Passive Income for Wealth Creation with Lior Gantz - CREPN #223

Passive Income is the goal of all investors seeking wealth creation.

Lior Gantz is the founder and editor of the number one rated financial newsletter, Wealth Research Group. 

At 12 years of age, Lior had to go to work out of necessity.  His father’s business was struggling, and there was no money. He hustled, babysitting, teaching basketball, and delivering goods to others.  By the age of 16, he had saved $20,000.

His banker suggested he invest his money to earn greater returns.  In order to do so, Lior needed his parents to sign a waiver, which they gladly provided.  His grandfather gave him two books on investing, and Lior was hooked on passive income. 

In 2015 his friends urged Lior to publish his thoughts and ideas, which was the creation of Wealth Research Group.  This is where Lior publishes his thoughts and observations for readers who want to learn  about wealth creation.

Global Economy

Lior’s father’s business was furniture and upholstery.  It’s demise was due to the changing global economy that is full of new, cheaper goods from foreign countries.  His failure to adjust forced Lior to learn a new way early in life. The blessing to experience this at an young age helped Lior create an expectation based on global competition rather than tradition ready for disruption.  

Peak Open Borders

Western corporations have taken advantage of cheap labor overseas.  This cheap labor provided a greater profit spread for investors. The downside is loss of traditional jobs and trade in balance.  The ultimate question that needs to be answered: are cheaper goods more valuable than the loss of jobs? While cheap goods are good for consumers, the loss of jobs depletes the consumers needed to consume the cheap goods.

Transition

The price of progress is the pain of change.  Consumers like cheap goods. Within an economic system, wages only go up.  So, how does a system convert from a traditional economy to a nimble world economy? 

There are 48 countries that produce for less than China.  You cannot regress to compete against cheap labor. Change requires skills.  Workers need to be trained for the jobs in the new economy so that they can contribute to the new economy.

Competing in a Global Economy

Governments have a few tools available to change the course of the economy; lower interest rates or impose tariffs on foreign imports.  Historically, the US has preferred low cost foreign goods and chosen to lower interest rates rather than impose tariffs.  

The challenge with any governmental use of its tools, is whether or not the desired results will happen.  When the US lowers interest rates to make borrowing money less expensive, the hope is to make low cost capital available for companies to borrow.  This allows them to make additional purchases.  

Millennial Outlook

Millennials are gainfully employed and paying down their student debt.  As they progress professionally, they are inheriting higher paying positions vacated by retiring baby boomers.  Millennials income is projected to peak in 2030. At the same time, they are coupling up and looking for suburban housing to raise a family.  

This momentum will continue and will shift the demand for housing from the multifamily to the single family.  This will be the new wave of housing demand. 

Private Equity Funds 

Private Equity is flexible.  Where they see opportunity with a positive return, they go.  It is projected that these funds that acquired huge real estate portfolios in the crash will look to sell these as the millennials become buyers. 

If the cost to acquire a home is beyond the cost to rent, millennials may continue to rent.

Neighborhoods access to good schools, safe neighborhoods will continue to attract parents of small children. But, home ownership is no longer sacred.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK: You have to know what you are investing in and who you are investing with.  If you invest in large proven companies, you are investing in the culture more than the people.  You can trust that the culture will continue to drive profits. However, when you invest in small companies, this is speculative, because it is not proven.  In this case, it is important to know the who.  

For more go to:

Wealth Research Group