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  • Marc Halpern, Part Time Investors LLC

What is “Being Rich?” Does It Matter and How to Get There?


I never had the goal to be rich and I still don’t. My #1 goal has always been to be happy and I have been enjoying happiness in my daily life since age 25, while I was still under the poverty level. My #2 goal was to achieve financial freedom and #3 goal was to achieve financial security. Financial freedom and financial security are different, as will be explained below. Goals #2 and #3 took longer to achieve. We’ll come back to being rich by the end of this article. Before we start, I recommend that you should not take advice from someone who has not achieved the things you seek (such as many of your Facebook friends). I have thought a lot about Goal #1 – Happiness. I formulated detailed definitions for happiness that I present in my lecture “How to Set and Achieve Measurable Goals for Happiness and Prosperity”. In fact, we are launching an app “Be Happier” to measure and improve happiness in your daily life based on an objective happiness metric I invented in 2007 (see attached screenshot including my current happiness score from this morning). I also have guidelines for whole life happiness that include long term items that cannot be measured by the same daily happiness metric (they are described in the lecture).

In any case, I have achieved happiness in my daily life and I have the numbers to prove it, plus I achieved happiness with long term whole life items. By the way, if you want to be a tester for the app “Be Happier”, please send me an E-mail with the subject line “Tester for Be Happier App”. The iPhone version will be available for testing in May or June 2019 with a full launch worldwide expected by the end of 2019. The Android version will be available for testing later this year. We will send you instructions for how to become a tester by E-mail as soon as available depending if you have iOS or Android. My #2 goal was financial freedom which I define by two parameters. The first parameter is similar to that defined by Robert Kiyosaki in his book “Rich Dad, Poor Dad.” The two metrics for financial freedom are (in my never humble opinion): 1. Passive income exceeds ROUTINE living expenses (preferably by 30% for cushion) AND (!!!) 2. Liquid portion of net worth exceeds reasonably anticipated SPECIAL expenses through end of life (including non-covered medical expenses, kid’s college, weddings, funerals, luxuries, car down payments, vacations, etc.) Depending on how one defines rich, it is not necessary to be rich to achieve financial freedom. My #3 goal was to achieve financial security which is different than financial freedom. Financial security involves risk management and mostly risk mitigation. In order to achieve financial security, in my never humble opinion, one must diversify both sources of income (passive and active) and diversify vehicles of net worth. I have seen way too many “rich” people lose everything due to having all eggs in one basket, including the real estate basket. When the one basket hits a downturn, even temporary, the lasting effect can be nearly irreversible. I have seen this happen to several people in my close sphere of influence and it is sad, sometimes tragic. In order to achieve financial security, I have diversified my assets in certain proportions in real estate, stock market (yes, stock market!), cash (yes, cash! though in my retirement plan), private equity (like Shark Tank deals), precious metals and other assets for hedge. By the way, in a low inflation environment, non-deployed cash in a self-directed Roth for example, waiting for a safe high yield opportunity, is an effective risk mitigation hedge (discussed below). On top of that, financial security dictates, for me, to build as much net worth as possible in protected assets and tax-free assets. By protected assets, I am referring to retirement funds such as traditional IRA, self directed IRA/401(k) and most importantly Roth. If an emergency comes up that would normally result in bankruptcy, assets in retirement funds are nearly untouchable in bankruptcy (not 100% untouchable, but nearly so). Retirement funds are why OJ always had plenty of assets despite judgments. For example, for many middle class people, if one can design and execute a strategic financial life plan to have at least $1 million or more in retirement funds, that protection enhances financial security. Then there is the whole area of "magic money" called Roth funds. I hold rental real estate in my self-directed Roth 401(k) including single family home rentals and apartment complex equity shares (last week I invested more Roth money in equity in an apartment deal managed by another investor). I am getting into notes with my Roth. One can argue whether or not note investing is real estate. Before I got good at real estate investing, I had Roth funds and pre-tax retirement funds in private lending. But the yields in distressed real estate converted into high cash flow rentals ($1,000 per month per door tax-free) on top of high equity in those rentals, all in tax-free Roth accounts, exceeds yields of private lending. Is private lending a subset of real estate? That depends in your point of view. One of the best investments of cash is Roth conversions. The arithmetic is very simple but few people do it because they are too obsessed with other financial activities or blinded by the pursuit of the vague concept of “being rich.” When you stop to do the calculations, the returns on Roth conversions are even more great than you might imagine, when invested properly and they are crucial when you reach an age that you don’t want to work anymore or can’t work anymore (once you hit 59 1/2). I do Roth conversions nearly every year and I am stepping it up during the temporary reduced tax period that expires in 2025. If you have pre-tax retirement funds, congratulations! If you do, you really need to learn a lot more about Roth conversions and how you can turbocharge your financial freedom AND financial security by doing Roth conversions followed by smarter investing thereafter. When people post inspirational memes on Facebook about acquiring assets to become rich, I wonder if they understand what they are talking about. I don’t consider myself “rich”. But I am happy, achieved financial freedom, financial security and I live a fulfilling life. If you seek similar life performance and are not there yet, you might want to consider our coaching services. Acquiring assets is important and protecting those assets is important. But acquiring assets beyond a certain point, is not a major goal in my life. Then again, everyone is different and many people do indeed pursue being rich. That’s OK. The US Constitution guarantees your right to pursue this (as long as you go about this in a legal and ethical manner). I also consider expanding my skill set as acquiring assets. Skills enable one to increase passive income, active income (yes, work for money on occasion!) and net worth. I expand my skill set every year. This is a key success factor. If you are “rich”, please share your definition or at least criteria for being “rich.” I disclosed my criteria for financial freedom and financial security. I would simply like to know what you think constitutes “rich.” I would also love to know from those of you who consider yourselves rich, what is the relative importance of becoming “richer” versus utilizing your time for non-financial forms of enjoyment. I’m not judging, I’m just curious to hear alternative perspectives. Please feel free to share your perspectives on “being rich” on our Facebook page www.facebook.com/parttimeinvestors.


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About Part Time Investors LLC

Marc Halpern started Part Time Investors LLC after being tired of the hype promoted by most real estate gurus. Marc presents valuable technical content with zero-hype in all of his presentations and blog posts, including the advantages AND disadvantages of every investment strategy discussed. Marc Halpern has a Ph.D. in organic chemistry and makes decisions based on in-depth due diligence. Marc achieved financial freedom through part time investing, excellent strategic planning, data analysis and a fiscally conservative approach.

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