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Aug 31, 2018

In the 18th episode of the Confident Wealth Podcast, Bill Bush and Pete Bush from the Horizon Financial Group talk about the illusion of wealth. They analyze the difference between liquid income and assets that are investments.

 

Time Stamped Show Notes:

  • 00:37 – Having a million dollars isn’t as substantial as it used to be.
  • 01:08 – Business owners that builds a business and sells it , but squanders the money, profession athletes that spend faster than they earn, and trust fund kids that inherit money.
  • 02:14 – Just because you have a large sum of wealth, it doesn’t mean you can touch it all right away.
  • 03:10 – Like the level of water in a bath tub, the water coming in is like money coming in. If you keep taking water out and investing, its wealth that aren’t liquid.
  • 07:07 – Don’t look at the value of an asset, look at what its ability to produce income is.

 

3 Key Points:

  1. Examples of the illusion of wealth: business owner that squanders their money, pro athletes that spend a four-year contract in one year, and trust fund kids.
  2. A lot of wealth isn’t liquid, you can’t touch it immediately.
  3. If your expenses grow, you need more coming in to keep your lifestyle the same.

 

Tweetable Quotes:

-    “A million dollars is not what it used to be.” – Pete Bush.

-    “The illusion of wealth, in other words, a person looks at their balance sheet, which is all of your assets minus your liabilities…and they look at that bottom line number, let’s say it’s $5 million…and they live like they have $5 million” – Pete Bush.

-    “Instead of looking at the bottom line number, the value of an asset, look at what its ability to produce income is.” – Pete Bush.

 

Resources Mentioned: