All Forum Posts by: Brady Mullen

 I love this, @Bjorn Ahlblad!  I love that you and your wife have embraced responsibility.  So many people talk about seeking a truly passive lifestyle, but for anyone who has tried that for a couple of weeks will realize life is meaningless without meaningful engagement and responsibilities.  The trick is to choose them, rather than having them choose you.  Thanks for sharing!

 I think passivity is an illusion.  We are all tempted to seek it, but the only true passive condition is death.  Gotta stay frosty! :)

 Right on, @Corey Conklin!  There is no more "real" asset than competence.  I love it.

I spend a lot of time thinking about how to apply my financial background (18 years as an independent financial advisor) to the choices we all must make about real estate.

I'm talking about choices like renting vs owning, investing in real estate, upsizing, downsizing, reverse mortgages (these are one of the most overlooked and misunderstood financial tools out there), refinancing, owning a 2nd home, etc.

I regularly offer continuing education courses to real estate agents about finance and real estate, and when it comes to investing in real estate, an odd thing surfaces quite often that I think is worth elaborating on.

I'm convinced that real estate investing provides better returns, on average, than other common investment options. It's hard to come to any other conclusion when you account for all the different ways in which it is accretive to personal wealth, such as appreciation, income, leverage (when used), and tax benefits.

When you quantify that and calculate the returns (not exactly easy to do), they are usually pretty impressive. 

The odd thing that happens when I share this topic with real estate agents is that it's tempting to interpret what I'm saying as "investing in real estate is BETTER than investing in other things", and this is an oversimplification of what I’m getting at.

Real estate investing isn't for everyone. And it is not proper to compare it to investing in mutual funds or ETF's or the like.

Here's the thing, investing in real estate is more like purchasing a franchise. It's like owning a small business. It's not passive. You could hire a property manager to help, but it's like hiring a manager for your small business - it does help simplify and scale, but it doesn't mean you can turn your back.

On the other hand, while owning a traditional portfolio (I'm generally a fan of the low fee index-style models) is passive, you also have no control over how those businesses are run. The only control you have is whether to own it or not.

Although real estate isn't passive, in return you have more control (and responsibility), which isn't what everyone is after. But if you're willing to learn the ropes, it's incredibly rewarding.

Yes!  I believe financial gain has similarities to exercise.  No doubt, exercise and wise personal financial behavior are generally good, but they can be taken to excess - we've all seen it.

It's a tricky thing to keep the servant and the master in their proper places.  When we live for financial gain (or fitness) rather than using those good habits to help us live a balanced and meaningful life, we have given up control to these mindless and relentless masters.

As you said, if you decide not to have children, this is a completely personal decision, and I'm sure it's not just financial.  God only knows the challenges babies born today will face.

My point is to keep an eye on why we do what we do. Is it always to serve the future, discounting all value in the present?  Or are we keeping an eye on the future, while living a meaningful present?

I love the approach.  The only true lasting wealth is competence, which can only be taught, not purchased.

I think the idea of "generational wealth" is much less compelling than avoiding "generational poverty".

Great post, Corey!

I agree with the overall sentiment of the post.  Unless you're going to live outside, you have to choose to rent or own.  When you consider the wealth difference, when all the financial components are accounted for, owning the roof over your head is one of the first foundational wealth-building decisions one can make.

I've been thinking this weekend about something I heard someone say about the cost of something over time.

It was something about purchasing a home with a mortgage, and having the total amount of money paid for that home over the life of the mortgage equal to more than 2.5 TIMES the so-called purchase price.

This is a fundamental (and common) mistake about how money works.

That's like saying that the dinner with my spouse didn't cost $100, but $2,000 because if I invested that money at 10% annually, compounded monthly for 30 years, it would be worth $2,000.

While it's true that spending money now that isn't necessary, means the forfeiting of some larger value in the future. But it's not the right kind of "true" that helps me navigate through life well.

I want to have dinners out with my spouse from time to time. I want to experience all sorts of things that wouldn't be considered "necessary". Also, my objective isn't to be the wealthiest guy in the graveyard.

One of my favorite books about personal finance is "The Richest Man in Babylon". It's about 100 years old, and it's as artistically written as it is helpful. While it may be a little simplistic for today's modern financial systems, it has the right idea about balancing the future and the present.

It promotes devoting a portion of your income for later and spending the rest in the present.

We are not guaranteed to experience the future anyway, so the present must have some value.

The point of all this is that extremes and ideologies are tempting, but they are ultimately dangerous dogmas. Living only for the moment is not wise, but neither is living like Ebeneezer Scrooge because it's what's best for your wealth.

Abiding by such ideologies swaps the role of master and servant played by you and your money. A balanced approach of living well and saving for the future is the key to maximizing the life experience.