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Are Alternative Investments for You? – Episode 305


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So you think it’s time to add something more exciting to your portfolio? Before you buy, it’s important to know how it will help you reach your long-term goals. On this episode of the Dentist Money™ Show, Ryan and Matt put their focus on alternative investments and where and when they might fit. There are many ways to invest, but the downside of some options may not be worth the risk.

 


 

Podcast Transcript

Ryan Isaac:
Hello, everybody. Welcome back to another episode of The Dentist Money Show, brought to you by Dentist Advisors, a no commission, fiduciary, dental-specific financial advisor just for dentists like you all over the country. Check us out at dentistadvisors.com. Look, today might be a longer episode. If you stick with us, put it on 1.2, 1.5, maybe double speed, stick with us. This is an important topic about alternative investing, out of the box investing, unconventional investing. We share some insights and some opinions and some points about what we’ve seen over hundreds, if not thousands of dentists and their investment behavior, what works, what does not work, what gets people to their end goal, what’s necessary, what’s not necessary, the things that get in the way, the distractions we have.

Ryan Isaac:
So we give our opinions and our insight and our perspective on all of these questions. It’s a very frequent question and sometimes it a concern for people about the way they invest money. So big topic here. I hope you make it through with us. If you do, congratulations. Thanks for tuning in. If you have any questions, of course, hit the website dentistadvisors.com. Book a free consultation. Let’s chat. Enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show where we help dentists make smart financial decisions. I am Ryan Isaac and I am joined here by the guy himself, it’s Mr. Matt Mulcock, the Hollywood Mountain as you know him. What’s up, Matt?

Matt Mulcock:
Yo, Ryan. How are you?

Ryan Isaac:
I’m good. Welcome back to the show.

Matt Mulcock:
You came in on the backdoor on the nickname. I thought you were not going to do it this time. I was [crosstalk 00:01:57] by it.

Ryan Isaac:
Oh, yeah, yeah.

Matt Mulcock:
I mean, you snuck it in.

Ryan Isaac:
Matt, today on the show, we’re going to talk about something that is… It’s a hot topic, man. It’s a hot-

Matt Mulcock:
Near and dear to our heart.

Ryan Isaac:
Near and dear. It’s a hot topic. This is a topic that gets thrown around wildly, willy-nilly as they say on-

Matt Mulcock:
Just all willy-nilly out there.

Ryan Isaac:
… on Facebook groups, you hear it in conversations, we talk about this with clients all the time. It’s very nuanced, man. There’s a lot of very big misunderstandings about it. A lot of miscommunication about it, misinformation about it. Some people have developed some pretty wild stories about what this is or is not and how it should or should not apply to them in their lives, and it can affect people negatively. So today, we’re talking about what we would call, there’s probably a few names for it, Matt, we can call it alternative investing or we can all it out-of-the-box investing or we could call it, I don’t know, non-

Matt Mulcock:
Exciting. Non-boring.

Ryan Isaac:
Yeah, non-boring, non-traditional, non-cookie cutter. Have you used a cookie cutter in a while? I haven’t used a cookie cutter in my household-

Matt Mulcock:
No, but my daughter is getting to that age where I think that’s going to be happening soon.

Ryan Isaac:
She likes cooking stuff? We just make normal boring cookies. We don’t even use cookie cutters.

Matt Mulcock:
Nope. Dude, if you had my wife’s cookies though… Have you ever had them?

Ryan Isaac:
No.

Matt Mulcock:
They are incredible. They are boring-

Ryan Isaac:
Next time I’m in Utah.

Matt Mulcock:
… like traditional cookies. They are incredibly good.

Ryan Isaac:
Dude, don’t knock the boring traditional because the boring traditional is what the good stuff in life is made out of and usually what all progress comes from, but we’ll get there. So I’m going to start this with a story. It actually just happened this morning. We planned on doing this episode anyway, but I was just in a conversation with a good friend of mine this morning and I was like, “Thank you for providing some podcast content, buddy.”

Matt Mulcock:
This morning? It’s not even that late in the day. How early are you talking to people?

Ryan Isaac:
Well, it started at, I don’t know, 7:00-something.

Matt Mulcock:
Bro.

Ryan Isaac:
But the conversation, because it’s 2021 and I’m a borderline millennial, I actually didn’t talk to this human on the phone because it’s weird to talk to people directly on the phone.

Matt Mulcock:
Was it like you Snapchatted him?

Ryan Isaac:
Well, it was the boomers’ social media. It was Polo.

Matt Mulcock:
Marco Polo? Okay. Just, I think I told you this, I, yeah, for the first time ever, got accused of being a boomer.

Ryan Isaac:
Because you used Polo?

Matt Mulcock:
I’m like, “I’m 34 years old.” I got accused of being a boomer because I use Marco Polo. They’re like, “That’s such a boomer app.” I was shaken.

Ryan Isaac:
So I digress. We were Marco Polo-ing and that was our conversation. It was back and forth a lot. It was really interesting. Anyway, skip to the-

Matt Mulcock:
Marco Polo was cool, man. I’m going to stand by that. It’s effective.

Ryan Isaac:
I’m fine with it. I’m a Voxer person too.

Matt Mulcock:
Yeah.

Ryan Isaac:
So I like it.

Matt Mulcock:
Come at me.

Ryan Isaac:
Anyway, my friend is a personal trainer and a coach, health and fitness coach, for many years. Probably going on 10 years now. This human being has just physically himself accomplished things that are kind of astounding. Like he is not a small human. He back squats well in excess of 500 pounds, which is not a lot to you, Matt, but [crosstalk 00:05:05]-

Matt Mulcock:
But it is a lot, especially now for sure.

Ryan Isaac:
It’s a crushing amount of weight. But he can also do like 10 ring muscle-ups as a big human being and run a pretty quick mile and walk on his hands for… He’s a CrossFitter, right? So what I’m getting at is this person is a very accomplished, very well-rounded person who has put his money where his mouth is, so to speak. Right? He’s eaten his own cookies, done his own training. He’s accomplished things as a coach that he’s trying to coach for other people. Right? That’s the setting. That’s the premise. He has lots of years of experience-

Matt Mulcock:
So this guy’s all around just bad A.

Ryan Isaac:
He knows what he’s doing, man. He’s done it and he coaches people on how to do it, having done it. So whatever. We were talking this morning how he helps run a fairly large sized gym, hundreds of members. He was talking about how it can be a little frustrating how finicky members of a gym or of a coaching program can be after mere weeks or a couple months only of following a certain fitness program. Within weeks, people already start going like, “Aw, man, this is a little boring. I’m not accomplishing what I want to accomplish. I’m not hitting the weights I want to hit. I think we need to change it up. What else is out there? Why aren’t you telling me? I saw this thing on Instagram. Why aren’t we doing this? Why are we doing basic core exercises when I just want to do some muscle-ups on the rings?” Or, “Why are we doing these weird basic flexibility drills when I just want to back squat 500?”

Matt Mulcock:
Easy. Just throw it on there. Just put it on your back and go.

Ryan Isaac:
Yeah. Like, “Why are we doing interval stuff when I just want to be able to run a mile in six minutes?” I mean, it’s just human nature to constantly be like, “All right, I think I’ve nailed this. What else is there?”

Matt Mulcock:
It is our human brain working against us. Yeah.

Ryan Isaac:
We have such short attention spans. It’s just our nature. So today, we’re going to talk about how this comes up in financial planning and in investing when we’re trying to figure out what’s a good plan and a good strategy to get you to your goals, and how sometimes this conversation of, well, what else is out there? We’re doing the boring stuff right now or we’re doing the normal stuff or the common stuff or the-

Matt Mulcock:
Cookie cutter.

Ryan Isaac:
The cookie cutter or whatever. We’ve got the Kirkland brand of stuff going on, but I kind of want the… I want the fancier name brands that is going on.

Matt Mulcock:
Dude, if I were a brand-

Ryan Isaac:
Yeah, what-

Matt Mulcock:
… I’d literally be Kirkland. I would. I’m so boring.

Ryan Isaac:
Why would not be Kirkland? Like dude.

Matt Mulcock:
Just in general, that’s just my life. It’s like I’m not interesting. I am definitely Kirkland of the brands.

Ryan Isaac:
It’s like pure value for great price and you just know it’s consistent, right? So anyway, Matt, I’m going to ask you to maybe just… Can you give some examples of where this question comes up or how it comes up or what people might be referring to? Just generally. Then we’re going to jump into some more specifics here. Just how does this come up in your conversations? How do you see it?

Matt Mulcock:
Oh, my gosh. This happens, I mean, especially… It’s obviously increased over the last year or so, these conversations. Because it’s super interesting to see the mindset shift of people. This isn’t, again, not a criticism. I totally get it. When you see what’s happening out there since basically COVID happened and you’re hearing all these stories and you’re seeing all these “investment strategies” that people are putting out there and making tons of money on, people all of a sudden start to get curious. Like why am I not doing that? So in the context that we’re-

Ryan Isaac:
FOMO. Investing FOMO.

Matt Mulcock:
Yeah. Totally. FOMO, yeah.

Ryan Isaac:
Another human condition. Totally.

Matt Mulcock:
Exactly. So the main context of this, where I hear this all the time, and I know the other advisor, we can speak to this as well, is just in this context of we’re doing a review, we talk to our clients several times a year, we’re doing a review of either their investments or their… whatever, anything in their financial situation as we follow our process. It usually will come back to like, “Hey, so my buddy…” or, “Oh, I saw this thing, what do you think?” Or, “I got approached by this investment strategy or this investment thing, product, real estate deal,” whatever. So they’ve been approached and they know our response is going to be at least questioning, and so they’re a little bit sheepish about it usually.

Matt Mulcock:
But it usually is coming up on our calls with our clients and they’re kind of be like, “Hey, what do you think about this? Should we be doing this?” That’s usually the context. Or at an event or whatever. But it’s usually in that context where someone’s like, “What else is there? So we got this stuff. What else is there?”

Ryan Isaac:
Okay. So they have something specific in some of these examples you’re thinking of. Like they’ve heard of something or seen something. Okay. How-

Matt Mulcock:
Or generally speaking, again, it’ll come down to, okay, we’ve got this lined up. We’ve been working together for a year, year and a half, two years, whatever. Oh, you’re tracking my progress. Oh, my gosh, look how great everything’s been going. My net worth’s grown by X, Y, or Z. What else? What else is there?

Ryan Isaac:
Yeah. What else can we do?

Matt Mulcock:
Yeah, what else can we do?

Ryan Isaac:
Which we’re acknowledging that’s a fair question.

Matt Mulcock:
Sure.

Ryan Isaac:
I mean, if we never ask that question, we wouldn’t have some of the amazing things we have in life and we’d never discover anything new. So, hey, totally fair question. I think it’s just… And I want to say this. I don’t know if you would agree, so I’ll just speak for myself. I tell clients this all the time. I don’t really believe in the right way to build wealth. I mean, our business does a certain thing and we do a certain thing well. We don’t do everything out there that you could possibly do. There is specialty firms that are hedge funds or real estate syndicates, right? I don’t know, or crypto managers or…

Matt Mulcock:
Or tax strategy experts who are going to have you invest in things that are going to maximize your tax savings.

Ryan Isaac:
I mean, there is really specific things and then there’s companies that will specifically only focus on those things. That’s fair. Yeah, our company does some things and that’s our bread and butter. It’s what we do. But I still don’t believe in there’s only a right way to build wealth. You have to have these assets and you have to… You don’t have to buy stocks. You don’t have to buy real estate. You don’t even have to own a dental practice. I don’t know-

Matt Mulcock:
There’s no one way to skin the wealth cat.

Ryan Isaac:
Yeah, be a high earning associate at a couple offices and, I don’t know, buy a bunch of KFCs. I mean, probably don’t, but you could.

Matt Mulcock:
I mean, probably not KFCs, but maybe. Who knows?

Ryan Isaac:
I just met someone the other day who owns like a dozen KFCs and I think they do pretty well, so I don’t know.

Matt Mulcock:
They probably do great. Yeah. Who knows?

Ryan Isaac:
I mean, I don’t know. All I guess I’m saying is a) that’s a fair question to ask constantly. I don’t know, man, I feel like we’re pretty curious people. I don’t really feel like we’re really stuck in the way that we think about things. I mean, that’s just not the culture inside of Dentist Advisors. It could come across that way. I don’t know. Because we do have a bread and butter of things that, I mean, that work.

Ryan Isaac:
So here is my point, is there is not a right way to do it, but there is an appropriate way, right? There is certain risks that aren’t worth taking, there is certain costs that are not worth paying, and there are certain trade-offs that are just not worth trying to chase. I don’t believe that there is the only right way, but there sure is appropriate and inappropriate paths and things that are worth and not worth your resources, your time, and your money.

Matt Mulcock:
Yeah. I totally agree. Here is what I think gets confused a lot, and I’m glad we have this show to be able to air this out there and just put it out there to the world.

Ryan Isaac:
Yeah, we’re just trying to be transparent.

Matt Mulcock:
Yeah. So here is what I think gets confused when we say a lot, like you just said it, where people think that we’re not curious or that we’re not open to other ideas, which I think is true, people do think that or they get that feeling from us as they’re bringing this stuff up.

Ryan Isaac:
Well, why? Can we say why? I would explain it like a giant core part of our business is we manage investment portfolios in stocks, bonds, and mutual funds. I mean, we’re a traditional asset class investment advisor. I mean-

Matt Mulcock:
Yeah, but I also-

Ryan Isaac:
As Michael Scott would say, so sue us. But please don’t. Don’t.

Matt Mulcock:
But don’t.

Ryan Isaac:
But don’t, but don’t.

Matt Mulcock:
Don’t sue us. But here is the thing. When a client… There is a big difference in me just being rigid and dogmatic and being like, “No, don’t do that,” versus asking questions. So for example, every single time a client comes to me and says, “Hey, what do you think about X, Y, or Z thing?” Either generally, like this general strategy, or they bring a specific investment. My question always, and so I’m going to spoiler alert, this is what I’m going to ask you. What’s driving this decision? Just tell me why? Where does this fit for you? That’s not me saying, “Don’t do it.”

Ryan Isaac:
Or, “Stupid,” or, “You can’t.”

Matt Mulcock:
It’s me saying, “Have you thought about why you’re doing this?”

Ryan Isaac:
Let’s explore.

Matt Mulcock:
“What is driving this?” The problem is most people don’t want to be asked that because they don’t know. I get that all the time. They’ll be like, “I don’t know. It just sounds good.”

Ryan Isaac:
Well, you’re hitting on something I was going to ask earlier, which is most of the time, that’s the first question. Okay, let’s explore this idea. Where does this come from? Or how about can you explain it to me? A lot of times-

Matt Mulcock:
Yeah. The strategy itself.

Ryan Isaac:
… the conversation dies there because it’s just something that gets… someone has heard something and then they’re trying to relay it like, “Oh, maybe you know, Matt,” and you’re like, “Well, you explain it to me.” And there is not an ability to explain. I mean, man, I think back over the 15 years we were… 15? That we’ve been in business, and I’ve walked through, man, the craziest investments you can think of, man. Like out-of-the-box. We’ve explored things with people from restaurants and food services to video game development, actual raw land oil drilling-

Matt Mulcock:
Oh, my favorite. The old oil drill.

Ryan Isaac:
… mines and mining. I mean, I’m trying to think of… There have been some pretty interesting business ideas.

Matt Mulcock:
Conservation easements.

Ryan Isaac:
Yeah, anything you can think of. I mean, we’ve never told a client, “No, we’re not even going to talk about that.” If anything, I would say that an independent fiduciary advisor that’s not selling a product and doesn’t get paid to place you into some of these investments might be the best person to explore this with because you’ll have a safe space to go say, “Yeah, I heard this thing. My friends do it. I feel a little left out. It seems like it’s maybe better that what we’re doing right now in my portfolio. Can we talk about it?”

Ryan Isaac:
I feel like, maybe this isn’t the perception, but I feel like the conversations are like, yeah, for sure, let’s explore it and they start with questions like you were saying. We just kind of walk through the pros and the cons and the risks and the costs, and we try to get as much analysis as we can and we try to dig… Because ultimately what we’re trying to do as Dentist Advisors, we’re just trying to say, “Look, you spent a decade in school. You’re maybe seven-figures in debt just to be a dentist and run a business. It might be the most profitable thing you’ll ever do in your whole life and it has tons of longevity and unlimited funding. It’s so predictable and so safe. Let’s just protect that at all costs before we venture into something that could disrupt… or something that could erase the progress that you’ll make from running a successful profitable practice and just saving money and conventional stuff like real estate and stocks.” Right?

Ryan Isaac:
So I don’t know. Is that a good disclaimer of just the context of where we’re coming from and these conversations? Is that fair?

Matt Mulcock:
Yeah. I think the other thing I had mentioned, you just said rarely or ever do we just say we’re not going to talk about it.

Ryan Isaac:
No.

Matt Mulcock:
I actually would say there are times-

Ryan Isaac:
Please, let’s talk about.

Matt Mulcock:
Well, I’d say we’ll definitely talk about it, but there are definitely times that I will offer yes, pushback, depending on my client’s situation-

Ryan Isaac:
Oh, for sure. You should. You should.

Matt Mulcock:
… because here’s the other thing, we’re not looking at this just in a vacuum of the investment itself, right? We’re looking at this from a comprehensive situation. This happens, right? So I have a client… This is a hypothetical situation, but this happened many times. Client comes to me. They have got barely enough for their emergency fund. They just got into their emergency fund.

Ryan Isaac:
Sure. Like early stages.

Matt Mulcock:
Early stages. Their practice is just up and running. They’re figuring out the overhead situation. They’re a couple years in maybe, right? They’re starting to save some money outside the emergency fund. We’re starting to put a debt plan together. They come to me and they say, “Hey, my friend is doing this insert alternative investment.”

Ryan Isaac:
Yeah, whatever. Yeah.

Matt Mulcock:
“It’s going to take 50 grand for me to do it. I really want to do it. They’re promising these returns of whatever.” I look at it and I say, “Oh, you want to take your emergency fund that you just built up and we just put together this strategy, you’re just starting to save some money in your core portfolio, and you want to go take that emergency fund to go put in this flier of an investment that you know nothing about?” That is where I’ll say, “Absolutely not.” I’m not your dad. I’m not your boss to say, “”Hey, you can’t do this.”

Ryan Isaac:
It’s your money.

Matt Mulcock:
I’m just your advisor saying, “Hey, I would highly recommend that you don’t do this in your specific situation.” So yes, there are situations where I will offer significant pushback, but I say, “Look-”

Ryan Isaac:
Well, as you should.

Matt Mulcock:
“… [crosstalk 00:18:57] all of your money.”

Ryan Isaac:
You’re a fiduciary.

Matt Mulcock:
“You can go do it.” Exactly.

Ryan Isaac:
Yeah, you’re personally held liable as a fiduciary to do what’s in their best interests, so, I mean, there are times when you should be giving pushback. I wonder if you would find the same thing, I found a lot of times by just asking enough questions, clients themselves will come to that… They’ll give their own pushback. By just asking enough questions. But the problem is, and we all go through this, when we’re in a situation with a friend or a colleague and something’s being discussed, we might not know much about it, but it seems like, “Oh, I might be missing out on something. This person’s pretty smart and successful.” There’s not much question asking that’s happening in those conversations because we just might not know a lot about it, so we don’t ask any questions. We take it to someone else.

Ryan Isaac:
But I find, man, when you start digging in and asking questions in a safe conversation, a lot of times, the clients come to their own conclusions. Like, “Oh, yeah. Yeah, I don’t know if I want to do this right now. Maybe later, but yeah, it might not be a good time.” Then there’s times as an advisor where you got to be like, “Look, I don’t think this is a good idea for you and here’s why. It’s your money, it’s your life. You do it, but I still think-”

Matt Mulcock:
Yeah. You do it, but I’m going to give you the other side of this thinking and hopefully get you to think about, again, the alternatives here of why you may not want to do this or maybe it’s not the right time to do this type of thing.

Ryan Isaac:
You have a quote I want you to share along this thought. I mean, so just to recap, a) there is no right way to do this, b) ask a million questions to a trusted source of a fiduciary that’s not selling stuff, explore things, c) I just personally feel protective over dentists in the insane investments that they make of time and life and money, debt, taxes, just to even open the doors of a practice and have a building and run it successfully. It’s just the most amazing investment you’ll make in your career likely. I just want to protect that thing for like 30 years because it’ll just kick off more money than anything else you’ll do. What’s the quote that you have? Because I think it just illustrates that so well.

Matt Mulcock:
Yeah, I just want to highlight that most of my thinking is not original. 99% of it. So I just basically read a bunch and then-

Ryan Isaac:
There’s a lot of smart people. That’s fair.

Matt Mulcock:
… be like, “Oh, I love that. I’m going to steal that.”

Ryan Isaac:
That’s a smart person. Yeah. I love it.

Matt Mulcock:
But I will give credit to where credit is due. So James Clear, one of my favorite modern day thinkers, he wrote Atomic Habits. He’s got a blog. If you don’t, you should follow it. He’s amazing. So yeah, one of my favorite quotes from him recently was 90% of success is doing the obvious thing for an uncommon amount of time, all while convincing yourself you’re not smarter than you are.

Ryan Isaac:
I love the way obvious there because I’ve heard that too.

Matt Mulcock:
I was just going to say that. Yeah. So to break this down a little bit, why I love this, it’s one of the most insightful, simple quotes ever, but it’s so insightful. So a couple of words stand out to me. Number one, success. The step that most people jump over when it comes to these conversations that they’re not thinking about is what actually define… The first step is define what success is to you.

Ryan Isaac:
Good call. Oh, yeah.

Matt Mulcock:
That’s where I get a little bit frustrated with these conversations, is because the reason I ask the question, the first question I ask is what’s driving this, is because in my opinion, it should always be, and where we’re coming from all the time with our clients, is getting you to your version of success, whatever that is. I always want to know, does this X, Y, or Z investment or this out-of-the-box thinking get you closer to that? If it does, tell me why. Tell me how. Right?

Matt Mulcock:
So what people, again, fail to jump over and not even think about as they’re on this path and looking at this investment is they don’t even think about what is success. That’s the first question you should be asking yourself.

Ryan Isaac:
So good.

Matt Mulcock:
What does success mean to you?

Ryan Isaac:
What does that even mean?

Matt Mulcock:
What does it even mean?

Ryan Isaac:
Yeah, what does that mean? Yeah.

Matt Mulcock:
Yeah. The other word, as you mentioned, that I love in that quote is obvious. Notice he did not use easy, he did not use simple. He used obvious.

Ryan Isaac:
Well, that’s exactly it. I mean, how often… That’s a word that’s often used to describe conventional stuff. Right? Like buying a couple rentals or owning some stocks and bonds and mutual funds or just running a boring old dumb dental practice. It’s so easy to do.

Matt Mulcock:
Building wealth is boring usually and it should be.

Ryan Isaac:
It kind of mostly should be. Yeah. And people will use the word obvious to describe something that they actually mean boring or too conventional or not good enough or not complex enough. But it’s those boring little obvious things that just… We’re humans, we’re bored, easy, we have short attention spans, and we just overlook those things in the long-term. But anyway. I know want to-

Matt Mulcock:
Yeah.

Ryan Isaac:
Yeah? Go ahead. No, finish your thought.

Matt Mulcock:
I was just going to say… Sorry. I was going to say, just really quick to that point of highlighting again the word obvious. I think it’s very, very specific. It was very intentional that he used that word and we talk about this all the time, what you just said. Obvious and easy are not the same thing.

