How to use power of compounding to grow your wealth - Greg Arthur, Andy Tanner

Summary

In this episode, Andy Tanner discusses Einstein's quote that compounding is the most powerful force in the universe and how it can be harnessed to build wealth. He explains how compounding works through examples like the 'Golden Goose' metaphor, contrasting it with simply earning investment returns. The discussion then covers different methods for compounding in the stock market - using margin loans, reinvesting dividends, and trading on price fluctuations. Tanner advocates compounding through dividend stocks for long-term, resilient wealth building. He emphasizes focusing on acquiring more income-generating assets rather than just increasing asset prices.

Takeaways

• 😀 Compounding is the most powerful force for building wealth according to Einstein
• 😃 Andy's free course teaches how to get started with cash flow & compounding
• 🤑 Compounding reinvests returns to purchase more assets, accelerating growth
• 😎 Leverage like margin can supercharge compounding but requires sophistication
• 👍 Dividend reinvestment is a simpler, safer compounding method
• 📈 Combining dividends, options strategies and minimized fees boosts compounding
• 🚀 Asset quantity growth matters more than asset price growth for compounding
• 💰 Railroad mogul Buffett showsextreme compounding over decades
• 🤔 Evaluating last year's asset accumulation is key to assessing compounding
• 💡 Education, cash flow, compounding and leverage together build wealth

Q & A

What does Einstein's quote about the most powerful force in the universe refer to?

It refers to the principle of compounding - the concept that money grows exponentially when the interest or earnings from an investment are reinvested back into the original investment.

How can compounding turn into money, according to the hosts?

By investing in assets that generate ongoing cash flow, and then reinvesting that cash flow to buy more income-producing assets. This creates exponential asset growth over time.

What is the main benefit of Tanner's free course mentioned?

It teaches financial education and how to start generating cash flow from investments, to transition from being an employee relying on a paycheck to an investor building multiple income streams.

What metaphor does Tanner use to explain compounding?

He uses the metaphor of a goose that lays golden eggs. If you invest $100 to buy a goose, and it lays a $100 egg, you can use that $100 to buy another goose, and keep repeating the process exponentially.

How does Tanner say you can create massive wealth explosions through compounding?

By continually reinvesting the returns from your assets to acquire more income-producing assets. Even small rates of compounding over decades can lead to hockey stick growth curves.

What's the difference between compounding and rate of return?

Compounding refers to the practice of reinvesting returns into buying additional assets. Rate of return refers to the percentage yield or speed of returns.

What are the three methods of compounding in stocks discussed?

1) Using margin loans to buy more stocks 2) Reinvesting dividends to acquire additional shares 3) Trading - buying low and selling high to accumulate more stocks.

Which compounding method does Tanner recommend for beginners?

Reinvesting dividends. It's simpler and less risky than using margin loans or short-term trading strategies.

How can compounding through dividends work powerfully over long periods?

The reinvested dividends buy more shares, which then earn larger dividend payments themselves, creating exponential growth in share count and dividends earned.

What three key wealth-building concepts does Tanner emphasize at the end?

Cash flow, compounding, and leverage. Generating ongoing cash flow to redeploy through the exponential power of compounding, accelerated strategically with leverage.

Outlines

00:00

😴 Introductory paragraph with informal greetings

The introductory paragraph consists of an informal welcome and introduction to the podcast hosts, Andy and Greg. They also briefly discuss the popularity of the podcast, inviting comments and feedback from listeners. Some of the key points include: promoting Andy's free course on achieving cash flow, the focus of the episode on Einstein's quote about the most powerful force in the universe, and a teaser for the interview with Andy.

05:01

📈 Andy elaborates on Einstein's quote about compounding

Andy discusses the true meaning and power behind Einstein's quote, noting that many people misunderstand or underestimate compounding. He explains the difference between compounding and rate of return. Compounding refers to reinvestment - using money from an asset to buy more of that asset. Andy stresses the exponential growth potential of diligent compounding.

10:01

💸 Examples of the power of long-term compounding

Andy provides examples to illustrate the immense power of long-term compounding, drawing from Warren Buffett's investments in Coca-Cola and Burlington Northern Railroad. Even small rates of annual compound growth over decades can lead to unbelievable wealth. This contrasts with limited wealth-building potential from jobs, pensions, or 401Ks with high fees.

15:03

😮 Using margin loans to accelerate compounding

Greg asks about using margin loans with stocks to accelerate compounding speed. Andy explains leverage like margin can tremendously boost outcomes but requires advanced skill. Interest rates are now high enough that margin may actually compound negatively. Andy notes real estate has more flexibility than stocks for negotiating favorable loan terms.

20:04

🤑 Reinvesting dividends for steady compound growth

Greg's second compounding method is to reinvest dividends from stocks to buy more shares. Andy strongly agrees this is an extremely easy way to steadily compound wealth over long periods. The safety comes from owning resilient businesses, not reacting to stock prices. Andy emphasizes dividends can provide excellent inflation-resistant compounding.

25:05

😒 Attempting to "buy low, sell high" rarely compounds money effectively

Greg asks about attempting to buy low and sell high to raise funds to buy more stocks. Andy dislikes this gambling-like approach for long-term compounding. It focuses on multiplying money rather than acquiring income-producing assets. Successfully timing buy low and sell high points is extremely difficult even for professionals.

30:05

🎯 Cash flow, compounding, leverage - the weapons of wealth builders

Andy closes by identifying cash flow, compounding, and leverage as the most important weapons for building wealth. Avoid Wall Street's excess fees crushing compounding. Add options strategies to dividend stocks for acceleration. Compass by acquiring more income-streams yearly, not just growing asset prices.

Keywords

💡compounding

The process of generating more wealth from an initial investment, by reinvesting gains. It is a core part of the video's discussion on building wealth over time. Examples include reinvesting dividends to buy more shares.

💡cash flow

Ongoing income generated by assets or investments. The video emphasizes the importance of buying income-producing assets to generate consistent cash flow for further investing and compounding.

💡assets

Property or investments that generate income. The video focuses on buying assets that produce cash flow, which can then be used to buy more assets. This expands the asset base through compounding.

💡leverage

Using debt or borrowed money to increase buying power and accelerate asset acquisition. Mentioned alongside compounding as a powerful wealth building tool, but also high risk.

💡rate of return

The gain or loss on an investment over a period, expressed as a percentage increase or decrease. Used to measure the effectiveness of a compounding strategy.

💡dividends

Regular income payments from stock investments. Mentioned as a way to compound by reinvesting the dividends to buy more shares.

💡interest rates

The cost of borrowing money. High rates can reduce the benefit of using leverage or margin loans to compound wealth.

💡inflation

Rising prices over time. Dividend stocks are said to provide some protection against inflation when compounding.

💡diversification

Investing across different assets, companies, sectors to reduce risk. Core to sustainable long-term compounding strategies.

💡financial education

Learning about money, investing and wealth building concepts. Presented as key for effectively employing compounding and leverage.

Highlights

Compounding is reinvestment - using money from an asset to buy more of that asset

