Building a Wealthy Mindset and a Winning Portfolio with Brian Preston – EP 141

Interview with Brian Preston

Building a Wealthy Mindset and a Winning Portfolio with Brian Preston

In this episode, you’ll learn:

✅ Brian’s 3-step strategy for recession-proof and low-interest wealth building.

✅ The biggest roadblocks that prevent people from being financially free.

✅ The fundamental (and often overlooked) steps to generating wealth – and keeping it.

Featured on This Episode: Brian Preston

✅ What he does: Brian Preston – CPA, CFP®, PFS – is the Founder and Managing Partner of Abound Wealth, a company that helps people accomplish all their financial goals by guiding them through smart financial planning and investing strategies. With over two decades of experience in personal financial planning and taxes, he’s driven to help others optimize their lives so they can focus on the things in life that truly matter to them. This desire to create educated clients led to the award-winning podcast, The Money Guy Show. The Money Guy Show has been broadcasting for over 15 years, and Brian has appeared on the Fox Business Channel and US News and has been featured in The Wall Street Journal, Bankrate.com, Newsweek, Kiplinger’s, Yahoo Finance, Forbes, and more.

💬 Words of wisdom: “You have to prioritize the vision of where you want to be in life and then figure out what incremental decisions you can make actually to get there.” – Brian Preston

🔎 Where to find Brian Preston: LinkedIn | Twitter

Key Takeaways with Brian Preston

• How the desire to show up for family led Brian to become an entrepreneur.
• The power of developing an appetite for risk-taking from an early age.
• How to build wealth without sacrificing time for fun and fulfilling activities.
• Life either happens TO you or FOR you.
• To build wealth, you need to get comfortable letting go of it.
• Taking care of the fundamentals so you can enjoy the “rich guy” activities.
• How a contrarian mindset helps you capitalize from recessions and economic downturns.

Free Strategy Session 

The Lifestyle Investor Insider

Resources

• Money Guy
• Brian Preston on LinkedIn | Twitter
• The Money Guy Show | Youtube
• Michael Hyatt
• Megan Hyatt Miller
• Christopher Carter Smith
• Family Brand
• Campfire Effect
• Brad Johnson

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Read the Full Transcript with Brian Preston

Justin Donald: Hey, Brian, great to have you on the show.

Brian Preston: Thanks, Justin. Really appreciate it. This is a big opportunity. Always love kind of spreading all the things that us financial mutants do.

Justin Donald: I love it. Well, I’m sure we can talk for hours upon hours about wealth creation, investing, financial literacy, financial freedom, managing money, just all the different things. And by the way, I want to get into a lot of that today, but I think it’s important to start out the episode with the fact that when I asked Michael Hyatt, who are the top people in your network, like, who should I know that you know, you are literally one of the first people that he mentioned by name and said, “You guys just have to connect. There’s just so much in common. You guys have a love of so many of the same things inside and outside of business.” And so, I’m just thrilled to have you on the show.

Brian Preston: By the way, that’s a huge compliment. I love Michael and Megan. And I got to tell you, some of the things that Michael has done for me is when I did Best Year Ever, when I was trying to make a commitment to be better with reading the Bible daily, having Bible studies. For some reason, nothing seemed to click until I did Best Year ever. And then I also know that when I got to the point that I needed an agent for doing some literary stuff, Michael hooked me up with the best person in the world. And so, if Michael said good things about me and even gave my name out, day has been made. So, that means a lot to me.

Justin Donald: I love it. Well, Michael tends to be a well-connected, resourceful man because he has really just shared so many resources with us, and it’s just been fun working with him and getting to know him. And we’re actually doing a program together. I had Chris Smith of Family Brand and Campfire Effect on our show. And so, we’re actually doing a Family Brand. I don’t know if you know Brad Johnson and his family, he’s in the financial space, and then Michael Hyatt. So, I’m excited to kind of create that Family Brand structure and all the things that come with it together with those fine families.

Brian Preston: Well, that’s awesome. I’ll try to live up to the hype that Michael might have set up around me. We’ll see if I can fit that measurement. You have to give me feedback later.