Ryan Isaac:
Oh, I forgot. I totally spaced. Yes. Go with that.

Matt Mulcock:
With wealth, building wealth is relatively obvious. There is a lot of technical stuff and things that you can do that obviously we do on the backend for sure. I’m not trying to diminish what we do, absolutely not. We add tons of value. But-

Ryan Isaac:
Well, it’s a lot more complex than people probably think, but it seems simple. Yeah.

Matt Mulcock:
But the core of it, the core foundational things, are really obvious.

Ryan Isaac:
Yeah, it’s true.

Matt Mulcock:
It’s not easy, it’s not easy, but it is very obvious.

Ryan Isaac:
I was just reminded of a story we shared in some podcasts once upon a time. I don’t remember when. I don’t even remember the subject. I just remember the story.

Matt Mulcock:
But it was good. Whatever it was, it was good.

Ryan Isaac:
The story was good.

Matt Mulcock:
It was very insightful. It was great.

Ryan Isaac:
Yeah. The story was good and the story is that the number four killer, like the fourth-

Matt Mulcock:
I remember this. Yeah.

Ryan Isaac:
Yeah, the fourth leading risk factor of death in the entire world is physical inactivity. Physical inactivity kills more than 5 million people per year.

Matt Mulcock:
Which is unbelievable.

Ryan Isaac:
Which is unreal. It literally just means gets off the chair and walk for 10 minutes would save millions of lives. I mean, that’s really what it comes down to. You can’t get more obvious or simple or basic than physical basic activity. But again, to your point, simple or obvious or traditional still doesn’t mean easy. It still doesn’t mean people do it well.

Ryan Isaac:
I guess, that’s some of the fight we’re here fighting, is that… I mean, it’s all opinion. I mean, investment opinions are like religions. There’s a million ways to believe in something and we’re going to fight about it. Right? Or politics. So believe what you want, but we’re still watching people participate in obvious things or simple things and still not achieving results because they’re not done correctly, even in the obvious simple things. Like people still making giant mistakes investing in the stock market, making giant mistakes in their practice, making giant mistakes in real estate. Right? Pretty basic simple asset classes, but there’s still enough mistakes being made consistently that help is still needed dramatically. It’s really big. So I don’t know. [crosstalk 00:25:56]-

Matt Mulcock:
They’re skipping… I mean, what it comes down to is skipping steps. That’s usually what I see. Some of the biggest mistakes when it comes to building wealth, some of the biggest mistakes all come back to people attempting to skip steps or accelerate the timeframe. Right?

Ryan Isaac:
Yeah. I like that.

Matt Mulcock:
Like they say, “Oh, I really want work to be optional.” So for most people, that takes a long time. That’s just the reality. For 95% of people, getting to the point of work being optional takes a long time. We’re talking multiple decades. Most mistakes come back to people saying, “I want that, but I want it faster-”

Ryan Isaac:
Yeah, it’s timing.

Matt Mulcock:
… and they tend to make mistakes.

Ryan Isaac:
I mean, if we had it, we could do a whole other episode on… We could just list all of the crazy alternative investment that a lot of our clients have, totally appropriate, that we have mutually agreed upon are fine to do. I mean, we could list some really interesting cool things, man. I mean, all kinds of stuff. All kinds of stuff. We couldn’t even get into it. But it’s timing, right? When people are maybe seeking more risk or something different, it’s like they’re doing it at a point in time when it’s not going to jeopardize the main core stuff that’s really going to get them to where they want to be. Or they might already be there and now they have the luxury.

Ryan Isaac:
Matt, it’s time.

Matt Mulcock:
Time for what, Ryan?

Ryan Isaac:
It’s time to book a free consultation at dentistadvisor.com. Just click on the big book free consultation button on the homepage and talk to one of our friendly advisors today.

Ryan Isaac:
I want to switch gears here for a second. I can’t believe how much time has already gone by. I want to read the actual, the definition, the investing definition of an alternative investment.

Matt Mulcock:
Hit me.

Ryan Isaac:
It actually surprised me. I should have started the show with this. This is like a cliffhanger.

Matt Mulcock:
Maybe the producers can edit this in post.

Ryan Isaac:
Edit this, but whatever. It is what it is. So an alternative investment is a financial asset that does not fall into one of the conventional investment categories. Conventional categories include stocks, bonds, and cash.

Matt Mulcock:
Boring. Boring.

Ryan Isaac:
Well, here’s what I thought was… surprised me. Alternative investments include private equity, okay, venture capital, okay, hedge funds, yeah, managed futures, yeah, art and antiques, yeah, commodities, derivatives, and contracts. Real estate is also often classified as an alternative investment. Here is what I wanted to point out that is actually kind of fascinating. One of the things that we do for our clients is we keep them really organized and we categorize all their stuff. We keep a balance sheet, assets and debts and net worth. On that balance sheet software, there is a pie chart that shows all of the assets people have in this pie chart in the categories. Like it’s a pie chart of how much of your assets is in real estate, how much is in private equity, private businesses, how much is in stocks, bonds, cash, retirement plans versus liquid investments.

Ryan Isaac:
What’s kind of crazy is I read this definition… So technically, okay? I’ll go back to… A lot of things are obvious as alternative investments. Futures, antiques, art, commodities, derivatives, hedge funds.

Matt Mulcock:
Baseball cards.

Ryan Isaac:
Yeah. Baseball cards. Dude, you’re mentioning things that people have-

Matt Mulcock:
Baseball stuff.

Ryan Isaac:
I mean, totally, man. So some of these things are obvious, but what wasn’t obvious to me, there are two asset classes every dentist owns heavily on their balance sheet that are already considered-

Matt Mulcock:
They’re alternative.

Ryan Isaac:
They’re already considered alternative investments. Private equity. What do you think that means? That is your practice. If you are a dental practice owner listening to this podcast right now, you own private equity investments.

Matt Mulcock:
You are already a private equity mogul, people. Just accept it.