Compounding leads to an explosion of wealth due to the exponential growth

The purpose of an asset is to purchase another asset when compounding

Compounding fees in a 401k cost more than the investment gains over time

Ask if your wealth plan employs consistent compounding daily

Dividends bless you through inflation over long periods

Safety in stocks comes from resilient businesses, not stock prices

Use dividends to buy more shares and compound exponentially

Day trading is hard and buys price not resilient assets

Gold doesn't compound, it hedges as stored emergency money

1% compounding difference is enormous over an investing lifetime

Cash flow, compounding, leverage are key wealth weapons

Ask if your assets purchased more assets last year

Compounding means increasing number of assets, not just value

Show your annual financials to prove compounding occurs

Transcripts

all right welcome to this episode of

Rich Dad stock cast with Andy Tanner and

today we're going to talk about is a

quote from Einstein the most powerful

force in the universe it's kind of a a

bold statement but what does that mean

Andy Tanner has a way to turn this most

powerful force in the universe into

money so I don't know if Einstein wants

to use that way I think he's probably

using black holes or something I don't

know but let's bring in Andy and uh and

you know what before we bring Andy in

let's make sure we we cover a couple

things

make sure you hit subscribe that way you

get Andy more Andy All Andy all the time

something like that oh boy oh boy be

sure be sure to put things in the

comments Andy and I read those uh we

love to hear your thoughts we we get

some of our topics from your your

thoughts in there so really important to

us um it's your way to actually talk to

Andy which most people can't afford I'm

just kidding Andy um everyone can afford

YouTube so and then Andy I I do want to

mention again I try to bring this up

every week I I fail times but you are

given every every viewer every listener

uh your free course zero to cash flow

which is a a web training and you want

to talk about that real fast sure uh

zero to cash flow is a course I created

uh to introduce people to financial

education for people that I I just know

my experience with the book Rich Dad

Poor Dad was as soon as I read it I

wanted to do something and I wanted to

have next steps of what to do more

and so if a person you know like when I

read it I looked at my asset column and

it was pretty sparse right and some

people have nothing and no other income

other than their job think about that

for a minute a person has multiple

streams of expenses I mean you got bills

going

out excuse me every which direction and

people have one stream of income whereas

you know wealth people might have you

know five rental properties that's five

streams of income or they might have you

know dozens of stocks that give a

dividend you know dozens of streams of

income and so the idea of cash flow is

to have extra money coming to you

somewhere other than a job other than

that what we call the the E quadrant the

employee quadrant uh we want to be in

the IE quadrant the investor quadrant

and so uh so yeah zero to cash flow is

how a person can do that very very

quickly now I will be frank no one's

going to get a million dollars their

first week but if you like the idea of

saying hey I don't care if I had uh

another stream of cash flow where I just

clicked the mouse to get it it was

pretty much simple why wouldn't I want

that extra just to begin learning how it

worked if nothing else so uh it just

shows you how I taught my sons basically

to go from zero to cash flow and if you

have kids have them watch it then they

can get wealthy and they won't move back

in with you so there you go when they're

older that sounds wonderful that's some

that's some right there I I need to

watch it again um but in all honesty I I

was joking about how much it would cost

to to actually work with Andy Tanner and

this is actually a way where you

actually get to experience Andy uh it

feels like it's one-on-one it feels like

he's talking straight to you and it's a

great course so highly recommended um I

do not think Andy you talk much about

Albert Einstein in zero to Castle I

usually do not uh my name and Albert

Einstein in the same sentence doesn't

usually fit uh very very well so um when

robt when when uh when Albert Einstein

made his reference he was talking about

the principle of compounding and what

what the danger is when you're talk

about compounding is a couple first

someone's eyes glazed over and say well

this is just math and you know complex

stuff blah blah blah and they don't see

the excitement of it or they might make

an even bigger mistake which I see all

the time and say well I already know

what that is so I don't need to learn

anything more about it yep and when when

I run into to the former I shrug my

shoulders and say well you know don't

listen then when I run into the ladder I

say well that's fine if you think you

already know about it show me your

financial statement show me how how

you've done and and so what I what I've

learned is you know I've been teaching I

spent you know 13 years on Robert's

advisor

team uh you know traveling and I learned

a lot from Kim and from Robert and from

the advisor team and I learned a lot

about teaching

and one of the things that I I strive

for now when I teach is not just uh the

transfer of information like okay I know

this someone taught it to me now I'm

going to pass it on to you the

perpetuation of information is not that

lifechanging it it has some of that but

what I've really g go for now is two

other things is

appreciation and inspiration for example

if I say the word compounding someone

might say well I understand it and they

very well may but do they have a real

appreciation for its power they might

not and are they inspired to actually do

something with it they might not and and

so that's where lives change and that's

where where education is about adus is

drawing out human potential and so if

someone isn't compounding well they

certainly have that potential within

them let's draw that potential out so

think about that within each person you

know you have the most powerful force in

the universe you can draw out if they'll

simply begin to compound uh and and

compounding is uh not what a lot of

people think it is uh it's much more

powerful than most people appreciate so

Andy I personally you know I'd heard

about it I heard about it in high school

if you if you put your money in the

savings account it'll compound and

you'll be a billionaire by 25 but I

didn't really understand the power of

compounding and you might not want want

to go in this direction but when you

were explaining the 401K and how they

the fees red compound fees yeah compound

for example this is a beautiful example

Greg uh someone might say oh I

understand compounding okay explain to

me how compounding costs work in a 401k

how do your cost compound and they would

be at a loss most likely to provide me

with those numbers or even to know where

to go to even think about to do the math

to do it so you know let's talk about

what compounding is a lot of people

people confuse it with rate of return

certainly rate of return is uh is

something you could associate with that

idea but compounding is is really what

we might call

reinvestment it is simply the the idea

of if I receive money from an asset that

I would use that to buy more asset in

other words instead of uh spending the

money you buy more of where it came from

so you know I I often we we kind of have

a joke on our show that you know can

Andy go an episode without referring to

either Golden Goose that lays go or

Goose lays golden eggs from asops avable

or cash flow Jack In The Box and it is

impossible for me to talk about cash

flow without that

metaphor think about this if if a goose

costs

$100 and you could sell it for

$200 do you have more asset when you

sell the goose no you lost it no yeah

you you have cash you have cash if a

goose uh you buy a goose for $100 and it

lays a golden egg that's worth $100 and

you use that to buy another

goose uh now you have two that's

compounding you huge difference in

mentality and so the the the purpose of

a of an asset is to purchase another

asset if you're

compounding the purpose of an asset is

to purchase another asset if you're

compounding and if a person applies this

what what happens is is there is a a

hockey stick an explosion of wealth

because think about this if I I mean

this sounds insanely simple it's one

level above a nursery rhyme it's an

asops Fable it's it's it's so simple but

if I buy a Golden Goose and I use that

egg to buy two uh now I have two working

for me and I get to buy

four right and and then I get to buy

eight and then get to buy 16 so by the

by that fourth generation I've got to

six you know I've got 16 you know 32 64

128 256 512 2024 I mean you know you go

to thousands of assets with very very

simple math that way uh and it is it's

just an it's a it's a it's a force that

grows wealth so fast at the end of the

compounding that that we have that

famous hockey stick graph and the reason

this is a worth talking about

Greg a person with a Social Security

pension that's looking forward to Social

Security has is not set up in a wealth

plan that creates an explosion of wealth

a person with a defined benefit pension

from their job is not set up with an

explosion of wealth and even a person

with a 401k is not set up to have a

maximal explosion of wealth simply

because the fees are what are compounded

more so than the than the than the money

are money is and so you know think about

this if someone says they understand

compounding my question is this are you

involved in a consistent wealth plan

that is designed to employ this and are

you set and on course course to have a

massive unbelievably large uh explosion

of wealth that would produce

Legacy uh for your family I mean if you

look at Warren Buffett his father was a

stock guy and he learned stocks from his

dad and then he learned more more

importantly from Benjamin Graham but he

didn't start out as a wealthy guy you

know his dad was a middle class guy he

was a stock broker uh he made money by

you know selling

or by you know having setting up

accounts for people not by actually

buying things so how do you how do you

become War buff it where you have you

know multiple like hundreds of

billions uh you don't do that working at

a job and you don't do it in a linear

fashion he gets money and buys more

asset gets money so you know the the

idea of asking a simple question today

the question isn't do you understand

compounding the question is to what

degree is your current wealth plan

compounding every day that's the

question and if a person's listening and

they say well I know what compounding is

okay great but if they can't answer the

question yes uh I'm set up and maybe

after break we can talk about

rate uh because rate simply describes

the speed at which you're doing this so

you know rate of compounding are not

synonymous ideas you know rate of return

is is a measurement of speed like for

for example if we could use this

metaphor miles per hour is how fast

you're going but driving a car might be

the method well flying an airplane might

be the method um riding a bicycle might

be your method so

compounding refers to a practice and

rate refers to how effective your

practice is so it's a it's a it's cool

conversation excuse me I got a little

frog in my throat no worries we do have

to go to break soon but um I did a

little research on compounding in the

stock market yeah and and I got three

different ways to do it and so I'm

really curious one there are if you

agree with the three and two which are

better than the other and is one

actually terrible I don't know yeah I I

think I I think I know the three that

you're talking about that's a nice

