Tom Wheelwright recently reminded us of an interesting quote …
“Be the FED!” – Robert Helms, The Real Estate Guys™ Investor Summit™
While there’s much debate about the origins, necessity and efficacy of the Federal Reserve, there’s probably not too much we can do about it. But, we can mimic their profitable pattern.
How the Fed Makes Money
The Fed makes money simply by earning interest on money it lends out to various governments and banks. The key to their infinite returns is that the money they lend out is not earned … they print it (on paper or a screen).
The “debt-order” of a government or bank is the trigger for all money creation.
Unfortunately, if we print money to lend out for interest, we go to jail. We don’t have this elite privilege.
Ways to Be the Fed Yourself
While we can’t print money ourselves, we can borrow like the governments and central banks do. When we take out a loan, our “debt-order” can create money too.
This new money can be invested to create cash flow and profits for us and is not income to us (not susceptible to income tax).
Who Pays the Debt Service?
Similar to the Fed, the governments have a privilege of their own … to tax their citizens to cover the interest and debt service on their “debt-orders”. Unfortunately, we don’t get this elite privilege either.
What we can do is invest our “debt-order” money into assets that produce cash flow (either through increasing our income or decreasing our expenses).
The cash flow produced by our investments can cover our debt-service.
The Best “Debt-Order” (We could call this our “Money-Order”, but now you see all money is actually debt.)
What makes one debt-order better than another is its price and terms (i.e. the impact it has on your cash flow and profits).
Real estate “debt-orders” (aka mortgages) offer the best price and terms available.
- Low cost
- Long amortization terms
- Fixed rates
What to Invest In
When you’re thinking about placing a “debt-order” to create money for investing and you’re wondering what to invest in for more profits and cash flow, here’s some ideas: