Hội Thảo Cực Kỳ Giàu Có - Jordan-Goodman

Presenter: So, our next presenter is pretty neat. Iíve actually had the chance to kind
of hang out with him a little bit over the last couple of days because heís been here.
You saw him up on the panel. How many of you feel like you know every trick of the trade
as far as investing goes? After three days you guys donít? Well, our next guest is known
as the Money Answer Man. The Money what? The Money who?
Audience: Answer Man!
Presenter: The Money Answer Man, and heís been doing this for over 20 to 30 years now.
Heís a published author. Heís written 12 books. His newest book is coming out in just
a couple of days, Ten Strategies on How to Make You Rich in Any, whatís the word?
Audience: Any!
Presenter: In Any Economy. Whether itís going up or going down, heís gonna show you how
to make some money. Now, this guyís pretty smart. Heís so smartÖ
Audience: How smart is he?
Presenter: Some of you guys are pretty sharp. The rest of you, umm. This guy is so smartÖ
Audience: How smart is he?
Presenter: He wrote his own dictionary. His own dictionary. How about that? The Dictionary
of Finance and Investment Terms. How many of you have written your own dictionary? Alright,
so you might have something to learn from this gentleman. Heís here to answer all of
your questions about finances, help teach you where to invest no matter what the economy,
no matter what the market is. Please, help me give a huge welcome for Mr. Jordan Goodman!
Jordan Goodman: Alright.
Presenter: Thank you.
Jordan Goodman: Okay.
Presenter: Very good.
Jordan Goodman
Jordan Goodman: Thank you! Alright! Here we go! So, the last speaker. Are you guys ready
to make a lot of money?
Audience: Yes!
Jordan Goodman: Would you mind if I gave you an income of 10% guaranteed, and if oil prices
go up, youíll double your money? Yes?
Audience: Yes!
Jordan Goodman: Would you mind if I cut your health care costs in half?
Audience: Yes!
Jordan Goodman: You would mind? Oh. That was a trick question. Would you mind if I gave
you a mortgage where it only went down, never up?
Audience: No!
Jordan Goodman: No, you wouldnít mind. That's good. So Iím gonna give you all of what Iíve
got in every resource of every aspect of personal finance. Is that good?
Audience: Yes!
Jordan Goodman: So, Iím gonna warn you upfront, paper and pencil, okay? Iím gonna give you
more resources in the time Iíve got with you than all the rest of the speakers combined.
And youíre gonna be amazed at some of these things you never knew existed, and Iím gonna
give you 800 numbers, websites, resources of all kinds, and youíre gonna say, ìThat's
just impossible.î Alright? So you were warned.
At the end of these things, peopleís hands are usually kind of bloody because theyíve
been taking so many notes. Alright. We are gonna bring it on. And also, by the way, Iím
glad to take questions as we go along. Iíve got plenty of time, and so with some of these
things you might have questions. Weíre gonna have some mic runners, so I am willing to
take questions, you know, as long as it doesnít get out of hand in the middle of all this.
Alright? Alright.
The first part I wanna talk about is the investing side, and the second partóyou see, I have
20 money secrets. The first 10 are kind of on the investing side. The second 10 are not
really investing. Theyíre making the most of your money in every other way possible.
Alright? Here we go. So, you ready to make money in hard times?
Audience: Yes!
Jordan Goodman: Are we in hard times?
Audience: Yes!
Jordan Goodman: Are they gonna get harder?
Audience: Yes!
Jordan Goodman: Are you gonna make more money when theyíre harder?
Audience: Yes!
Jordan Goodman: Alright. You got the idea. Number One: Tax Liens and Deeds. Okay, now,
some of you may have heard of some of these things, some may not have heard of these things,
but basically what happens with the tax lien and deed is when somebody does not pay their
property taxes the local municipality puts a lien on your property, and depending on
the locality, they have a mandated penalty interest rate which can be as low as 9% and
as high as 25%.
For example, in Texas itís at typically 25%. And so when the homeowner does pay their taxes
and catches up with it, they have to pay that penalty interest rate which you as the owner
of the lien get to receive. Now, you are not collecting it from the homeowner who didnít
pay the taxes. You get it from the municipality.
So that's the worst thing that can happen, is you get 9% to 25%. The best thing that
can happen is they donít pay their property taxes at all, and then you get to buy their
house for the property taxes. Okay. So, you have a house that's worth 200,000, 300,000,
500,000, 700,000, whatever it may be that you just bought for 3000, 6000, whatever the
property taxes may be. Okay?
So, now you bought a house that's worth 700,000 for 10,000, whatever it may be. Now, itís
a tough real estate market, so say youíre willing to discount the house to 500,000.
You still make like 20 times your money. Itís not a bad thing.
Audience: What about the bank of the mortgage?
Jordan Goodman: The bank of the mortgage? Okay. Now, in many cases, there is a bank
in the middle, and in that case you would get your penalty interest rate and you would
not get to buy the house. But sometimes, things happen. For example, Iíll tell you the story
of somebody I knew in Oklahoma, and there was a bank in the middle. Somebody bought
the lien for I think it was $3000 dollars. The house was worth about 300,000. There was
a mortgage on the property, and the mortgage was made by a small local bank.
And it turned out that during the time, that small bank was being taken over by a big bank,
and after the homeowner says he's not gonna pay his taxes and the home is gonna be sold,
the bank has 60 days to, in effect, foreclose on it. And so what happened was the little
bank thought it was the responsibility of the big bank, and the big bank thought it
was the responsibility of the little bank, and 60 days passed, nothing happened, and
the guy got to buy the house for $3000 that was worth $300,000.
So, may banks be inefficient, right? So it doesnít always happen, and I would say about
1 in 20 times youíre going to actually get to buy the house. So if you bought a whole
bunch of tax liens and deeds, youíre going to have a better chance of kind of hitting
these homeruns. But meanwhile, youíre earning 9% to 25% with basically no risk, with the
municipality behind you. Alright? So that's basically what works. So whatís happening
right now is there's a huge amount of tax liens and deeds out there. Because of all
the hard times, the amount you have to choose from is just staggering.
Now, you have to be careful which kind of tax lien and deed you get. You want something
that's actually a house or something that's saleable. Sometimes, youíll a get lien on
a railroad track or something or a toxic waste dump or something that's not exactly gonna
be saleable. So itís good to know what youíre getting involved with. But if those are good-quality
properties, you could go in and what you do is you bid on these things, and you can either
do it in person at these auctions or, in many cases, you can do it online as well.
So in the book, I actually give you some specific resources, websites, where you could actually
learn about this stuff and bid online for these tax liens and deeds. Alright? So you
see how this is a way to benefit when the economy goes down? You actually have more
to choose from. That good for number one?
Audience: Yes!
Jordan Goodman: Alright. Liens and deeds are listed by the county. As people do not pay
their taxes, they have a list, and they have an auction. Next Thursday, these are all the
people who didnít pay their property taxes, and they have an auction. In some cases, you
may be the only one to show up at the auction. In general, the ones with the highest interest
rates, like Texas, is where you have more people showing up. But some people, like Missouri
I think is 9%, you show up and like youíre the only one in the courthouse, ìIíll take
this one, this one, this one.î There's nobody competing against you.
Now, in some cases what happens, if there's a lot of competition, what you do is you bid
down the interest rate. Itíll start at 25%. If there are tons of people who want it, itíll
go to 24, 23, and itís sold at 17%. So, there's a reason why that rate is high. It attracts
a lot of investors. Alright? But you can, again, do this online. You can do this from
home. You donít have to actually show up at the auction. Alright, so that's number
one.
Go ahead. Can we get the mics up here? Because weíre getting some questions, we want everybody
to hear the questions. We have a question right here. Let's just get you the mic. Yup.
Stand up and speak. Yes, go ahead.
Audience: Are your strategies applicable in Canada and the United States?
Jordan Goodman: Yes. Absolutely. And Iím gonna tell you, some things are not in Canada,
but most of them are, and Canadians can buy tax liens and deeds. No problem whatsoever.
Absolutely. Okay. Number one. Got a question over here? Go ahead.
Audience: Iím just curious. If you have the deed to a property, arenít you assuming all
the liabilities of the property as well?
Jordan Goodman: Well, you are, but I mean the mortgage would have been taken out at
that point. But the liabilities Iím worried are like it was a gas station and youíre
gonna get the EPA wanting you to clean up a toxic waste dump, that kind of thing. But
yeah, you get to own the full property for the amount of the property taxes that you
paid.
Audience: But ultimately, you are responsible for whatever the deal happens to be?
Jordan Goodman: That's right.
Audience: Thank you.
Jordan Goodman: But I mean, typically, what people will do, and this again can be done
remotely. I mean, you can be in New York and buy tax liens in Arizona or whatever. Typically,
what people do is they buy the house if that happens, and then get a local real estate
agent to sell it for them. So you have huge leverage in, you know, if you bought it for
3000 or 6000, and the thing is worth 300,000, you can come down a lot, underprice the market
and still sell it for huge, huge profits. Any question over here? No. Okay. Alright.
On the go. So that's number one.
Number Two: Buy Below-Market-Value Real Estate. Several different ways. And some of the speakers
before have talked about this, but just to go over these again. Pre-foreclosures is one
way to do it. Now, this is where somebody isnít in foreclosure yet, but they are heading
in that direction and they are very willing to deal. This is a desperate seller who is
willing to do all kinds of things to help you get the house, and in many cases not even
take financing back.
So thereís all kinds of ways of getting pre-foreclosures. Again, the idea is youíre getting real estate
way below market value, and you can then sell it at market value, even a little bit below
market value, but still make lots of money because youíve got a desperate seller, and
boy are there a lot of pre-foreclosures out there today.
The second way is actual foreclosures. Now, hereís where you go to a foreclosure auction
and bid on it. A lot people doing this these days, but there's plenty of foreclosures to
go around and many more to come. Just to give you a little background why this is happening.
The whole subprime mortgage has blown up. This is what the whole situation is.
People got into these mortgages at way below market rates, 2, 3, 4, 5%, and it would be
great, and then in three years itíll adjust up to the market. Well, three years has arrived
now that weíre in 2007. So peopleís mortgages are adjusting up to 6, 7, 8, 9%, their payments
are doubling, and they just cannot afford those higher rates, and so that's why theyíre
going into delinquency.
The foreclosure rate is now double what it was a year ago, and in some states itís much,
much higher than that. So there's gonna be tons of foreclosures that youíll be able
to take advantage of. So itís not taking advantage of somebody, they lost their home,
but you are able to buy it way below market and then sell it at a market level.
The next one are so-called bank-owned real estate or real estate owned, REOs, and this
is where the bank has foreclosed on it and the bank wants to get rid of the property.
They do not like being in the real estate business, and there's tons of real estate
that the banks now own that theyíre willing to sell and make all kinds of incredible deals.
In fact, Iíve been talking to several people whoíve said theyíve been buying bank REOs,
and the bank had it listed for 113,000 and they bought it for 60,000 or some incrediblyóbecause
the banks wanna get the stuff off their balance sheet. So again, the banks, you can go to
banks, I give you a whole system of how you do it, but you can do terrifically getting
high-quality real estate at way below market prices by buying it directly from the banks
that have already foreclosed these properties.
Question over here. Let's get the mic over there.
Audience: If youíre buying a foreclosure, donít you have to do cash?
Jordan Goodman: Typically, you do have to do cash or have a certified check available.
That's correct. Because theyíre not gonna finance you at a foreclosure auction. That's
correct. Good idea but I donít think theyíre gonna do it. Question over here. Mic. Just
stand up so everybody can hear the question.
Audience: Hi. My experience has been that when you get a loan, they sell it out in the
market. So, which banks are the banks that are holding most of the notes?
Jordan Goodman: Well, youíre right. What happens with mortgages is they have been taking
the mortgages and selling them to mortgage-backed securities, and then that's being sold to
investors around the world. The problem has been when there are foreclosures, those foreclosures
and the losses go to the investors around the world, which is whatís been happening.
That's why banks in Germany and Spain and Australia have been blowing up, because theyíve
been having huge amounts of these mortgage-backed securities. So that has been a problem. So
the result of that is banks are now not willing to make loans over the levels set by Fannie
Mae and Freddie Mac, which is 419,000, because theyíre not able to sell it to mortgage-backed
securities.
That's why Merrill Lynch took an 8.4-billion-dollar loss. That's why Citibank is gonna take an
11-billion-dollar loss. UBS, 3 billion. All of these because they have these mortgage-backed
securities that have fallen so dramatically in value. So itís really changed. In the
old days, a bank would make a mortgage and actually hold onto it. Go ahead.
Audience: So theyíre not sitting in your hometown banks, typically.
Jordan Goodman: Correct. Whatís happened is the mortgage-backed securities market,
mortgages are originated locally and then sold into mortgage-backed securities that
are then sold to investors all over the world. So who ownsówell, I mean in a case like that,
the mortgage-backed security ultimately is gonna be where the pain is being felt. So
youíll have a local bank that is originating it and kind of administering the loan, and
theyíre the ones who are gonna do the foreclosures and so on.
But the difference in the market now is theyíve been sold to these mortgage-backed securities
and spread all over the world, whereas in the past, like for example during the savings
and loans crisis in the late ë80s and early ë90s, it was the local banks that got hurt,
and they went under because they were holding the securities that went under. Now, itís
diversified all over the world.
Audience: So the idea of going to your local banks or the banks in your area, they probably
wonít have the loans?
Jordan Goodman: Some will, some will not, but there's plenty ofóI actually have some
resources in the book that kind of gives you exactly where to find it, but in many cases,
the local banks, there are so many foreclosures out there and REOs. There's plenty to go around,
believe me. Your local banks will have plenty.
Audience: Thank you.
Jordan Goodman: Sure. Thank you. Okay the next one is probate property. Now, this is
when somebody dies, typically their house is gonna pass to their kids and their kids
typically arenít there, theyíre off somewhere else. So the kids typically want to cash in
the house, and you can buy that real estate usually at way below market value out of probate.
And so, say the house is worth, whatever, 300,000, and the family bought it 30 years
ago for 50,000, whatever it may be, and the kids wanna get rid of it. So they wonít sell
for 300,000, theyíll sell it for 250,000, whatever it is, for them. They just wanna
get this out of theiróthey wanna cash in the asset in effect. That's a way of getting
really high-quality real estate at way below market prices. The whole idea is to get below-market-value
real estate, and probate is certainly a way to do it.
And then the last one is FSBO, for sale by owner. What you want, and there's plenty of
them out there, are desperate sellers. And people who, what we just talked about, not
even pre-foreclosure, but theyíve got these mortgages where theyíre adjusting up and
theyíre really getting hurt. They in many cases wanna sell.
All kinds of reasons why people wanna sell: Divorce, financial hardship of various types.
And you approach these homeowners, and then youíre trying to help them out out of their
situation, and the result is theyíre willing to give back financing, give you great deals
on the house. And if you get it below market value, when you sell it at market value, even
a little bit less, you can make yourself lots of money in real estate. Question over here.
Let's get the mic over there.
Audience: You know how we got a benefit from the hard times? Iím a little worried about
taking, like I heard in the panel when Greg had the graduates doing land trust, putting
the properties on your name, and like, let's say there's a house thatís worth 300,000
and the sellers are desperate, and you just, ìOkay, Iíll take over a hundred thousand
dollars and see you later.î Iím worried about getting sued left and right.
Jordan Goodman: Well, you wanna make sure, do a title search. I mean, make sure that
itís a clean property and that there's no environmental problems. I mean, you wanna
do some investigation and due diligence before you buy the thing.
Audience: Getting sued by the owners, like if youíre gonna help them and youíre gonna
make like a hundred thousand dollars.
Jordan Goodman: This is all done by contract. Remember that the people who are selling you
the real estate in general are gonna be desperate, and you are their savior. You are helping
them. Youíre not stealing their property. They wanna get out of their house one way
or the other. I mean, this is just happening all over the country with people with subprime
mortgages, all the things we talked about, the real estate owned at banks, the probate.
You are helping the seller get out of the situation and you profit from it.
Audience: So just do a nice contract and that's it, right?
Jordan Goodman: It all has to be done under contract. Absolutely. And Iíve got some things
actually in the book where I show you where to get all the contracts. All this paperwork
is done in advance. You donít have to start from scratch on this kind of stuff.
Audience: Okay.
Jordan Goodman: Alright? So there's loads of ways today, and again, as the times get
harder, there's gonna be more and more great real estate deals out there. Sounds good?
Alright. Want another one?
Audience: Yes!
Jordan Goodman: Alright. Number Three: Oil and Gas Investments. I saw today that oil
was up to $96 a barrel on the markets. Itís going up to a hundred maybe by Christmas,
maybe next week, something like that. I mean, just briefly, the reason that oil and gas
is going up, oil particularly, is there's a basic supply-demand imbalance for oil in
the world. Supply has been coming down because the oil fields have been getting exhausted.
Cantarell in Mexico is producing 50% of what it was three years ago. Even the Ghawar Field,
which is the big one in Saudi Arabia, they have to now pump 20 gallons of water in to
get the oil out, whereas it used to be like 1 gallon. So the big fields of the world are
in general being exhausted, and meanwhile, the demand is going up dramatically, not only
in the US.
We still buy and run these SUVs, and we talk about energy efficiency but we donít live
it in many cases. And China, everybody that switches from a bicycle to a car, is now long-term
demand for oil. Theyíre moving into factories and office buildings and apartment buildings.
This is all creating huge energy demand, and Chinaís growing at about 11% a year. Same
is true in India, in Indonesia. The whole third world is just using more and more oil.
So, oil demand is going up, oil supply is stagnant or coming down to some extent, and
that's why oil prices are going up. And on top of that you the speculative aspect that
these futures traders, if they see something going up, theyíre gonna jump in like crazy,
so it makes it go up even faster because that's whatís been happening lately.
So the idea is that even in hard times, I mean it seems strange, doesnít, that the
economy is going down yet oil prices are going up, and I think that's gonna continue to happen.
So, here are some ways to play that. There are so-called income trusts that have yields
of between 8 and 12%. Now, that's double, sometimes triple, what youíre earning at
a money market fund or CD or something like that.
They typically are in Canada. There's about 50 or 60 of them right now, really high-quality
income trusts. They own existing reserves of oil and gas, typically 20 or 30 years worth
of oil. Theyíre not exploring for new oil. Theyíve already found the oil. They pump
the oil out, and gas, and then sell it and give very, very high dividend yields.
Now, typically they pay their dividends monthly. Most companies are quarterly, but these guys
actually pay it monthly. So itís a way of getting passive income on a monthly basis,
annualized comes to 8 to as much as 12%. This sound good? Okay. Now, in addition to that,
when oil prices go up, the stock prices go up as well, so you get capital appreciation
and double or triple the income youíre getting with a money market fund or CD of some kind.
Alright?
So let me give you some examples. Provident Energy trusts, symbol for that is PVX. I first
started talking about that on radio shows when it was about 6. Itís now about 13, and
still yielding about 11% today. Another oneís called Pengrowth Energy, PGH. That's yielding
about 11% now, something like that. Another oneís called Penn West Energy, PWE, which
is a large one that actually just bought another one called Harvest Energy.
Now, there was something that happened about a year ago in Canada which affected these
things, and I want you to be clear about that. What used to happen until, it was actually
a Halloween night 2006, is these were not taxed at the corporate level, and so all the
income they would distribute to would be taxed at the dividend level but not at the corporate
level.
And so this became extremely popular in Canada, and companies that were not oil and gas were
converting to income trust status like crazy. And when two of the biggest companies in Canada,
BCE, Bell Canada, and Telus, the two big phone companies, said, ìWeíre gonna become income
trust, too,î the government kind of freaked out and said, ìOh boy, weíre gonna lose
all of our corporations. Theyíre all gonna become income trusts and weíre not gonna
have any tax revenue.î
Now, the conservative government that had been elected I think in May in Canada had
specifically and explicitly said in their campaign they are never going to tax income
trusts at the corporate level. Okay? And that's what everybody thought, and literally on Halloween
night, as all the investment bankers were out trick or treating with their kids, they
said, ìWe changed our mind. Weíre gonna tax them.î
This was a complete and total shock to the marketplace, and income trust fell by about
20 to 25% the next day because nobody had expected this whatsoever. And so that in fact
has happened, that is going to go into effect starting in 2011. So in 2011, income trusts
are gonna be paying taxes in Canada at the corporate level, which will lower the dividend
yields to some extent. But whatís happened is, when the income trust dropped, everything
else was the same.
In fact, oil prices had gone up, and in fact, there had been a huge amount of takeovers
in this area, over 20 takeovers of income trusts in the last year, because the values
of these things were way below market value. And of course, the yields went up. if theyíre
paying the same dividend yields and the stock price goes down, what used to be a 10% yield
now became like a 13% yield.
So if youíre buying it today after the fall, in effect, I think there's huge potential
upside. So, Harvest Energy, theyíre just one after another that's been taken over.
In fact, one of the big ones, Primewest Energy, was just taken over by the government of Abu
Dhabi for about $5 billion. Iíve had that one for a long time. I got it at about 16.
It was taken over at 26, so I made $10 a share on the investment, and Iíve been earning
11% yields being paid monthly on top of that.
So, yes, they are gonna be taxed at the corporate level starting 2011, but I still think they
are a terrific way, and then the prices go up with oil and gas prices, and they also
raise their dividends. When you have oil and gas prices going up, remember theyíre paying
monthly, they actually raise their dividends as well. There's a question over here.
Audience: Are these symbols on Toronto or New York?
Jordan Goodman: These are New York symbols, but itís actually pretty much the same symbol
but you just like put T in front of it in Toronto. T.PVX, that kind of thing. Alright?
So, now, these are three examples. There are loads of them, and actually in the Fast Profits
in Hard Times book, I list the 30 largest ones and give you the stock symbols and what
they invest in and the address of them and all the details about them. But these are
just three examples to kind of get you started, alright? Have you heard of these before? Great.
Alright.
Okay, the next one is kind of similar. Itís kind of an American version of these and are
called Master Limited Partnerships or MLPs. What these are is theyíre taking existing
oil and gas properties, rolling them up into whatís called an MLP, and they are not taxed
at the corporate level, and then they pay out income yields of somewhere from 6 to 10%,
something like that.
Now, actually there have been several income trusts that have become MLPs. In fact, Provident
Energy, I mentioned here, has been become an MLP or is going to do that. So itís a
way of them avoiding taxation at the Canadian level. They become a U.S. MLP. So itís the
same kind of thing, and you can not only get them directly but there are mutual funds that
give you a broad diversified portfolio of either MLPs or income trusts. So I mention
in the book all of the different names and phone numbers of all these. Two examples of
some good MLPs was one called Enbridge, which is EEP, and Magellan Midstream Partners, MMP.
Now, typically what the Master Limited Partnerships do is a very, very stable business, which
is pipelines. Now, the income trusts are going up and down with oil prices, in general up,
but pipelines have long-term contracts to transport oil and gas, and it really doesnít
even matter what the price of oil and gas is as long as the contracts are in place.
So they tend to be much more stable, and itís a way of getting much higher income than certainly
what youíre getting on a CD or money market fund.
