DON’T Save Your Money (with Marko of Whiteboard Finance)
As Robert Kiyosaki says, savers are LOSERS! How does the rapid inflation in 2021 really affect people who want to save their money? And how can they smartly invest it instead? Join Ken McElroy and Marko of Whiteboard Finance in a discussion about 2021’s rapid inflation and how to hedge it all with investments.
Ken McElroy:
Hey everybody. It’s Ken McElroy. I am here with my buddy Marco and he’s got the white board finance show. And so, Hey Marco, how are you?
Marko Zlatic:
I’m doing well, Ken, how are you doing?
Ken McElroy:
So if you guys haven’t seen his stuff, he’s got 600,000 followers on YouTube. He does all kinds of great stuff on, on how to save money. He’s got a commercial real estate background. So when we met personally at George Gavin’s birthday party, uh, we just talked all about real estate deals, which was obviously I loved, uh, but also he’s got to take it to a whole different level that he talks about Bitcoin and all kinds of, you know, real, uh, stock investing, but also inflation. And I know you had an incredible, uh, video the other day that you did on Michael Barry’s predictions. And if you guys don’t know who Michael Barry is, he’s the guy that is in the big short he’s the guy he, he made, what 800 was the $800 million or something.
Marko Zlatic:
Yeah. His firm made 800 million. I think he personally banked like a hundred, 200 million off that
Ken McElroy:
Crazy. So, so this is the guy that kind of predicted that. And uh, so you guys really need to watch that video too. I watched that one. It was a great, great video as a Marco. Thanks for educating people. Thanks for being on the
Marko Zlatic:
Show. Yeah, I appreciate it. Thank you for having me on Ken.
Ken McElroy:
Sure, sure. So, as you guys know, uh, I do a lot of stuff with Kiyosaki and Robert was at the same birthday party and, and so all of us huddled together, you know, we had mark, mark boss there, we had George there and we had Robert there. You and I, and we just sat in the back, just talking man about all kinds of stuff. And one of the things that Robert says a lot is savers are losers and, you know, not all savers are losers, but can you explain what he’s really saying there? Who is and who isn’t and, uh, cause it’s basically, this is the topic that we’re all chatting about.
Marko Zlatic:
Yeah, absolutely. So I have a couple of videos on my channel literally say literally titled saving money is losing you money in 2021. Uh, the reason for that, the premise is basically everyone knows now that you know, the us dollar, it’s not really backed by anything. Uh, we can talk about what it’s backed by, but I’m not going to go into that on this podcast. Uh, but basically it’s Fiat, right? It’s an inflationary monetary system. However, the rate of inflation is outpacing the rate of savings, right? So if I have a just call it a a hundred thousand dollars in a savings account that may be earning me what 0.4% in a quote unquote, high yield savings account. And I say that with air quotes with high yield, but you know, the rate of inflation, as people may know, historically has been anywhere from about one and a half to 3%. But a lot of people are saying other numbers otherwise, which is a lot higher than 3%. When you look at like healthcare costs, real estate, things like that. So the premise is, is that savers aren’t losers. I’m not making fun of people, literally calling them losers. I’m saying that they are literally losing money by saving money instead of investing it. Yeah.
