When it comes to creating wealth and building cash flow, most people don’t have a clue. The vast majority of those who get into the real estate business (or any other asset market for that matter) don’t realize that they’re playing with fire and almost always get burned.
That’s why I was so excited to have MC Laubscher, the host of the Cashflow Ninja podcast, on Accelerated Investor. MC is a former rugby player and coach at Princeton who has recently taken significant strides in the investing world. He understands that it takes both cunning and strategy to generate cash flow and wealth. A cavalier approach won’t suffice.
This post distills the advice that MC Laubscher imparted during our epic conversation. Read on for a wealth creation masterclass.
When it comes to building financial success, MC takes a unique approach informed by his days playing rugby at a high level. He found that the best way to compete in the sport was to carefully observe what his opponents were doing and then try to emulate them. People who were better than him often had subtle strategies or tricks that gave them an edge. MC discovered that all he had to do to improve his own performance was to observe them very carefully. Eventually, their secret would come out. It was a breakthrough.
The same approach inspired his thinking in the business world. The more that he observed the best players in the wealth-creation space, the more he learned their tricks and started using them to his advantage.
Utilize The Four-Time CC Concept
MC’s strategy revolves around his Four-Time CC concept. If you want to be successful in generating cash flow and wealth, you must ensure that the following four pillars are in place. If they’re not, you’ll struggle to develop sustainable, long-term cash flow to support your dream lifestyle.
Cash Creation. The first “CC” is cash creation. Customers need to receive tangible value from what you’re doing, or your enterprise will never get off the ground. MC makes the case that investing in yourself is a necessary condition for cash creation. If you haven’t built the skills, “soulful” relationship capital, and mental capital to provide value to others, you won’t succeed. Very successful people focus almost exclusively on these three factors because they know from experience that this is what works.
Cash Capture. The next pillar of MC’s approach is what he calls “cash capture.” This is the idea that once your customers have paid you for your services, you need to put that cash to use. Putting money in the bank is worse than useless. Most accounts don’t pay interest, so deposits get eaten by inflation. MC, therefore, recommends leveraging assets, like gold and silver, to acquire more cash flow investments. These assets are ideal if you think a recession is around the corner. Once you convert cash to capital, you can start generating more money. The more cash you invest, the higher your absolute returns will be.
Cash Flow Strategies. Next up are cash flow strategies. It can be tough when you first enter a new business area. The incumbents always have an advantage because they have the brands, networks, and supply chains to make things happen.
MC, however, points out that you don’t have to adopt a “scarcity mindset” where you convince yourself that you have to compete with the guys already in the industry for a slice of the pie. He points out that there is a range of other cash flow strategies that you can use.
Why not, for instance, partner with the big guys, find out how they operate and then build a network from within? That’s way easier than adopting an adversarial market stance and getting nowhere. Just provide value to the incumbent 800-pound behemoth and transfer a slice of its energy to your cause.
Cash Flow Control. The final stage is cash flow control. Once you’ve found a mechanism for generating money and multiplying your assets, you need to find a way to protect it. Creating massive personal wealth is only part of the process. You also need to build a wall around it to keep it safe and prevent the chaotic, external world from finding ways of draining it all away.
As MC points out, the US is a litigious place, and it is becoming more so. Today, you don’t have to do anything wrong to get sued – it can just happen. In this environment, the best strategy is to get your legal team on the case and make sure that you have proper asset protection strategies in place. Your solicitors should comb over all of your financial positions in detail to make sure that there are no legal opportunities for people looking to get their hands on your wealth.
Paying taxes is an unavoidable part of living in the US, but it can massively cut into your wealth creation ambition.
MC makes an excellent point. “There’s no return in the market that can come close to cutting your tax bill.” If you can reduce your taxes by 20 percent, then you have just earned a de facto 20 percent return on your income, without having to take any risks in the market.
The best way to reduce taxes is to look for tax advisors and accountants who keep things simple. Lowering taxes is possible, but you have to do it smartly and legally. Investigations by the IRS are NOT – I repeat NOT – a good strategy for building long-term wealth and cash flow.
Once you slash the amount of tax that you’re paying, you can then leverage those savings and plow them back into cash creation – the first pillar of wealth creation we discussed above.
MC taught me that when it comes to wealth creation and generating cash flow, it doesn’t pay to follow the masses. Becoming successful is about whittling down successful strategies to their essence and ignoring the noise created by financial juggernauts and the media. Learn the tools of the trade, and you will succeed.