Ryan Isaac:
And if you have the organization that we provide for our clients and you looked at your pie chart, I guarantee you would see that 50% of your assets, unless you’re a lot older and you’ve really grown assets in other places, is private equity. Which is mind-blowing to me. It reminds me of a conversation, I mentioned this on a podcast a few weeks ago. I was talking to a dentist who was wildly successful. Like mid-career, he’s already just totally figured out and nailed it. Could just autopilot coast forever. He was saying how easy his job was. He runs two specialty practices. Huge and growing. I remember stopping him in the conversation and being like, “Dude-”

Matt Mulcock:
That’s not easy.

Ryan Isaac:
“… you’re just used to it. It is not easy. You’re just used to it.” So a) I mean, huge chunk of the average dentist balance sheet is sitting in private equity. Because you’re used to it, because you’re immersed in it, because that’s what you’ve been thinking about for 10 years of school. By the time you get out, you’re like, “Yeah, owning a practice. Who doesn’t own a practice? It’s so easy.” It’s not easy. It is not common. Okay? Sometimes when I hear, “I need something alternative. I need out-of-the-box thinking,” I’m kind of like, “Dude, as a dentist, you are already doing something that is extremely out-of-the-box. You own and run a seven-figure business with a dozen-plus people, with all these moving parts and a 50% profit margin. Tell me what part of that is not out-of-the-box or you’re just used to it.”

Matt Mulcock:
The 99% of the population don’t own. They’re not-

Ryan Isaac:
Or never will.

Matt Mulcock:
99% of the population-

Ryan Isaac:
Couldn’t fathom. You go to your-

Matt Mulcock:
Well, and they don’t own-

Ryan Isaac:
They don’t.

Matt Mulcock:
They can’t even.

Ryan Isaac:
They can’t.

Matt Mulcock:
In many states, they can’t even own that business.

Ryan Isaac:
No.

Matt Mulcock:
They are literally restricted-

Ryan Isaac:
From owning.

Matt Mulcock:
… from owning-

Ryan Isaac:
From doing what you do.

Matt Mulcock:
… that business.

Ryan Isaac:
Yeah, go to your neighbor, your friend who is a… even successful W2 employee of a company somewhere and just be like, “Can you fathom having 25 employees and two locations and doing $3 million a year in revenue and a 50% profit margin?”

Matt Mulcock:
Yeah, and I think you’re getting… This is so good, right? I think you’re getting to the point of where we get frustrated sometimes with people, is being like, “Look at what you’re doing right now.”

Ryan Isaac:
Already is what you’re describing.

Matt Mulcock:
Already. It’s like when people… We always joke around. Dental school is a long time to go to school and a lot of money to become a real estate mogul. Because so many people come out of dental school and be like, “I’m going to go into real estate.”

Ryan Isaac:
Yeah, and you’re like, “Why?”

Matt Mulcock:
It’s like, “Why?”

Ryan Isaac:
I mean, cool. That’s great. [crosstalk 00:32:21]-

Matt Mulcock:
You literally have an advantage over 99% of the population because you are so freaking smart and you worked your butt off for so long to get into something that not a lot of people can get into. You have such an advantage in this business and the first thing you do is you want to jump into a public pool with millions of other people?

Ryan Isaac:
Yeah, with no barrier to entry.

Matt Mulcock:
You’re in a private hot tub right now. You’re in a private hot tub and the first thing you want to do-

Ryan Isaac:
It’s an infinity pool hot tub overlooking the ocean.

Matt Mulcock:
It’s an infinity pool hot tub overlooking the Caribbean-

Ryan Isaac:
An island. Yeah.

Matt Mulcock:
… by yourself and you look over and you’re like, “You know what? That public pool with a millions of people-”

Ryan Isaac:
No gate.

Matt Mulcock:
“… that looks…” No gate. Anyone can walk in. There is no lifeguard. Kids are drowning in the pool. You’re just like, “Yeah, let’s go over there and hang out.”

Ryan Isaac:
Let’s go there.

Matt Mulcock:
Like, “That looks fun.”

Ryan Isaac:
Yeah. We’re fired up, man. Just because we’re just saying you’re used to the fact that you are a private equity business owner. But you own a massive part of your assets, and always will be, are in private equity. By owning a dental practice. The only reason-

Matt Mulcock:
A killer business.

Ryan Isaac:
A killer business. A killer business. The only reason that you’re still looking for what else is out there is because… And, man, I know you can relate to this even if it’s hard to admit. You’re just bored. You’ve mastered your craft. You’re halfway through your career. You’ve got tons of money. You’ve mastered it. You’re just bored. And it’s okay. It’s okay. We’re human.

Matt Mulcock:
Building wealth is boring.

Ryan Isaac:
It is boring. Yeah.

Matt Mulcock:
I wish I could be bored because that means I’d be wealthy. But I’m not bored because I’m not wealthy.

Ryan Isaac:
So here is that other thing in that definition. Real estate can be considered an alternative investment. I wouldn’t have defined it that way. I would have said it’s one of pretty main asset classes-

Matt Mulcock:
The core.

Ryan Isaac:
… a core asset class. So going back to the pie chart, if you look at the average dentist who owns at least a house and maybe a building, you’re looking at another gigantic chunk of a balance sheet that is sitting in two types of private equity and real estate alternative investments on your balance sheet. Real estate and a private business. The point is, and I show clients this all the time, I’m like, “Look, you feel like you’re missing out on some other maybe more complex, advanced, sexy stuff out there. Maybe you want… You wanting to because you have an interest is a different thing than needing to. As a fiduciary advisor, I’m just here to tell you, I’m here to point you in the direction and help you get the stuff you need. The stuff you want is a different conversation and we can figure out how that fits in.

Matt Mulcock:
Yeah, and understand the reasons behind why.

Ryan Isaac:
And the reason behind it. Why.

Matt Mulcock:
What is driving this desire. But I like what you just said and I think the second part of that, you said you feel like you’re missing out on other things, but again, hopefully this… We want to shift people’s mindsets. Other people are missing out on your thing. That’s the whole point. What a world we live in that a asset class, an asset class on a consistent basis for the last 30-plus years, 100 years, an asset class that produces on average 10% to 12% returns. That is now, in this day and age right now where we’re in-

Ryan Isaac:
Is boring.

