 This is Think Tech Hawaii, Community Matters here. Guys, welcome back for Episode 9 on here on Think Tech Hawaii, and we still haven't gotten canceled, right? So thank you guys for tuning in. I'm your host here, Prince Dykes. If this is your first episode you're watching, I will highly recommend you go back and watch all of the previous episodes you might enjoy. But today, we're going to get into an interesting topic called invest or lose. Prince, what do you mean by invest or lose? I'm giving you the concept that if you don't invest, you are guaranteed pretty much to lose. You have to invest. That's why it's important. That's why we have this show here on the Prince of Investment to go around and teach the world, push financial literacy to tell you why all the other good stuff like that. But as always, I don't have a lot of time, and I definitely know you guys don't have a lot of time, so we're going to jump straight into it. So why? Why is it important? What do you mean by if I don't invest, if I don't lose? Let's think about it. When you get paid or you make your money, money is somewhere. Everybody has their money somewhere, whether it's under their mattress, whether it's at their cousin's house, their mom's house, their basement, their savings account, their money market account, their CD, or whatever the case may be, everybody has their money somewhere. The concept is if you don't invest, you will lose. What do you mean by that, Prince? I put my money into my savings account, I'm not losing anything. I'm here to tell you, yes you are. It's something that a lot of us don't pay attention to, it's called inflation. If your investment is not making 3%, 3.22% in 2017 on average, and according, that's according to inflationdata.com, if you're not making that every year, or at least this year, 3% to 4%, you'll actually lose the money. Why is that, and how is that? That's pretty simple, right? It's called purchasing power. You don't lose physical money, you lose purchasing power each and every day. The price of everything goes up gradually and gradually and gradually. Like me, I just turned 33 years old. I remember when I was in high school, we used to better take a dollar to a vending machine and be able to get two or three things out of the vending machine. But now, you take that same dollar to a vending machine and you pretty much get nothing. Why is that? What change? Did the product just taste better? Does it cost more to make? Yes, it does cost more to make. Look at gas prices. Look at everything around the world. It costs more and more to make. That's called inflation. The price of everything is going up. Your rent is going up, your rent, the gas, the water, the groceries, everything, the cost of just living just goes up. So it means that if you have money sitting in one particular area, it is losing what is called purchasing power. Meaning that if you take this money, if you go somewhere, you'll be able to purchase less. Same dollar amount, but you'll be able to purchase less. Let's think for a situation hypothetically. I have $100. I say, hey, let's say 20 years ago, my dad had $100 and he decided not to spend it. He decided to put it in his closet and save it for good times. He takes it, he put it into his closet, he doesn't invest it. He goes back 20 years later, he goes into his closet. What is gonna be there? $100. People say, hey, he didn't lose anything. He has $100 still. That's true. But $100 had way more purchasing power 20 years ago. Meaning you could buy more than you can today with the same $100. Same dollar value, same everything. But once you take it to the store, things gradually cost more. That's something that you can't see. It's called inflation. That's why if you don't invest to match or beat inflation, you are losing. Go to the title of this episode, invest or lose. I hope that makes sense to you. Now, there are numerous ways that you can take your money where you can put it. You get paid by direct deposit. You can put it in the checking account. You can go into a savings account. You can go into a money market account. You can go into a CD. You can go into Treasury bonds. You can go into stocks. You can go into real estate. You can go into business or another business. Those are different places you can put your money. Now, as I listed those things out that was increasing with risk, meaning that if you go into a checking account, it's not that much risk involved. You put your money in, you can take it out, all the good stuff. A savings account, you have a little bit more risk involved. A money market account, you have a little bit, you're not taking on risk, but you're taking on risk as far as liquidity, being able to pull it out as fast, right? So you're taking on risk as things go along. Now, the thing about that is those are different instruments that you can use to put money at to actually beat or match or beat inflation. What is one instrument that has beaten, consistently beaten the inflation rate over the last 100 years? Probably guessed it, it's the stock market. That's not what I'm saying, that's historical data. The stock market on general, the S&P 500 on average returns between five to seven percent. That's what all the ups and downs, wild wings on average, five to seven percent. And what did I tell you inflation average is? 3.22 percent. So that's one way you can invest to beat inflation. I'm not trying to tell you where exactly to give you advice to what you should do. I'm just letting you know that if you're not investing, you are losing money. That's a concept that I didn't understand. I was like, what do you mean? I didn't lose any money. I still see the same amount of money in my account. It's something called inflation. It doesn't pop up in your account, your checking account lets you get a very, very good financial institution. It doesn't pop up and say, hey, guess what? This is how much purchasing power you lost, right? It doesn't say that. So it's invisibly taken away your money by losing purchasing power. So if you don't invest, if you don't use a financial institution or some type of financial backing or a type of instruments that are out of here, you're gonna constantly lose, lose and lose. You hear that terminology, the rich get richer while the poor gets poorer. You wonder why that is? Because when you get paid, what do you do with your money? That's the biggest question. What do you place it? Do you place it in the instrument that can grow? Or do you place it in the instrument that can grow? You say, hey, well, I save money. Saving money is great. But guess what? According to bankrate.com, the average savings account earns 0.06%. 0.06%. Inflation, the average inflation is 3.22%. So if the price of everything is going up on a gradual annual basis of 3.22%, what your savings account is only making 0.06%, you're losing, if my math is correct, 3.14% annually every year that you don't even know. Now there are different type of cities out there that can match inflation. There are ways that it's called TIPS, Treasury Inflation Protection. Treasury Inflation Protection. That's something that you can invest in with, I think it's called treasurydirect.com, where you can invest in and to actually purchase tips, they call them tips. Treasury Inflation Protection, where they go out, you can invest and your money will actually move with inflation. That's one of the ways you can keep up with inflation. But there are numerous ways. I want you to understand that there are plenty ways, and plenty ways that you can make and lose money by not investing. Because some people look at the world of investing, they're like, well, I don't wanna lose my money. You're losing anyway, if you didn't notice it. It doesn't matter because inflation is gradually eating us up every day, whether you know it or not. So one of the best things you can do is to become familiar with investing, and you don't have to be a rocket science out there. You don't have to be a day trader. You don't have to be a real estate mogul. You don't have to be a business genius to make simple investments. But it's something I wanna let you know that it's important that you must do it. Now, let's get into some of the different ways that I listed earlier that you can invest, right? We all know a savings account, that's on average it earns 0.06%. So what are some ways I can keep up with or match inflation? One of the ways I just listed, there are some CDs out there. There are some CDs, and there are some, what they're called high interest checking accounts. High interest checking accounts, I've seen some that range from three to 7%. Now the thing about when you're looking at a financial institution that's paying an interest rate that high, you gotta look at the credit risk. What does credit risk mean? What is the likelihood that this company or this bank or this financial institution will go bye-bye? Because with every investment, there is somewhere or somehow that you have to take some type of risk, in some case maybe. Now, one of the things that I had listed, I'm speaking about taking a credit risk, is that I spoke about last week on last week episode was insurance. That's another great investment vehicle that can match or beat inflation. I'm not talking about being a rocket science or whatever the case may be to go out here and say, hey, I wanna make 10% in a day, 30% in a day, hey, I'm up this way, and I heard a buddy. When people day trade, when people that's out there trading stock traders, 92% of the stuff that you're seeing out there, those are losers. I'm just being honest. It's nowhere in the world that anybody can just open up a day trading account and just start making 30, 40, 50% a year. Now, I hate to bring this up, but it's an honest topic, right? If you don't know who Whitney Tilson is, Whitney Tilson had Case Capital, right? We all know that Case Capital closed its doors on Friday. This is a company that managed hundreds of millions of dollars. It was a hedge fund. It's not the only hedge fund. It's been a ratch of hedge funds that have closed their doors. People are saying, Prince, what are you getting at? Why are you talking about a hedge fund? The reason why I'm talking about a hedge fund, bringing in perspective is, these are some of the best and the brightest minds in finance. And they had an inability to beat the stock market. From AccordingToBloomBird.com, Case Capital Tool was down 3%, going into this, I think 8% this year, and it was down 3%. Don't quote me on that, but I think it was down 8%. 