12 ASSETS THAT MAKE YOU RICH

- Hey guys, Toby Mathis here. And today, we're going to go over 12 assets that make you rich. Now, why am I talking about this?

I'm a tax attorney. I've worked with tens of thousands of investors. My firm, Anderson Business Advisors, does over 10,000 tax returns for investors and high net worth individuals every year.

And we notice certain trends. I like to look at what they're actually investing in. And then I'm also a data junkie.

I love looking at the IRS and their data to tell us what are the wealthy investing in. And believe it or not, you can always figure that stuff out by researching the data in Publication 55 and other publications that the IRS puts out, as well as following certain think tanks where they do freedom of information acts and they dig into the data. So I'm not going to bore you with all that, I'm just going to jump in and start talking about the type of assets that'll make you wealthy.

Number one, this is going to trip you out, some of you guys aren't going to believe me, it's our friend, cash. Why is cash so important? Cash is so important because it allows you to take advantage of opportunities.

Now, what examples can I give you? I could give you a ton of examples like Microsoft, Apple, and Berkshire Hathaway just sitting on billions, hundreds of billions of dollars of cash. And here's the funny thing about cash.

If it's just sitting there and not earning interest, it's losing value. The US dollar is losing purchasing power due to inflation on a daily basis. Gimme an example.

If your grandfather had put $50,000 of cash underneath his mattress and then you find it, he passes away, and here's this $50,000. When he put it there, let's say it was 50 years ago, that was a fortune. Probably could have bought a couple houses with it, right?

That $50,000 has been losing its purchasing power. But you need that money, that cash, to take advantage of opportunities. It's always about the timing of an opportunity that shows up and your ability to capitalize it.

And that's why people keep that cash. What I would say is why you're doing that cash is put it in a high yield, I'm just going to call it a high yield savings, or some sort of money market account, something where it's making interest to offset the inflation so it's continuing to grow. Don't just sit there and think, when I say cash, it means you have greenback sitting in a bank or sitting in a checking account or sitting in a safe.

Don't do that. You need to fight off that inflation, and one of the things is a high yield savings will almost always equal about that rate so that you're not melting your money away. But cash is number one.

Number two, this is a big one, real estate. And there's three reasons we like real estate. Number one, you can rent it out and get paid.

So if I own real estate, the real estate will do the work for me. I can hire a property manager and I can make money every day forever, literally. Like if I have a good rental property, all right, I get a property manager, I may never visit it.

I have over 300 properties with my partner, Clint, and most of the properties I've never actually set foot on. I don't want to see 'em, right? I just want 'em to make me money.

And that's what we're doing is we put 'em into a rental pool, somebody's going to use it, and they're going to pay you for that. Real estate is great 'cause it's a perpetual asset. I can buy it once and it can pay me for hundreds of years, thousands of years even.

I just went to Rome, thousands of years some of those structures have been around, right? So there's rent, but there's also appreciation. It goes up in value because people want real estate.

I have a rental property, it's not uncommon, and many of our rental properties where they've doubled in, tripled in value. In fact, the average since COVID is about a 93% increase in the value in most metropolitan areas of the real estate. It's crazy what that appreciation can do.

Now, a lot of you guys are homeowners and you know what I'm talking about. You're like, hey, I get that appreciation, but you don't get the rent, and then you don't get something else, which is if it's an investment property, you also get depreciation. What's depreciation?

Depreciation equals deduction. So you don't have to pay a tax on the rent. You could actually have enough excess deduction if you're a real estate professional, if you know how to use short-term rentals to actually offset other income that you make, including your W2 wages.

That's why real estate is so effective and can make you so wealthy. Plus, I can leverage into real estate. I could put 20% down and get properties and get the appreciation on a hundred percent and get the rent on a hundred percent and allow the property to pay off the leverage that I put on it.

And I may never come out of pocket on that type of transaction. I may come out for the down payment, but the benefit, the tax benefit to me, may equal that amount. In other words, the amount of deduction I get by knowing what I'm doing on a tax side could actually cover and give me enough savings to cover the down payment to where technically I'm at net zero, but I own this property and it's paying for itself.

The tenants are paying for my property, including the loan on it. In which case, yes, that can make you very wealthy if you figure that one out. And by the way, if you want to learn how to do that, I'm going to share with you a free ebook here in a minute that you're going to be able to get and you can learn about these things absolutely free.

It's a lot of fun. Number three, bonds. Now, I know a lot of you guys are like, but bonds, they've been going down forever, right?

Because interest rates are high. When interest rates are low, bonds start going up, right? But bonds, and there's three flavors.

There's government bonds, there's like through the treasury, there's corporate bonds when you are literally giving money to large companies like Amazon. Others, instead of just going to a bank, they're going to issue bonds and they're going to pay you that interest rate. And then there's tax-free muni bonds, which are absolutely fantastic for our high income folks, that can make you rich 'cause you're not having to pay tax on it.

Or if you retiree and you're like, man, it makes my social security tax, but when I make too much money, tax-free muni bonds are your friends there too. But bonds are typically in almost all portfolios. In fact, if you listen to most financial planners, they're going to say 60-40 or 80-20, they're going to have some mix of bonds and securities.

And in some cases, like in some institutions, they can only invest in bonds. And so bonds can make you rich. The interest on them can be fantastic.

And the tax-free interest, which I personally use a lot because the tax savings, not having to pay tax on it, make up for the little bit less of performance that it gets 'cause they don't pay quite as high as other investments, but I'm okay because it's not what you make, it's what you keep. And in my situation, quite often, I'm doing a lot better than I would've if I had tax on the transaction. So those bonds become your friends.

Number four, stocks, and I'm just going to put REITs, real estate investment trust, which are bought and sold just like stocks. I'm just going to call them stocks. But when you are buying pieces of publicly-traded companies, you could do this so easily now.

I remember when I was growing up, it was so expensive when I was a young adult, it was 50 to 100 bucks just to buy, just to pay the broker to buy the company that I wanted. So if I wanted to buy Microsoft shares, if I wanted to buy Amazon, there was an expense. And it wasn't until the last 10, 15 years that it really went away.

Like now it's, you could go to eToro, you could go to Robinhood, you could go to Schwab, you could go to Fidelity, like there's all these different places you can go that you can buy shares for free, there's no transaction costs, and you can be an owner of these companies and start to build your wealth. And by the way, the rich own stocks. Astronomically high amount of the value of that stock market is held by the top 20% of the wealthy in this country.

If you want to join them, you start buying those stocks, and you could do so with a hundred bucks, like less than a hundred bucks, you could start buying micro shares. But once you start doing it, you will now open up your brain to start learning about it. And believe me, that will make a huge impact.

And this is where I'm going to stop and say, if you put in the comments, "free book," put in the comments "free book," we will send you "Infinity Investing" so you can learn how to invest in these things and you can start learning about how to actually build wealth, things that will produce perpetual infinite income for you and your legacy helps build literally for 102 years, it could set you up, free. All you got to do in the comments is just type in "free book" and we'll send you the link so you can get a free ebook of "Infinity Investing" which is gold medal winning book I wrote a couple years ago, maybe longer than that now. But it's absolutely will change the way you look at wealth and will help you make more.

All right, number five, mutual funds, index funds. And I'm just going to write ETF, which is a fancy way of saying a bunch of these in a bucket. If you don't know what to invest in, if you don't want to try to figure out what to invest in, then you could go mutual funds and ETFs and buy a bucket.

In other words, hey, I don't know what flavor of pizza I want, so I'm going to get a combination or I'm going to, maybe they're going to put one slice of each type of pizza into a pie. All right, if I could do that, I'll do it. Yeah, then you could just try different things, right?

So that's what an ETF is. It's a bucket of stocks. The ETFs and mutual funds are essentially the same things.

ETFs are more transparent and they're less expensive, so they're dominating mutual funds. But I'm not going to say, hey, mutual funds, avoid 'em. I'm going to say be very careful because mutual funds have a lot of hidden fees.

Make sure you're buying the right type and doing so intelligently. If you want to be real simple in ETF, you could do like the SPY, VOO is another one bucket of the the S&P 500, or DIVO, which is one of my favorites, Kevin Simpson over there who does covered calls, which is one of my favorite strategies and gets great returns, DIVO is a great bucket of stocks, it's an ETF. If you understand what covered calls are, Read "Infinity Investing," it'll teach you all about that.

Number six, commodities. If I could spell it right. Commodities, raw materials.

Let's just talk. It's gold, it's oil, it's art, which has been outperforming the S&P as well. People don't realize you can invest in alcohol, wine, I invest in whiskey, barrels of whiskey.

It's kind of weird, but they get great returns, double digit returns. Bitcoin might fall into that category. But all of those, even some cars I might put in there, and say, hey, if you're a collector, that might be where those go in.

But they're absolutely an asset class that can make you rich. Now, technically, the way I look at it is I always say an asset feeds you and a liability bleeds you. So an asset's supposed to be paying you, but in the realm of commodities, you may not get paid.

But it still has a place in our, in the way that we invest, we actually do something called 30-30-30-10 where we're 30% in dividend producing stocks, we're 30% in real estate, and by the way, a REIT is a real estate, bunch of real estate that is purchased like a stock, but it pays out 90% of its income every year to its shareholders. They're great as well. But that could be real estate.

Managed money is 30%. So 30% dividend stocks, 30% real estate, a real estate equivalent, 30% managed money, where somebody else is making the decisions or you're mirroring somebody else's portfolio, it could be Berkshire Hathaway for all I care, you could mirror a bunch of different portfolios, you could do syndications in that. And then 10% is cash or cash equivalent.