Matt Mulcock:
… pretty much a COVID world, is boring. People are like, “10 to 12%? Come on man.” [crosstalk 00:35:21]-

Ryan Isaac:
And there’s volatility. I mean, there’s excitement.

Matt Mulcock:
Yeah. For sure. But it’s like, that’s boring. We were joking about this. A stock portfolio is like the new bond portfolio. People are like, “Oh, that’s boring. 10 to 12%? Come on.”

Ryan Isaac:
Well, it just seems easy to do.

Matt Mulcock:
“Buy crypto.”

Ryan Isaac:
Yeah.

Matt Mulcock:
Yeah.

Ryan Isaac:
Well, it’s like anyone can do that and, yeah, anyone can access it. I think that’s what’s happened is so much needed technology and needed access has come out to the masses to access stocks, but there’s been a mistake and assumption that increased access has increased everyone’s abilities. Let’s just remind everybody this isn’t just us saying this, this is just studies and data that-

Matt Mulcock:
Studies show.

Ryan Isaac:
… most investors aren’t even getting near what the market is achieving. I mean, so if the boring old market’s doing 10 to 12 a year over long periods of time, the average investor in stocks is not hitting that. So-

Matt Mulcock:
I’m sorry. Don’t tell me what your buddy’s done for the last 18 months. Come back to me in 30 years and tell me how he’s done.

Ryan Isaac:
You got to talk decades.

Matt Mulcock:
Yeah, the only thing that matters really with an investment strategy is having one that you can stick with.

Ryan Isaac:
Yeah, it’s true.

Matt Mulcock:
So I’ll be honest, I don’t really… When people come to me, like, “My buddy is doing this in the last 18 or 24 months,” I’m like, “I’ll be honest, I don’t care. Tell me what they’re doing in 30 years from now.”

Ryan Isaac:
A longer timeframe. Man, this went so long. I don’t even know what we’re going to cut out of this honestly because I feel like this is just-

Matt Mulcock:
All my rants. All of my rants.

Ryan Isaac:
No way. This is needed. Again, we just want you to get… We want you to actually get what you need before we chase all the stuff that we want just so that we protect all the investment you’ve made as a dentist. There’s some tried and true ways that are like… You can’t use the word guaranteed, okay? Because the world might end and there might not be real estate or stocks one day. I don’t know.

Matt Mulcock:
And I think legally, we can’t say guaranteed or something. I don’t know.

Ryan Isaac:
Look, there’s some paths you can take that it just mitigates your risk a lot and increases your likelihood of achieving some pretty good expected long-term returns. Here’s the thing I wanted to say about alternative investments though, that our clients do participate in. I mean, I think it actually would be kind of fun to anonymously go through a list of some of the… There’s some pretty wild things that clients have done, but I want to just say that in the world of alternative investments, some this more complex, maybe sexier stuff that people envision or hear about, you need to know that it’s legitimate. It’s a gigantic world. It’s out there. But we’re not talking about 20 grand investments. We’re not talking about $100,000 investments sometimes.

Ryan Isaac:
Some of these legitimate alternative investing opportunities, funds, they require a lot of money upfront because that’s just the nature of them. Someone who’s raising money for a gigantic projects, private companies, new developments, they’re not looking for 10 grand from 1,000 different people. They want $500,000 buy-ins upfront. They want $1 million buy-ins. I’m saying this from experience, having helped place clients in these things, having helped them research them, seek them out, vet them, say no to that one, yes to this one. They’re putting gigantic sums of money because even those big sums of money are still safe, small enough percentages of overall liquidity that it’s okay for them to pursue that increased risk. Increased risks, we’re talking about higher costs, less liquidity, less transparency, more volatility-

Matt Mulcock:
More volatility, and more likely-

Ryan Isaac:
… more [crosstalk 00:38:53].

Matt Mulcock:
Oh, sorry. Go ahead.

Ryan Isaac:
Well, no, more of a chance to lose all of the money. Not like stocks where they go down for a little bit, then go back up. A chance to lose all of the principal permanently. Like permanent loss of capital is… That likelihood increases the more you venture into these things. So I just wanted to point that out. Yes, this stuff does exist and there is a time and a place for it. But it’s not like while you’re still trying to build a practice and there’s 100 grand in the bank and you still need to buy a house or move or something.

Ryan Isaac:
I guess, and I’m thinking of a few clients in particular who have… They might say, “Well, I found some unique,” let’s say, “real estate opportunities were I pitched in 25 grand into this group and it was a good return.” Yes, that stuff does exist. What I’m just trying to illustrate though is most of the legitimate opportunities for private equity, venture capital, private real estate, private lending, solar, land development, technology, app building. Most of the legitimate opportunities are not looking for 5 and 10 grand or 20 grand or even 50 grand.

Matt Mulcock:
Even 100 grand.

Ryan Isaac:
Even 100 grand.

Matt Mulcock:
[crosstalk 00:40:07]-

Ryan Isaac:
So if you’ve got… Even if you’ve got $500,000 in a brokerage account, in an investment account, which is applause. That’s huge. That’s a big deal. It’s a lot of money. You can’t take $100,000 of it and chase a solar project or an app development. You just can’t do that responsibility. That’s my opinion. We might disagree. That’s fine. But as a fiduciary, I just couldn’t see that being a responsible move. I also want to point out that, yes, they exist, but barriers to entry for legitimate opportunities are much higher than most people will expect. If you’re in the early stages or even middle stages of building a practice, it’s just not… It’s not going to come up in a conversation because I’m not thinking about, hey, you should check this out because it’s not on the radar. You shouldn’t. That’s my opinion.

Matt Mulcock:
My thing too on that is don’t use the exception to prove the rule.

Ryan Isaac:
Yeah, good call.