Ken McElroy:
Yeah. So, and if you go back and look, there’s, I would encourage you guys to go Google this, you know, go, go take a look at the strength of the U S dollar and there’s all kinds of stuff on this. And you know, you guys, I mean, I know, uh, you know, my, uh, my, my, my, my, my dad had this insurance policy when he, when he died and, um, you know, and we’re, we’re, we’re checking all this stuff out. And, and I remember him saying, he’s like, Hey, uh, you know, your mom’s taking care of, you know, and I’m like, okay, great dad, great. You know, as a kid, you don’t really dig into your folk stuff. So we pulled it out. It was 10 grand, you know, and, uh, you know, he’s from Iowa. And he had bought it years ago back when he was in the military. And, you know, in his mind it was, but it didn’t what happened was it, it did not, um, you know, it did not meet with inflation. You know, it was 10 grand back then, which was a lot of money, you know, the fifties and, and, uh, you know, but in obviously in the two thousands, it wasn’t, and that was all basically inflation. And so people don’t realize if that could have been $10,000 sitting in a, in a, in a, in a desk, same issue,
Marko Zlatic:
Right? Yep, absolutely. Yeah. When you look at the old school perspective of stuffing cash in your mattress or in the drywall, you know, um, that stuff is not only getting neat in a way by, uh, mice and bugs, but it’s literally the purchasing power is literally being eaten away by inflation. And
Ken McElroy:
So that’s what we’re talking about guys. And so can you talk to them about what inflation is and why it matters because it’s going to be here, it’s actually going to get worse. I believe we all believe you cannot throw this much money, money, by the way, in one of your videos, I saw that they stopped reporting M2. Is that right?
Marko Zlatic:
Yeah. So the way, so not completely, but yes, the way that you, and I know it, if you go to like the St Louis feds website, you can check out M one and M two, which is basically, you know, the money supply, you know, it’s the money supply in the system. If you want to look at it that way for layman’s terms. Um, you know, especially if you look at after, uh, quarter one of 2000, uh, 2020 after, you know, surveys, the sickness, it’s literally just like a hockey stick, they just put in trillions. Um, but yeah, to answer your question, you know, inflation, you know, typically the federal reserve has targeted 2%. Uh, that’s kind of the sweet spot when it comes to employment and, you know, a economic activity and things like that. Um, however, to your point, you know, with all this introduction of new monetary units in the system, that is literally the classical definition of inflation is just simply introducing more monetary units into the system, which we’ve done trillions of over the past 12 months.
Marko Zlatic:
So at some point I feel like the game of musical chairs has to stop. I’m not going to say it’s going to be, you know, why Mr. Germany with people with wheel barrels, taking wheelbarrows of cash, going to the store to buy bread and cheese. Um, but we have seen inflation and asset prices such as stocks. You know, stocks are at an all time high real estate is at an all time high. Um, if you look at cities like Toronto, for example, almost an entire generation of millennials and gen Z, they’re almost priced out of the entire Toronto housing markets because of how expensive things have gotten. Yeah. And
Ken McElroy:
By the way that that’s happening all over, uh, you know, as you start to look at it, I was in park city, Utah last weekend skiing, and same thing, you know, uh, you know, the prices and a lot of these little quarter lane, Idaho, which is where I have a home, all that stuff, all of a sudden, you know, that entry-level is pushed way up. It’s not a good thing.
Marko Zlatic:
Yeah. I think it’s a perfect storm of low interest rates. Um, high demand, low supply, uh, demographics, such as baby boomers, not really selling their place right now. They’re kind of staying in their forever homes. And there’s just really a shortage of supply if you will, with a lot of money in the system. So it’s, you know, it’s a perfect storm of prices having to go up. Yeah, it definitely is.
Ken McElroy:
So now we’re going to take a quick break and we’ll be right back with Marco from whiteboard finance, right after this.
Ken McElroy:
Welcome back, Marko. Also, let’s right into these low interest rates because, you know, obviously that’s been driving up some of these prices. We just kind of talked a little bit about that. And we’ve been told that these rates are going to be around until 2023. And you know, how, how are these tied to consumers behavior?
Marko Zlatic:
Yeah. So if you think of interest rates is just the lever. Think of it as just a lever. It’s like the federal reserve saying, Hey, um, economic activity is going great. You know, let’s raise rates, let’s slow things down. Uh, think of it. You know, if you’re a business owner you’re less likely to borrow money. If you’re a consumer you’re less likely to borrow money or go into debt because rates are higher, the cost of borrowing capital or money is higher. Now, if you look at it at the opposite end of the spectrum, when you lower rates, um, it’s much easier to borrow money in order to spur economic activity. And it’s much easier for the consumer to spend money or to borrow money on credit. Um, because interest rates are lower making that money cheaper to borrow. If that makes sense. So if you just think of it like a big lever, that’s almost what the federal reserve does by changing interest rates up or down. Right.
