Consistency. Proof of work. Discipline.
We've learned that there are no shortcuts, and that these are the keys to personal freedom.
Somehow my little brother, Nick, tricked me into going to the gym when I was feeling low on energy about 11 years ago.
That moment changed my life.
Today, I go three times a week. I understand more about my food, my health, my bloodwork, and my energy levels than I ever have in my life.
I'm forever grateful that he forced me to do it.
The confidence I've gained from having a better understanding of my physical structure has spilled over into many other parts of my life.
In the picture above, from left to right, that's Nadeem, Mike, Tyler the trainer, and myself.
Nadeem just started joining us at Radix and it's been interesting to see how quickly he's adapting to the new routine.
Not only is his physical body changing but his thoughts on food, rest, and stretching are too.
And we're having conversations about consistency, proof of work, and discipline when it comes to working out.
Of all things in life, I can point to consistency as one the keys to living the life you want.
Take this email for example. We started writing it in 2007. Every week, without fail.
Now 16 years later, it's the backbone of communication for our business. It started with 7 subscribers...of which we were 5. After an "unsubscribe" we were down to one actual person on our list at the beginning.
Now this email has touched tens of thousands of email addresses over the years.
"Perfect fitness" doesn't start with a perfect day or a perfect routine.
It's just a consistent effort. Every day, without fail, whether you feel like it or not.
The "perfect life" doesn't start with a perfect investment or a perfect relationship. It starts with consistent effort. Every day, without fail, whether you feel like it or not.
Anyhoo, enough of that...on to money stuff...
Since 2008, the S&P 500 is up 302%.
Here's the chart.
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But if you adjust for the increase in money that has been created, the M2 Money Supply, then you'll see it's not up in actual "purchasing power" nearly as much.
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Since 2008, it's really only up 28%.
We'll have people argue us on this; they'll say M2 isn't "CPI", but what they don't understand is that it doesn't matter if M2 isn't CPI.
More dollars have been printed.
These dollars leak into the economy in different ways and they're definitely not always reported by the government in CPI.
The bottom line is that whatever dollars you had in 2008 are less of the total amount that exists today.
As a result, those dollars are simply "worth less".
If rates are low then inflation in prices hits real estate prices first.
If rates are high but cheques and "stimulus" are dropped into people's bank accounts then inflation in prices hits groceries and rent and Gamestop-type stocks first.
If we look at the Compound Annual Growth Rate (CAGR) of the S&P 500 from January 1, 2008 until today it's 7.84% CAGR.
That just about matches exactly the growth rate in dollars, or M2.
In Canada, our M2 Money Supply has increased at about 7% per year and it's actually accelerating...
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(You can follow Nick and myself on Twitter @tomkaradza and @nickkaradza)
So if the money supply is debasing your purchasing power at about the same rate as the S&P 500 is increasing, then it's very, very difficult to "get ahead" in purchasing power terms by investing in the S&P 500.
Never mind fees and expenses on top of that.
It's why we always come back to the power of leverage with income properties as one way to "get ahead".
As much as real estate is difficult, it does offer us this:
20% down on income property,
7% historic appreciation rate over medium/long term,
= 35% annual return on your 20% investment
35% definitely outpaces M2 growth.
It's the simple reason why real estate, held over time, is a wealth creator.
It's also why, now with Bitcoin, we have a new option as well.
Bitcoin's historic compound annual growth rate is ridiculous. Over the last 4 years, from May 30, 2020 until today, it's 59% compounded per year.
59%.
When we first started calculating this I actually couldn't believe it.
Bonkers.
So many Canadians dismiss both real estate and Bitcoin without really understanding them.
Check out this next chart.
The Western governments are basically "buying" economic growth, but they're getting a horrible return on their debt dollars...
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For every new dollar of government spending they're really not getting much growth at all.
Feels to us that a lot more new dollars (M2) are going to be created in short order.
Are you ready for that?
This is what you call the beginning of a "debt spiral" which we'll dive into in more detail over the coming weeks.
More debt = less growth. Not fun.
Owning good quality hard assets, in our opinion, is one way to stand clear of this mess.
The quality of your hard assets is going to equal the quality of your financial future over the next few years.
That's it for this week, everyone!
Remember.
There's no escape.
Consistency. Proof of work. Discipline.
These are the paths to personal freedom in all aspects of life!!
Tom & Nick
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And if you still have questions at the end of the class, guess what? We’re going to tackle them together…LIVE! It doesn’t even have to be about this specific strategy. It can be about real estate, interest rates, population trends, inflation, or anything else that’s on your mind. This will be short and sweet, with a lot of information jammed into a short time, and about 15-20 minutes of LIVE Q&A at the end. |