Matt Mulcock:
Or act like this exception means that it’s the rule. Once it happens-

Ryan Isaac:
Yeah, one time I knew a guy who did this and then-

Matt Mulcock:
Exactly. Someone’s probably out there right now being like, “Well, I heard about this one time-”

Ryan Isaac:
Yeah, that’s happened. Yeah.

Matt Mulcock:
“… my buddy put in $10,000 into Bitcoin 10 years ago-”

Ryan Isaac:
$10 million.

Matt Mulcock:
“… and now he’s worth millions of dollars.”

Ryan Isaac:
Which dang it. Yeah.

Matt Mulcock:
Awesome. That’s great. That doesn’t mean it’s a sustainable strategy and that’s an exception that does not prove the rule. To your point, the rule is… The guideline is you can’t, I loved what you said, you can’t responsibly advocate for that as a sound strategy.

Ryan Isaac:
At that time.

Matt Mulcock:
Taking these fliers-

Ryan Isaac:
At that time.

Matt Mulcock:
At that moment in your life.

Ryan Isaac:
Yeah. At that time.

Matt Mulcock:
I guess, my final word on this, and I won’t rant it out, is there is a time and a place for alternatives. We are not anti-alternative. Again, we’re just… The same thing with real estate. We’re not anti-real estate.

Ryan Isaac:
Yeah, no, I don’t believe there is a right way. I’ve already said that. I say that all the time.

Matt Mulcock:
There is not a right way to do this.

Ryan Isaac:
There is not a right way. Let’s explore anything.

Matt Mulcock:
We are a pro thoughtful and intentional wealth building. That’s what we are a pro. There is ways to do that, like you said. There is multiple ways to do this. We’re not saying there is a right and a wrong way. But our path for our clients generally comes in steps that maybe sometimes where people feel like they take too long. Again, mistakes are generally made, massive mistakes, by the way it can happen instantaneously where progress takes a long time-

Ryan Isaac:
Long time, yeah.

Matt Mulcock:
… and those instantaneous massive destructive mistakes usually can be boiled down to you’re trying to accelerate the process.

Ryan Isaac:
Yeah, wrong time. Yeah.

Matt Mulcock:
You’re trying to skip steps. I’ve seen it so many times. Trying to skip steps usually leads to a lot of heartache, a lot of stress, and a lot less money.

Ryan Isaac:
Man, thanks for all the thoughts. This was long. I feel like we could just keep talking about this. Bottom line, we just want you to be safe and happy and protect that.

Matt Mulcock:
The two hour special.

Ryan Isaac:
Yeah. Just protect that practice, man. I mean, I just can’t say that enough. I will do anything to help someone to protect it.

Matt Mulcock:
And take a step back every time you’re thinking about this. Just take a step back and think, “What’s driving this? What’s driving this decision?”

Ryan Isaac:
Yeah, why? Yeah.

Matt Mulcock:
No judgements. Just pure curiosity. That’s where I come from, that’s where we come from when we ask that-

Ryan Isaac:
Just purely curious.

Matt Mulcock:
… is what is driving this decision? Let’s pinpoint that first before we move on to anything else.

Ryan Isaac:
Yeah, and more often than not, when you ask that question, genuinely curious, just helping someone be curious, they’ll come to that conclusion. I mean, everyone’s mostly pretty smart and thinks through things. If there’s just enough time to slow down and ask questions, people will come to those conclusions. I also want to say that I… Because I want this for myself, so I want to say this that I want for my clients, I want people to do what you want in life. I want you to pursue passions and interests and hobbies. I really want you to. Because I want that for myself too. But for example, I learned to surf at 40 years old. I’m not going to stop being a financial advisor and put that in jeopardy in order to pursue my surfing career. Because I ain’t got one.

Matt Mulcock:
We calling that a career?

Ryan Isaac:
It never happened. But on the same token, I wouldn’t want a side interest or a side project or a hobby to interfere with your ability to run a dental practice for a couple decades or a few decades-

Matt Mulcock:
And build predictable wealth.

Ryan Isaac:
… and build real, predictable, safe wealth. I just wouldn’t want that to interfere. So let’s just, like you said, Matt, let’s find a way in the right timing responsibly to incorporate stuff that you want to do that you might not need to do. You don’t need some of these things. But if you want them, let’s just find the right time and place to participate in them safely so you can explore that, have that outlet, but also not jeopardize anything else that really, fundamentally, at the core, matters.

Matt Mulcock:
Yep. Do not sacrifice what you currently have for what you don’t really need. That’s Morgan Housel for you.

Ryan Isaac:
We’re going to end that.

Matt Mulcock:
Do not sacrifice-

Ryan Isaac:
Was that Housel?

Matt Mulcock:
It was Housel. Don’t sacrifice what you currently have for what you don’t really need.

Ryan Isaac:
Of course, it was Housel. We’re going to end on that.

Matt Mulcock:
He’s the best.

Ryan Isaac:
Thanks for joining us, guys. This is a long one. I hope you made it. If you have any questions, if you have pushback, if you have other opinions on this, tell us. Let’s talk about it and would love to hear from you. If you have any questions-

Matt Mulcock:
Hey, we’ve had some people go on Facebook and come at us hard.

Ryan Isaac:
Yeah, I love it.

Matt Mulcock:
Honestly, we love it. We really do.

Ryan Isaac:
No, it’s good feedback, man. It’s good-

Matt Mulcock:
The whole reason this whole world works, the whole market works is because of diversity of opinion.

Ryan Isaac:
Diversity of opinion.

Matt Mulcock:
So keep them coming.

Ryan Isaac:
Keep it coming. Dentist Advisors Facebook Group. Post something there. If you have a topic you want us to cover, another point of view you want us to cover, someone you want us to interview… If you have suggestions for interviews, that’d be kind of cool. Who’s an expert you would love to hear from on what topic? Let’s get them on the show.

Ryan Isaac:
If you want to chat with us, go to dentistadvisors.com. Click on the book free consultation link. Let’s have a chat. Matt, thanks for being here.

Matt Mulcock:
Thanks, Ryan.

Ryan Isaac:
Thanks all of you for listening and we’ll catch you next time. Bye-bye.

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