And money markets are gonna be going down. The Federal Reserve has been lowering interest
rates and youíre gonna be seeing the yields which might be 4-1/2%, go down to 4, to 3-1/2,
and so on. Itís gonna be very similar to what happened after 2001 when the Fed lowered
interest rates to try to save the economy. So this is the way weíre actually gonna have
yields going up and the stock prices going up as opposed to other kind of safe investments
where their yields are gonna be going down. Alright? Any questions about that? Over here?
Audience: Hi. Isnít one of the dangers of income trusts that are energy-based that itís
a depleting resource?
Jordan Goodman: It is a depleting resource except they keep buying new reserves. So,
because of the cash flow they have from oil at $95 a barrel, theyíve got plenty of cash
to go out and buy new reserves. Before you buy one, I mean the three I mentioned are
very, very solid, you wanna see what kind of reserves they have, and theyíll put right
in their year-end reports how many years of life they have yet. So that is correct. You
wanna make sure that they have good-quality reserves. But in general, theyíve been buying
reserves and theyíve got plenty, plenty of years to have these. Correct. Alright? Okay,
so that was numberówe have a question over here?
Audience: More of a comment than a question. A lot of the income trusts, they do buy replacement
reserves, but a number of them donít replace their reserves as fast as they deplete them,
so be really careful and look at the sheet because you may get yourself into a trust
that pays a really good dividend, pays a really good yieldÖ
Jordan Goodman: But itís depleting its assets, correct. I agree.
Audience: Öbut itís actually depleting its assets, and then what happens is the stock
depletes and you end up losing all of your capital even though you got the yield.
Jordan Goodman: So there's something called the replacement ratio, and in these statements
itíll say what percent of the assets we replaced each year. And typically theyíre buying assets,
sometimes exploring, but typically buying assets. That's one of the reasons why theyíve
had a lot of takeovers in these fields. So that's correct. You donít want something
that's just depleting its assets down but is constantly replacing its assets. That's
correct. Thank you. Okay, so that's Number Three. Was that one good?
Audience: Yes!
Jordan Goodman: Alright. Wanna make more money?
Audience: Yes!
Jordan Goodman: Alright. Just wanna make sure. Alright. There are other high dividend stocks,
and I consider a high dividend stock anything yielding 5% or higher, and Iíll just give
you some other examples of this. Oil tanker stocks. Two examples of that would be Frontline,
FRO, and Double Hull Tankers, DHT. Now, what Double Hull does is they have all these tankers
that obviously have double hulls, and this came in after the Exxon Valdez hit. They had
single hulls, and you hit a rock and you destroy half of Alaska, so that wasnít very good.
So now, there are more regulations coming in. The tankers have to be double hull, so
if they run aground they donít spill oil all over the place. So in fact, it takes a
long time to build a tanker, like five years. If you were to order a tanker today, you may
get it in 2012. So, in effect, they have a monopoly on this. There is not a lot of competition
for them, and with oil prices where they are today, there's a lot of demand for tankers.
They typically charge about $200,000 a day to transport oil from the Middle East to North
America, whatever it may be. And a lot of transporting it to Asia, where they have huge
demand for oil as well. So they have very, very high dividend yields, typically 10 to
15% dividend yields, and the stocks move up along with oil prices as well. So that's one,
and there are some others. Knightsbridge is another one. There's a bunch of these oil
tanker stocks that have done very, very well.
Second would be utilities. Now, here again, people do like to keep their lights on, and
so the high-quality utilities I mentioned here, Con Edison, FairPoint Communications,
which is in the telephone business, water utilities, telephone, electric, gas, very
stable demand, and they have very high yields, and in many cases, theyíve been raising their
dividend yields, and as interest rates come down, utility prices, stock prices, tend to
go up.
So, again, itís a way of benefiting from the weaker economy because people do tend
to pay their utility bills. Youíre getting higher dividends, stock prices tend to do
very well in uncertain times. So those are just a few examples there.
And then the fourth category here are so-called business development corporations or BDCs.
Now, these are companies you may not be as familiar with that what they do is they have
capital and they either lend it or take equity positions in medium- and smaller-sized companies.
Now, when they lend it, theyíre getting very high interest rates because these are companies
that may not be that credit-worthy, so theyíre getting yields on their loans of 10% or higher,
so that's why they can pay out dividends of typically 6, 7, 8%. And, they get equity in
these companies as well so if the companies do well and grow and eventually go public,
they get a nice equity participation as well.
So itís a combination of very high current income and growth. So some examples there
would be CapitalSource, CSE, Allied Capital, ALD, there's one called Gramercy Capital.
There's a whole bunch of these things. Again, I list them all in the book, but this is a
way of getting high income, benefiting from medium- and small-sized businesses, and getting
some really good potential growth.
So there's lots of companies that have 5% yields or higher. Iíll give you some examples.
Thereís a newsletter called High-Yield Investing that actually has these on an ongoing basis;
highyieldinvesting.com is their website. There's another newsletter I mentioned called The
25% Cash Machine. There's guy named Bryan Perry who runs that one. So those are two
newsletters that on an ongoing basis are covering these yields, stocks, of 5% or higher.
Itís called The 25% Cash Machine. There's a cash machine, and the guyís name is Bryan
Perry, B-R-Y-A-N P-E-R-R-Y. Bryan Perry. So that's a way of ongoing seeing the new high
yield stocks all the time. Alright. Are we feeling good so far?
Audience: Yes!
Jordan Goodman: You wanna make more money?
Audience: Yes!
Jordan Goodman: Just wanna make sure. Okay. On we go. That was Number Four. Number Five:
DRIPs, Dividend Reinvestment Plans. Now, this is for the lazy person who is not gonna spend
any time watching stocks. What a dividend reinvestment plan is, is if you reinvest dividends
back into the company, there typically is about 1300 of them, and in addition to reinvesting
dividends you can do whatís called optional cash purchase or OCP.
So, say you have Exxon, whatever, itís yielding 5%. The dividends are buying more Exxon stock
all the time, and you can set it up so automatically you could put in another hundred dollars a
month, whatever it may be. Itís buying shares on an automatic basis with no commissions
whatsoever. There's a website, directinvesting.com, where you can set that up. I think they charge
you a one-time fee of like $10 per stock to set it up, and then itís just on automatic
pilot for the future.
So DRIPs are a very good way of building up capital over time brainlessly. You donít
even think about it, just automatically happening for you obviously get into high-quality stocks.
Now, on top of regular dividend reinvestment plans are called discount dividend reinvestment
plans or discount DRIPs. Now, hereís an example of free money. Are you open to free money?
Audience: Yes!
Jordan Goodman: Alright. Discount DRIPs wanna have long-term shareholder loyalty, so what
they do is they will typically pay 5% discount on reinvested dividends. So if you give them
$100 of dividends, youíve reinvested $100 of dividends, you donít get back $100, you
get $105 worth of stock in that company, and of course itís compounding, and this is all
happening on an automatic basis without you even thinking about it. Alright? So that's
an example of free money. Five percent every month, no commissions, on automatic pilot.
You want automatic free money going for you?
Audience: Yes!
Jordan Goodman: Alright. There you go. So here are some examples of some of the companies
that have discount DRIPs: First National Community Bank, the symbol for that is FNCB; Health
Care REIT is a real estate investment trust, HCN is the symbol for that; and Marathon Oil,
MRO. There's actually about 25 of them, and in the book I list all of them with all the
details, their stock symbols, with the discounts, how you do it, and so on.
So you set up some of these things, as long as theyíre high-quality companies, they have
long-term records of paying dividends, youíve got a discount on top of that, you do it,
you put it away, and then 20 years from now, you wake up and like, ìWow, did that grow!î
These are what I call Rip Van Winkle stocks. They just show up 20 years later after youíve
gone asleep, and youíre amazed at how much money youíve made no matter what the economyís
doing. Question over here. Just use the mic. Yeah.
Audience: Can you usually set up a DRIP by just contacting the company directly or do
you need toÖ?
Jordan Goodman: Typically not the company directly. They have custodians that do it,
and this place I mentioned, directinvesting.com, they have it set up so you can do any company
in one place. Itís not really with a company directly, although you do have to have the
shares in your own name. If you do it in a street name, then they donít know who you
are. So you have it in your name, and then the dividends reinvest like that. So the best
of all worlds is you set up a discount drip and you do optional cash purchase where youíre
putting a hundred dollars a month into it, and youíll just be amazed over time on how
that money can add up. Alright? So that's Number Five. Was that one good?
Audience: Yes!
Jordan Goodman: Alright. You want more money?
Audience: Yes!
Jordan Goodman: Alright. Number Six: Bond Strategies. There's lots of ways to do extremely
well in the bond market, and it doesnít just have to earn you 4 or 5%, but you could really
make your money grow a lot. The first one, zero coupon bonds. Now, a zero coupon bond
is where you buy it now at a deeply discounted price and it matures at a particular time
in the future, and you know exactly how much youíre going to get, and you donít have
to worry about anything.
Now, the best thing to do is a government-backed bond, a Treasury, which are called STRIPs,
for example. So if you bought, say, a 20-year zero coupon bond, and Iím making up the numbers,
youíd buy it for $1000 today, it would be worth $20,000 in 20 years or something like
that. Whatever it is, youíve locked in the interest rate and it just automatically goes.
Youíre not getting any current payments, but every year that goes by you are having
that money grow.
Now, I actually bought some zero coupon bonds myself in 1981 when interest rates were about
12%, and I happen to know the numbers for this. I bought it at $12,000, and it becomes
$100,000 in 20 years. Now, that was when rates were 12%. Youíre not gonna get that today,
but the principle is you never have to think about it again for 20 years, and your money
is there. Alright?
Now, you could place your coupon bonds aggressively as well. When interest rates fall, the value
of zero coupon bonds goes up extremely fast because youíve locked in on interest rate,
but interest rates rise, they go down. So theyíre the most volatile of all bonds, but
for most conservative investors, itís a very simple way to lock in rates of return for
many years and you donít have to worry about it.
Itís best to keep zero coupon bonds in some kind of a tax-deferred account like an RRSP
or an IRA, because every year that goes by you are getting interests in theory which
are called the crude interest, but youíre not actually getting the cash. If you keep
that inside an IRA, there's no taxable event. Alright? So that's zero coupon bonds.
The next one, foreign bonds and bond funds. Now, my view is that the dollar, which has
been falling, is gonna continue to fall even further. Today, apparently, it was falling
very sharply this morning. U.S. has huge trade deficits. Itís gonna be like $900 billion
this year. We have these huge budget deficits, and we are lowering interest rates while the
rest of the world is raising interest rates, so our dollar becomes less and less attractive.
So the way to profit from that is to have your money in foreign currencies in various
ways so as the dollar falls you actually appreciate, and one of the ways to do that with income
is foreign bonds and bond funds. So with that, you can either do a diversified portfolio
where your money is now in Canadian dollars, in Euro, in Yen, in British pounds, so as
the U.S. dollar falls, youíre actually rejoicing. Alright? Iím patriotic. This is not illegal.
This is called profiting from hard times. Question over here.
Audience: Where do you go to find these bonds, like Singapore or Chinese or Malaysian?
Jordan Goodman: Through a broker. A broker has them, and actually there are some funds,
and Iíve actually listed some of these, where you can get a diversified fund and theyíll
do it for you. So itís a very simple way to do it. Itís probably better if youíre
gonna have relatively small amounts of money, you know, $1000 to $10,000, to buy a fund
instead of buying individual bonds, because theyíre not that liquid.
But if you buy a fund, they may have a hundred foreign bonds in them, and you could get a
no-load fund from Fidelity or T Rowe Price or Vanguard, closed-end funds. There are loads
of these things out there, and again, I mean, in the book I list a lot of the specific ones
that are the best, but that's probably the easiest way for most people to do it, through
a fund, either open-end or closed-end fund. Okay? So that's foreign bonds.
Mortgage-backed bonds is the other one. Now, there's obviously been a lot of turmoil in
the mortgage-backed bond business but it doesnít mean you have to abandon it altogether. I
would stay with the safest mortgage-backed securities, which would be issued by Fannie
Mae, Freddy Mac or Ginnie Mae, would be the big three. Here, youíre getting peopleís
mortgages that the government is guaranteeing if people do not make their principal payments
youíre going to get paid that way.
Youíll get about a 5 or 6% interest rate on those, and again, you can do them directly,
but probably the easiest way for most people is through a mutual fund, and probably the
best one would be the Vanguard Ginnie Mae Fund. Itís a huge fund, well-capitalized,
very simple, and youíre gonna get about a 5 or 6% yield on that. If interest rates fall
as I think theyíre going to with what the Federal Reserve is doing, you actually have
a bit of a capital gain as well. This is a very conservative kind of way of doing it.
Municipal bonds is another way, in the United States anyway. You get tax-free income. If
youíre buying a municipal bond in the state where you live, itís double tax-free, and
if you happen to be in New York City, itís triple tax-free. Itís free from New York
City, New York State and Federal taxes.
So the so-called taxable equivalent yield. The value of the yield youíre getting is
worth more the higher your tax bracket is. And you wanna get a municipal bond. We have
a question over here. Get the mic over there. The value of the municipal bond, it can be
insured by municipal bond insurance companies like MBIA and Ambac, so youíre gonna be protected
in case there are problems at the municipality. Go ahead.
Audience: Hi. On municipal bonds, say that you have residences in two or three states,
are you able to purchase those and get the deduction on that interest rate in all three
states?
Jordan Goodman: You donít get a deduction. The income you get is tax-free. You get it
in the state in which you file taxes. So if you file taxes in that state, yes, that would
be income tax-free to you in that state.
Audience: Okay. Thank you.
Jordan Goodman: Now, you can either buy individual bonds or bond funds that are single state.
You could buy a New York State or a California bond, that's only gonna buy California municipal
bonds that would be double tax-free to you in that state. So the yields on those today
might be 4 or 5%, but at a taxable equivalent yield, youíd have to get a yield of 7 or
8% to end up with the same dollars in your pocket as a 4 or 5% bond that way. So that's
what makes sense particularly if youíre in a higher tax bracket. Okay.
And then, the last one would be closed-end bond funds. Now, these are funds traded on
the stock exchanges, like the New York Stock Exchange typically, that have a widely diversified
portfolio of bonds. Some of them may be foreign bonds, some of them may be municipal bonds,
some of them may be a mix of all different kinds of bonds.
One good example, the BlackRock Strategic Income Fund, BSD is the symbol on that, has
a very good record. That's got about a 9% yield today, and you buy it as a stock. Some
of them, if theyíre trading below their net asset value, theyíre trading at a discount,
say itís a 10% discount, you are buying a dollar for 90 cents. A little bit more free
money right there. So it actually boosts your yield on something like that.
If theyíre trading at a premium, if theyíre trading over the value of their portfolio,
you probably want to stay away from it. But thereís loads of great closed-end bond funds
with very high yields where they take care of it all for you. Alright? So those are some
bond strategies. Those good?
Audience: Yes!
Jordan Goodman: Alright. Number Six. Number Seven: Option Strategies. Now, one of the
speakers earlier talked about this, and these can make a lot of sense if you learn how to
do it. A very conservative way to do options is to sell covered calls. Now what this means
is you own an existing stock in your portfolio and you sell the right to buy that stock at
a particular price sometime in the future, in a month or two in the future. You sell
that, and in return for that you get a premium, which you get to keep.
Now, if the stock stays where it is or goes down, you just get to keep the premium, and
in effect youíve rented your stock and you get money for no extra cost. If the stock
goes up to a certain level, you are going to have to sell your stock to meet that call.
Say you bought a stock at 30 and you donít think itís gonna do that much, but say you
sell a call at 40, so the stock goes up to 40, you then sell your stock and youíve locked
in a 10-dollar profit, and meanwhile, youíve got a premium of $2 or $3 a share.
So itís a way of kind of renting out your stocks, getting regular income from them,
and the worst thing that can happen is you sell your stock at a profit. So that's not
a bad thing, right? And you can do this over and over. Just think of it as renting out
your stock portfolio and augmenting your income in a very conservative way. So that's selling
covered calls.
And then, if you wanna get more aggressive, is to buy puts either from a broad stock market
index like the S&P 500 or the Dow or the NASDAQ, or even more fun, narrow sectors. So as these
sectors decline, you make money. Now, personally, Iíve been doing this lately in the financial
sector, and I have a financial sector put that has gone up dramatically.
So every time I see Citibank writing off $11 billion, I say, ìCould it be $15 billion?î
you know. The more pain in the mortgage market and the more write-offs, the subprime blowing
up and some bank in England having a run, I say, ìThis is great,î because the value
of that put is going up at value. Alright? So you can watch everybody else jump out of
windows or you can profit from it. That's a very simple way to do it.
Now, this doesnít meanóthis isnít illegal. This isnít immoral. Other people are making
money this way. You might as well join them. Alright? So, either broad market decline or
individual sectors. I happen to think the financial sector has got more pain to come,
so that's certainly a way to go.
Or, you could go the other side, buy calls on hot sectors that look like theyíre going
up. These are three sectors that Iíve been playing lately. Solar is one of them. Natalie
talked about Suntech, SunPower, Conergy, Q-Cells, First Solar. I was in a call option in First
Solar two weeks ago that went up $50 in a day, and my option went up about $26,000 on
that one day. That was good.
So, obviously itís volatile, but that's the kind of thing, if oil prices keep going up,
I think solarís gonna become more and more attractive as an alternative. So, solar is
one area I would do calls in. Chinese stocks. We certainly heard about that before. Volatile,
but I think have huge upside potential with the growth going on there. So Iíve been playing
a broad index of Chinese stocks. We can play some individual ones.
And gold is another one. As the U.S. dollar falls, gold keeps going up. Today, it was
up back over $800 an ounce. So, again, you can do a broad-based index and you can do
options on it. That's like turbocharging it. But again, if the dollarís falling, itís
like donít weep. Itís like, oh, great, that means goldís gonna go up more. So those are
some conservative ways. Question. Go ahead.
Audience: Yeah, I was wondering for your calls and puts. What sort of term are you buying?
Are you buying three months out, one year out? Whatís the term?
Jordan Goodman: I wouldnít buy one year out. I typically buy two or three months out, and
if I have confidence in the direction, then I will buy an out of the money put or call.
Okay? So, First Solar is an example. I bought a 120 call when the stock was 115, and then
when the stock went up to 170 or whatever it was, I made a huge amount of money that
way. So, itís a little bit more aggressive way to do it.
If you wanna be more conservative, you can do kind of at the money where the stock is
currently trading or even in the money further. But if you have a pretty good sense of direction,
give it two or three months. If you do it one month, you may be in the right direction
but not have enough time to do it. That's the way I would play the options. Question
over here.
Audience: Öindex?
Jordan Goodman: Broad-based indexes. Uh-huh. So, for example, the Dow Jones Industrials
is a broad-based index. That's what they call the Diamonds, DIA. Or the NASDAQ, they call
the QQQs. Or the Standard and Poorís 500. Itís called the Spiders. These are broad-based
indexes.
So if the overall stock market falls, that's a way of profiting from the overall stock
market falling by buying puts on a broad index. That's a little bit safer than picking a particular
industry, but if you pick an industry that has lots of pain, that means lots of profit,
right? Does that answer your question? Okay, good. Alright. Question over here?
Audience: What do the actual terms of in the money and out of the money mean?
Jordan Goodman: Okay. If a stock is trading say at 30, something that would be at the
money would be a call option or put option giving you the right to buy or sell at 30,
okay? Say itís a call, which is, if you want to go up, a call that would be in the money
would be at 25, so youíve already got $5 of whatís called intrinsic value in it. A
call that would be out of the money would be the stocks trading at 30 and youíre getting
a call at 35. So itís not there yet, is the idea.
So if you get something that's out of the money, itís cheaper to buy but itís a little
bit riskier because the stock has to go up to 35 or higher for you to make money. That's
briefly the in and out of the money. Alright? Okay. I wanna keep going. We got lots more
to cover here.
Okay. Number Eight: Foreign Exchange Trading, and again we had one of the speakers talk
about this. With the dollar falling, you could profit by having your money in foreign currencies.
So, different ways of doing that. There are foreign exchange CDs, these are FDIC-insured
CDs, by a company called EverBank, E-V-E-R-B-A-N-K; everbank.com is their website.
They have CDs denominated in Canadian dollars, pounds, Euros, Yen, Australian dollars, whatever
currency you want. So you have a guaranteed interest of typically about 5 or 6% and appreciation
as the U.S. dollar falls against these foreign currencies. So there's a way of getting FDIC
insurance and gain against the weak U.S. dollar.
Then, the other way you could do it is to buy and sell foreign exchange directly, and
you heard before, that's really relatively easy to do. You just have to follow the charts
and make sure you get it right. You can make a long-term bet on these things, and again,
I would bet against the U.S. dollar. That's a way of profiting from that, and we talked
about this a little bit before.
Buying foreign stocks and bonds and funds in foreign currencies, so as the U.S. dollar
falls, you get appreciation that way. So this is definitely a trend that's gonna go further.
People say, ìHow much further could the dollar fall? Has it a lot further to fall?î The
Canadians in the crowd certainly know how much the Canadian dollar has appreciated.
Had you bought Canadian dollars or had you money in Canadian dollars, youíve made a
lot of money just on the exchange alone.
Okay, Number Nine: Cash Flow Strategies. Was there a question? No. Okay. Cash flow strategies.
Now, this is something you might not have heard about before. This is when there's any
kind of a cash flow, that cash flow can be sold at a discount and allow you to profit.
So Iím gonna go through the six different kinds of cash flows that are out there, and
thereís a whole world of trading cash flows out there. In fact, there's a place called
the American Cash Flow Association that has over $5 billion in cash flows being traded
every year.
So let me explain what a cash flow is. A business-based cash flow is a company has invoices and theyíre
maybe not getting paid on these, but theyíre gonna get paid eventually. Theyíre willing
to sell those invoices to you at a discount. So, say theyíre billed out $10,000. If I
give you $9000 right now, I get the $10,000 when it comes in. This is called factoring.
This is factoring for the little guy.
So the way you could do it is either you could be the one who buys the invoices in a case
like that or you can broker it where you put a buyer together with the seller and you make
a commission on it. And this is something you can do in your part-time, and itís not
affected by the economy really whatsoever. So that's business-based cash flows.
Collateral-based cash flows are cash flows based on some kind of a collateral. Mortgage
notes, you could have a note on a car, on a motorcycle, on a boat. Anything that's a
piece of collateral that could be seized if the underlying loan is not paid back is a
collateral-based loan. So there's a huge business in mortgage notes, for example, and you can
buy and sell mortgage notes at a discount and make yourself quite a nice living on that.
Consumer-based cash flows is where the consumer owes money one way or the other, and if itís
collected, typically itís sold at a very big discount and you could make money on that.
So the most obvious example of that would be past due credit card receivables. There
are people that buy credit card portfolios at 2 and 3 and 4 cents on the dollar, and
they then harass all the credit card people out there, and if they get 10 cents on the
dollar theyíve doubled their money.
If youíve ever had a very old credit card bill and you get a call from somebody, ìSeven
years ago you didnít pay your credit bill.î ìOh, I forgot about that.î ìPay it now.î
Some of the people pay, and so itís a way of getting very, very deeply discounted cash
flows that could beóthe hedge funds that do this make millions of dollars buying consumer-based
cash flows.
The next one is contingency-based cash flows. Now, there's a whole business out there of
investing in lawsuits, and hereís how it works. Either lawsuits or settlements. So,
Johnny just got run over by a motorcycle, went to court, heís getting a million-dollar
settlement being paid by the insurance company or something, or they settled it out of court
or there was a jury verdict, whatever it may be.
Johnnyís still in the hospital. He needs the money now. Itís a million dollars but
itís gonna take him a long time to get the money. So he's willing to give you, if you
give him $600,000 right now, you can get to collect the million when it comes in, or whatever
the numbers may be. So that's called contingency-based.
So there are people, literally the only thing they do is they hang around courtrooms, and
right after there's been a settlement they approach the attorney and say, ìCould I buy
that settlement from you at a discount?î Isnít this wonderful? And you see how this
is not affected by the economy. There's always gonna be people being sued and winning lawsuits
and so on, so you can make a lot of money on contingency-based cash flows.
Next one is insurance-based cash flows. Now, this is where there's gonna be an insurance
company paying one way or the other. So, for example, doctors love to sell their invoices
because they get paid very slowly by insurance companies or Medicare. So instead of waiting
three or four months or whatever it may be to get paid, they are willing to sell their
receivables at a discount, and then when Medicare or the insurance companies pay, you get the
difference between what you bought at a discount and the full price.
A lot of doctors work on that all the time. So, some people, all they do is approach doctors
and say, ìWill you be willing to sell your receivables?î And they do that all the time
because doctors can get into real cash flow crises.
Another insurance-based kind of a cash flow would be annuities, or there's something else
called viaticals. Viaticals, now, this may sound a little bit creepy but people do this
all the time. If you have somebody with a life insurance policy that's worth, say, $100,000,
and they get terminally ill, theyíre not gonna be around to enjoy the policy but they
need money now, so theyíre willing to sell that insurance policy at $60,000, $70,000,
whatever it may be, and when they die, you collect the $100,000. Meanwhile, theyíve
got money to live for the last few days of their lives. So there's a whole world out
there with viaticals to do it. Question over here.
Audience: What rate do you get on the insurance-basedÖ?
Jordan Goodman: All of this is negotiable. This is where all the skills you have from
negotiation come in. So, it depends on the buy and sell price, and there's no fixed price
out there. You have to offer them a price theyíre willing to accept and you have to
do something that's acceptable to you, but this is all up to negotiation. But I mean,
typically, it could be 20, 25, 30% over relatively short periods of time.
And there are a lot of other factors. For example, how sure is the payment? The surer
the payment the lower the interest rateís gonna be. Like the consumer-based one is more
unsure, so itís gonna be a higher yield than a very sure kind of payment. I mean, like
Medicare or insurance companies, you know theyíre gonna pay, you just donít know when.
Alright?
And then the last one is government-based cash flows. The best example of this would
be lotteries. Somebody wins a 20-million-dollar lottery and theyíre gonna take their payments
over 20 years or something. Instead of waiting, they will sell that lottery cash flow at a
discount, and then they get their money right away to go blow, and then they go back and
become poor again.
But meanwhile, youíve got a locked-in rate of return for the next 20 years paid by the
government. So that's a very secure, that's an easy one to get. So when lottery winners
win, they get attacked by all these people wanting to buy their cash flows. Go ahead.
Audience: Going back to the life insurance piece for a minute.
Jordan Goodman: Mm-hmm.
Audience: Does it matter whether or not itís term or whole life?
Jordan Goodman: It doesnít really matter. Just the main thing is life insurance is gonna
pay when the person dies. Alright? Yes, go ahead.
Audience: Also on the insurance-based one, do you have some good examples of those?
Jordan Goodman: Well, like I said, viaticals would be a good example where, you know, somebody
who has an insurance policy and theyíre pretty much terminally ill, and in fact you can buy
a whole portfolio of them, so you donít have to wait for one person to die but as they
keep dying they keep paying. This sounds kind of gruesome doesnít it? But itís perfectly
legal and it works. And you see how this is not affected by the economy, right? Alright.
Viatical is V-I-A-T-I-C-A-L. Viatical. Viatical. Okay.
Alright. So that's Number Nine. Number Ten: Passive Income Strategies. Now, Harv talked
about some of these but let me just briefly go over some of the passive income strategies
that are great.
Vending machines. If you have chips or Coca-Cola or whatever it may be in the right location,
it is literally a cash machine. You will get lots of change as long as you keep supplying
it. You go to Wal-Mart and buy your potato chips or whatever it may be at 10 cents and
you put them in the machine for a dollar, and these are just literally cash machines.
You can earn very, very high yields on those. Main thing is to have a product that people
want in a location they want. There's a whole world of doing that, but that's vending machines.
The next one is credit card reading machines. Now, this is where every time you swipe a
credit card or debit card, a fee is generated by the merchant. It might be 25 cents. So
you buy a portfolio of so-called POS, point-of-sale machines, that every time anybodyís swiping
those cards, youíre getting fees automatically. So you can buy into whole portfolios of POS
machines that, for example, one of them has all of the taxicabs in Toronto, is an example.
So, apparently itís mandated in Toronto. You have to do it with credit or debit cards,
and so every time anybody has arrived in Toronto, youíre getting a little piece of the action.
So you buy it for typically 10,000 to 15,000, whatever it may be. The yields on those are
typically about 25% per year, and then it appreciates over time, and you can actually
reinvest your money back into more POS machines and build up a nice portfolio for yourself.
So that's credit card and debit card swiping machines.
The next one is timeshare rentals. Now, this is if you have a timeshare in a high-quality
location at a time of year that people wanna rent, you can rent that out typically over
the Internet very simply and get very nice income that's gonna be far more than your
annual maintenance cost is gonna be.
Iíve actually done this myself. I bought Marriott timeshares, which are high-quality
and high-demand. I went into one of these places, and there's a guy who bought 50 timeshares,
and all he does in life is rent out timeshares and does it all on the Internet. And he has
massive passive income, and as long as itís in a high-quality place in a good time of
year, theyíre really relatively easy to rent, and that's a good source of passive income.
These good?
Audience: Yes!
Jordan Goodman: Alright. The next one is payday loan store funds. Now, you see them all round
Las Vegas for sure. Check-cashing places, payday loans and so on. There's about 20%
of the population that doesnít have bank accounts at all. They just canít afford them,
they donít have the minimums, whatever it may be, and they live on these payday loan
stores.
And you can say itís bad, but itís the way it is. This is a service people wanna pay
for. Now, they typically pay very high interest rates for short periods of time. They may
have a loan for two weeks until they get their pay check, and so the interest rate on that
can be 20% or higher in many cases. So if you have a whole portfolio of payday loans,
typically today theyíre getting about 13, 14%. And extremely stable, theyíve been around
for a very long time. Again, from your point of view, passive income just comes on a regular
basis.
And then, last one would be Internet advertising. How many of you have a website? Lots of you
have websites. If you can attract traffic to your website, you can make passive income
automatically. Now, Google has whatís called AdWords, MSN has something, Yahoo has whatís
called an affiliate program. We have a question over here. Just give us your comment with
the mic. Yup.
Audience: Okay. AdWords is the pay-per-click side of Google Ads.
Jordan Goodman: Right.
Audience: What youíre referring to, I believe, is AdSense.
Jordan Goodman: Correct. You could do it both ways. The pay-per-clickÖ
Audience: Well, Iím saying pay-per-click would be an expense of mine. AdSense is where
I get the income from supporting the pay-per-click.
Jordan Goodman: Correct. Thatís correct.
Audience: So Iím just clarifying AdWords is an expense. Itís not a source of income.
Jordan Goodman: That's correct. Appreciate that. That's correct. That's right. So, the
point is that you attract people to your website, and theyíre typically gonna have content
that's related to your kind of content, and as long as people are clicking on it, youíre
getting regular income. This is making money in your sleep. Passive income. Alright?
So, really briefly, I could go into more detail on all of them, those are 10 strategies where
you profit even if the economy goes down. Does that sound good?
Audience: Yes!
Jordan Goodman: Okay. So now weíve taken care of all your investments, youíre making
a huge amount of money even though the economyís going down. Now, Iím gonna take care of the
rest of your personal finances. Is that okay?
Audience: Yes!
Jordan Goodman: Alright. Here are my 10 secrets to financial success, and these are not really
investment-related. My first principle is: Never refuse money. Can you repeat that?
Audience: Never refuse money!
Jordan Goodman: Alright. Do you think there is free money to be had out there? Do you
want some?
Audience: Yes!
Jordan Goodman: A little or a lot?
Audience: A lot!
Jordan Goodman: Just wanted to make sure. Okay. First one. Microinvesting. Now, microinvesting
is where you sign up with a place, Iím gonna give you some names right here, where every
time you buy anything, they give you a rebate. It goes automatically into either your kidís
college savings account or your retirement account.
So there's a place called Upromise you might have heard of, their phone number (888) 434-9111,
upromise.com is their website, that every time you buy anything at a Upromise-related
retail, and there's about a thousand of them, theyíre putting money automatically into
your kidís college savings account. And you have to have a college savings account set
up for the money to go into, but as long as you do, on a quarterly basis money just keeps
going in there.
The average American spends enough so from age 0 to 18 the average American kid would
accumulate about $22,000 dollars from Upromise if you started at birth. So that's an example
of free money. Now, the same thing is true for retirement. There's something called NestEggz,
N-E-S-T-E-G-G-Z, at nesteggz.com or (866) 837-8380, that everything else is the same
but instead of going into a college savings account, money goes into your IRA or your
RRSP. So you can have money automatically going into your retirement savings account,
which you then invest and earn a good return on.
And in Canada, there's a special place called Futura Rewards, F-U-T-U-R-A Rewards, futurarewards.ca,
and their phone number (866) 728-3454, which is called Kids Futures. This is the same thing.
The money is going into a college savings account for your kids in Canada only. If there's
a Canadian one I try to give it to you, and there's one there. So that's one example of
free money.
Number two: Get a mortgage where the interest rates only go down and never up. Have you
heard of this before? Okay. This is a new thing. The interest rate drops automatically
whenever interest rates drop but never rises when interest rates rise. This is not something
youíre gonna get at your local bank by any means.
Hereís how it works. They start at the current market rate, maybe slightly higher than the
market rate. They take a look every six months. If interest rates have dropped by a quarter
point or more, it automatically goes down. They call you up and say, ìWell, time to
go in and lower your rate again,î and you donít normally object to that. Your maturity
stays the same, so youíre not starting all over again. When you normally refinance, youíre
gonna be starting the clock all over again. Here, your maturity stays the same no matter
how many refinancings you do, and there's no closing cost each time you do the refinancing.
This sound good?
Audience: Yes!
Jordan Goodman: Okay. You could do this for investment properties as well as your own
home as well, by the way. Now, Iím gonna give you an example of me doing this, because
I eat my own cooking here, and this is something that Iíve done and enjoyed very much.
I got my original mortgage in February 2001 at 7-3/4. At the time, rates were maybe 7-1/2,
something like that, so I got it at 7-3/4. And then, a few months later in August, rates
fell, went down to 7-1/4. So the lawyer calls, I was going to sign a bunch of papers. Each
time this happened, I saved about $100,000. So Iím willing to spend an hour to save $100,000
and lower my interest rate.
Then, in June 2002, the next year, they come in again and said, ìWell, itís dropped again,
6-3/4.î I said, ìOh, Iím willing to spend another hour signing papers.î So I went back
in, and now it went down to 6-3/4. Then, by January of the next year, rates had fallen
again, 6-1/4. Went back in. Everything else was the same, the appraisal was the same,
no need for credit reports or all the stuff. Just everything is the same except the rate
just went down.
Then I went back July of that year, it went down to 5-3/4. And this is really kind of
fun, but the lawyer is kind of getting sick of me, you know. We just keeping doing the
same thing over and over, but each time it gets better. And then, January 2004, it went
down again to 5-1/4. He's really gotten sick of me now, but Iím enjoying this process.
And finally, by June 2004, it went down to 4-3/4, which is where it is today. Itíll
never go up from 4-3/4. Okay?
Now, how much money do you think that's gonna save you? Hundreds of thousands of dollars.
Okay? It depends on the size of your mortgage. Itís gonna save you a lot. Okay, where and
how to get it? You ready?
Audience: Yes!
Jordan Goodman: Alright. Theyíre interested in this one. Itís called the ARC Loan, the
Automatic Rate Cut mortgage. The ARC Loan. Itís from Canada as well, 800-ARCLOAN, or
the website www.arcloan.com. Now, they just have a very different philosophy than most
mortgage companies. Most mortgage companies are trying to get as much interest, as many
points, as many fees as you can upfront. When interest rates fall, everybody walks across
the street and they start all over again and they have all the fees and all that. But they
assume theyíre gonna lose half their customers.
The people at ARC Loan, and Iíve dealt with them since 1993, theyíve been doing this,
their view is we wanna hold on to customers for life, and if interest rates fall we want
the customers to benefit in that, and therefore, they get these mortgage servicing fees. Every
time you pay your mortgage payment, the company gets a mortgage servicing fee. So theyíre
willing to hold on to the fees instead of kind of getting as much as they can from you
upfront, and then assuming youíre gonna walk across the street. Alright?
So, if you go to your local bank and say, ìIíd like an ARC Loan,î theyíre gonna
say, ìAre you from Mars?î They have never heard about these things before. But these
are the kinds of things that exist that most people do not have a clue exist. We have a
question over here.
Audience: Yeah, are these loans assumable?
Jordan Goodman: Yes, they are assumable. Theyíre assumable loans. And just to re-emphasize
one of the points. The maturity does not change. So when I started my original mortgage in
February 2001, itís a 30-year mortgage, it was a February of 2031 maturity. The maturity
is still February 2031. So every time rates went down, I did not start all over again.
So you get that double benefit. Youíre now paying a lower payment, and youíre still
paying it off for the same period of time. Okay? Go ahead.
Audience: [inaudible]
Jordan Goodman: The question was residential, commercial? No, they can do commercial as
well. You can do investment property as well as your own home. Got a question over here?
Go ahead. Wasnít there a question over here? Here we go.
Audience: When you go to your lawyer every six months to sign the paperwork, do you have
to pay your lawyer?
Jordan Goodman: Typically paid by ARC Loan.
Audience: Wow.
Jordan Goodman: Yeah. No closing costs, points or fees each time it happens. Itís correct.
Go ahead.
Audience: Yeah. What type of qualifications for the people getting these loans?
Jordan Goodman: The better your credit, the better the interest rateís gonna be. Okay?
So even if you have, and they do A credit, B and C credit, so if you have not as great
credit, you can still get an ARC Loan but the interest rateís gonna be higher. Itís
still gonna come down, correct. So today, last I checked with ARC Loan, they were at
about 6-1/4, 6-1/2, something like that, maybe even 6. Iím not sure, but something in that
range.
If you have C credit, you might be getting 7-1/2, something like that, whatever. So you
can still get it, but based on your credit youíre gonna have a higher interest rate.
Question over here.
Audience: Can you use this type of mortgage for like recreational, like buying like Costa
Rica property orÖ?
Jordan Goodman: I donít think Costa Ricaís gonna work. They like to do it in the U.S.
or Canada.
Audience: Oh, really?
Jordan Goodman: Yeah.
Audience: So, butÖokay.
Jordan Goodman: Theyíll do investment property, but I donít think, we can ask the Costa Rican
people but I donít think theyíre gonna do that in Costa Rica.
Audience: Okay. Can you use it then for real estate purposes, buying other propertyÖ?
Jordan Goodman: Yes. As I said, you can do investment property as well.
Audience: You can?
Jordan Goodman: Yes.
Audience: And would the rate be higher?
Jordan Goodman: Slightly.
Audience: Slightly?
Jordan Goodman: Commercialís gonna be slightly higher than residential.
Audience: Okay.
Jordan Goodman: But youíre still gonna save yourself a lot of money. Go ahead.
Audience: Whatís the process if you have an existing mortgage to switch it over into
this? Does it cost youÖ?
Jordan Goodman: You are refinancing your existing mortgage into an ARC Loan. Now, remember there
are not closing costs, points or fees. So the first time out, your rate might be slightly
higher than the market. So, I started 7-3/4. At that time, rates might have been 7-1/2.
But in the long run, Iíve come out extremely ahead. But you are in effect refinancing your
mortgage into an ARC Loan. Yes, go ahead.
Audience: Whatís the percentage of the down payment?
Jordan Goodman: Depends on what you want. I mean, they would like at least 10%. These
are not subprime loans. These are not no-documentation loans. This is a legitimate, real mortgage
that's not gonna blow up on you. But they would like at least a 10% down payment. One
more over here. I want to keep going. Yeah? Go ahead.
Audience: Can you get more than one mortgage?
Jordan Goodman: You could absolutely get more than one mortgage. Absolutely. People do it
on their primary residents and invest properties.
Audience: And are they just online?
Jordan Goodman: Well, they are online. You know, they call people and itís done by phone
as well. So you can go onto arcloan.com and see the whole, they have a little calculator
that can show you whatís gonna happen. But you do have to then call them at 800-ARCLOAN,
and theyíll take care of it on the phone. But it can be done on any state or in Canada.
Alright. Iím gonna keep going. Weíve got more things. Was that one good?
Audience: Yes!
Jordan Goodman: Would you wanna save more money on your mortgage?
Audience: Yes!
Jordan Goodman: Alright. Here we go. Now, this is something where you can pay your mortgage
off in five to seven years instead of 30 years. Now, you combine the Equity Advantage System
with your ARC Loan and youíve got the best of all worlds. Alright?
Now, hereís how it works. Instead of having a traditional 30-year mortgage where youíre
paying off pretty much interest for the first 10 or 15 years, youíre paying off a very
small amount of principal, with the Equity Advantage System youíre paying off principal
from day one. And the way it works is, in effect, itís a home equity line, a specialized
home equity line, where you put your income into it and you pay your expenses out of it,
and the result is your average daily balance on your mortgage goes down from day one. And
the end result of that is you literally can pay your mortgage off in five to seven years.
Now, you combine the ARC Loan with the rates coming down with an Equity Advantage System,
and you could pay your mortgage off even faster. If interest rates fall, youíre gonna get
a better rate. So the phone number for that is (888) 262-5540, and the website truthinequity.com.
At truthinequity.com, there's a whole form you fill out. At the end of it it says, ìIn
your situation with this amount of mortgage, this interest rate, youíll pay your mortgage
off in 5.6 years,î or whatever it may be, and there's a whole spreadsheet that goes
with it.
And if you put an extra thousand dollars into your mortgage, itíll pay it off in two more
months, whatever it may be. But the key thing is to pay down principal. Okay? Most of you
are paying interests, and this is paying thousands and hundreds of thousands of dollars in interest
that you can short-circuit by doing an Equity Advantage System. Is that good?
Audience: Yes!
Jordan Goodman: Alright. You want more mortgage tips?
Audience: Yes!
Jordan Goodman: Alright. Weíre making a lot of money here. This is good. Canada as well.
They do it in Canada as well. Absolutely. Okay. Now, Iím gonna solve a problem for
you you donít even know you had. We have a question over here. Let's get the mic over
here, please. Yeah, let's just keep the mic runners around so we canÖ Question over here.
Audience: Can you do that with a home equity loan?
Jordan Goodman: This is a form of home equity loan. See, I didnít want to go into it in
too much detail, but basically you pay all your expenses out of it. You put your salary
into it, you put dividends, you put interests into it, okay? So during the time your interest
and income is in it, your home equity, your balance, is down. As much as you can, you
get all your expenses on a credit card. You pay it like once a month.
So during the time that your income is in it your balance is down, then it goes back
up when youíve paid your expense, and it goes down. The key thing is getting that balance
down on a regular basis, and this is a whole disciplined way of doing it. So itís a form
of home equity loan, but most home equity loans do not allow you to buy or write a check
for $1.12 or something. This allows you to do it with any size. Alright? Okay, I wanna
keep going.
Okay. Iím gonna solve a problem for you you didnít know you had. Is that okay?
Audience: Yes!
Jordan Goodman: Alright. If you have an adjustable-rate mortgage, how many people here have adjustable-rate
mortgages? Lots of you. In many cases, something like 40% of all cases, the adjustable-rate
mortgage payment is wrong. There's a lot of complexities depending on what index it was
tied to and so on, and in many cases, adjustable-rate mortgage payments are wrong.
So, Iím gonna give you a place thatíll actually get you refunds of thousands of dollars if
your payment is wrong and lower your monthly payment as well. Itís called the ARM check,
standing for adjustable-rate mortgage check, and the website for that is checkmyarm.com,
and the phone number for that is 800-MISTAKE.
The guy who runs this, a guy named David Ginsburg in Maryland, said he had a case recently where
theyíd been paying the wrong payments for 15 years and they were owed $32,000. Theyíd
overpayed by $32,000. So the bank wasnít happy to hear from them but it was accurate.
So what he actually does is he kind of audits your existing mortgage, what you should have
been paying, and then gives a detailed breakdown of, ìHereís what you should have been paying
all along,î and says to the bank, ìHereís what we should be paying,î and usually they
canít dispute it. Alright? So that's adjustable-rate mortgage.
And the other area that a lot of people have wrong is escrow. If you are having property
insurance and property taxes withheld, in many cases they are being over-withheld by
the banks. So, again, he does the same thing. He does an audit, and thatís called escrow
check or checkmyescrow.com, their website, and the phone numberís 800-MISTAKE, the same
thing as that. And he checks, and in many, many cases, banks are over-withholding escrow,
and of course youíre not earning anything but the bank is earning something on it.
So itís a way of getting that escrow down to as low as possible to make sure that that's
accurate. Iíve had a lot of people do this and they get incredible surprises at how much
theyíve been overpaying in both escrow and ARM payments.
One more thing in the mortgage area, reverse mortgages. Now, weíre not all there yet but
when you hit 62, a lot of people, the only asset theyíve got left is their home. Theyíve
gone through all their savings and so on, and if you get a reverse mortgage, itís a
way of getting income from your home and you still have to live there, and you have to
make no payments.
When you sell the home or die eventually, then the home will typically be sold and repay
the reverse mortgage, but meanwhile you get to live in your home for the rest of your
life and, in fact, have a decent lifestyle. Typically, youíll get about 60% of the appraised
value of the home. Iím just gonna finish, and Iíll take your question.
You can draw down the equity in three ways. Typically as a credit line, so you have a
credit line you can access whenever you like, as a lump sum, you take down the entire 200,000
at once or as an annuity, a certain payment for the rest of your life. So those are three
ways you could typically get out a reverse mortgage. The homeowner receives more income,
the homeowner can stay in their residence a long time instead of having to move to a
nursing home or something like that, and one of the best things is you, the kids, face
fewer financial burdens.
Iím finding a lot of people who are getting to retirement age who have a beautiful home
around them and no other money, and theyíre gonna move back with the kids. This is what
I call the reverse boomerang generation, you know. The parents are moving in with the kids
now because they donít have enough money. So if you were in the kidsí situation, itís
a great way to keep your parents in their home and you have a life. We have a question
over here.
Audience: Yes, back to the ARM check.
Jordan Goodman: ARM check? Uh-huh.
Audience: Would they go back if youíd already paid off your mortgage?
Jordan Goodman: Not if you paid it off. Youíd have to have one payment left. Yeah. But if
the mortgage is already paid off, itís too late. But if you have an existing ARM going,
they will audit it for you. Yes.
Okay, so hereís a good way to get the best reverse mortgage out there. The phone number
is (800) 931-0370, extension 1344. Itís a bank called Access National Bank, which is
the best out there. They have a very good program, they really work with it, and in
many cases I find, the kids recommend this to the parents. Okay? The parents are 62-plus
and, you know, I mean the argument you can make to your parents is, ìIím gonna get
less of an inheritance and you get to live in your house.î
Now, what youíre really thinking is you donít want them to move into you, but you donít
tell them that, you know. But really, in many cases, people who are 62-plus have these wonderful
homes. Theyíre what I call house-rich, cash-poor, and this is the perfect solution for them.
They donít have to make payments. They get to use that equity, have a decent lifestyle,
and so you as a kid get less but meanwhile it works better in many ways. Question over
here.
Audience: In California the cost of a reverse mortgage is around $80,000.
Jordan Goodman: Not that much. These guys are gonna be nothing close to that. There
are certain fees that are mandated for closing cost upfront. Itíll typically be between
$8000 and $10,000, should be nothing close to $80,000. That's a total ripoff if theyíre
charging that much. These are guys that work on a national basis. Alright? So that's reverse
mortgage. So those are some mortgage tips. On we go.
Improve your credit situation. A lot of people are not really monitoring their credit very
carefully and they really wanna do better with that. So, the first thing you wanna do
is to get the best credit card interest rates possible. There are credit cards out there
with much lower interest rates than traditionally what youíre gonna get in the mail. Thereís
one state in the United States which is the king of low-interest credit cards. Anybody
know what state that is? Arkansas.
Arkansas. Arkansas, yeah. Arkansas has used that were set in the depression and theyíve
never raised them since. So they have rates of 7 or 8 or 9% on credit cards there. In
many cases, you get no-annual-fee credit cards. If you were paying in full every month and
you want to have a card with no annual fee, thereís tons of 0% balance transfer offers
out there. And if you do this, this is what I call, Iím gonna talk about this a little
bit later, credit card surfing, where you surf your balance from one to another with
0% money.
Frequent flyer miles. If you wanna do that, the way to do it is concentrate all your miles
on one airline where youíre gonna getópeople have like five different frequent flyer miles,
and by the time theyíve accumulated enough they expire, so get one airline that youíre
gonna concentrate your mileage on. You can get like rewards from hotels and all kinds
of other places.
Secured credit cards. If you have not-so-great credit and youíre not able to get an unsecured
credit card, a secured credit card is where you put up a certain amount of money, theyíll
give you a credit line for that amount, and then you can get your credit established,
and then you can kind of graduate to an unsecured card.
A good source for all of this is credit-card-perks.com. Itís a free website, and you put on your
situation and theyíll say, ìHere are the best low-interest cards and frequent flyer
cards,î all the things Iíve mentioned. Theyíll get you the best possible deal on credit cards
anywhere in the country. If you go after it, youíre gonna do a lot better than just what
you get in the mail. Those are the worst offers. Question over here.
Audience: Actually just a comment. Be aware of the zero-balance transfers. If you are
surfing your balances like that, it will lower your credit score significantly. So you donít
wanna do that if youíre about to be doing something financing like buying a new home
or something like that. You wanna wait a year.
Jordan Goodman: Iím about to get into that, but I agree with you. You donít wanna do
too much surfing, yes. Alright. Also, monitor your credit report. How many people here have
not seen their credit report in the last year or so? You have no idea whatís on there.
That is dangerous. So you wanna make sure your credit report is accurate. Know exactly
what your credit score is, your so-called FICO score.
Understand the effect on your credit score of every move you make. That's what we were
talking about. With credit card surfing, that could lower your score, so with something
like this you can know in advance before you mess up your credit what the effect of that
is going to be. Also, protect against identity theft. Something like 10 million Americans
got hit by identity theft in the last year.
And in many cases, itís not that youíre doing something wrong. Itís somebody stole
your data who was in some kind of a classified situation and they go off and do things. So
what happens in this service, the one I mention in particular here, the one I think is best,
is called the Equifax Credit Watch System, and their website is guardmycredit.com. There's
a slight fee for it. I think itís about $40 a year, but you can look at it any time.
Anything funny whatsoever goes on with your credit, they email you right away, and say,
ìDid you just buy 15 refrigerators in Buenos Aires?î Or, ìDid you just buy 20 fur coats
in Romania,î or something, and if it wasnít you, you kind of know something funny is going
on. You put whatís called a freeze on your account and stop it from happening again.
But if you donít have something like this, whatíll happen is you get your bill two or
three weeks later and you see this bill for all these refrigerators in Buenos Aires, and
then you have to try to recover. You wanna know this is happening right away. With ID
theft, you gotta stop it right away.
I always do this. Let's have some fun here. Is there anybody here who has been a victim
of ID theft? Lots of names, whoa! Lots of it. Alright, let's just have one fun story.
Where is there a mic? Okay. Just have your hands up. Okay, over here. We got a good ID.
Just tell us briefly your story.
Audience: I went to the gas station and my credit card wouldnít take the charge of 50
bucks, and we were on our way to San Diego. Iím from San Jose, Northern California. Whoís
from Northern California?
Audience: Whoo!
Jordan Goodman: Uh-huh.
Audience: And I couldnít charge it and I called right away, ìWhatís going on?î because
it was pretty much paid off. And we called, ìBy the way, you have a 16,000-dollar balance.î
ìWhat the heck is going on?î I turned around and, ìShould we take off? Should we stay?
What should we do?î I panicked. Iíd never experienced that in my life.
And, ìItís just a 16,000-dollar balance. Weíll take care of it.î Iím like, ìWell,
what are these charges?î and you know, so I panicked and I just took off. But later
on I found out that they were using my credit card in Orlando and going to strip clubs,
and my wife thought it was me but it wasnít meÖ
[Laughter]
Jordan Goodman: You sure? [Laughing]
Audience: They charged $300 a pop. The $300 a pop, so it wouldnít trigger any alarms
or anything like that, and they added up to like $13,000 or something like that. They
took care of it, but it was just reallyÖ
Jordan Goodman: This is not the time you wanna find out you have, ìOh, $16,000,î you canít
get gas at the station, you know? So, anyway, obviously we have loads of stories we could
tell but ID theft is a huge problem. You gotta be protected against it. So there's a website,
take care of it for you, guardmycredit.com. On we go.
We talked about surfing. I just wanna briefly talk about the three different kinds of credit
card surfing. There's active credit card surfing, moving your balance from one place to another.
If you do it right, it canít hurt your score but it can keep your interest rates much lower.
A lot of people are doing this all the time. Oh, let's get the slides up, yeah? Okay. There
we go. Active credit card surfing is where youíre moving your balances from one place
to another.
Passive credit card surfing is where you move your balance to one of these cards that are
low, permanently low, like some of the Arkansas cards. For example, there's Pulaski Bank,
Simmons Bank, Arkansas National Bank. Those are three examples where theyíre gonna get
you permanently low interest rates.
And then, maximizing your grace periodís the third one. That's where the grace periodís
the difference between when you buy something and when you have to pay for it. So a very
simple technique to maximize your grace is, say you have three credit cards, know when
the bill goes out, and if you canít remember write it on the card. So say you have one
card that bills on the 5th of the month, one on the 15th, and one on the 25th, just for
example. You go and buy something, you remember when it bills, and you bill it on the one
where the bill most recently went out.
So today is the 19th. So let's just do a little example. Weíre gonna go and clean out Circus
Circus across the street here, okay? And so youíre gonnaówhich cards should you use,
A which bills on the 5th, B the 15th or C on the 25th? Todayís the 19th. B is right,
the 15th. So now itíll be billed the 15th of December and you have extra time where
the moneyís earning interest for you instead ofóbecause a lot of people will do something
and they get the bill like the next day. ìBoy, they were really fast.î They werenít aware
of when the billing cycles are. Alright, so that's just a little bit on credit card surfing.
Okay, on we go. You have a question over here? Okay, just get the mic. Yeah. Right over here.
Audience: You said to know your credit score, but arenít there three reporting agencies,
and are you gonna get a different score from each of the three agencies?
Jordan Goodman: Yes, there are three. There's Equifax, Experian and TransUnion, and at Equifax
you get a 3-in-1 report, and youíre right. You will have slightly different numbers.
There are actually three of you out there. You didnít know that. But they have different
information on them. So you do wanna see all three because when you apply for a car loan
or a mortgage, whatever it may be, you never know which credit bureau theyíre gonna use
for which report.
Audience: And one time I got my credit report but they said it would be extra, I had to
pay extra, to get the actual credit score. Is that right?
Jordan Goodman: Yeah. Sometimes that's true. If itís a FICO score, which is the Fair Isaac
Company, they will charge a little bit extra. At this service, at this credit watch I mentioned,
itís all included. Any time you want, you can get the credit report and the credit score.
Make sure itís accurate.
Audience: Thank you.
Jordan Goodman: Okay. On we go. Number four is getting out of debt using a high-quality
credit counseling service. Let's get the slides up here. Yeah. Did you see that one? There
we go. Get out of debt using a high-quality debt counseling service. What they will do
is consolidate all your credit card bills, medical bills and other kinds of debt into
one monthly payment instead of having all these different payments all over the place.
You pay a much lower interest rate, typically 2, 3, 4% instead of 18 or 25. I saw a credit
card recently at 32%, and you know, itís gonna save you a lot of money that way, and
you get out of debt much faster than you possibly could on your own. This is whatís called
a DMP or debt management program. Itís on your credit report as a neutral event. In
itself, it doesnít hurt you or help you, but it does help you get out of debt much
faster.
Some examples, Debt Relief Solutions is a big one in the U.S., 800-4DEBTHELP is their
phone number, or their website debtreliefsolutions.com. In Canada, the best one I found is called
Consolidated Credit Counseling of Canada. Their phone number, (800) 656-3920. Their
website, consolidatedcredit.ca. So both of them do the same. They consolidate all your
credit into a low interest rate, help you get out of debt much sooner than you ever
could on your own.
For businesses, if you have a business, there's a place called Corporate Turnaround, their
phone number (800) 411-1113, or their website dontdeclare.com. And that's if you have a
business that has a lot of credit card debt or other kinds of debts as well, they will
work with the creditors to lower your interest rate and, in many cases, settle for 50 or
75 cents on the dollar, and they work in Canada as well. Mm-hmm.
And if you have tax problems with the IRS or state revenue agencies, there's a place
called Tax Problem Resolution, and their phone number is (949) 250-5888, or their website
taxproblemresolution.com. The IRS has a program calledóitís basically getting rid of taxes.
Theyíll typically settle for like 5 or 10 cents on the dollar. So if you donít know
how to do it, these people are experts at that. Itís helping you save tons of money
on back taxes.
Okay. We just got you out of debt. On we go. Okay, number five. Iím gonna cut your health
care cost now. Alright. There's something called medical repricing, which is a way to
lower your health care cost. Basically, what it does is allows you to be part of a network
even if you have preexisting medical conditions and save yourself tons of money on medical
expenses. I do this all the time.
If youíre self-employed, in many cases you cannot afford regular health insurance. We
have about 50 million people in America with no health insurance. Or, if you have some
kind of a preexisting medical condition, you might not be able to get health care at any
price because they only like to take people on which theyíre not gonna have claims. And
this doesnít apply to Canadians. I know you have national health care. Youíre completely
happy, so there are no problems for you whatsoever there.
But for Americans, you have something, and then a lot of Americans have absolutely nothing,
so medical repricing may be a good solution for that. Here is how it works. You pay one
monthly fee. Typically itís around $100, depending on whether you get a family plan
or not, but roughly about $100 for your entire family. You gain access to a very wide network
of doctors, hospitals, drug stores, all at significant discounts, 40, 50, 60% off the
retail price.
The people that pay the most for health care are the people who have no insurance, the
people who can afford it the least. So this is a way of being part of a network even though
youíre not employed at some company that offers health insurance. You qualify even
if you have a preexisting medical condition. Most health insurance companies run the other
direction if youíve had any kind of cancer, anything whatsoever. This way, even if you
have preexisting medical conditions, you can save yourself a ton of money.
Here are the best ones I like out there, the ones I use. medicalrepricing.com is the website,
or at the same place itís called Global Healthcare Systems. Their website is also ghcsystems.com.
Their phone number, (888) 521-8141. They have the biggest network of doctors and hospitals
out there to save you tons and tons of money.
Another way to do this, there are so-called medical negotiators, and what they will do
is even after the fact, is go in and negotiate for you because theyíre doing it for many,
many people at once and get you much better prices than you can get on your own. The best
place I know with the medical negotiator is called Equal Health. Their phone numberís
(866) 490-4989, and their website, equalhealth.com.
So thereís two ways to do the medical repricing, but Iíve just saved you about 50% on your
health bills right there. Is that good?
Audience: Yeah!
Jordan Goodman: Alright. On we go. Whoops. You wanna see it? I told you weíre going
fast and Iím running out of time here, so. Okay, number six, car buying. How many people
like to buy cars? Well, itís something you typically do every three years, every five
years. Youíre not really that good at it. Itís not something you typically have fun
doing. So instead, use a car-buying service that will get you the absolute best deal on
a car.
What theyíll do is this: They charge you a modest fee, typically between $200 and $400.
If you want them to do the entire thing from beginning to end, itís about $400. If they
just advise you, itíll typically be about $200 or so. First of all, they help you upfront,
and they only work for you, the consumer, to tell you if buying or leasing is gonna
be better in your situation. Then, they negotiate to get you a far better price than you could
ever get on your own because they buy hundreds of cars a year, youíre buying one car every
five years or something.
They know all the dealers. Theyíll typically go within about a hundred-mile radius of where
you are and have the dealers competing against each other, and they get you the best deal,
they do all the paperwork, and you go on and pick the thing up. So it saves you a lot of
time as well as a lot of money. And they also will get you better financing or leasing terms
than you ever can get on your own.
I bought my last three cars this way, and Iíll just tell you my most recent example.
I have an Infiniti í35, and I went to the local dealer, I live in New York, and went
in and said, ìYou know, Iíd like to get a good deal,î and they said, ìOkay, this
is the best price we can do.î I said, ìIs that your final offer? Get it in writing.î
And I said, ìOkay, that's your final offer.î
I then faxed this to the car-buying service. They beat it by $6000. Six thousand dollars,
and it turns out Iíve been in New York, it was in New Jersey, I drove 20 minutes to save
$6000. I thought that was worth it, you know. And it turns out there was a rebate from Infiniti
to the dealers if they got the sale in by the end of the month for like $5000, which
I would never have known about. That's what these car-buying services do.
So just for fun, I went back to the original dealer after Iíd bought the car in New Jersey
and said, ìYou know, what about this rebate $5000?î And he said, ìWell, youíre not
supposed to know about that?î I said, ìOh, Iím sorry.î I actually brought them the
letter, you know, and said, ìThis is theÖî ìWeíre supposed to keep that.î I said,
ìOh, okay. Well, you didnít get the sale because of it.î So you can save yourself
a ton of money on cars.
The place to do it is called Car Source. Their website is carq.com. Their phone number, (800)
517-2277. There's a woman there named Linda Goldberg who is an absolutely ferocious consumer-oriented
car-buying person who has been doing this for many, many years, and she can take the
time and effort to make sure you get the absolute best deals.
Has anybody here bought a car through Linda Goldberg? Over here. Get a mic over here.
Just very briefly, just tell us your story.
Audience: Yeah, I went to Linda and she helped me buy a car. Took about two months. I got
a good credit score. Best I could get was about 6-1/2. She got me I think it was 2.5
or 3, and spent a lot of time negotiating the odds and ends and things like that.
Jordan Goodman: But how much did she save you on the car?
Audience: About $4000.
Jordan Goodman: Yeah.
Audience: I just turned up, picked the key up, signed the papers, and away we went.
Jordan Goodman: Very good.
Jordan Goodman: Question over here. Mic in here. Mic here, please. Here we go. Right
here. This is typical. This is what happens.
Audience: Is this good in Canada, too?
Jordan Goodman: Itís even better in Canada.
Audience: Oh, okay.
Jordan Goodman: Okay. Linda Iíve been working with for a long time. She has been shocked.
In the last two years or so, Iíve been working with her in Canada. Canadian car dealers get
away with absolutely murder. Their profit margin, in the U.S. it might be $2500, in
Canada it might be $10,000 to $13,000 profit margin. Because there's fewer dealers, and
they just are monopolistic about it. So she loves saving money for Canadians. So, absolutely.
Now, sometimes, the best deal may be having to go across the border and getting it in
the U.S. and bringing it back. Itís perfectly legal, and she knows how to do that. So, absolutely,
she works in Canada. Absolutely. Okay, so weíve just saved you tons of money on your
cars. You ready for another one?
Audience: Yes!
Jordan Goodman: Alright. Weíre on a roll here. Number seven. Okay, let's get it up
here. Yeah. Here we go. Financial aid for college. The good news, there's loads of money
available for college, and a lot of people do not know how to get it. Certainly, student
loans is one way. Now, you go to your college and theyíre gonna tell you this is the place
to get student loans. That's the one where the college gets a kickback.
There's been a big scandal about that recently. A lot of college financial aid officers were
having all kinds of fancy trips for saying, ìThis is the loan.î Okay, this is the place
Iím gonna give you right now that has no connection to colleges whatsoever and offers
the lowest interest rate. Itís called My Rich Uncle. Hmm? Scholarships is a different
thing. This is loans. Iím gonna do scholarships next.
Their website is myrichuncle.com. You didnít know you had a rich uncle, but now you do.
And their phone number, (888) 697-4248. Now, with student loans, there's a maximum that
the government sets. Every lender out there that I know of except My Rich Uncle charges
the maximum. These guys charge the minimum. Alright? Now, they donít have a huge marketing
effort and so on, but they do really, really good stuff.
It was actually founded by two college students at NYU who were just disgusted with the whole
system and set up a whole thing thatís much, much better. So, you know, you have to call
them, but Iíve just saved you tens of thousands of dollars on your student loans.
And then, as far as scholarships and grants, there is loads of money available, $75 billion
dollars in scholarships every year. About $3 to $4 billion is not given out because
they canít find the people that meet the criteria. So you gotta help these scholarship
committees that are looking to give you billions of dollars that youíre not taking the money
from them. Theyíre complaining all the time. Who fits these criteria? The left-handed Lithuanian
tennis player who wants to go to Wyoming State or something. They canít find the person.
Alright?
So if youíre in a situation, hereís the way to do it. There's a website, fastweb.com,
and another one, finaid.com as well. You put in everything about yourself or your kid,
it comes back, ìIn your situation, here are the scholarships you have a chance of getting.î
Tons of money out there to be had. And for Canadians too, yes.
Okay, number eight. Understand your money type. Now, the money type, I actually did
a book on this, you have a financial personality. When you went through MMI, you probably went
through that whole money type exercise, but I go into this in much more detail. These
are the six types of money types I talk about very briefly. Strivers are the people who
are kind of very outgoing and entrepreneurial, making things happen.
Ostriches are people who donít wanna deal with money whatsoever. They have their head
in the sand and hope itíll all go away. Debt desperadoes are the people who get out of
debt by going into more debt. ìIím gonna get rid of my credit cards by doing a home
equity loan.î And then, when that's filled up, ìThen, Iíll borrow from my 401k to get
out of debt.î And then, when that oneís cleaned out, ìIíll borrow from my insurance
policy.î They kind of keep borrowing to get themselves out, and someday they kind of wake
up.
Coasters are people who think everything is fine, nothing will ever go wrong, so they
just kind of coast along until they hit what I call a financial brick wall. ìOh, the kidís
turning 17. I think we should start saving for college, donít you think, honey?î Or
theyíre 58, ìI think we should start some retirement plan, you know,î or ìWeíre going
to the loan closing for the house. I think itís time to a start a down payment.î These
are coasters. They just kind of keep going along.
High rollers. Weíre loaded with high rollers in Las Vegas here, people who love to spend
money and think that everything will go fine. They have no safety net whatsoever. And squirrels
are the people who are totally living in fear. They are holding on to everything very tightly,
waiting for the next depression, kind of the opposite of the high rollers.
And actually itís interesting, when you marry somebody, you typically marry a different
kind of money type. So squirrels marrying high rollers, it makes for some very interesting
discussions, doesnít it? On we go.
Number nine. Protect yourself against long-term health care costs. Lots of us are gonna live
many more years than our parents did, which is great, except whoís paying for this? Long-term
medical needs are not paid for by Medicaid unless youíre completely impoverished, and
that's becoming very difficult to qualify for Medicaid. Itís not paid for by Medicare,
itís not paid for by health insurance, Social Security.
Youíre gonna be on your own, and in many cases, if you can get a long-term care policy
when youíre relatively young, itís gonna cover many, many years that youíre going
to need that money. A lot of people buy long-term care insurance when they see their parents
needing it, and you wanna get that earlier. The younger you get it, the more healthy you
are, the better it is. If you start waiting till your 60s and 70s, either you canít afford
it because the price goes up or you canít get it at all because there's preexisting
medical conditions.
So hereís a good place, an independent place to get it, Long-Term Care Quote. Their phone
number is (800) 587-3279. Their website is searchltc.com, like searchlongtermcare.com.
Itís an independent agency that has no allegiance to any particular company. They find you the
best deal and can save you just tons of money.
Question over here. They work for Canada as well. Well, actually, no. Canada will take
care of all your health care forever, right? So you never worry about these things. No,
Iím kidding. I think they may, but they are more designed for the U.S., actually, where
itís a really big problem. Okay, so that's long-term care. On we go.
Number 10: Create a realistic financial plan. Lots of people have no financial plan. They
have no idea where they wanna be going. So hereís what you should do with the financial
plan. Working with an expert planner, first of all, set financial goals. Short-term goals
are things like in the next year or so, medium-term are like the first five years or so, long-term
would be five years to as much as 30 years like retirement planning, maybe starting a
new business, something like that. You wanna create a net worth snapshot, which is how
much you owe minus how much you own, kind of see where you are and do that roughly once
a year.
Determine your risk tolerance. Youíve heard a lot of things during this week about all
kinds of things. They may be outside your risk tolerance level, so you wanna kind of
see where your risk tolerance is at, and then actually receive the support to implement
the plan. You can have a great plan but if itís sitting on the shelf, itís not doing
you any good.
A guy that Iíve worked with for many years is named Allen Grommet. He runs a company
called Caring Financial Services. He's based in New Jersey. His website, caringfinancialservices.com.
His phone number, (800) 881-1477. Iíve worked with Allen for over 20 years. He's extremely
patient with people, really takes you through the whole process.
You donít have to do it in person. You can be at your computer and he can be at his,
and he can be working online, filling out all the different forms, and then heís not
trying to sell you anything. He's just trying to give you a financial plan to help you reach
your goals. It makes a huge, huge difference.
So, hopefully, youíll find all that helpful. Take advantage of all these things and be
wealthy. Thank you.