Justin Donald: I love it. That sounds good. Well, you’ve got your own show. We can see in the background you’re in your studio. You’ve been podcasting for quite some time. You’ve had your own. You’ve been a broadcaster. I think you still are a broadcaster. But your beginnings were much different than this. You started out as a bus driver. So, a big jump from bus driver to broadcast personality and a financial mind.

Brian Preston: Yeah. I am accidental about a lot of things. Not to age myself, but I always tell people I’m kind of the Mr. Magoo of success, and the fact that I have very good ears, that I listen out, and when things open up, I don’t miss those opportunities. But without a doubt, I did. I was a University of Georgia bus driver all through my college years. I was first a bus driver, and then I became a bus driver trainer, which was kind of sad because I no longer was driving those big buses anymore. But that was a great opportunity.

And then I got into public accounting, and everything was great with that. And I was even around in the mid-90s, when accountants got into doing financial planning, and that was a big opportunity. But then I switched to a large firm, and unfortunately, my father got sick and he passed away back in 2000. And I remember at the time, I was leaving the house, like 6:30 in the morning, not coming home until after 7 o’clock at night. We didn’t have kids yet, but I was like, I can’t do.

And I saw this all over you, everything on researching, you Justin, you’re all about family. And you wanted to be able to do things on your time with going to recitals or anything with school activities. I had the same moment when my father passed away is that I realized that I was nowhere set up to do what my father had done for me and the fact that I wasn’t going to be in any of the school plays, I wasn’t going be in any of the sporting events because I was trapped in this very corporate world, well paid. It was kind of a gilded cage.

So, I really had a heart to heart with my wife. And I said, “I think, now with my father passing, I’ve got to restructure my entire life.” And so, I actually went out on my own in 2002, which cracks me up how naive I was about how entrepreneurship would work. I moved my business down to my hometown because I thought everybody who I played with their kids or had any brush-up against in society and my small town would want to come hire me to help them manage their finances, accounting, whatever their needs were, because I would help to paint your walls back then, and nobody showed up. It was kind of this deafening silence when you start a company and clients don’t come in the door.

But I just hustled and I worked hard. And over three years, it kind of had reached a point that I had success. Also, during that period, we had our first child, and my wife was able to kind of prioritize on focusing on my daughter to do that. Matter of fact, she’s actually on the other side of the studio door. She’s home for the summer from college, and I’ve got her interning with our production team, doing video editing and animations and all kind of other cool stuff. So, there’s even more to the story.

Justin Donald: That’s awesome.

Brian Preston: Here’s the big breakaway, and then we’ll get back is how I’m here. 2006, I started podcasting because I wanted to be an educator, I wanted to be a school teacher, and I felt like so many people didn’t know how money worked. And when I got my first iPod, it’s the one– you can’t see it, but it’s right over here off my shoulder. I put it on the wall. I was like, this is the thing that’s going to change people’s life. And I started podcasting. And that was kind of before everybody else was doing it. But that’s how I kind of got into doing broadcasting education because it really came from a place of I want people to be able to make better financial decisions.

Justin Donald: Oh, I love that. I love your story. And there’s so many similarities where, for me, I’m growing up and I’m realizing that decisions that I made before that I didn’t realize were going to impact the trajectory of where I was going were made. It was almost like when I had the freedom and space to make decisions, I didn’t know the impact or implications of those decisions. And then eventually, you just kind of find yourself in something that maybe you did never think you were going to be in.

And the golden handcuffs are a real thing, right? The more you make, the harder it is to leave. And the higher you move up, the harder it is to leave. The more time that you’ve “dedicated” to something makes it harder to leave because it’s like, well, I’d be throwing away all of these years that I worked so hard to get here, even though I know that I maybe was misguided, I don’t want to be here, but I don’t want it to be for nothing, right? Did you experience any of that?

