7

Surviving the Financial Apocalypse – Podcast Episode 17

As an entrepreneur, you inevitably go through some periods where money is tight. If things work out, you later get to a stage where you start to wonder what you should do with all your money.

Should you invest in stocks or real estate? Just keep it all in a savings account? Reinvest in your own business? And what implications do economic instability and possible financial crises have for you as a business owner?

In this podcast episode, we share our thoughts on these financial topics (disclaimer: neither of us are financial experts of any kind) and invite you to do the same.

Podcast Video

Podcast Audio

Click here to download the mp3 file of this episode.

Links

We appreciate all ratings and reviews on iTunes! If you have any questions or feedback about this episode, please leave a comment below.

Shane's Signature

Shane
 

I'm Shane Melaugh and I'm the guy writing most of the posts on this blog. My goal is to provide you with useful, straight-forward insights on how to grow your business by creating compelling offers, driving traffic and increasing conversions.

Click Here to Leave a Comment Below 7 comments
Artur - July 19, 2013

Over the years of ups and downs, near riches as well a being net negative I’ve learned that diversity is key: diversify income and investments, off line and online, and nothing beats having a good portion of cash in hand. Probably the latter is most important because it allows one to take advantage of opportunities.

Reply
brian - July 19, 2013

yep, in the states…..city of Detroit just filed bankruptcy(largest one to date) from liberal mismanagement to overpromising retired pensions/unions workers. Just goes to show people need to be responsible for themselves and not depend on some pension or government promises, but unfortunately many countries are becoming more government dominated economies.

As someone who has had professional experience/licenses as institutional stock broker, mortgage broker, real estate broker, and long time landlord over the years………..investing is like internet marketing – you spend initial time learning and failing finding what really works, then you either stick with it to make money or quit and move on. Nothing though compares to return from starting business/owning own products but there is high risk.

Most people will outlive their stock investments portfolio because market doesn’t always go up. For those that have retirement money in the market, they should learn about call/put options. You can buy put options to lock in a defined downside risk.

ps- saw your FBA review – I bought that spendy course and well worth it(the peer group is awesome- everyone is deep into it and no one off chasing other shiny objects). Definitely different from the typical wholesale(same as dropshipping model) where you cant control pricing. Regarding risk, its overexaggerated- I think there is more risk selling something like diet advice or financial trading advice but that just my opinion. also, no one mentioned the tools provided with the course(real software, not junky WSO type of software). just my 2 cents.

Reply
Joe Garma - July 19, 2013

A few comments…

Among Warren Buffets’ many memorable sayings is that a working income is the best hedge against inflation, which as Paul suggested, can eat up any fixed income (interest or dividends) thrown off by suchinvestments. The idea here is, on average, wages will rise to meet inflation.

Of course, this assumes you are, or can, get a job. More and more can’t and one of my many concerns about the world economy is that employment isn’t going to get better. Probably worse.

Which ties into your primary assertion that being an entrepreneur that produces a product is the smart, safer (although hard) way to go to help ensure one’s financial solvency.

Sounds good if two things happen: 1. You can do it, and 2. people will buy your stuff.

Assuming #1 is true, it will remain true should there be a crash. But if #2 is now true, it may not be so after a crash. People will lose jobs, and those with money will be more reluctant to buy your stuff.

So, staying with your theme, the example Paul makes about a product you modified and then got a 10000% return on is the way to go if a product producer — meaning, build something fast, get it to the market fast, make the money fast in excess of what you spend + the value of your time. This way, you’re less likely to get stuck should their be another financial hemorrhage.

One more thing… if your world view is that, sooner than later, you’ll be facing a crash, and you can make and sell products with modest investments of time and money, go for it, BUT also hedge your bets. Keep enough money on the side to stock up on food and other essentials, and in my view it would be a good idea NOT to have all your money in banks… have some in cash and in silver/gold coins.

Final thought — you guys really got it right about living in a place where costs are low and yet the situation does not reduce your income potential.

My 2 cents.

-Joe

P.S. As an American, I too am worried about this nation.

P.P.S. Fine looking women in Budapest.

Reply
Carl - July 19, 2013

Super annoying to not be able to
1. see how long the episode is
2. adjust volume
3. fast forward if i want to
When i see video players configured like this i close and don’t watch it (I know I can open in new tab and watch on youtube but its another unnecessary click and tab)

Reply
Andy - July 20, 2013

One thing i didnt agree with was saying that investing in the stock market is a 0 sum game. When you buy shares or ETF’s, or whatever, you are essentially buying a share in that business.

I started investing in 2007. I’m from the UK and stuck the maximum amount of cash possible in stocks and shares ISA’s. I rode out the crash. I know long term the stock marketing is going to go up <5% a year. At the age of 25, i'm not planning to take my money out for another 30 or so years, so to me, its not risky at all. I'm pretty diversified with a bunch of shares tracking different markets and commodities. I know that i am going to take 30% hits, its just part of the course. I am willing to take that. Just as the market crashed in 08, if you left your money in there, you would now be positive.

What i have come to the conclusion of is this:

– If you are doing IM, keep what you need in living expenses for a few years in cash.
– Have the rest in investments that you are easily able to liquidate in the worst case scenario.
– Invest as much as you are comfortable in your business.

Right now i am earning about $10k month with my sites, 7 or 8k of that being profit. Personally im not comfortable plowing much more money that in to my sites. So i have a certain percent of excess money that i either need to let get eradicated or i have it do something for me. So i chose to invest. And i know i am not smart enough to pick the winners and the losers thats why i just buy the market as a whole, and take a few punts (for my own enjoyment) on stuff that i think will do well.

Two of my punts Tesla and Netflix have done super well so i am happy with that so far.

Anyway, what im trying to say is, i dont think its something you should be scared of. You should know the risks and invest if it meets your goals. If you can use all your capital to put back in to your business and make more, then well do that, if you cant and have taken some money out, investing is not such a bad option. It beats sitting in a bank account earning 1% when inflation is 5%.

Reply
Ti Roberts - July 23, 2013

I can tell that this is going to be a great podcast, Shane, from what I’ve listened to so far. I don’t currently have the time to listen to the whole episode, but this is definitely one I’ll listen to in my down time.

Since I’ve became a more financially conscious business owner, I’ve struggled with where to put my business monies.

Most of the time I’ll split it 50, 50 between reinvesting into my business and personal matters. However, I know I can’t feasibly keep doing this if I want to scale up quickly.

Thanks for taking the time to cover this subject for us. I’m sure it’ll help me greatly.

This isn’t my first time visiting your blog, Shane; however, it is my first time commenting on your content. I just want to say that I love the content that you produce and how extremely helpful it is. I’ll be sure to share this podcast with my social circle.

I look forward to connecting more with you soon.

Thanks again and keep the great content coming!

Ti

Reply
Iain - July 30, 2013

I like the discussion that you guys had. Some very crucial points were brought up from it.

Playing on the safe side is definitely something that I tend to do quite often. I am not much of a risk taker, but as you talked about there are times when it can pay off to do just that.

I really like the idea of taking some money on doing some testing with it. Similar to what you guys did with that 2k.

Keep up the great work.

Reply

Leave a Reply: