Today's Guest

Toby Mathis is a founder of Infinity Investing Workshop and Anderson Business Advisors, one of the most successful investing, law, tax, and estate planning companies in the United States. Toby’s businesses have been featured on the Inc. list of fastest-growing US companies on three different occasions and voted one of the “Best Places to Work.” He has sat on the Boards of hundreds of companies, including public and private enterprises, non-profits, and business leagues. He brings a wealth of experience to Infinity Investing and is ready to transform how you look at your investments. 

Episode Transcript

(Please excuse grammatical errors due to transcription)

Gordon Henry:             Hey, hey, this is Gordon Henry at Winning on Main Street and this week we're fortunate to meet Toby Mathis. Welcome to the show, Toby.

Toby Mathis:                Hey, thanks for having me Gordon.

Gordon Henry:             Good to have you. So quick intro on Toby. Toby is the founder of Infinity Investing Workshop and Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the US. Toby's businesses have been featured on the Inc list of fastest growing US companies on three different occasions and have been voted as best places to work. He's the author of Infinity Investing, How the Rich Get Richer, and How You Can Do the Same. He sits or has sat on the boards of hundreds of companies, including public and private enterprises, nonprofits, business leagues. He brings a wealth of experience to Infinity Investing, and he's ready to transform the way you look at your investments.

                                   And what should listeners get out of this episode? Toby is, I think you'll hear, is not offering a get rich quick plan. It's a get rich slow approach. I like that. It takes time to implement long-lasting strategies that lead to financial independence. He's created a roadmap for you to follow to create wealth over time. So Toby, welcome to the show. Thanks for joining us. We want to talk about your specific recommendations for how people should build wealth. But first just tell us briefly how you got into the business of financial advisory services.

Toby Mathis:                Yeah, I can start all the way in the beginning. I'm a tax attorney by trade and I'm not a licensed financial planner, so I'm never going to tell you what to do and how to do it. I'm going to tell you what other folks are doing that are successful and that Wall Street, for the most part, it's agitating you, trying to get you to do things that aren't in your best interest. And you can kind of figure out by looking and talking to very wealthy folks, you can kind of get yourself out of that pattern because it's kind of a hamster wheel when you get on it. So I'll just tell you from my standpoint, our firm, there's over 500 of us and we do over 10,000 tax returns a year for affluent investors. And so I can see who's successful and who's not.

                                   And if you're a guru and I see your tax return, I can tell whether you're actually full of it or whether you're giving out good advice. And over the, it's been more than two decades that we've been operating, I've seen the good, the bad and the ugly and I have a pretty good feel now, the BS meter's out there as to what's going to work and what's not going to work. And it's contrary to what a lot of the common advice that's given is. And I'll just tell you this from a tax standpoint, the tax code usually tells you what to invest in because it gives you incentives to invest in it.

Gordon Henry:             Got it. So just to be clear for our listeners, there's a lot of wealth building advisors out there. How are you guys really different?

Toby Mathis:                Yeah, well we're going to tell you what actually works and we're not interested in managing your money or anything like that. We're just a group that we all go together and we look at great opportunities. So for example, on the law side and the tax side, there's no investor, we're just going to help you maximize your return. So for example, business A and business B, they could be grossing the same amount and they could be netting the same amount, but the taxes could be wildly different depending on how they structure themselves. And when I say wildly different, it could literally double your profit if you're doing something in a tax advantage manner versus if you're just kind of following the easy way or the common way. A lot of accountants, for example, are taught a particular set of methodology. For example, they know 1040s, so they want everybody to be a... When I say 1040, I mean their tax return, and they want you to stay there. That's their comfort zone.

                                   And so you set up a business quite often though, 70% of the time, have you as a sole proprietor when in all actuality that may increase your audit risk by over a thousand percent and create a tax scenario to where you're paying both sides of the employment taxes, which is actually one of the highest, if not... Some years, it is the highest revenue generator for our government. Even beyond federal income taxes are those employment taxes. They're kind of a, we don't talk about them a lot, but they're insidious and they're right there. And so if you're not doing something to avoid it, you might end up paying both the employee side and the employer side of those employment taxes plus your federal taxes and you're paying significantly more than somebody who structures themselves as an S-corp for example. And you're competing with that individual.

                                   So if you're two businesses, all things being equal, if one of them is generating, let's say you're making a hundred thousand dollars a year and one of them keeps an extra $10,000 a year because they know what they're doing from a tax perspective, it's really tough over time for that person who's the sole proprietor to compete with that business because they're going to run out of money because they're paying more in taxes.

Gordon Henry:             Got it. So your bio says you studied wealthy people's tax returns, you've explained to us that you have many clients and that explains how you have access. What did you learn?

Toby Mathis:                What I learned realistically is that there's really two tax roads and there's two wealth roads. So there's a road, and I use an example that I like, that's runs true to me, which is if anybody's ever been to Orlando and gone to Disney World, you know that there's lots of signs that'll take you to Disney World when you leave the Orlando airport. So let's say you get a rental car and you're going to go to Disney World, there's plenty of signs that'll take you right onto the tollway and you'll pay tolls your entire way until you get to Disney World and you're none the wiser. You're like, "so I had to pay a bunch of tolls as I went." The locals know that the first exit out of that airport takes you onto something called Sand Lake Road and you can drive the entire way and avoid all the tolls, but the signs all point you to the toll road and that's the tax system.

                                   If you don't know or don't work with somebody who knows, you're going to end up paying the tolls the whole way. And I think the financial industry is the same. If you just put stuff blindly in your 401K or your IRA or you do mutual funds, you're not aware at the amount of absolute redundant fee you're paying. Quite often it's management fees, but it's estimated, and I've read different articles and I've done my own analysis on it, it's right around 4.8% is what the cost is on an annual basis on let's say a typical mutual fund when the market's returning on average, let's say 7%, so your financial professionals make more on your retirement than you do over a 30-year stretch, it's actually really significant. It's quite literally if you made a million dollars, over 600,000 of it went to your manager in the financial industry and you could avoid that a hundred percent, you could literally eliminate that extra cost and keep more.

                                   The difference is one person doesn't know and they're doing it the easy way and they're following what their plan administrator's saying or maybe you don't even have an option. And then there's the people that do know and they say, "Hey, you know what? I'm going to do some of this myself. It's not that difficult. In fact I have a higher degree of success when I do it that way." And it's just waking up and realizing that there's different options. And it's kind of interesting that it's in both those same areas. You're looking at taxes, you're looking at financial planning, you look at legacy planning, you look at lawsuit protection, all those things. There's a very costly road that is the commonly traveled. And then there's the one that the wealthy and the affluent use.

Gordon Henry:             So let's unpack that for a second because you're touching on an issue that I was interested to read about when I heard about what you're doing, which is taxes and mutual funds. Now I don't know what the percentage is exactly, but many, many people, 40, 50, 60% of America probably has their 401K sitting in a mutual fund. So we're talking about what a lot of people do and what represents a very significant portion of a lot of people's retirement. So it's important. So you are saying that if there's two people working for a big company who have, let's say a hundred grand sitting in an S&P 500 index fund, one of those people is going to pay a high tax and one of those people may pay a low tax?

Toby Mathis:                Not so much in that scenario because they're both in a tax exempt environment.

Gordon Henry:             Okay.

Toby Mathis:                One of them understands the difference between a Roth and a traditional and they're doing a Roth 401K as opposed to just putting it in blindly in a traditional 401k. And they're willing to pay a little bit of tax now to have no tax later. But from a investment standpoint, let's change it up a little bit and say one person is in control of their own retirement and the other one's doing the company retirement plan. The company retirement plan gives you five options. A, you could put it in this mutual fund, that mutual fund or another mutual fund. And then the other person sets up their own IRA and is investing their own money. What I'm going to say is that the cost, the expense of having that money managed might be five, six times as high for the mutual fund than the individual who's managing their own money. You could do an ETF, know exactly what you're investing in, just do the SPY or just do the S&P 500 if that's all you wanted to do.

                                   And statistically you're going to do better than 90, the actual number is over 15 years, 92% of the money managers out there underperform the S&P 500. So if that's all you did, you just eliminated that extra cost, which is somewhere in the 4.8% range. It's not small and you added that to your return by just doing that. And I'm saying that's pretty extreme. When you do that over a 30-year period, it's the difference between having a decent retirement, let's say you have $400,000 in your retirement, maybe you're saving $10,000 a year versus having over a million bucks. It's that extreme. And it's just math, it's just penciling it out. And of course I'm going to get a bunch of haters that say "no, mutual funds are great." I'm not saying mutual funds are not great, I'm saying that they're more expensive than some of the alternatives and some of the alternatives are actually better.

Gordon Henry:             Got it. Okay. I wanted to move on to another topic that I know you write about a lot, which is college. Colleges for kids. One of your focuses is on helping the next generation and you say college degrees aren't worth what they once were. What's wrong with college today? How should it change? What should kids do?

Toby Mathis:                I think that college has gone up expense-wise in that you're not valuing the market value of your degree. So an English degree is not worth the same as an engineering degree. And so in all reality, if you're paying the same for that credit hour, the English majors are subsidizing the engineering majors. Realistically, you're both investing the same dollar, the return is not the same. And we've been detached from the market value of our degrees. We'll go spend $200,000 on a degree that's not going to give us the income stream to justify that much expense and you're going to go into debt to do it. The government's backing up these federally backed loans and everybody's off to the races. When I went to school it wasn't quite this extreme. I don't know when you went to school but it was a lot harder to get loans and more of them were private loans and we were told not to have the debt.

                                   So I worked and got out of school with very little debt. That's not what happening now is they're encouraging this debt load and the value of that degree does not justify that. I'm not saying that hey, the engineers, the medical professionals, attorneys', accountants, those are valuable degrees. Computer science is the number one value right now of degrees, but we're not looking at that. People are getting a music degree, history degree or something and they're paying the same price for the higher valued degree and we're not letting market value do its thing because it's this insidious loaning and money machine that these schools, and again I don't want to make it sound like I'm against colleges, but boy they charge a lot for some of these degrees and they know full well that the value of that degree does not justify that expense.

Gordon Henry:             So what are you recommending or arguing for? Should colleges stop offering, let's say English or art degrees, should they charge less for them? Should kids and parents just not take them? What are you recommending?

Toby Mathis:                I would say that there's a value to that degree and that you don't pay more for that degree. So yeah, if it's going to an institution where you're spending a hundred thousand dollars a year to get a degree that you probably aren't going to increase your income over your career. In other words, it's not a high paying income. Just think about teachers. I don't think I'd want to be $500,000 in debt with the teachers degree. I don't care. It's just the market's not going to pay you enough to cover that. You're going to be in a bad financial situation your entire lifetime because you're going to be paying that debt down or you're going to try to pay that debt down. So solution wise, I would say the government really shouldn't be subsidizing the loans and making it to where these institutions can go kind of bonkers on what they charge.

                                   But it really comes down to the consumer. The consumer needs to look at these things and say, "is my degree worth what I'm going to pay for it?" And if the answer is yes, by all means go out there. And again, if you're going to get a medical degree, that's very, very valuable degree. I could understand going into debt for it. But if you're getting a degree that doesn't have as much value and I wish I had the list but you could just grab the bottom 10 and say, oh those are not really going to be bearing a lot of fruit money-wise, then maybe you shouldn't go into massive debt trying to get it.

Gordon Henry:             Yeah. Let's move on to another topic regarding the next generation. You talk about the crisis in wealth building. You say a generation, I think you're talking about the younger generation, doesn't know how to grow their money and will become dependent on the government. That's pretty scary. How do we avoid that?

Toby Mathis:                Financial education and teaching them how money actually works. There's an old adage that he who doesn't understand compound interest pays it. He who understands it, earns it. And we don't really teach that to kids. If I knew, hey, if I went and I bought let's say a Rolex watch, because I'm here in Vegas and the weirdest thing during the pandemic was when they were giving out money, kind of the economic assistance, there were lines going into Gucci, going into the Rolex store, going into these high-end stores and they were filled with young people and you kind of want to walk over and say, "hey, you know that watch, it might be 10 grand? That's going to be worth 200,000 if you just invested it conservatively when you retire. So would you rather buy the watch now or have a nice retirement?" Or you're just flipping it on its head saying "Hey, if you incur that debt and you just pay that minimum, do you know how much you're going to pay? You're going to be paying for 10,000 bucks, you're going to be paying 30 or $40,000. Is that really a wise decision?"

                                   And a lot of people would say no, no. I mean some people, they'd still say yes, but we can't help those folks. But you should have some knowledge about money. And the thing that really bothers me, and I'll just, I know this is probably, you don't necessarily want me going down these avenues here, but I'll get on my soapbox for a second because people don't know what assets are. We're taught your biggest asset is your house and your house is a liability. They don't even let you use it, credit investors, when you're allowed to invest in certain type of riskier investments, they don't even allow you to include that when you're meeting the definition of whether you're an accredited investor, literally you can't use your house value. The investing community knows dang well that that house is a big liability for a lot of people that you're paying into it and that the bigger the house you get and the more expensive a house you get, the more it's going to cost you.

                                   But we tell people when they're young, "oh you need to buy a big house and you need buy a really nice car, we'll give you 0% interest." And they never talk about all the cost of it and they don't go down to the very basic principle of when you're young and you invest in assets and an asset pays you over time and it's going to increase over time, it's really tough to screw up if that's what you buy first. On the flip side, if you buy liabilities first, it's really tough to be successful. So just make a good decision. It's no different than going around the monopoly board when you play monopoly the first few times, if you skipped over buying the rental properties that you can now start to generate, the utilities and all that, and instead when you land on it, it gave you the option, get into debt with a brand-new car, most people right now are jumping on that thing and getting into debt.

                                   You would never win that game if you had that option. And we're doing that in real time and real life. And you're seeing these folks and especially the younger generation, last time I checked it was less than I think 5% of the wealth being generated was for millennials, it's a really small percentage compared to everybody else. It is tough to get out of that situation. And so you need to get to these people young and say, here's the correct principles, please invest in assets. Here's what an asset is. An asset is going to pay you. It's not a gambling, it's not playing the crypto game. You need to buy things that are cash flow positive and that are going to pay you every quarter, every month, every year. But it's putting money in your pocket and you need to stay away from putting your hard-earned cash into things that are going to cost you more money in the future.

                                   So when you buy that expensive car, an oil change on a exotic car is not cheap, or you get a Porsche, a tire's going to cost you a thousand bucks as opposed to you get the Toyota, it might be a hundred or 200 bucks, right? It's so expensive. Or if you get the really nice big house, it comes with a really nice big property tax bill, lots of utilities, your mortgage is higher, all these things, you need to be intelligent about it and make a decision that is actually thoughtful as opposed as to just blindly reacting saying "I'm told I should be consuming. I deserve this. I need the bigger house, I need this, that and the other." And then going into debt for it. You buy a liability with a liability. I call it the losing loop. You're in for a world of hurt and I don't care how much money you make, you're going to find yourself sitting at 50 feeling like you're choking because you can't see the light at the end of the tunnel because your whole life is revolving around paying your mortgage and your car bills and your college tuition for your kids and any other expenses that you've incurred along the way and your credit card bills.

                                   And you start feeling like, but I make so much money, why do I keep so little? And the reason is because you've been taught the opposite of what you should be doing.

Gordon Henry:             What you say reminds me of a book I've always recommended called The Millionaire Next Door, which was a best seller and I always thought a lot of common sense, which talked about somebody who wasn't in a super duper high paying job or career, but who just was careful about their pennies, didn't overspend and put away what they could and how it accumulated over time and they ended up a millionaire even though they weren't some famous CEO or what have you. That's kind of what you're saying I hear is put the money in the assets, get a return on your investment. Don't overspend on luxuries that may feel good today, but don't do anything for you tomorrow.

Toby Mathis:                Yeah, Gordon, they did a study, I think it was Hogan, he's part of the Dave Ramsey Group and Dave, love him or hate him, he's talking some common sense, sometimes I don't like the kind of money shaming thing that goes on there, but they did a study of millionaires, I think they did 10,000 millionaires, and the top three categories for the millionaires were engineers, accountants and teachers. Teachers. Flipping teachers, right? The people that you'd say, oh, there's no way that the millionaires, that more millionaires... No, it's because the teachers love what they were doing, they live below their means, and they just consistently put some money aside and you let it do its thing and over 20 or 30 years you're going to be well off.

                                   In fact, there was this life hack that somebody told me once, they said, "Hey Toby, go open up a brokerage account and buy a bunch of companies that you use every day that are profitable and reward their shareholders. Just go do it and fill it up and put it on auto-buy where it's going to buy 200 bucks a month or something like that and then lose your password, lose your password for about 20 years and then come back and you're going to be really, really pleasantly surprised. You're going to be really rich." And when you pencil out those numbers, you realize like, oh my gosh, yeah, don't try to time the market, just consistently buy and buy good companies.

                                   It's kind of the Warren Buffet thing or Warren Buffet, I think his first billion was when he was about 50, but the vast majority of all of his money, like 90% plus has been since he's been 50. And it's because he is patient and lets time to its thing. It keeps proving itself over and over again. Every time you look at a study, just live below your means, put your money into investments, let them do their thing over time. Invest in assets, avoid all the hype, don't listen to cable TV, all these guys telling you what to invest in. Use your own common sense. You can figure it out. "Hey, when I drive down the road, what's the gas station I stop at? What's the grocery store I go to? What do I like? Do I like going to Starbucks? Do I like going to Costco? Yeah, get those things. What's my cell phone company?"

                                   Oh, invest in good companies that are proven, that have a competitive advantage, that make money and share it with their shareholders. And it's a very small world. It's like less than a hundred companies really start to fit that bill. Just invest in those. You're going to be better off than any money manager if you do that.

Gordon Henry:             Yeah, interesting advice. So I want to go back for a second to your real estate comment because I was interested to hear you say, you were kind of saying the person who buys the big home that that's not an asset. You explain why because you can't even list it if you want to become an accredited investor, which is a process for high net worth individual, can't even list the house, but you recommend real estate as an investment I believe. And so I want to ask you, how should people invest in real estate? Should they become a landlord, for example? What's the process that you recommend?

Toby Mathis:                Yeah, I'll use an example of a young man that I had the pleasure of talking to over the last few years. He was a realtor in California and he was living at home while he was becoming a realtor. And he was making, he said his first year was 20,000, next year was 40,000, then he went up to 60, then he went up to a hundred. He became a millionaire in about a four-year stretch because he took all of his money, he lived at home and he bought rental properties. That's all he did. And he laughs now because he makes about $30,000 a month in rental income and everybody's always saying, "you can't do that." It's like, yeah, actually you can, if you buy cash flow properties, you buy them smart. You're not buying it on the coast right now. You're probably not going to find too many things that are going to cash flow, but there's plenty of opportunities in the United States if you know where to look.

                                   And you could buy things that are just going to pay for themselves over the years. I'm in Vegas where in 2008 I think our property values dropped 75%. The properties we owned in Las Vegas that we still own to this day when we were buying during that period of time, I mean they have to have paid for themselves at least a couple times over on the rents, but the rents went up during that stretch and they've gone up every year ever since. And now I look back and I don't know how many years it's been since I bought some of these, probably 20 years, and you're looking back and you're just realizing, wow, this thing is just... I use the term infinity investing because I buy things that I'm never going to sell that are going to provide an infinite income stream for myself and my family or the organizations that I care about.

                                   And so when you look at real estate, it needs to be putting money in your pocket. If it's not putting in money in your pocket, then it's a liability. If it is putting money in your pocket, then it's an asset. And so you buy a rental property, two rental properties, one is cash flow positive and yes, you have to factor. And if you're using debt, I'm not a big debt fan, so I love it. I think most people could retire if they owned seven bread and butter properties in North Carolina, Ohio, Missouri, Indiana, Texas, Oklahoma. If you had some bread and butter properties, let's say you had seven outright, I think you're retired. In those seven properties right now, you could still buy them for a hundred, 120,000 each. And people that you're in New York, I'm in Las Vegas, you probably can't buy that here, right?

                                   It's going to be 250, 300,000 just to get started. But there's still plenty of places where you can go buy these properties. I myself, my partner and I own over 300 properties. We've been buying them for years. We love buying them. You could just, they're like little cash machines and they're just going to keep kicking you the money and it doesn't stop. It just keeps paying out and it's going to go on for, again, if you get into the legacy planning, and this always throws people off. I say when you do a legacy plan, think 200 years into the future, what is your estate look like in 200 years? Because you're not there, what does it look like? So you need to build it now so that it could last that long. So I'm going to invest in things that I don't have to do anything. Once it's there, I just have to have, I can have an outside manager manage it and that's it.

                                   I put some money aside from my CapEx, which is so I can fix up the house over time, if I budget accordingly, it's going to just keep perpetuating itself over the years and in 200 years you're going to have this money machine that's still printing it out for your kids' kids' kids' kids. And yes, you can even control what it's used for. Hey, I only want it used for education for my kids or for them to travel out of the United States so they can see other cultures. You can be very specific about what you want it to be used for and let it perpetuate itself and it's super easy to do.

Gordon Henry:             Interesting. Now this show is dedicated to small business owners. So I want to talk a little bit about this from the small business owner perspective instead of just the individual investor, although that's pretty relevant as well. How does your message to entrepreneurs look differently? Do you advocate people go into business for themselves and how should they do it maybe differently than some are doing it today?

Toby Mathis:                Yeah, first off, I am a huge small business fan. I hung my shingle out when I got out of law school. I did not go work for the big firm. You eat it for two or three years. You just take it right in the kisser, but it pays off. I'm a big believer in small business, but there are two ways to operate. The number one way is naked and following your accountant's advice. And when I say naked, it means you're not putting a box around yourself for protection to make sure that if you make a mistake, it doesn't follow you around the rest of your life. So we want to isolate the liability, you do that with LLCs and corporations, to make sure that if I slip up or something bad happens that whatever I do in my business does not cause me eternal strife, like it follow me around forever.

                                   Number two is make sure that you're doing so in a tax advantage way. Again, the tax code is really, I would say it's 10% how to pay taxes and 90% how to avoid them. And if all you do is read the 10% about how to pay taxes, you'll be a great taxpayer to this country and you'll pay more than just about everybody else. And that's really tough to be competitive. In fact, I'll use an example and I'll be shocked if you know this. IKEA, the furniture store is a charity. It pays almost no tax. And so when you wonder how did IKEA grow and compete with all these big furniture outlets, how does it keep its competitive advantage? It's all about the aesthetic appeal. They're about interior design and they pay almost no tax. It's a really small amount of tax.

                                   That's a huge competitive advantage. And so if I'm putting two businesses side by side and I say this business has to pay 20% out of tax and this guy here he's going to pay 40, who's going to win? I'm putting my money on the guy who's paying 20, right? If you can cut that tax bill in half, you're way better off. And unfortunately most of the accountants aren't really helpful in that stretch. I mean, just my experience and no dig on CPAs and EAs and accountants and stuff, but most of them aren't necessarily tax planners. So really good about taking your numbers and putting them in a balance sheet and a P&L, they're probably really good at tax prep, but you have to push them a little bit to say, "are there any other ways that I can utilize the tax code to minimize my tax hit?" And the answer is an astounding yes, there's tons of ways that are available to you if you choose, but it's an affirmative choice and you actually have to do something to take advantage of it.

Gordon Henry:             Okay. So you are a big fan of small business owners and your message really is that you have to, as an entrepreneur, you really have to be aggressive about finding a tax advisor who can help you minimize your taxes.

Toby Mathis:                Fair enough.

Gordon Henry:             Yeah. Okay. Is there anything different in terms of the actual running of the businesses that you recommend to your small business customers in terms of how they can, is it all about taxes or is there something else in terms of the running of the business that you recommend in terms of how you should build wealth?

Toby Mathis:                So I believe you have to know your numbers. So the number one killer of small businesses is running out of cash. The easiest way to run out of cash is not to track your expenses and be intelligent about your balance sheet. And so if you don't have, and I know you have software, the Thryv, you have to have something. I'm not going to say this one's better than others and everything else, you have to have something to where you're able to make accurate planning in that you know your numbers. So I meet people all the time that say, "oh, I made a hundred thousand dollars last year." And I look at them and say, "what did you net, what did you pay in tax?" And they're like, "oh shoot, I haven't paid the taxes yet." And I'm like, "well how long has it been since you paid your taxes?" It's usually two or three years and they're behind.

                                   And literally it would eat up every dollar they have, they've not been running at what's really a true profit, their cash flow is gone. And if they knew that and they were honest about it in the very beginning, they would've changed things going forward. But they didn't even know because some much, we do the ostrich, we stick our head in the sand and we try to pretend like it's not happening, but you kind of have to do that cold water in the face, wake up, here's what my numbers are. As far as running a business, I've seen people that make money at things that I never thought were possible to make money at. I was listening to one of your podcasts with the gal from Swish and we have a...

Gordon Henry:             Swig.

Toby Mathis:                Swig? Swig, sorry.

Gordon Henry:             Soda.

Toby Mathis:                It's this... Yeah, the soda. And I heard it because we have an office in Draper, Utah and they're always talking about a hit Swig or swish. And they went out and they have all these different drinks. I haven't been there, but I'm listening to it going, you're making that kind of... You're having that much success with what? Fountain drinks? And everybody loves them, right? You just never would've guessed it. So I make no judgment on whatever somebody's doing. My job is to be a fan and to give them all the tools so that they can minimize the amount of expense they're paying so that they can use as much of that money to follow their dream as humanly possible and then put it in a tax advantaged arena, allow time to do its thing and make sure that that legacy, that they pass it on in loving, caring way as opposed to leaving them a bit of a dumpster fire for their heirs to have to fight over when something happens to them.

                                   And we, over the last few years, just because of COVID and everything else, a lot of unexpected deaths both from cancer, COVID, and some of the related incidents and you see some younger folks where they, thank God we had plans put in place because you see the difference between people who didn't and people who did. And it's night and day, it's absolutely catastrophic, if you don't have some sort of plan in place for a business, it's not going to make it. So you got to do a little bit of planning on the front side, but I have no idea, I've had people that just move dirt, make money and I go, "how do you make money moving dirt?" And they're like, "well, it's for the oil rigs and we have to put the same dirt back into the hole and we dig this huge hole so they don't have to drill it." Okay, I never would've known that. I wouldn't have no idea. That's genius. I'm just going to help them keep more of that money, do everything we can legally to keep as much of that money as humanly possible.

Gordon Henry:             We'll be right back with more from Toby Mathis. But first a message from our friends at Build, Scale, Grow. Build, Scale, Grow provides fractional COO and CFO services so you can focus on exponential growth. The insightful leaders at Build Scale Grow apply hard won lessons to help you scale quickly and exit successfully. Let Build Scale Grow's experienced team of operations and finance experts install industry leading practices, people and software so you can concentrate your time and energy on expanding. Visit webuildscalegrow.com to learn more. That's webuildscalegrow.com.

                                   And we're back with Toby Mathis. Fascinating conversation about investing and how to keep more of your hard-earned money and money you may make from investing. So Toby, you wrote a book called Infinity Investing, how the Rich Get Richer and How You Can Do The Same. Tell us what are the principles the book introduces.

Toby Mathis:                At its core Infinity, this means perpetual. So I am not a big believer in the idea that you build up money for retirement and then you spend it down during your retirement years. I have a mother who's in her eighties and she can see her account getting smaller, especially when the market drops and it causes her anxiety and she's thinking, what if I outlive my money? I just think that's a horrible situation to be in. So what we do differently is we buy assets and live off of the product of those assets. So the income off those assets, and there's really five types of income that I pay attention to. The top two are dividends and rents. Those are reoccurring revenue sources. And then you learn to live off of that revenue source. So you replace whatever it is that you need to live off of.

                                   Let's say the average American it's about $5,000 a month. So I would target $5,000 a month with an average person and say, what can we purchase that's going to produce that? And once you have enough coming in from rent, royalties, dividends, interests, I use short-term capital gains on the sale of options on securities, but we call them infinity income sources. Once you have enough coming in from those essentially passive income sources, you no longer have to work. And so you could live an infinite number of days without drawing down your principle. In other words, we create little cash machines that we never have to get rid of and you live off of what it generates. So it's kind of like chickens. I've worked with organizations, I sit on the board the organization that does a lot of humanitarian work in other countries and one of the things that you realize is chickens, they create protein, but if you eat the chicken, you've ended that protein source, which is the eggs. So it's really important not to eat the chicken.

                                   People eat the chicken in their retirement and we're teaching them to cook and eat the chicken. And then eventually you have one chicken left and you're stressed out and you're a hundred years old and you're like, oh man, there's no more chicken left. Or you're 85 and you've eaten all your chickens and now you're on the public, you're living off of social security and you're pretty miserable and you're going back to Walmart and you're a greeter. You don't want to be in that situation. We want to have lots and lots of chickens, we're eating the eggs.

                                   And in the infinity investing, that's all it really boils down to is identifying what are assets and what are liabilities. Doing the hard calculation, what do I really generate? If I am working off of my labor, then it's the old Warren Buffet quote. If you don't figure a way to make money while you're sleeping, you're going to work till you die. I got to make it to where I'm out of that equation because A, I can't create a legacy if it's a spend down situation. I'm going to spend all my money during my retirement. I'm not leaving anything for anybody. If I want to create a legacy for future generations, I got to create the money machine. I got to have a whole bunch of chickens.

Gordon Henry:             Well said. Just a few more questions before we go, Toby. You talk a lot about how the rich get richer and a lot of things about wealth. Is there a stigma today you think in the US about being rich?

Toby Mathis:                I think that there's people that are not wealthy a lot of times pick at the wealthy and there is the uber rich, the billionaires, and I think of Carnegie, Andrew Carnegie, richest person at the time and he said that millionaires were trustees of the poor. I think that we've lost our way of realizing that it's hard to do good things for other people if your glass is empty or your pitcher is empty. A minister once told me, because we were having this exact discussion and he said, "Toby, I believe that if you're good at making money, you owe it to society to continue to make lots because some people are really bad at it or they're not in a position to do it at all and you can't fill other people's glasses if your pitcher is empty." And it just kind of stuck with me.

                                   It's just one of those off conversations that I sit there and go around a lot today. I'm like, yeah, you need to, if you're good at it and you have a talent at it, use that talent. If you're great at business, go ahead and make a ton of money, but don't be a goober. I was going to say something worse, but don't be that guy, right? Don't be that rich miserable bastard. Be somebody who's giving back, and that is actually a tenet in Infinity Investing, one of the things that I do get into is there's a 70-30 rule. Live off of 70%, give 10%, pay off any excess debts with 10% and invest 10%. I don't care how much you're making, just try to do it as best you can. Whether you're making $3,000 a month or $30,000 a month, try to follow those same principles.

                                   There is something about giving that I've seen consistently on my highest, wealthiest clients, the highest income earners, consistently give. And I think that that's part of the problem is that we don't look at those who are successful and think they're going to do good things for society. A lot of times we think it was at the expense of somebody else. And to me that's kind of that scarcity mentality that seems kind of pervasive right now. We're not looking at it saying, "Hey, we can get everybody out of poverty." If we want to, we actually can, if we decide as a country that that's what we want to do. But a lot of us are like, well they rich are taking advantage of the poor. History does not suggest that, we are way better off this day and age than we were a hundred years ago.

                                   So I'm not one of those nostalgic, "oh, if only we can go back to the good old days." No, there's a lot more disease and there's a lot more poverty. We can rise up and long as we're responsible about it, we shouldn't be jealous or angry at other folks. What we should realize is that the vast majority of millionaires are self-made. Vast majority did not have rich upbringings. They made it and somebody once told me, they said, "we're all self-made, it's only the rich admit it." And there's a lot of truth in that and not everybody is lucky enough to have a successful business, because there is a degree of luck to it. You work your butt off, luck tends to happen. But there's folks that I've seen that, man, they did everything and they still had life situations that came up. There was illnesses or they hired the wrong employee who sued them into oblivion, things like that where you know what, you try to minimize that.

                                   So I don't sit here and say, "gosh, you know what, those rich people, they're just really bad." I say they're lucky to a certain extent and thank God we have them, because they can is if they're caring and giving and they do right by society, they're going to be able to do a lot of things and make society better than it was before without them.

Gordon Henry:             Yeah. Couple more questions. You use the phrase stock market landlord. I thought that was an intriguing way to say something. What exactly is a stock market landlord and how can ordinary people become stock market landlords?

Toby Mathis:                So I look at the stock market no different than I look at real estate. If I'm going to buy a piece of property, I don't buy it and hope it goes up in value. Because realistically I don't intend to sell it. I buy it because it's going to produce income. Yet in the stock market, they trick us into buying all these new companies, the growth stocks that aren't making any profit. They're usually upside down on their balance sheet and they're not paying us anything and we hope that they go up and I'm like, if you're going to buy stock, it's going to pay you, you're going to get rent. What kind of rents can you get? Two types of rents, dividends, which means it's profitable and it pays its shareholders or you buy a REIT or I'm going to sell options on it. If I have at least a hundred shares of something, I can sell a contract on it and I am going to give people the right to buy it from me for more than I paid.

                                   So if I bought stock at a hundred bucks, I might sell people the right to buy it from me for the next month for 105 and I get to keep that money and so I start generating that. Never do I just buy a company and hope that it goes up in value. I need to be making the dividends at a minimum and preferably I'm renting out that stock to somebody else. It's called covered calls. It's not anything more exciting than that. I call it being a stock market landlord because I'm using the asset to generate more income.

Gordon Henry:             Interesting. Okay. And your company, Infinity Investing, I just wanted to talk a little bit more about that. I noticed you have events, I guess these are events where people who want to learn more can attend. Can you tell us about the events you run?

Toby Mathis:                Yeah, so most of the time we're focusing in on real estate because that's the one that gets the biggest job done. Although there's plenty of education on stock market, but just be aware that we make the stock market so small that it tends to be kind of boring. There's about 60 companies that you would look at at any given time and out of that 60 companies there might be five that are appropriate for purchasing. So if it gets really easy on the stock market side, we're looking at companies that are not trending down, that pay good dividend, that have some juicy premiums. So if you want to option them, you can make money and you do that. We will teach you to do that. It's absolutely free, Infinity Investing, just come in for a basic membership. The events that we teach is showing you how a lot of folks are already retired if they repositioned their assets.

                                   So they might be sitting on a 401K that is still in a company account, maybe they've left the employment, they might be sitting on $500,000 or whatever, and they don't realize that they can control that money and invest in real estate and other assets with it. And so they're just sitting on their hands, they have no idea, and they're letting somebody else manage those funds and they're getting a really small return. In fact, when we do the numbers, it's usually kind of shocking for them when they realize what their actual return is versus what they've been told their return is. I use my mom as an example, she invested like $25,000 with this financial planner and he would tell her that they were making 7% a year and I'd look at her account balance and it would go down, it would be like $24,900.

                                   I'm like, "Mom, your account balance went down. You didn't make money." Oh no, no, no. He told me that I made money this year, da da da da da. And it's because of course there's only so much disclosure of costs that they have to do. So they could say, oh, this returned, but the fee fees were this, and yeah, you're down a little bit, right? It repeats itself over and over again. So we just show people how to move that money into a self-directed environment. Yes, you can invest in lots of different things inside of an IRA or 401K. Your 401K or your IRA may not allow it, but the rules allow you to do it. You just may have to roll it into a self-directed plan. Let me show you to unlock that.

                                   And then as a group, we bring in opportunities for people to buy cash flow properties. So one of our partners there is Alpine Capital and they do a really good job. They manage about 3000 properties that are cash flow properties primarily in Idaho, Indiana, Charlotte, Winston-Salem, in different places where cash flow properties exist and then they self-manage, they do turnkey. And in those ones, our members can actually get access to those opportunities, too.

Gordon Henry:             Right. Toby, we're out of time, this has been great. Where can people learn more about what you're doing if they're interested?

Toby Mathis:                I would encourage people just to Google my name or go to tobymathis.com and take a look. I put a ton of free content out there on the YouTube channels, and all we do is we just try to educate so eventually things that make sense are true. Correct? Eventually it'll ring true for you. And if you understand the principles, you'll realize, wait a second, this makes sense and I want to do what you guys are doing and it's the easiest thing to do is to come and join us. But the easiest way to do that is just to go Toby Mathis and join my YouTube channel.

Gordon Henry:             Okay. Well thanks for coming on our show, Toby, great to have you here and have a chance to chat with you.

Toby Mathis:                It was fun.

Gordon Henry:             And I want to thank our producer, Tim Alleman and coordinators Diette Barnett and Daniel Huddleston. They do an awesome job. And if you enjoyed this podcast, please tell your colleagues, friends and family to subscribe it. Please leave us a five-star review, helps us in the rankings. Until next week, make it a great week.

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