinking I try to beat back when it comes to investing, business ownership and wealth building.

The mentality is the get it quick with not a lot of skin in the game mentality. The millionaire tomorrow from a buck mentality. I see this in a lot of new wealth builders.

My problem with this line of thinking is that it is actually counter productive to the new wealth builder because they rush in, skip analysis, take more risk than they should and they look at investing as a one time event that makes a few bucks, not a marathon that yields wealth that you could never spend.

Another reason I stepped in was because the $20 thinking is another example of both a gamblers mentality and a lottery mentality. Neither of which help create wealth only poor people looking for that miracle. Too many people are skipping the preparation to get wealthy. Those same people are the ones who lose it even if they make it. If you have a little money you likely have a spending problem despite what people on the internet tell you.

Commit to the process

See, by committing to a process you watch your pennies instead of throwing them away. By committing to be an investor and not a gambler you would have more accumulated in the first place. This allows you to make good investments not trashy ones.

We all want to be rich but some of us would be good enough if we just had a solid $200k put aside. That is more than most of you inherited or expect to inherit. You can get there with a process but you can’t get there chasing a something for little to nothing pipe dream. If you only have $20 to “invest” you have deeper problems that need to be addressed first.

Are y’all investing or gambling? Are you looking for the stock market to be your ticket to the good life? Are you hoping that real estate will yield you Gucci and Louis money? If this is you I can promise you that you will lose a lot of money before you make money. Hopefully you have money to lose while you learn.

If you are going to invest with me you need to be an investor. You need to embody what it takes to be an investor. Frugality, long term thinking, delayed gratification, the ability to reinvest your profits, the ability to see what is not there before it is there. Just like certain skills make you a great engineer or a great lawyer, there are certain skills and traits that make you a good investors. Gambling and short term thinking is not one of them.

What I would recommend these people to do is do what we did. Instead of looking to flip $20 four times over (a 400% return, which is hardly ever seen), systematically put $25 aside with a group of your friends. If 10 of you put aside $25 a month for a year you would have $3,000. If you wanted to make $80 out of that $3,000 you would only need a 2.6 return. You could trip and fall over 2.6% in the stock market.

We have to get out the a lot for a little or a lot very quick mentality. This thinking is going to ruin the MFU industry and it is going to ruin flippers who are churning homes into a soft market. ALWAYS think long term. ALWAYS think generational. Don’t invest for a vacation, invest for your kids kids vacation.

While I respect the mindset of investing and using the stock market to make money I am also not a fan of the quick and fast mentality that so many people bring to investing. It doesn’t end well. It won’t end well. People respect investors, nobody respects gamblers.
Are y all investing or gambling?

If you are interested in learning how to invest long distance email charles@capitaltodd.com

I encourage you to invest with us and join our partnership.  We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.  We are also going to buy a truck by midyear.  If you want to form your own contact us for a consultation and we will walk you through the process.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

We have an amazing course that will teach you all you need to know about how the stock market works and you can find that here: https://www.udemy.com/what-they-didnt-teach-you-about-money/

Thanks for reading!

Be great, invest well,

Todd Millionaire

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Yeah, I did that! By @Annettes_Worth

People say you have to go through the programs of Dave Ramsey then Robert Kiyosaki in order to build generational wealth. I’ve been a student of both and have paid off debt then used debt in order to purchase real estate. I’m currently on my journey to financial confidence. Notice I didn’t say financial freedom. Even if you have the money not to have to work for 9-5 income, when you find the formula to making money, you’re not going to stop working when your money machine starts spitting cash back out to you.

Anyway, I ended up purchasing a single family property from an auction site. I pulled from my retirement account, emergency fund, personal line of credit and two of my paychecks that deposited before my closing date in order to make this cash purchase. Then, I went into a susu with my coworker and mentor who encouraged me to start the renovations on this property instead of waiting for  the winter season to end.

I purchased the house in October and the renovations were completed. A tenant was placed in the property by February. I did it! I was able to create a money machine that spit out $1595 a month! The options for my family were endless. I could pay off my line of credit. I could invest. I could help my nephew pay for college. I could put money towards my mother’s mortgage. I could let the cash build and pay for another property. I didn’t have to work overtime if I didn’t want to. There was so much I could think about how this additional monthly income could help my family.

I always wanted to learn about investing in the stock market. Being a long time listener to Ericka Williams, I ended up investing in peer to peer notes through Lending Club, and then later with The Black Seed Group and Todd Capital Investment Club. I was finally connected with people who understood the stock market and was getting familiar with new terms. I learned how to not purchase a stock based on what stock was hot just for that moment and I wanted to learn more. I saw an IG post from FinCon and one of the people in the picture was Teri Ijeoma. My nephew told me he saw a webinar about investing in the stock market and I heard her name again. I watched her webinar and decided to invest in myself and take the Invest With Teri course on learning how to trade in the stock market.

By the end of my 8-week course, I was on my way trading in my simulation account and making mistakes and watching fake money grow and shrink. By trial and error, I learned from these mistakes and decided to make a move that would change my life and my mindset forever.

Honestly, when you hear people say you can make $1000 a day, you tend to think that those results may be for someone else. I was ok with making an extra $100 a day because that would be more than what I would make if my money was sitting in a bank account. In order to be a day trader, you need at least $25,000 in a trade account. I had already decided to do a cash out refinance on the property I purchased above to pay off my line of credit. I also made the decision to make an attempt at day trading with the knowledge I just learned. Guess what happened!  I lost money! I wanted to quit. I had to add more money into my account and wait until the next day for it to hit my account. I went through a bunch of emotions as I saw my balance turn red when I was losing money and the excitement of seeing green when I was in profit. It was literally a roller coaster of emotions because I was investing with money that would have benefited my family in so many other ways. I doubted myself as to why I was trying this new venture. I was already making a good salary as a RN. Why mess with a good thing? I stopped trading and went  back through the material and the beginning of the course that included videos discussing emotions and greed during investing process. This explained exactly what I was going through. I regrouped and created an investment strategy that included limits for myself and even had to take deep breaths in order to control my impulse of wanting to exit the trade when the price was in the red. Guess what happened! I made money! I made small amounts at first: $150, $500, $800, etc. 

Then it happened, I made the highest amount that I have made to date in one day, over $1500!!! This was my pivot moment. This was the day when my mindset changed forever. Not only did I make over $1000 in one day, I made in one day what I made from my rental income in one month!

I love real estate. I can search for properties for hours in order to find deals. Real Estate preserves wealth. However, whatever vehicle you use to make the money to purchase real estate, you owe it to yourself to learn a skill other than your 9-5 income in order to invest in real estate. The trajectory of the potential for my family’s generational wealth has increased exponentially. So there it is, I’m still learning. I’m still a beginner. I am taking the Advanced portion of the Invest with Teri course to add more tools to my tool box. 

Join me on my journey to financial confidence on IG: @Annettes_Worth.

Yeah, I did that!!!

Buy low means buy everything that goes low right?

A lot of people read what I write and assume they know what I know. This is a problem because in making this assumption you assume that you know everything else that I know. What do I mean? This means that you think that because you know principles regarding investing, finance, real estate etc that you have the same understanding as me. Knowing and understanding are two different things.

Knowing is just being aware of something. You know the terms and the definitions. You have a basic textbook and academic knowledge of a subject. Understanding means you know why it exists, why it doesn’t exists and why something in the future should or should not exist.

This thinking is why I can spot a bubble a mile away while others are rushing toward the opportunity. This KNOWLEDGE is why I am avoiding multi family. This KNOWLEDGE is why I am avoiding hot markets with the foresight to see that other major, yet overlooked, markets will inevitably increase in value.

See knowledge is key but too many of us put value on knowledge and not enough on understanding. When I left college I had a knowledge of financial terms. I proceeded to use that knowledge to lose a ton of money.

A lot of people hear me say buy the bad and sell the good and think this principle is a blanket principle. This is the difference between knowing and understanding. Knowing sees a price go down. Understanding sees it go down and looks at all the reasons why it is going down, can decipher if those are valid or invalid reasons and can also determine if this is a temporary drop or a larger problem.

This argument came up this morning when Jamaal asked if we should buy more Netflix because they are down today. My problem with the idea is that Netflix has long been overvalued and is under real threat from competitors. They are a company that is saddled with debt with no light at the end of the tunnel. The moat that they once had is now long gone. If the moat is gone the premium price is gone. Netflix has gone from pioneer to just one of the pack as others are getting in the game with better quality content.

What we think is a momentary blip could be the beginning of a long term reversal for Netflix. The stock is up 47% on the year, 35% in the past month and our position in NFLX doubled in value over the course of the last year. I always say to be fearful when people are greedy. An indication of greed is seeing how much you made in a stock and then trying to make just as much if not more in that same stock. That is how you lose.

The point of this post is that it is important to not just buy what falls. You must instead buy what falls, that should not have fallen, or should not have fallen as far as it fell. That is value investing, that is how Warren Buffet and Munger make their money. That is how I make my money.

Some things fall because they deserve to fall. Some things run up because they deserve to run up. By understanding value and understanding fundamentals you can make sure you make the right call not just the black and white “buy on bad” call. Our goal is to be wise investors not foolish ones. It’s great to know the black and white rules but it is better to know why those rules exist so you can exploit them when they don’t work.

If you are interested in learning how to invest long distance email charles@capitaltodd.com

I encourage you to invest with us and join our partnership.  We are doing a great work and if we keep up the pace we can be into twelve doors before the middle of next year.  We are also going to buy a truck by midyear.  If you want to form your own contact us for a consultation and we will walk you through the process.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

We have an amazing course that will teach you all you need to know about how the stock market works and you can find that here: https://www.udemy.com/what-they-didnt-teach-you-about-money/

Thanks for reading!

Be great, invest well,

Todd Millionaire

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Dollar-Cost Averaging

In the world of investing there’s what I like to call the big 3, in regards to investment strategy. There’s the “Buffet Rule” better know widely as “Value Investing”; which focuses on the company’s fundamental rather than the stock price. There’s growth & technical investing, these strategies involves technician analysis in addition to growth companies with the highest upside. And lastingly, Day and Short-term trading, which is exactly what it sounds, a trade that is as short as 24hrs. But there is another strategy that isn’t as widely used as the other three but has been gaining traction over the past decade or so, Dollar-Cost Averaging.

Essentially, you invest a fixed sum of money into Mutual Funds, ETFs or individual shares on a regular(weekly or monthly) basis regardless of where the market stands. Dollar-cost averaging can be emotionally difficult at times(especially for investing novices) if you don’t know what to expect. By investing on a regular basis, you will also be investing during bear marketing and corrections. Which means you could reach a phrase where you’re buying even when fund or individual is have consecutive bad weeks or months. But the overall risk outweigh short term pain you might experience.

By putting in a fixed amount weekly, bi-weekly, or monthly, you are buying more shares when the prices are low and fewer shares when the prices are high. Though this is a investing strategy itself I believe it requires a sub-strategy within its implementation. This strategy should not be used against highly volatile companies that have high swings in stock prices, that would cause you to go from being able to buy 10 shares one week but only 1 shares the next. This strategy is best used for fundamentally sound companies, preferable those that buy an attractive dividend.

Mutual funds and ETFs are so vastly diversified that they are less prone to market volatility so they are already structural forms to suit this strategy. And if you pick the correct one they will also pay a fund dividend. But the real back bone of this strategy is the compound interest mechanism at its core. This strategy seeks to have you invest a fixed amount monthly and then have you reinvest your dividends or ROI amassing more shares. Thereby multiplying your return 3, 4, 5, perhaps even 10X fold.

This strategy should sound familiar with our investment club members because we sorta of use a hybrid version of this strategy with our monthly contributions and survey votes. Though we might not buy all the same securities every month we have in our portfolio we buy at least one of those holding with each monthly contribution. This is a highly effectively strategy not widely yet practice but I think as people become more financial literacy will take on more visibility.

Jamaal W Vetose

President

Todd Capital Investment

Appreciation vs. Preservation Pt 9. Bond Diversification

Diversification is an important part to your investment portfolio just as important as the money you use to invest in the financial vehicle you amass. Stocks provide investors with a variety of options to choose from and bonds are no different. In this latest part of the series, we’re going to examine some of the various bonds types that you have to choose from.

There are a variety of bonds, ranging from government issued, to the more speculative and even foreign company and government bonds. They all fall under these five bond type categories:

  • U.S. Government Securities
  • Mortgage-Backed Securities
  • Municipal Bonds
  • Corporate Bonds
  • Junk Bonds
  • Each offers distinctive benefits for an investor but also has it own unique drawbacks as well. Some will fit best in your portfolio while others shouldn’t be trifled with at all. And since I covered Treasury, Municipal, and Corporate in part 8 of this series, I’ll focus on the junk and mortgage backed securities bonds to compliment that writing.
  • High Yield Bonds
  • These bonds are better know in the financial markets by their official name(High Yield Bonds) and their more recognizable name by investors is, junk bonds. These bonds can offer a higher rate of return or higher yield than most other bonds because their risk is much greater.
  • Junk bonds are bonds that don’t make the grade or pass the traditional smell test. They are issued by corporate companies either growing, struggling, restructuring, and most importantly considered at great risk to default on their bond issue, for whatever reason. These get issued when companies are merging and have debts to pay in completely said transactions.

    These high yield bonds include not only a risk of default by the company but also that their market value will decrease suddenly and drastically. This usually will occur because the company that issued these bonds are not as secured as the high-grade bonds. Sometimes a company that initially issued high yield bonds will improve and than those bonds will become low yielding one. So if you are daring and strategic the idea would be to buy some high yield bonds from a company initially that you feel that will become low yield and get out of the trade.

    Mortgage-Backed Securities

    Mortgaged-backed securities(MBS) can be a highly profitable, extremely complicated, and highly risky investment mechanism. Yes, these are the same bonds that nearly brought down the world financial system back in 2008, but this vehicle had been around long before than and had made a lot of people a lot of money.

    Financial institutions help create MBS by selling part of their residential mortgage portfolios to investors; investors basically buy a piece of a pool of mortgages. With the banks being the creators of these type of bonds to alleviate these bonds risk a hedge bet might be to buy the shares of banks either in ETFs or individuals to be defensive against the pull back of these bonds. But that’s a whole another blog post.

    There are several types of MBS available today for purchase. And of course in addition to the private offering by company, the government also has their hands in this as well. One of the most common pass-through Ginnie Mae, issues by the Government National Mortgage Association, an agency of the federal government. The benefits of all MBS is investors receive high interest payments, consisting of both principal and interest.

    In Conclusion

    The most important factor of bond investing is diversification, that is the key to success. You should hold just one type of bond you should invest in a variety to mitigate the over risk and maximize your potential profitability. Holding a range of maturities-a strategy commonly called laddering- helps your portfolio not to take too big of a hit when interest rate raise too high. Make sure your bond ladder correlates well with your overall financial plan. But if bonds make you uncomfortable stay out of them all together. Honestly if the rest of your income in relatively safe from the negative effects of inflation, you may not have to make risky bond choices to stay ahead anyway.

    Jamaal W Vetose

    President

    Todd Capital Investments