How to Maximize Your Returns Tax-Free

This week’s podcast is about energy. But before we do that I want to comment on a few things about our investing ecosystem.

A decade ago when I first started playing around with this podcast concept I was very excited about a whole new world of investing that I was learning about.

Why invest in the stock market if you could invest in real estate, oil and gas and other businesses that seemingly made a lot more money and had a lot less risk?

A decade later, I can see why it often makes sense for people to just buy ETFs and call it a day. Or, maybe a highly stable asset class such as permanent life insurance i.e. Wealth Formula Banking.

Private investing can be very lucrative, but it’s not regulated so it attracts all kinds of nefarious and/or incompetent characters to the space.

Retail (mom-and-pop) investors are particularly vulnerable to these people because they tend to have less financial sophistication. That’s not to say they aren’t intelligent. It’s just hard to be a full-time professional and a sophisticated investor at the same time.

That gets a little dangerous because personal finance podcasters like me are looking for content. We see ourselves as providing education and entertainment when in fact we often inadvertently endorse individuals to whom we should not give a platform.

I have to admit that I have been guilty of this myself. Especially early on, I would interview anyone with an interesting idea without considering that my listeners might take the interview as a stamp of approval from me.

For example, despite my own vehement and vocal dislike for investments in oil and gas drilling, I’ve given a platform to people on my podcast who were raising money for that. People in our community lost money because of that. For that, I apologize.

In recent months, retail investors in this space have been hit especially hard. The SEC has shut down funds in the carbon capture and cannabis spaces that appear to be based in some level of fraud and other funds have simply collapsed based on poor business plans that were never attenable in the first place.

Fortunately, our group was able to dodge these schemes. It’s hard enough to invest without swimming with sharks.

Case in point…my real estate portfolio and that of my investor group absolutely has some losers in it right now.

Much of that is due to an unprecedented slope of rate hikes and unexpected price escalations in such things as materials, property taxes, and insurance. But it’s not because of fraud. In investing, you can’t always win. You just need to win more than you lose.

At the end of the day, my own investments are still going to net out quite profitably. I’ve borrowed from traditional investing paradigms and “volume-averaged” into a lot of different assets.

I’ve stuck to a plan over several years that will, fortunately, overcome some setbacks and I will now position myself to be opportunistic and take advantage of oncoming distress. It will get ugly and most will be too scared to take action—especially if they have suffered losses. But that’s exactly when you want to be greedy, not afraid.

But going back to how we can move forward in the safest way possible, we do need to be proactive in risk mitigation—especially when it comes to avoiding scams. So what am I going to do?

1) I will not interview anyone actively raising capital unless I am personally involved in the operation in a position of transparency.

2) Our Investor Club will only present opportunities in which I am a managing partner and/or which has undergone due diligence by a third-party SEC registered broker-dealer.

In taking these steps, my podcast itself does become a little bit more challenging. As you may have already noticed, we have shifted to more macro issues than investment-related topics.

However, I also believe that the steps we are taking with the podcast and with the investor club will provide our group a “best in class” retail experience that involves institutional-level due diligence. It will be more complicated and challenging to execute but that’s what you deserve.

Now, getting back to this week’s episode of Wealth Formula podcast. We are going to talk about oil and alternative energy sources at the macro level. It’s information that you need to understand the larger global financial picture today so make sure to tune in!

Alex Stevens serves as the Manager of Policy and Communications for the American Energy Alliance. In his role, Alex writes on the relationship between business and government in the energy industry as well as the effects of regulation and subsidies on energy markets. Alex graduated with a B.S. in Political Science from Central Michigan University and a B.A. in Journalism from Oakland University.

Shownotes:

• Why are we still on an oil based economy?
• EPA story about combustion engine emissions
• Are renewable energy and electric vehicles as green as they seem?