8% so far this year, and it was down 3% last year. Why is that so bad? You look at it. The stock market is at an all-time high. The stock market is up 9%. Last year, the stock market, I'm not mistaken, was up 8% at the end of the year. Why is that a big thing? Because that's saying that one person, instead of going to Case Capital Tool, it could have just invested their money into the S&P 500 and got a better return. Why am I saying all this? These are the best and the biggest and most resourceful people in the world, and they struggle or can't beat the market on a consistent basis. So you out there that's tuning in, that's watching this on Facebook, YouTube, Instagram, live here, or whatever you may get it, or podcasts, or have you may get this information, I don't want you to walk in and say, well, I'm not interested in making 7%, 5%, because I saw someone make 10%. That's true, but can they do it on a consistent basis? Anybody, a monkey can press the right button and make a 15% return, but can you consistently do that? And I'm here to let you know, you don't have to be a rocket science, and you don't have to go out there and try to beat the market, be the next Wolf of Wall Street in order to invest. You can do stuff like CD. There's some special CDs out there, some financial institutions run, one-year CDs that are up to 3%. Another way you can do it is, you can invest into the index, index and vexing, find a low-cost vehicle like an ETF right now that tracks the S&P 500. That's the benchmark of finance. That thing has consistently, over the last 100 years, beat inflation. That's one way you can beat, that's one way that you can beat inflation. Another way you can beat inflation is by looking into different types of long-term CDs and some bonds. Now the thing about bonds, right, is bonds are a little bit difficult because right now the federal government interest rate is at 1.16%. That's a very low interest rate. When a federal government interest rates are low, interest rates and bond prices moving to seesaw. Bond prices go up, I mean not bond prices, but interest rates go up, bonds go down. It's an episode, I think that was episode two where James Fortland came in for Wall Street and explained that concept of how he would stay away from bonds and why. Because interest rates are very low and we think that he may come up in the future. So that's something to think about. That's why it's important to learn and to get into investing. Because if you're not into investing, you're investing every day, you're just on the wrong side of the field. So for a prime example, you may go and go to your favorite, you may go to McDonald's, or you may buy Nike shoes, or you may every day, your own Google searches something, your own Facebook posting something, your own YouTube, which is Google, own watching videos or whatever the case may be. You are contributing to capitalism, but the thing is you're on the wrong side. You're on Amazon, you're searching, you're watching your YouTube. Think about all the things that you run your life around every day that you spend money on that you don't even recognize. You get up in the day early in the morning, you watch Facebook, you may jump on Amazon at lunchtime, may purchase something, you may go on iTunes and download something, you may watch some videos on YouTube, you may, these are all companies that you can invest into. Or even if you're not interested in investing into these companies, look at all of these companies, these are the top 500 companies in the S&P 500. This is what, this is a benchmark of finance. So you're contributing to society every day. You go to the mall, you go to lunch, you fix your car, you do this. You're contributing, but you're not benefiting. While you're not benefiting, the only way you can benefit is to invest. So guys, stay tuned here. We're gonna take a quick break. I'm gonna be back giving you guys more ways that you could match or beat inflation. This is Think Tech Hawaii, raising public awareness. What does she have? She's sad, all the better to see you with my dear. That's full, what are you doing? Okay, cool. Research says reading from birth accelerates the baby's brain development. And you're doing that now? Oh yeah, this is the starting line. Posh, this is over, you're dead. Read aloud 15 minutes, every child, every parent, every day. And we're back. If you missed earlier what we were speaking about, about investing, we went and we talked about inflation, investor lose. The thing that people don't pay attention to is inflation. We talked that the natural interest rate according to inflationdata.com is 3.22. According to bankrate.com, 0.06 is the savings account. Now am I sitting here advocating that you should just go and invest everything? No, I'm not gonna say invest everything. But once you have the savings, and once you do have the savings, I want you to think about and shift the mind. Before you get into any investment video, you must shift the mind. This episode to show you, to show you the importance of investing and why it's important and why you should do it, right? So before we went into the break, we were speaking about investment vehicles, right? We spoke about investing into the index, how the index has consistently beat inflation over the last 100 years, right? We spoke about how you're contributing to the society every year. The top 500 companies in America, we're talking about things like Google, we're talking about things like Facebook, we're talking about things like Amazon, things that we know every day, Apple, companies that you use every day. You wake up in the morning, you pick up your iPhone, you go on to Facebook, you watch some YouTube videos, you go do a little shopping on Amazon, and then you, on your way to work, you grab breakfast from McDonald's, you're contributing to society every single day. If you've never invested before, you are investing, you're just on the wrong side of the fence because the people that