little teaser maybe we can come back

after that that was pretty good I even

recognize the teaser I'm I'm picking up

on this stuff I'm going to guess that I

like two of the three that's going to be

my guess that all three are possible but

two of the three will be my favorite I'm

also curious if you could use all three

at the same time because you were

talking about right of compounding and

maybe that's one way to to speed that

rate up but we'll hit all that on the

way back before you go be sure to go

into the description get Andy's zero to

cash flow course it's free gift uh crazy

generous and we'll be right back uh

after this break

awesome okay we're back we're back with

Rich Dad stock cast with Andy Tanner and

we are about to explore three different

ways to compound in the stock market as

an investor so I'm going to give you my

first one Andy because it's my favorite

um it's it's something though at the

same time I've been a little bit

hesitant to do I actually want you to

hold my hand after this show to teach me

how to do it but we'll worry about that

in a minute so the the first way I found

is to you buy a bunch of stocks let's

just say you buy a bunch of Ford stocks

and then what you can do is go to your

broker and you say all these stocks

they're worth

$1,000 so I would like to take a loan

for

$500 buy more Ford stocks watch them

grow get another loan as as that value

increases because my understanding is

the margin let you borrow half of your

value and just keep borrowing as my um

stocks grow and grow and grow is that is

that one of the

three certainly margin well by the way

you you uh you you one that wasn't one

of the things I thought of the three

that you were going to say oh cool uh

margin ex is certainly a tool we could

talk about this even on another podcast

is we're talking about leverage which

you know if I had gloves

on or gloves off and bare knuckled it

and I wanted to land punches to fight

for Financial Freedom I would say that

that my my my my leftand jab my leftand

jab or my you know right cross that's

compounding uh my uppercut the really

knocks the dude out is leverage and if

you take those two

ideas uh of the you know think about the

quotes around these we had Einstein

saying that compounding is the most

powerful force in the universe and there

was another guy smarter than me that

said if I have a lever large enough I

can move the entire world so we're

talking about you know very powerful

things here uh leverage can get into you

know past the speed of light power of

infinity that's what the Starship

Enterprise runs on man warp drives you

know hyper drives in the millenum in the

Millennium Falcon you know you're going

faster than the Millennium Falcon you

know when you start bending time and

space with infinity so when you take

this type of mathematics of compounding

and acceleration of Leverage the world

is your oyster so I I don't use a lot of

margin myself simply because uh it takes

a tremendous amount of skill and

experience to deal with that kind of

debt and right now the reason I don't

use a lot of martiin is interest rates

are so high that let's say you know a

company like you mentioned might you

know compound at a certain rate and pay

a certain amount of dividend if I borrow

money to to to buy that the it's the

same as real estate actually is you have

to have a really good deal so if you can

get a really good deal on your real

estate and you can pay what is now you

know five six% on a mortgage uh you need

to get more than five six% uh in your

cash flow right on that or your or your

compounding the wrong way and it shrinks

your your stuff so I don't I don't

usually recommend you know students

starting out with the margin do I use it

yes do I have some margin at use as we

speak right now yes I do but I don't use

a lot of it uh simply because the rate

right now is pretty high and that's when

the ask to be done with skill one of the

advantages of real estate that you do

not have in

stocks is that I can negotiate a price

and that price is in the eye of the

beholder for example if a person goes

into a pawn shop their value is is speed

they just don't want to mess with

anything and they just want cash right

now so they're willing to pay for that

speed by taking less money well the same

is true in real estate if a person is

has a divorce and it's nasty and they

their life sucks and they want this get

over quick if they can just sell the

property quickly uh without a lot of

hassle to them that's valuable look I

get some money I don't have to deal with

this person anymore so what they what

people want is is different so in the

real Market I have the power of

negotiation I can say hey this you can

take it down down down down okay now it

fits with that leverage of debt in the

stock market we do not have that luxury

at all uh however uh we do have options

that give us that and so the to use a

margin account and an options account

you're now entering not in a no you're

not in a novice area you're in a very

risky sophisticated

a high reward high risk uh and yet you

can still create high probabilities uh

that's an arena is a big deal so that's

kind of granular on it but to answer

your question in a word yes that would

if you were using debt to acquire more

asset uh you're certainly acquiring more

assets the question is does that cash

flow you produce create more asset

enough that you can be profitable with

that debt and buy more asset so that

would be a method uh compounding for a

very sophisticated investor not a

beginner most likely that's not me

that's why I said I would need you to

hold my hand before I would even do that

because that's a little scary we should

have Ed this moment though to say that

this is financial education not advice

yeah you know you said it's scary I I

don't know scary is also in the eye of

the beholder think of this what if I uh

put you blindfolded you and I said I'm

going to take you somewhere and when you

open your eyes you're going to have have

to deal with what emerges so I you know

take you by the hand you feel feel

things moving and you know an hour later

I set you in a seat and I I leave the

room and you take off your blindfold and

you're sitting behind the cockpit of a

747 what's your heart rate do and 30,000

feet by the way we're in the air when

this happen i' probably having a heart

attack at so high you probably have a

heart attack okay but here's what's

interesting if a pilot gets on a bicycle

and decides to ride to the city park

what happens to his heart

nothing if a pilot gets in a car which

is a much more levered you know that's

an accelerated piece of equipment is

there more risk there in driving the car

than the bike yeah you know there's you

know you got to be 16 take a test

understand the rules of road but his

heart rate doesn't get up if you put him

behind the the P of 747 it's no

different than the bicycle in terms of

heart rate So when you say it's

scary uh it's Bend based on your

education level and what's the most

risky uh of those things riding a bike

driving a car flying at 747 what has the

most risk well one's a big metal tube at

30,000 fet in the air going 500 miles an

hour and it is the least risky mode of

travel and yet the most effective why

pre-light pre-flight

checklists uh safety measures skilled

Pilots training so I would rather have

my friend Corey holiday use a margin

account investing in multiple leg

options with Hedges I'd feel more secure

with my money with him doing that than

with my

mother putting it in some freaking piece

of sh or piece of crap

401K so I mean when you say it's

scary for who oh I'm talking for me

I'm I'm more like your mother than Corey

well but it speaks to the power of

financial education right the same as

the pilot you know a guy like Kenny can

do things other people think crazy

doesn't get his heart rate up like this

is just play this is fun Warren Buffett

same thing he's just playing he's just

playing Monopoly he's just having fun at

this point you know he's he's he can't

stop he's in his 90s you know Charlie

passed away and still working they can't

stop because it's so much fun they'd

rather do that than retire and you know

sit around and do

nothing well let me dig into the second

one yeah let's do those so we don't run

out of time I went too far on that my

too much digression too much digression

well there's too much to learn is the I

think the RO problem okay I think this

one solid I'm don't even gonna you're

gonna hate this word I'm gonna say easy

and that is you you buy a stock with a

good dividend every time you get that

dividend you just buy more of that stock

so in my opinion it's a slower but much

safer way to compound what's your

thoughts on that I I would concur and

actually I don't like the word easy I

like the word simple but in this case

that is so freaking easy um and Warren

Buffett uses the word easy um in his 202

or uh 20121 annual report he uses the

word easy he says it is he says it's

like shooting fish in a barrel that's

how e that's the that's the ease he uses

what it is so easy you know by wonderful

companies wonderful prices that the

reason that's safe

is the safety in stocks is not in the

stock price that stuff's all over the

place the safety in stocks is in the

resilience of good American Business uh

you're not going to take down the

Coca-Cola Company very easily it's got

what he calls a modor around it it just

is a solid Castle well RC Cola G to come

out with a new formula and bring him

down next year not it's not going to

happen right you're just you have

billions of people that buy those every

day not once in a while like billions of

beverages a day that kind of force is

very safe it has survived world wars it

has survived Vietnam Wars has survived

stock market crashes 911 a recent

pandemic you can't kill certain

companies uh you know Burlington

Northern Santa Fe is a railroad that

produces 40% of the world or of the

nation's Freight from coast to coast

Warren Buffett owns it he owns he

controls think of that he controls 40%

of the freight you want ship something

you got to go through him he holds the

cards he has the power you know you have

real estate or you want a place to live

I have the house you don't I have the

power you want to ship something I have

the power so when you when you buy a

business that's very low risk if you

worry about the price that's high risk

so most dividends compound lower but but

if you give it some time Greg like

someone's going to say oh dividends 1%

doesn't even keep up with inflation

actually dividends are blessed by

inflation uh Warren Buffett bought his

shares of cocacola at

$325

cents I think the dividend I own it I

should know this and I don't but I think

the dividend on it is like a $150 a year

that's fif that's your rate of

compounding so he can buy every two

years he could buy another share every

two years and then those shares can buy

another share every two years now those

shares could buy every two years and

within a decade you're filthy stinking

vulgar Rich at that type of rate and now

you know decades and decades and decades

later I mean it's just he'll never sell

that company that company will never go

bankrupt uh your your grand your

grandkids will likely enjoy a Coke and a

smile they develop new beverages that we

haven't even thought of yet and and it

was just the wealth is unbelievable so

if people poo poo dividends that just

simply lets me know that they really

don't understand compounding inflation

and and they're ignorant in that asset

class okay I'm I'm GNA throw this back

to you you said there was one that I was

gonna mention that that you don't love

which one is that uh Buy Low sell High

you know I buy a stock at $5 I sell it

at 10 and then I buy two more stocks at

$5 and I sell it at 10 and now I have

you know 20 stocks at $5 and the idea of

Buy Low sell high is

uh you know it's the day Traders and by

the way I will tell you there are people

that are good at this there are Quant

traders that are good at this there are

uh people people that use AI to to do

this and while it's not the norm to find

someone good at it there are people that

are day Traders I just don't like that

lifestyle I don't like that method for

me it's really hard to

do uh you know I like I don't like Trend

and and trying to guess Trends some

people say Andy's really good at it I'm

I'm as a you know I'm better I'm a

better technical analyst than a guy off

the street for sure but it's not my

passion I'd rather own a business and

have cash flow than guess Trends and buy

low and sell High uh it's kind of like a

house flipper there's guys that flip

houses and make a ton of money but

they're not you're trying to compound

money and not compound assets if that

makes sense in other words every time

you get like if you were a gold guy and

you wanted to compound gold how would

you do

it oh I'd have to wait till the price

goes up sell your gold then you then you

w have any gold anymore yeah then I have

to wait for the price to drop price to

go down exactly and then you have to buy

more so you'd have to really have a a

crystal ball on price because it doesn't

cash flow right y so the purpose of gold

is really not to compound the purpose of

gold is to hedge right it's a place to

store money which is why guys like

Buffett and guys like myself you know I

I I'm a big believer in gold and I have

a significant amount of gold physical

like you a secure location hidden from

everybody you know but it's more of a

safety net for me and more of a hedge an

emergency store of wealth uh in case the

dollar is is in trouble and I need

another way to exchange that's really

what it is it's like food storage almost

it's just money storage it's not set up

to compound so the major majority of the

opportunities I seek are are not the

golden egg but the goose that lays it

and when I get a golden egg out of the

goose I want another goose I want to buy

another one as soon as possible

gotcha so we we are out of time go ahead

so I will tell you it's interesting the

zero to cash flow uh you know it's

couple hours to go through it we

actually show how to accelerate rates of

compounding by the use of options I I

don't like dividends in isolation

because the speed is not fast enough the

rate of accumulation doesn't really suit

me compared to other opportunities that

are there but if you add very

Conservative Strategies in the options

Market things that can be done in an IRA

I mean think it let let's finish with a

three punch idea punch number one give

the finger to Wall Street and say I'm

not gonna give you any more my money

because you slow my rate Warren Buffett

used this word on a 1% fee he said it's

enormous what it does to the get a

compounding calculator out and play with

1% over your lifetime just take your

lifetime of investing and add one you

know pick a pick a pick a a rate add 1%

to it and subtract 1% to it and see what

those three rates go with just a

variance of 1% up or 1% down from any

rate you want it's astounding it's

enormous so number one if you want to

compound faster give the finger to Wall

Street say look you guys suck at this

anyway learn get some education to it

yourself it'll pay you millions of

dollars over your life most likely

millions of dollars over your life most

likely in in compounding number two okay

then then you say I'm going to get my

dividend and then number three add your

options to it and if 1% is enormous

you're adding huge compounding and none

of those things require the price to go

up and so over time when the price does

go up well who cares I mean sure you're

going to make a boatload in your net

worth but it's not Warren Buffett's net

worth that's impressive it's is cash

flow uh and the cash flow is really what

you want cash flow will help you

compound and buy more asset not just

have the value of your asset go up you

want the number of assets you have to

increase not just the value of the asset

by itself let me say it again the best

compounding means the number of assets

that you have are increasing not just

the value of a single asset via supply

and demand you know on its

price well Andy thank you so much for

the show uh just to kind of end this I

know we started with Einstein but you

once told me compounding is the number

one weapon of a wealth Builder so it is

in my opinion cash flow compounding and

leverage are the three triple

combination cash flow compounding

leverage you learn those three I would

end with this question the most

important how do you get the most out at

watching this today if you just spent

time watching this conversation and

listening the way you end this is you

ask yourself am I compounding in the

number of assets is the current wealth

plan I am in am I adding more asset on a

regular basis for example last year how

many more shares how many more doors how

many more businesses how many more

income streams did I uh gather that's

the question if the answer is none or

not many then it's time for financial

education to increase and change your

wealth plan to where it's employing

compounding that will create a wealth

explosion of assets uh in your life so

if you say I understand compounding I

get it show me your financial statement

last year show me your asset column and

now show me it this year and let's see

how many more assets were purchased with

money from previous assets that's the

question tough question for some you

know got to look in the mirror a little

bit on that one so absolutely well Annie

thank you so much uh let's see I don't

think I'm going to see you until the

week I'm going to head out for the the

week so I'll see you next appreciate you

brother you too man very much especially

the education it's it's incredible so

thank you and I'll see you next look

forward to our discussions every week

thanks great thanks everybody thank you

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