A lot of those commodities would be cash equivalent, like gold, like Bitcoin, things like that would be in that portfolio. But it's still something that I would have in there, even though technically, the way I look at the world, it's not a cashflow producing asset, but it still has a place, I still like it, and it absolutely works well. The next realm, let's go number seven.

I'm going to say IP, which just stands for intellectual property. So when you have write a book, for example, if you are a songwriter, if you write code, if you, a number of these things, if you get trademarks or patents on things, that's intellectual property and you could be receiving income off of those quite often in the form of licensing fee. If you're a writer, it might be ordinary income, active income if you're writing, for example, if I'm writing books.

But if you are investing in pools of IP, which there are syndications, there are investments that own intellectual property and receive licensing fees, there are huge companies, think like IBM and Microsoft and some of these Apple, Tesla, Tesla, I don't know if they actually go out and get the patents, but a lot of these tech companies go out and they're constantly creating more intellectual property that then they can license and get paid on and have others pay them for. So that intellectual property, things like royalties come out of that. Those are something you don't want to ignore and are things you can invest in that'll continue to pay you over time a considerable amount of money.

Just think of things like it was, I think it was Michael Buffer, since I'm here in Vegas, you know, let's get ready to, I don't know if I can even say it, but you know what he always says, let's get ready to. That's a, I think he trademarked that puppy, and I think he gets paid anytime somebody says that. That's why I'm being careful.

I don't want get nixed on YouTube because I violated his intellectual property. But that's where it is, is yeah, if I create something, I can get paid. And I think he makes millions of dollars with people licensing that phrase from him.

And it's kind of funky. And then you have other, like musicians, the Beatles catalog, you have, you always hear about people selling their music rights. Taylor Swift was a big one for a long time.

Where you had these big catalogs of the intellectual property that then get sold and they're making licensing fees. Or Mariah Carey, you know, All I Want for Christmas, every year is she makes millions of dollars constantly on the intellectual property from that. Or if you're a book writer, you may get all sorts of different rights, depending if somebody takes your book and makes it into a movie, people are always buying your book, you're getting a royalty.

People you know are using it in different capacities, you can get paid on it, and that's intellectual property. Number eight, I'm just going to put this, I know I put it as a commodity too, but crypto, because there's different types of crypto. You could be mining it, you can be doing staking, you could be investing.

There's a lot of what we call crap coins out there, you're not going to make a lot of money on. But then you have the things where you can actually be making money just by holding it. And I have a ton of clients that have made millions of dollars in crypto.

I'm not going to sit there and say like, Warren Buffett might say, you know, it's garbage or whatever they called it, it's poop. But there is value in it, there's people making a lot of money in it, and I don't want to ignore it. There are even funds now that are created to invest in crypto.

I know people that have mined it since for years and years and have done quite well. I'm not going to say don't do crypto, I'm just going to say be careful. In the 30-30-30-10 that I was describing earlier, it's usually in that 10% category of cash or cash equivalents.

That's where I am sticking that. Number nine is collectibles. And again, kind of like we were talking about before, it could be art, it could be wine, it could be whiskey, it could be cars, it could be watches, it could be jewelry, it could be even certain types of, I know bags are a big thing where people are, you know, if Hermes and you're sitting there, you're buying and you're lucky enough to get a Birkin or something like that, the resale on 'em goes up, Chanel goes up.

A lot of these things are actually appreciating in value. It's not for everybody, but it is for some people. And again, I mentioned some of those in the realm of commodities, but it kind of goes in better categorized as collectibles.

Number 10. And this is for you folks that are out there who are bootstrapping who want to create your own thing, and that is building a business. And we've all seen it.

Most of the wealthiest people in the world built a business, right? And they built a brand, goodwill, they're able to sell their company or they were able to sell a portion of their company via public offering, and taking it public and selling shares to the public. But businesses have a lot of the type of assets we just talked about.

They have intellectual property that they're developing. They're also, they have something called goodwill, which is their customer base, the name recognition, the brand that they're creating, that has a value. They have, I mean, we obviously mentioned the trademarks and patents, but also the equipment that they create.

There's the old joke that McDonald's wasn't a food company, it was a real estate company 'cause they were buying up all the real estate. And, you know, they always say like that's really the type of business it is. Everybody thinks they sell hamburgers, but where they were really generating all their wealth was on the stores and all the real estate.

Businesses have multiple asset classes that they start to build up on their balance sheet. And that's actually where Warren Buffet comes in when he was investing or value investors, a lot of times, they're trying to uncover the true value of the assets that are on that balance sheet, because we depreciate things and quite often, it's not tracked. So you have to figure out what's the value of the brand and there's all sorts of different mechanisms to do it and what the market will pay you for that.