invest into the economy, right? The people that invest into the economy, they're the ones that's benefiting. Right now, today, here in 2017, October 3rd, today's the third, October 3rd today, the stock market is at an all-time high. It has been at an all-time high now for the last one or two years, and that the stock market has been going up in tremendous ways. How much have you benefited from it? You're sitting back and, wow, how could the economy be growing this fast? Unemployment is at an all-time low, the stock market is at an all-time high, but you're not benefiting from it. The reason why you're not benefiting from it because you're not investing, right? That's one of the things I want to do is to shape to mind and to think about it. One of the other vehicles that I didn't get a chance to mention that I mentioned last week on the episode that's quite often overlooked is insurance. You have insurance products out there, yes, that's right, insurance. When you go out there and you purchase insurance, if you have a whole-life policy, a whole-life policy carries what's called a cash value. When you have a cash value, you can take that cash value, you can have that cash value match an index, one of the major index. And what did I say was one of the things that beat the stock market, not the stock market, twisting my words there, what is one of the things that I said that has consistently beat inflation? It has been the stock market, right? So insurance products are another way that you could, whole-life insurance policy is another way that you can explore ways to match or beat inflation. Different types of CDs, high interest rate checking accounts. You have things like that. You have certain bonds, but this is the case, right? When you're looking at bonds in the bond industry, I'm not a bond expert, but I do know a thing or two. We had on Mr. Lars Kroger, who's a bond expert here, I think it was on episode four. But the thing about it that he spoke about bonds is when a bond pays a high interest rate, let's say for example, this bond telling you that I'm gonna pay you 12%, right? A bond that pays a high interest rate usually has a low credit rating. If you have a low credit rating, they pay a high interest rate to entice investors. If the company has a high credit rating, they pay a low interest rating because they have a high interest, a high credit rating. Why is that important? Let's bring this down to common sense. That's what I like to do. Think about it. If you go into a bank, you have bad credit. Why do you have bad credit? Because either you don't have credit or your trustworthiness of paying money back is not too trustworthy. They don't really trust you or whatever the case may be. But so since a bank think they're taking a risk by loaning you this money, since they're taking this much risk, they may say no to giving you the loan or they may give you the loan at a high interest rate. Why do you get a high interest rate? Because you are seeing this to be a risky lender. Not lender, but you're to seem to be a risky customer. If I'm lending you the money and you never pay people back and you got a bad history of paying off your debt, you're gonna get a high interest rate because I feel like I'm taking a high risk and with a high risk, I will like a higher reward. Versus someone who has a great credit rating, they have a high credit score. They always pay people back. The debt-to-income ratio, they look like they can pay you back. The overall health and wealth of the company look pretty good. It's my earpiece slipping a little bit. The overall company, you look like a pretty good person you can lend to. Guess what? They're lending it to you at a low interest rate because you've seen this to be a low risk of not paying me back. So it's the same thing in business, same thing coming down to bonds. What is a bond? A bond is take a company like Coca-Cola. They're saying, hey, we're gonna give you this piece of paper that says the IOU, essentially. We're gonna give you this IOU. And when you receive this IOU, you're gonna give me a thousand dollars. And you give me this thousand dollars, I'm gonna pay you back, let's say, 10% over five years. So you give me the thousand dollars, I give you the piece of paper that says I'm gonna pay you back with interest in five years. I take your a thousand dollars and I go build a new company, expand, create products, market. Do whatever I gotta do with my product to do it this money so I can make back, hopefully, 12% so I can pay you back your 10% and profit 2%, grow the business, right? The only thing about that is, what if I let you borrow my money, then I go out of business? That's the risk that comes down to bonds. That's called credit risk. So just like people, how we're graded upon, oh, I have a 300 credit score, 400, 500, 600, 700, 800, bonds have the same credit score. They're graded by, hey, this is a AAA bond, a AA bond, a single A bond, a triple B bond, all the way down to C and A, and I think anything below C is considered to be junk bonds. So the bonds that are at the bottom pay high interest rates because you're taking a higher credit interest, not a high credit interest, but you're taking a higher risk. Let's say a company like Coca-Cola, who's financially sound, they're not gonna pay a high interest rate, but a brand new technology company that can disappear any day, they're gonna pay a high interest rate, right? So you have to worry about what's called defaulting and not being able to pay