3 Secrets of the Wealthy

Presented by:Brian Bogaert

How They Create and Preserve Wealth Through Real Estate

Investments

Agenda

Secret #1: What the Rich do

Secret #2: The Single Best way

Secret #3: What They Know that You Don’t

Next Steps

3 Secrets of the Wealthy

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Brian Bogaert - Personally own over $1.3 million in real

estate, investing since 2004- Retired at age 37 from having a J-O-BRight Side Capital Corp.- Building and Preserving wealth for

Canadians through investing RSP money into real estate

Credentials

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In 2008 Stats Canada estimated that half the households with workers aged 55 to 64 have a financial net worth LESS THAN $120,000.

Households with workers under 50 have even less, around $30,000

“Middle income workers need to be concerned about their retirement” the study suggests

SECRET #1: What the Rich Do

Take Control of your Finances and Retirement Plan

Banks used to make the majority of their money from the spread on interest. Now they make it from charging you fees.

Meanwhile, the bailouts of U.S. Banks in this economic meltdown could be between 2 and 4 TRILLION $$

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Even in the midst of the worst recession since 1945, RBC reported first quarter earnings of $1 Billion for 09

Banks – is there really Freedom 55??

Do you really believe Banks are working to ensure you can retire??!

Fees are collected whether investments go up or down

How many wealthy advisors do you know?

What is their track record through good times and bad?

What is their level of education and experience

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The vast majority of financial planners in Canada earn their incomes from commissions paid by the fund companies whose products they sell to clients.

Financial Advisors – how good is the advice?

The key to wealth is to realize that only you can truly be in control of your financial well-being.

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Credit still flowing in Canada

Private Funds; Trusts; REIT’s; Individual Companies; Commodities; Land; Real Estate; Equity Items (Art, Wine, Jewelry)…

The Wealthy understand the keys to growing investments

Preservation of Capital is not achieved through guarantees such as with GIC’s paying low interest

Diversification does not mean spreading money across multiple mutual funds

OPM – the power of borrowed money and leverage

What the Rich invest in to create and preserve wealth?

“ More money has been made in real estate than in all industrial investments combined”

- Andrew Carnegie“Every person who invests in well-

selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”

- Theodore Roosevelt

How the Rich create and preserve wealth: REAL ESTATE

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Secret #2: The Single Best way

Real Estate offers more positive elements in one investment than almost any other option Leverage

Income Generating Cash Flow

Long Term Capital Growth

Tangible Asset with ‘real’ value

Control over results

Upside in both good and bad markets

Tax advantages

Why Real Estate?

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Starting Capital: $100,000 Average Return/Year: 10%Term: 5 Years Result:?

Leverage Example

Stocks Amount purchased: $100,000 - $2,500 (fees) = $97,500

Value after 5 years: $146,250 minus fees = $145,275Gain of: $45,275

Actual annual return: 9.1%

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Leverage Example

Real EstateAmount Purchased: $100,000 capital25% down = $400,000 revenue property ($300k mortgage)

Value after 5 years @ 10%/year: $644,204 Sell for $640,000 minus Realtor/Lawyer fees = $600,000

Pay mortgage and still left with $320,000+ (Principal pay down)Plus, $500/month cash flow for 60 months = $30,000Total: $350,000

Actual Annual Return: 50%

When Real Estate goes up by 3% a year, your ROI is actually much higher

The Power of Leverage

Direct comparison to Stock Market Returns

How do they really Measure Up?

How do you invest in Real Estate? Do it yourself (hands on)

Joint Ventures (some hands on)

Funds (passive investing)

Private/Public REIT (mostly passive)

Regardless of the method, proper education is key!

Flip This House

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Risk vs. Reward

What is Risk? Why does everyone speak so negatively about Risk?Risk is uncertainty and every investment has Risk. Risk is potentially positive or negative. The other side of Risk is Reward.

THERE IS NO REWARD WITHOUT SOME RISK

Secret #3: What They Know that You Don’t

The majority of ‘experts’ will tell you to avoid Risk at all costs. Here are some of the ways they suggest you do that:

• Only invest if your capital is guaranteed

• Get a fixed mortgage rate rather than variable

• Diversify by investing in multiple mutual funds, savings bonds and GIC’s

• Pay down your mortgage as fast as you can

• Never trust an investment claiming high returns

They tell you to look for MAXIMUM SECURITY

Risk

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The Stock Market

Donald Trump calls the Stock Market gambling and the majority of people dabbling in it do so with little education

Stocks were down over 40% in the last crash! Real estate in Canada is down only 15%

Emotion – the highs are higher and the lows are lower because of emotion. Every book on stocks will tell you to conquer the emotion yet most people cannot

Fees – most people who play the stocks do not even know what their fees are

Interestingly enough, the Stock Market is one of THE riskiest investment choices out there, yet this is the basis for so-called ‘secure’ mutual funds

WHERE IS THE TRUE RISK TO YOU?!

Mutual Funds

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There are now more mutual funds than companies to invest in. Diversification??But the real hidden issue for Canadians is fees

MER: Management and Operating Expenses (average < 1% to > 3%) Loads: fees you pay when you buy AND sell units of a fund Trailer fees – Fees paid to the MF dealers for each year you hold the fund

In some scenarios, over one third of the growth of your investment could be going to fees, and you don’t even know about it.

Today’s Cdn GIC rates range from a yield of 1.5% to 2.75% Inflation is currently at 2% (Bank of Canada)

What many people fail to realize is that these so called ‘safe’ investments that protect capital are often at or under the inflation rate.

Your investment capital is actually shrinking over time. And, should inflation suddenly increase, as many are predicting after the current recession, your locked in money will erode even faster.

THIS IS A SIGNIFICANT RISK TO CONSIDER

Safe investments – Bonds and GIC’s

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The generation before us believed in playing it safe. They wanted guarantees on their money in order to avoid risk. Should we demand the same?

Risk vs. Reward

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The key to any investment is evaluating RISK vs. REWARD. What level of risk are you willing to live with to achieve your desired level of reward?

With education comes the ability to evaluate an investment vs. your goals.

Where are you in your life? What risk can you tolerate? How long would it take you to recover? Can you invest and still sleep at night?

What are your financial goals and timelines? Do you have a plan to get there?

“The policy of being too cautious is the greatest risk of all.” Pt. Jawaharlal Nehru (first Prime Minister of independent India)

3 Part Educational Seminar – Real Estate

Part 1 – Economic Fundamentals that drive real estate

Part 2 – How to invest in Real Estate (hands on/off options)

Part 3 – Evaluating real estate investments

This seminar is sign-up only

Next Steps – Taking Action

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Next Steps - Taking Action

Brian Bogaert - Manager, Investor ExperienceRight Side Capital Corp

GWF1 – Generational Wealth Fund 1 – RSP and TFSA eligible investment in Canadian real estate

Please come and see me for more details and to arrange a consultation

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The Right Side Generational Wealth Fund™

Remember, “the decisions you make today

impact your family for generations”