Brian Preston: Yeah, I mean, what I find, and Justin, you’re spot on is that I found that I’m so glad that I challenged myself and took risks at the appropriate time because I feel like a lot of people just are too scared or they let too much life happen to them without making the jump. And what I mean by that, it doesn’t have to be as crazy as starting a company. We’ll get to that. But it is one of those things where I can remember, I was originally in college, a finance major, but I was worried when I started looking around to see what finance majors from University of Georgia did, they all became sales folks. And then I was like, “Well, I don’t come from money. I don’t know anybody with money. I’m not going to be able to sell anything to anybody.”

But I looked around you, J, and I noticed every graduate from the accounting program had a job. And my whole purpose for graduating was to make sure I didn’t move back in with the parents. And so, that was a decision that I consider was the road less traveled. It was harder. I mean, accounting was a much harder major than the finance majors, no offense to anybody. We’ve hired quite a few finance majors.

But it’s the same mentality that leads to entrepreneurship is that how do you challenge yourself and take risk or make small– at the time, seem like small decisions that have huge tails of impacts. That’s what you’re asking and that’s what I feel like naturally, I was able to do with choosing a good major in college, but then also recognizing that when my life was being compromised, where I didn’t own my time, I didn’t get to have my family and do all the things that I cherished and prized and cared about, more the center of me, I had to shake it up, even if it hurt in the short term.

Justin Donald: Yeah. I’ve got a really funny story for you because it’s exactly what you just said. When I was in college, I didn’t know, I went to the University of Illinois. And they’ve got a fantastic business school and business program. And I remember thinking, well, I don’t know what I want to do. I want to be in business, I like business, I like money, I like numbers. I think I’ll be an accounting major.

And I started taking accounting and I was like, oh, man, accounting is not for me. This is not easy. This takes a lot of energy and effort. And by the way, I could do it. I did fine. It just took a lot of energy and effort. And then I was like, you know what? I don’t think I’m wired to be in accounting. And I never wanted to be an accountant. I just wanted that background. So, then I was like, “All right, I’m switching to finance.” I knew that that was the easier path. Now, that said…

Brian Preston: We might have crossed paths on the decision matrix there.

Justin Donald: Totally. And by the way, that said, I had friends that were like, “Well, you should come into marketing because it’s really easy.” And I’m like, “Well, I’m not trying to do the easiest route.” And that’s not to say marketing is always the easiest route, but at our school, that was the easy one. And I was like, “No, I’m not trying for easy, I’m trying for what I feel fulfilled by and what I enjoy learning about.” And once I opened up this scope of finance and where all you could go and how you could get into real estate and wealth management and managing money and just all these different niches, like that became a lot of fun. But for the record, finance was way easier than accounting.

Brian Preston: Well, I think it all goes back to mindset towards return on investment or intrinsic value and value proposition. So, it obviously worked out well for you in finance, maybe some of that’s perceived, but I did. I know for a fact that all my friends that did graduate with finance degrees at the time, now maybe things are different now, but some of them are quite successful in fields outside of investing and stuff like that. They own other businesses, restaurants, and things like that. I knew that they were in trouble when they were calling to sell me product. I was like, man, have you made it this far down the Rolodex that I am who you’re trying to sell this product to? So, I think it all goes back to ROI, intrinsic value, and how do you get the best out of every opportunity that’s presented to you.

Justin Donald: Yeah, 100%. And so, at one point, Brian, you are building your business, but I think you also started building your investment arm, and what I mean by that is like your own personal portfolio. So, you went on your own. You’re scaling your own business, and I want to learn more and kind of hear some of that story. But at the same time, you’re acquiring assets too.

Brian Preston: Sure.

Justin Donald: You’re kind of doing two things at once, which I think is hard. I think most people don’t do that. Most people have a hard time prioritizing time to be able to do that. So, they’re all in on the one thing, and maybe that’s good. Maybe it’s good to be all in on the one thing. But if the one thing doesn’t go well, then all your eggs are in that one basket. There’s no backup plan. So, I’d love to hear kind of your philosophy around that and kind of how you navigated that.

Brian Preston: Well, I think, we live in this consumption society where the YOLOs of no day is promised and so forth. And I always remind people, you go live to a ripe old age. Statistics show, so you better plan accordingly. And the conversation my wife and I had in our early 20s because we got married when we were 24. We met our senior years at University of Georgia. As I was like, “Look, if we can be serious about saving and investing for the future in our 20s and 30s, we can really enjoy life for 40s, 50s, and beyond.” And I’m not saying to be a miser or Ebenezer Scrooge in your 20s and 30s, I’m just saying you have to prioritize the vision of where you want to be in life and then figure out what incremental decisions you can make to actually get there.

So, in my 20s and 30s, my wife and I still bedazzled our basic life. We went to Italy on a trip, but we did it in a very value-oriented way, which is now funny because you think about all the funny stories of dragging your luggage down the cobblestone streets and getting ripped off when you’re buying your tickets to different venues versus now, when we go on trips, I mean, my trips now will cost more than I made the first two years out of college. But you have to figure out how do you do get rich activities young enough through deferred gratification and discipline so that you can live the life that you really want later on because, and you don’t want to sacrifice everything, but you do need to be very deliberate with every second because that is your job is selling your time. So, you have to figure out how you’re going to own your time as fast as possible.

Justin Donald: Yeah, 100%. And I think I loved the way that you laid it out there. And I think it’s really important. The goal is not to postpone life. The goal is to live life today, too, but in a responsible way. So, how can you have an epic life today around some boundaries, whatever boundaries are needed, whether it’s amount of time, the cost, the pricing. So, it’s not don’t live today so that you can retire because we don’t know what tomorrow holds, but it’s let’s live a good life today and let’s get creative on how to do it, but let’s do it, and then let’s also responsibly save and invest for the future, right?

Brian Preston: Yeah, you got to be purposeful. Begin with the in-demand, you’ve heard Kobe talk about that. That’s important. I think a lot of people are not active participants in their life. I noticed when I was getting ready for this interview, you talk about being the hero. And anybody who’s done the storyboarding and those type of things on how you want your life to unfold, you do have to make those active decisions. Don’t just let life come at you, and then you wake up 20 years later and go, “This is why I’m having a midlife crisis.” And I see that around my peers, I see that too many people wait too long to really get serious about having a purposeful life.

Justin Donald: Yeah, there’s no doubt about that. And I think for most people, it is this life by default. It is a life that just happens because if we’re not intentional, I mean, life’s going to happen and you can either steer it in the direction you want to go, or external forces are steering it in a direction and it may not be the direction that you want to go. So, I love the intentionality aspect around it, and I know you guys do a lot there and talk a lot there about that.

One of the things that I think is great with what you guys do, your programs, your products, the education that you have is really just your financial literacy. You do a great job. You said it earlier that you wanted to be a teacher. This is a way to be a highly paid teacher, teaching exactly what it is that you want.

But the reason you’re successful is not because you chase the dollars, you chase the thing you’re passionate about in a medium that allowed you to earn more than what someone in a traditional medium would allow. And you’ve been able to scale that. You’ve been able to have more impact. But you do a good job of teaching financial literacy. And I love the fact that it’s about how do you help others on their journey.

So, I want to talk about that a little bit. I want to talk about some of the things, I mean, I certainly want to get into state of the economy today because it’s a different time right now than it was last year in 2022. But before we go there, I’d love to just talk about some of the basic building blocks that you see that exist for people to really kind of get their finances in check and to actually create wealth and not just stay stagnant.

There’s a group of people that they’re fighting to get out of debt. You’ve got a group of people that really just kind of stay in one spot. It’s like spending everything that’s coming in. And then you’ve got another group of people that are actively building wealth over time. And generally, if you’re not intentional and proactive, you’re going to default into one of the middle or bottom tier. So, only if you’re intentional do I think outside of some luck because most people don’t have a windfall of like, hey, here’s $100 million, right? That’s a small percentage of people that have a big exit like that. So, what are some of those basic building blocks?

Brian Preston: Well, I think, first, let’s stratify, and the fact that if you just have a thousand bucks in the bank, unfortunately, in our society, you’re better than 60% of your peers because the average American can’t even come up with a thousand bucks. But I want to caution because now we’re in this new society, new world, I don’t know how long it’ll last, but you can make 5% on your cash. So, a lot of people are like, man, it’s nice to see at the end of the month actually get paid interest.

But this is the trap I think my parents and a lot of people who are doing the heavy lifting because if you can just be a disciplined person and turn your wages or your time into money, don’t be just happy with letting it just build up in cash. You actually at some point have to become an investor because that’s the problem. That’s the trap.

My parents, they were great at the saving, but they never actually turned those savings into investments. So, I call it the army of dollars, so they can work just as hard for you as you do with your back, your brains, and your hands because if you’re ever going to get your time, you have to find something that replaces your efforts. And that’s what I think is the mindset that you got to actually move beyond just being disciplined. And that’s where a lot of people pat themselves on the back because they’re good savers.

But at some point, if you don’t put the money to work or actually let go of it, to let it go away for a period of time and see if it can become a better version of itself through that army of dollars, you’re missing out on the most valuable resource, which is time and your money working for you because that’s the biggest thing that I don’t think people understand is how valuable compounding interest and just letting money grow upon itself can do is because we, as humans, we think linear, we think, it’s all going to be 1, 2, 3, 4, 5, or if you go 2 plus 2, 4, 6, 8. That’s all linear.

I’m telling you to think exponential because that’s what I’ve experienced with success is that you start off small where 2 times 2 is 4, and then 4 times 4 is 16. But then after that, you will look three to five years down the road and go, “Holy cow, I didn’t even know this was available to me until I kind of opened up my mindset to what investing can actually do.”

Justin Donald: Yeah, and I’ve got a real-life example on that Brian. One of my friends here in Austin, his parents just moved here, and they are retirement age. They haven’t retired yet. They can retire based on age and maybe should retire. But the problem is they’ve done a great job. They’ve done a great job of saving and living beneath their means and they have saved money, but they never invested. So, they have $2.5 million. That’s more than most people have, which is great, but it’s just been money that they put aside in a bank account, meaning they’ve been losing money every year to inflation.

And if they had just put it in the S&P 500 index, that in itself is– yeah, I mean, so you’re talking, and that’s exponential, right? That is a big difference. And so, the discipline of having a savings goal is the foundation of it, but it’s not the end result. The end result is you have to take some action. Like, today, I don’t believe anyone should outsource their financial literacy. I think everyone should take ownership to have some level of financial education. Even if you are outsourcing the majority of who’s helping you build your wealth, I think you need to have a foundation that’s strong enough to know that that’s the person you want to partner with, that they have a good track record that they can actually get the desired results, right?

Brian Preston: And actually, what you just described, and you speak in my love language here, Justin. The fact that as part of that educator is I just give away information. We call it the abundance cycle here at The Money Guy Show is that we just want people to show up, learn, apply these concepts, let it grow until you reach a level of success. Because here’s what I’ve realized, this is why it is fishing out of the barrel and the fact that you can try to keep your life as simple as possible, but if you do this right and you start having success, I guarantee you if I looked at your tax return, Justin, it is complicated because it just happens.

Success creates complexity, and the fact that even if everything is done as simply as possible, you’re going to have K-1s, you need to be thinking about should you be doing cash balance or deferred comp with your business, and all these, there’s things that just show up, or somehow, you ended up with you sold a house, the market wasn’t right. So, you’re ready to move out of a house, but your other house was finished building, so you end up turning this into a rental property. All these things turn into the complexities that end up leading to the abundance cycle of why I think we’ve had success. But I’m exactly with you is that I think everybody should take an active role because an educated consumer is going to be not only good with your money and purposeful with your money, but you also make sure you’re not getting ripped off. And you can be a great team member as you get into that exponential growth with building true wealth.

Justin Donald: 100%. It’s funny, there’s a running joke with the family office that I use that my estate is the most complex estate they have, that I have the most LLCs of anyone that they work with. And so, it’s an interesting thing because that was never the intent. That’s not how it started. But I also think it’s important to hire people that can solve for that, that can take complex and simplify it, and actually make sure that it is structured the right way and it works the right way and that you have a team of A-plus people. I think most people, they start investing money with someone that they know, not because they’re great, but because they know them. They start utilizing tax services from a CPA that they know, not because they’re best in class, but just because of proximity. And I think it’s important that as you’re evaluating, that it’s not just because you know them, it’s because they are world class or at least have a high level of expertise and success in the field or arena that they oversee.

Brian Preston: Well, I saw something in your bio, Justin, that stuck out to me because I think we’re on the same path. And the fact that I do think your needs will change over your lifetime too. A lot of times, in the beginning, you do get credit just for going through the effort. If you’re a person just starting out, when you have your first child, getting the life insurance and getting the wills in place, it’s okay if that’s the neighborhood person, but you’re going to find as you get into eight-figure and beyond, even to nine figures-type success, you might have to do an apple cart turnover. It’s a sad thing because you dealt with people who were great for you for that period of time, but once you– and this is the biggest shock for me with success is that the decisions that you have to make and how time is placed into those estate planning and the structure, it can get scary and it can get very complicated. And if you don’t have the right players and you find that you know more than you feel like your advisors do, you might have outgrown the coverage of what you’re getting from them.

Justin Donald: 100%. I think it’s important to re-evaluate your team every year, and that goes for your estate plan, it goes for your tax strategy, it goes for your investment strategy. I also think it’s really important that everyone has their own investment criteria that they draw out for their life. Like, what is it that you want out of life? And what is the criteria that needs to fit for your life to be a success in the way that you see it? And everyone’s life is a little different. And then the deals that people are going to do are different. And the strategies people are going to employ are going to be different.

One of the things I’d love to get into is, because I love just seeing different people’s world views on state of the economy and what you’re doing with capital, I’m curious what you think, like where are we headed? Are you sitting on the sidelines in cash? Are you investing currently because you think it’s just going to continue to grow, or maybe you don’t think it’s going to grow, but you just don’t think you’re going to lose as much as if you’re sitting in cash?

Brian Preston: Because these are really great questions, but I’d be remiss if I didn’t first tell people because I don’t know what level your audience is at. So, I always try to catch people up because we’re good. I’m going to tell you the fun stuff, but I also need to bring the basic stuff in. If you go to MoneyGuy.com/resources, we have the financial order of operations. This is the nonstop process because I want to make sure everybody gets their get rich strategies first. That’s the foundation that you don’t screw up and get out over your skis too early.

But then once you have that financial foundation underneath you, you get to do really fun stuff. And I call it rich guy activities or rich people activities because that’s kind of where you’re going with this, Justin. So, I will tell you personally, there’s a portion of my investments that are just always be buying, is that every month in my joint accounts, in my retirement accounts, because I have not only a 401(k) profit sharing at my company, but I have cash balance plans. Those every month are buying. I’m actually really sick in the fact that I’m actually buying every week. That’s the financial mutant mindset I am is that I want to be taking advantage of what’s going on every week. So, that type of stuff.

And I’m boring. I buy like total market indexes, index funds, and other things as part of their diversified portfolio. But I think that’s the boring stuff. But I want to make sure people didn’t think I skipped steps because you got to do the get rich stuff before you can do the fun activities. What I’m doing outside of that is, is that I am building up some additional cash, not because I wanted to stay in cash, but it’s just that I love, I’ve gotten a taste of commercial real estate.

If you come into downtown Franklin, I am blessed that I own one of the larger commercial spaces right off the square, and it’s kind of fun collecting rent from restaurants, retailers. We got a speakeasy that’s coming in the back of our building that’s coming in the next two months. But there’s a lot of really fun stuff, plus I have my own businesses up here that are paying rent as well. And I can’t help but think that the interest rate environment we’re in is going to catch a lot of people who might have not done the foundational get rich activities first, and they’re going to get caught skinny dipping. So, they’re going to be completely naked to these high interest rates. They didn’t do the term long enough.

And I think that that’s when having resources, I call it the oxygen of deal making is having enough cash where you can buy when nobody else can. So, I’m kind of building up some of that because I think we’ll probably do more commercial real estate and then things like that, but don’t forget the basics. But that’s kind of what I’m thinking. I think that there will be people that didn’t plan accordingly to these interest rates.

You already see it with the banks. I mean, I don’t think people do a good enough job of explaining how some of these banks knuckleheaded this up and the fact that they got a lot of cash, it came in the door. They didn’t know what to do with it or how to deploy it well. So, they had to go buy notes. And some of them didn’t manage a portfolio where they went too far out on the duration that when interest rates got spiked up by the Fed, the value of all those bonds came down to the point that when you lose a billion dollars’ worth of value on your bond portfolio and that’s always your market cap, the value of your equity is, you’re essentially a zombie company. And that’s what happens.

So, you just have to make sure that you are paying attention to the risk so that you are– I notice because all over your stuff, you have the Warren Buffett mantras and other things. This is your love language that I’m talking to you right now, Justin, is that you want to be able to understand what things are worth their value and make sure you’re in a position to capitalize on that when these cycles, because it repeats. This is the other thing. People never learn that the cycle is repeatable.

And the other thing I always tell people about, even my own success, it’s not like I had to wake up and choose to make this decision today. Usually, the opportunities are wide enough that you can drive a truck through them. You just have to be paying attention to what’s going on in the world around us.

Justin Donald: 100%, yeah, and I think a lot of people are just not paying attention and they’re not looking at the bread crumbs that are paving the way to what success in investing looks like. We had a frothy decade where anything that almost anyone touched turned to gold. So, everyone thinks they’re great at what they do and everyone who stress-tested their acquisition, their model for buying whatever business or real estate it was, didn’t really do a real stress test. They did a medium-case scenario, but they called it a worst-case scenario.

And then, we talk about this all the time, it’s just the most ridiculous type of funding in terms and bridge loans where you’re not locking in a rate or you’ve got floating rates and short duration, two years, three years, five years. And so, we’ve already started seeing some of the turnover here and some of these deals going bad, but this is just the beginning, I think.

But for those that are in a good spot that aren’t going to allow, I guess, fear and the media to heighten their emotions and scare them, they can stand back and say, “Hey, most of the wealth in America was created in times of economic stress or economic turmoil.” So, instead of being afraid, they’re on the sidelines watching, waiting, evaluating, eager to get into the game. I think that’s where you’re going to be. Just, again, this is all around mindset, but if you have the right mindset when it comes to a challenging economic season, it may not actually be challenging for you.

Brian Preston: Well, I think opportunities come out of those pruning moments. I mean, without a doubt, everything in my life, even the passing of my father, as I talked about earlier, was what led to me to start a business. That’s a contrarian opportunity that came out of getting that clarity of mindset, of the trauma of the moment. The same thing, I mean, the pandemic, as bad as it was, it did create opportunities if you could take advantage of, just like with this commercial building. There’s always when there’s chaos or uncertainty, if you can fine-tune and focus your vision and ask yourself, are there opportunities being created out of this?

And just like I will tell you, artificial intelligence is every news line and it will be a disruptive technology, but you just need to be paying attention when this disruption comes, what is going on in the chaos that I might be able to capitalize on in a contrarian mindset that will be there. And you said something I thought was really powerful, Justin. We talk about putting on your 3D glasses. And when I talk about putting on the 3D glasses is that always have the three business plans, meaning you write out your cash flow plan using three different versions, the dreaming plan of, oh my gosh, we’re going to be so rich. This is going to be the greatest, easiest thing I’ve ever done.

Then I want you to do the down to earth plan, which means that this is likely what will happen. I just read an article today about some of these apartment complexes and other things and private equity deals that are now resetting the rates and it’s blowing them up completely is they didn’t do the doo-doo plan. And you got to do the plan of what happens when this goes bad because it’s better to plan for that while it’s not reality, so you can structure the plan and you don’t get caught in that shock and awe moment of not knowing what to do. You don’t want to be the deer in headlights. You actually want to go ahead and plan ahead so that it doesn’t become a catastrophic failure for you and your family.

Justin Donald: Yeah, without a doubt. And more over on that, we were in a decade where you were penalized as a syndicator, as a general partner for actually providing those numbers, the right numbers, because the returns wouldn’t be as good because you didn’t want to model out that you’ve got a larger capital expense balance that you’re going to hold or you didn’t want to model out what a lower debt-to-equity ratio would look like, safer terms.