And that is all built, it's almost created out of nothing. Like if you think about Tesla and some of these really valuable companies created out of nothing, Nvidia created out of nothing. It's an idea.

And then they come up with a product, and then that product people want, and then the intellectual property they develop becomes more and more valuable. And as a result, the people, more and more people want to participate in that, so the share value goes up. All these companies that have trillion dollar valuations nowadays, which is crazy, right?

Where is it? It's because that business valuation and anybody can do it. That's the beautiful part.

Anybody can create this and start to build those types of assets too. It's just takes the desire and the time to build those things. Number 11, assets.

I'm going to call it tax-advantaged accounts. So your IRAs, your 401Ks, your defined benefit plans, your HSAs, where they are growing tax-advantaged, you're not paying tax on the growth, they become very valuable. Your Roth accounts, all those things.

Any of these things that we've listed, any of these, any of these that are held in one of these becomes even more valuable because you're not paying tax as you go. So for a lot of folks, especially wealthy folks, that becomes very, very important. If I can somehow get it into a tax-advantaged account, it becomes that much more valuable.

And so that becomes an asset that really can make you rich. In fact, they did a study, I think it was Ben Hogan who works with Dave Ramsey, if you've ever heard of Dave Ramsey, he has a national radio show and he's pretty well known about personal finance. Not everybody agrees with him, but they did a study of 10,000 millionaires.

And the top three categories were engineers, accountants, and teachers. And teachers, by far and away, like when I look at teachers and I look at my own clients, it's because they consistently put money into a tax-advantaged account, like a 401k, they're getting matched and the growth compounds tax free. And they do it over a long period of time.

They have a 30 year career. And the money that they were planting in the very beginning has really borne fruit and it's continued to escalate in value, 'cause the S&P in its history is, you know, about right around 10% is its annual growth. When you're not paying tax on it every seven years, you're doubling.

They did that. And let's just say you had four doublings and you're always putting more money into it, it's amazing how much more money you could have. You put $10,000 in a year and it doubles every seven years.

It goes, you know, 10,000, 20,000, 40,000, 80,000, 160, and you're constantly doing that, the next thing you know, you have quite a bit of money sitting in there. And if you're getting a higher interest rate, even, obviously you compound that much faster. But if you're doing it inside a tax-advantaged account, it's even better.

So like Peter Thiel, PayPal, what, $4 billion in a Roth, never going to pay tax on it. That's an extreme example, but it's still a good example. And the last one that I'm going to put on here are number 12 is the good old checkup from the neck up.

And I would just say it's education and skill. I'll never forget Brian Tracy using an example. There was a facility that had a problem, a breakdown.

I'll just say it's an electric factory or something, and they could not figure it out. And there was an expert in the area, and they called up the expert, and they said he'll know how to fix it. So he flew out, he said, 10 grand and I'll fix it for you.

So they said, no problem. He comes in, he looks at and analyzes the issue in about 15 minutes, identifies what was wrong, and said do this and it'll fix it. And that sure enough, they did what he suggested and they fixed it.

So he sent his bill for $10,000, and of course the president of the company of the plant said, that's not fair. $10,000 for 15 minutes is absolutely ridiculous. There's no way I'm going to pay you that $10,000.

And he says, okay, my time was free, for knowing what the problem was is $10,000. And that's what it is, it's education and skill. It's specialized knowledge.

It's knowing how to do something. People will absolutely pay. And it can make you very, very wealthy if you spend the time fixing yourself and learning things and developing new skills.

So I always say it's the checkup from the neck up. It's those things where you're learning and learning and learning. And the old adage is, learn until you earn, learn until you earn, right?

Learn and then take the L away. And again, you could be developing multiple lines of skills. I have to say for folks that are learning the stock market, for example, they say, should I learn real estate?

And the answer is yes, you can do both. Well, should I learn lending? Yes, you should learn about lending as well.

There's never a situation where the answer's going to be no when it comes to learning. I am better learning. And the prime example, if you've ever heard of Steve Jobs talking in his, he does a commencement address where he is talking about when he left college.

Before he left college, he knew he was going to be leaving. He took a calligraphy course. And that calligraphy course, of course, became fonts inside of a Mac and changed the world like the way we know it, computing, because of something that he chose to learn that had nothing to do with computers, it still benefited him.

So I'm always going to say, if there's one thing, it's be a student forever. Learn, learn, learn. You're never going to know how it's going to pay off.

Even in real estate, I'm like, hey, should you go learn how to do some woodworking? Should you learn how to do electrical? Absolutely.

It's going to benefit you in your investing period because that little bit of knowledge is going to give you more breadth and scope when you're analyzing deals that can actually help you. Speaking of which, if you want to continue to learn and you want to continue to help your education, both on the financial side, asset protection and tax, subscribe to my channel. It's absolutely free.

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