you your money back when you purchase new companies like that. That's something I want you to think about. But that's one way. If you go out and buy a junk bond that pays a high interest rate, that's over inflation, you have to look at the credit rating, right? And this being 100% honest, I was on Wall Street last summer. One of the things I discovered, you know, Bloomberg is not Bloomberg, but Stanley and poor Bloomberg, they're all right there on Wall Street. And some companies, that's why we had the 2008 financial crisis. The companies that are grading these companies, sometimes they're in bed with each other. So to kind of give you the words of saying pretty much, you know, the credit agency and the company could be a conflict of interest. That's pretty much what I'm saying. So let's take, if I know you're giving me my credit score, maybe it may be money up under the table to, hey, instead of giving me a double A, give me a single A. Instead of giving me a single A, give me a double A. Because a company, you know, if they have a high credit rating, it's the likelihood that they'll get more investors, more people who trust them, more fund managers who trust them. So that's just something to think about, you know? But bonds, overall, I don't wanna dig too far into the weeds, but bonds, credit rating is, credit risk is one of the risks you're taking when you purchase a bond. Would that company be able to pay you back? But you can buy one of the safest bonds you can purchase is a treasury bond, or a bond from the US government. The US government sells bonds, those are the most safest ones, and you can get those off of treasurydirect.com, or you can go to online brokers from E-Trade to the Ameritrade, you can purchase bonds. So that's one way. You can purchase bonds to come back and beat inflation. Then you go with, from bonds, you have CDs. Look at some high interest rate CDs. We live in a very low interest rate society, so there's not too many CDs out there that are gonna match and beat inflation, because the federal government is 1.16, so we're looking to explore different types of CDs. Another thing you can explore is high interest rate checking accounts. Another thing you may wanna explore is index investing. Another thing you wanna explore, insurance products. Or you can take your money, invest it into yourself, start your own business. Or you can take your money and invest into someone else's business, or you can go into real estate. Those are all different types of vehicles that you can do with your particular money, right? So the concept of this episode is to show is to tell you that, hey, you have to invest. If you're not investing, you are losing. Guarantee. When you take your paycheck and you put it into your pocket, you can count it every day. You say, hey, I'm not losing money, but you're losing purchasing power because the price of everything is continuously going up. And right now, if you're here in America, America is one of the richest companies, not company, but country in the world. Our stock market is at an all-time high. But if you're not growing, it's because you're not growing because you're not investing. This is what they're saying, the rich get richer, the poor gets poorer. When the rich get paid, they look to purchase assets. Assets are things that can make the money. Virtues, I won't say poor, but the common person, I'm guilty of it too. We buy goods, things like clothes, things like clothes or cars, things that will lose value over time. Versus the wealthy, they pretty much have all the goods they probably want. They look to purchase real estate. They look to make investments, new companies. They look to expand their companies. That's why the rich get richer and the poor gets poorer. Because if you're constantly buying things that will lose value, ask yourself this, when you're buying, when you get paid, ask yourself, where am I putting my money? Any piece of my paycheck that can possibly make money? If you're saying nowhere or you don't, most people have nowhere, nothing like that, then of course it's like you're spinning tires. You can't get ahead. In order to get ahead, you must have a dog in the fight as some would say. So you must invest some type of way. This is why this show's so important. And I'm giving you the resources and ways you can invest and telling you why it is important with statistical data. So I hope that was very, very helpful for you. And as always, if you guys got questions or anything like that, let me know. Drop a comment. I don't know, drop a comment or wherever you may find this or inbox me at askaskprints at royalfinancial.com. Ask prints at royalfinancial.com. I will answer your questions probably live on air. Now I can't get back to everybody's questions because I receive a ton of emails, sometimes and a ton of comments. But I do read all of my emails and comments and I do try to get back to people as much as possible. Don't forget to hit the like, subscribe, comment button on YouTube, Facebook, Twitter, Instagram or whatever you see around the world. As always, my name is Prince Dax. I'm your host, The Prince of Investment. We're still here. We did episode nine. Thank you guys for tuning in. I thank you guys for the great response that we have gotten across the globe and I appreciate it. Every Tuesday at 11 a.m., don't forget to tune in. I'll be here. Until the next video, podcast, cartoon, book whatever you see me do crazy around the world, peace, be safe, I'm out and thank you.