And so, in order to give the sexier numbers, the higher return numbers, a higher IRR, a higher preferred return, it was a less responsible business plan. And I think a lot of people started investing in these alternative investments in an environment where syndicators were rewarded for that. And we’re going to see the penalties of that today. And so, I’ve always stood by the fact that my goal is not to optimize returns, all of them.

There is a different asset allocation that needs to happen at different stages in life, at different net worths. And the goal is not to maximize every dollar, the goal is financial balance. And so, you’ve got some money that is exposed to greater risk, but you’ve got other money that’s sitting over here in Treasuries and you’re making your 4% to 5%, and you’ve got other money that’s sitting in cash waiting for a good deal. You’ve got other money that is in public equities, in private equity, in VC, in private credit. And so, to have a well-balanced portfolio means that you’re not maximizing the return on every dollar. You’re focused on the portfolio as a whole and having hedges in place.

But I do think that we’re going to see the fallout of trying to maximize these dollars in alternative investments and going with the group that promised a higher IRR, even though IRR means nothing, a pro forma means nothing. I don’t care about today’s pro forma. I care about what your last deal that went full cycle, what that pro forma said. And then were you at what you said or ahead of what you said? Or were you behind what you said?

Brian Preston: What I can’t believe, the bankers have not done themselves any favors. And I know when we’ve done some deals, when I went ahead and they almost acted like they never got this question, I was like, look, I notice that this is a three-year and you’ve shown me a five-year lock on this commercial loan here. What does it look like if you give me 10? And what does it look like if you give me 15? And they’re like, 10? 15? I was like, yeah, I was like, rates are so low right now. You’re crazy if you’re not thinking about going out.

And then you find out it was like a quarter of a point to have seven years to the interest rate. I’m like, yeah, this is the greatest deal of all time. You’ll give me this much money for less than 3% because I think a lot of people, this is the thing that I think I would encourage everyone as you start building wealth, also be a student of learning history because we have this recency bias where we think that what we’re in is the way things will always be. And that’s just not the reality.

And anybody who’s been around long enough knew that these depressed rates, it’s just not sustainable forever. It just is not. Now, let me give some whipped cream for somebody who might be sweating this a little bit. I think probably in 2024, the Fed will start dropping rates again. They’re going to try to create some stimulus because that’s their easiest lever to pull and they’ll do it. So, it will probably create an opportunity for some people to get some relief. But I think, in 2023, you’re probably going to need to sweat it out a little bit.

Justin Donald: 100%. I completely agree with you. And this has just been a ton of fun. Brian, I just want to thank you for your time with us and for sharing your wisdom, your knowledge, your expertise with our audience. Where can our listeners and those who are watching this show learn more about you and learn more about your business?

Brian Preston: Yeah, I would encourage everybody, go to MoneyGuy.com. We’ve been podcasting since 2006. And then we got into YouTube in 2017. And our biggest goal is if you are in that process of getting that financial foundation so you can go do the get rich activities so that you can do the fun stuff later, go check it out because we have so much free stuff.

One of the things we didn’t get to talk about, the money multiplier. What is $1 worth for you depending on what your age is? We have all that and more, MoneyGuy.com/resources. And I just love giving it away. I have found the more abundance I share, the more I get dividends and rewards.

And that’s why I think when you think about Michael sharing my name, that is the abundance cycle because me and him have had discussions about how can we pay it forward because he has that mentality. In our short conversation, Justin, I can tell you, you have that heart of abundance as well. And if you can find people to surround yourself like that, there is nothing but upside in the long term. It’s really incredible.

Justin Donald: Well, I love it. I appreciate you hooking our audience up. And I love ending every episode with a question, and a question that I really want people to take some form of action on. So, to those of you listening, to those of you watching, what’s one step you can take today to move towards financial freedom, to move towards a life by design that’s truly on your terms, so not by default, but by design? And what’s one actionable item that you got from today’s episode from Brian that you can implement immediately? Thanks so much, and we’ll catch you next week.

Brian Preston: Thank you, Justin.