Heads I Win, Tails You Lose: A Financial Strategy to Reignite the American Dream by Donohoe Patrick H

Author:Donohoe, Patrick H.
Language: eng
Format: epub
Publisher: Lioncrest Publishing
Published: 2018-07-19T16:00:00+00:00

Chapter 7

7. A Solid Foundation

“Everyone has the ability to build a financial ark to survive and flourish in the future. But you must invest time in your financial education to build an ark with a solid foundation.”

—Robert Kiyosaki

Your financial statement is the scorecard that measures wealth-building activities—saving and investing. Your Human Capital Statement helps you identify wealth-creating opportunities—making more money.

My experience with many business owners and investors has taught me that wealth building has a foundation upon which your assets and liabilities grow. It’s not your entire financial strategy—but it’s arguably the most vital. The financial tool we recommend as your foundation dates to the turn of the twentieth century and has been used by wealthy families, big banks, and corporations. These guys understand the value of liquidity—they are the ones who capitalize on market downturns. This understanding originates from decades of experience with market and business cycles and the knowledge that life doesn’t always work out as planned. They are prepared to prosper in those moments because they have a solid foundation.

I met Martin in 2011. He was a real estate developer, author, and entrepreneur—having started several businesses. He seemed to be wealthy—had a big house, drove a fancy SUV, and traveled to exotic places. Martin was charismatic. We had similar philosophical interests and hit it off immediately. I told him about my business and my perspective on securing a financial foundation before investing. Although my specialization intrigued him—setting up what I call The Wealth Maximization Account™—he sneered at me, sat back in his chair and, shaking his head, said, “Savings is for losers. I can make a 30 percent return in my sleep—that’s a hard sell to a guy like me, Pat.”

Years earlier, before 2008, I heard this statement a lot. Martin’s words seemed to replay in my mind in slow motion, bringing back some not-so-fond memories of my personal liquidity crisis and those of many people I knew. I must admit, Martin’s words caught me a little off guard since the aftermath of the crisis was still palpable.

Years later, Martin connected with me through a text—apparently one of his businesses had lost its biggest contract and his tech start-up was running out of cash. He only had two months left. He needed a $75,000 loan. His situation escalated from there and he was forced to take on partners and give them a hefty percentage of the companies. Martin had made millions, probably tens of millions up to that point, but he couldn’t come up with $75,000. Fortunately, his business did rebound, but his share of the company was less now—much less.

Martin would have benefited from a solid foundation.

Your Foundation: The Wealth Maximization Account

Imagine what you would want out of a foundational asset before you started to put a portion of your assets and earned income into it. What would you want the account benefits to be? Here are the common responses I have received over the years:

Availability or liquidity on demand

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