Ken McElroy:
I mean, we’re both commercial real estate guys too, with that kind of background. And so we’ve seen that firsthand when, you know, when, when rates go up, then the amount that they give you goes down and so therefore your down payment goes up and therefore your returns go down. Right. So it’s interesting as, as these rates kind of come out, I don’t see how the, I mean, do you see the, these, these going up? Because the only thing it could do is slow down the year economy,
Marko Zlatic:
Right? Yeah. I agree. Um, if you look at like countries like Japan, they’ve had pretty much negative interest rate policy or zero interest rate policy for 20, 30 years now. Um, to answer your question, the last time the rates went up was I believe December of 2018 or the summer of 18 and the stock market basically just crashed. And that’s when they lowered rates basically two, three months later, right after that. And then when you have everything that happened with Corona, um, that’s when we went back to Europe, which is zero interest rate policy, making everything flat. So basically the federal funds rate, which is the rate at which commercial banks get their money lent to them from the fed at a was zero. And then they just kind of, you know, Hey, Ken, you want a mortgage here? You can get it at 2.4, 9%. They make the difference on that spread or that arbitrage.
Ken McElroy:
Yeah. And then he, that’s why it’s a great time to borrow good debt. Yeah. It really, really is, you know? Um, so, so why do these, uh, interest rates, uh, creating, uh, some inequality in the wealth? You know, they’ve been throwing around this, I love this term, the K shaped recovery, by the way, I just did a video on this. It’s going to be coming out, but like, I’m like, okay, well, K shape. Like that’s a new one, you know, I’ve heard you, I’ve heard V I’ve heard w you know, but K means that somebody below it, you know, and obviously to be above that, you know, on the high side of the K is a good thing, but you know, let’s talk a little bit about that because when talk about the K shape recover, they’re just leaving half the economy behind.
Marko Zlatic:
Yeah. So I think that, uh, the federal reserve is a big, um, uh, how do I say it? It’s, it’s forcing wealth inequality because of their monetary policy. And the reason I think that is because for the people who have assets, let’s just say you have, you know, multiple rental properties. So you have a nice primary residence that you own. You have a bunch of money in stocks, you know, things that have historically gone up and rates are low. Um, those are the people benefiting from a low interest rate environment right now, the people who are living paycheck to paycheck. Let’s just say someone working at a fast food restaurant making minimum wage, right? These are people typically leaving, uh, living hand to mouth week to week. You know, they pay all their bills. They work another week just to be able to feed that cycle.
Marko Zlatic:
Well, these people typically rent, you know, they typically don’t own assets such as stocks or real estate, things like that. So they’re basically getting the last of the Fiat money, which is being depreciated because they’re introducing more and more into it, into the system. And it’s an inflationary system, meaning that a dollar tomorrow is worth less than a dollar today. So the people that own assets are the ones that are benefiting from the inflation, the people that don’t own assets, which are typically in more poverty stricken areas and low income, those are the people that are getting hurt by this monetary policy. If that makes sense.
Ken McElroy:
Makes total sense to me. I remember as out of university, I started site managing property and, you know, as I was paying for rent and, you know, getting student loans and all those kinds of things, and I remember the owner came in one day of the property I was managing and he was like, good job, man. Good job. And I handed over the rents to him, you know, and I’m like, I’m on the wrong side of the desk. Right. You know, like I want to be the guy that owns the asset because, you know, I’ve collected all this money, handing it over to him, he ran to the bank and, and I’m like, man, like you’ll how do I be that guy? Right. Yeah. And that’s yeah.
Marko Zlatic:
The other side of the table. Yeah, absolutely. Yeah. You want to own, you want to own the tangible assets now? Um, I don’t know if you want to take the conversation this direction, but sometimes digital assets are becoming, uh, just as, uh, they’re appreciating just as much, if not more as physical, tangible assets. Right. They
Ken McElroy:
Are. I’d love to talk about that. If you, if you have a moment, you know, um, is it NFT? Is that what it’s called?
Marko Zlatic:
Uh, yeah. So NFTs, I’ll be the first one to admit I’m not an expert on it, but I think it’s definitely frothy. Uh, there’s a piece of art that just sold for, I don’t know, I think like 70 million or something like that, 62 million and it’s literally just a JPEG, you know, that stuff. I I’ll be the first one to say, I don’t understand. Uh, but, uh, with the rabbit hole that I have gone down over the past couple of years is Bitcoin. Um, and I know that your friend, Robert Kiyosaki is a big proponent of Bitcoin as well as precious metals. Um, and I think that Bitcoin is almost like digital gold that has a lot of the same properties as physical gold, except, you know, you can send it to anywhere on earth, as long as there’s an internet connection. Right. So it’s a much more, um, uh, it’s, it’s, it’s an easier, uh, type of currency to transact in rather than precious metals. But, uh, I think, you know, I’m a big proponent of Bitcoin. I was, I believe 12 and a half percent of my net worth right now is in it, uh, it used to be much lower, but when you see everything that’s been going on in the last 12 months with all the unprecedented monetary policy and just, you know, the way society is going, um, I think that, you know, with technology being the way it is in 2021, I think Bitcoin is may potentially be the future. Yeah,
Ken McElroy:
You could be right. Just last night we saw that, uh, Elon Musk said you could buy a Tesla with Bitcoin that just came out. I was like, wow. Yeah,
Marko Zlatic:
The more important part there, Ken is, there’s two tweets, the one where he said, you can buy a Tesla with Bitcoin. But the tweet after that was where he said, we run our own nodes and we’re not, we’re not transacting that are not converting that Bitcoin into Fiat. They’re just keeping it as Bitcoin on their books. So that was actually the more important tweet of those two. I think it means that he’s a very forward thinker, you know? So it means to me that him and people like Michael Saylor of CEO, of micro strategy, a publicly traded company, um, they’re buying, they’re taking their cash treasuries, their Fiat treasuries their dollars, essentially. And instead of buying bonds or buying back their own stock or using it in other ways, uh, they’re buying Bitcoin and keeping on their balance sheets. So to me, these are two very smart people. And I think inevitably other companies will follow such as a square like Jack Dorsey, the CEO of Twitter, uh, square has added, I believe 50 million or a hundred million of Bitcoin on their balance sheet. And then you start to see other merchants like PayPal and other people that are allowing you to transact in Bitcoin and hold Bitcoin. So, um, I think it’s just the tip of the iceberg. I really think Bitcoin is email in 1996 right now. It’s still very early.
Ken McElroy:
Well. Yeah. And, and, you know, we kind of touched on this, but you know, again, savers are losers, you know, and they’re not specifically losers, but, but if they take all that in cash and they have it in cash, then it is at the depreciating asset. Yeah.
Marko Zlatic:
Yeah. The, the analogy, oh, sorry to interrupt Ken real quick. The analogy that the analogy that Michael Saylor uses a CEO of micro strategy, he says that his cash is literally just a melting ice cube on their balance sheet. Um, you know, he feels like, you know, it’s just melting away. So, um, he feels that Bitcoin is one of the greatest savings technologies ever created. Um, it’s this sounds crazy just listening to this, but once you actually go down the rabbit hole and really understand the technology behind it, um, it really is a beautiful, decentralized savings technology that can’t be debased such as the federal reserve is debasing, you know, your hard work, my hard work by printing trillions of dollars overnight. So, right,
Ken McElroy:
Right. And by the way, we’re not advocating you guys go out and buy a bunch of bit. No, no, no, no. Do your own research, but you, but when, when guys like Elon Musk say, listen, we want to keep it in Bitcoin. That’s a big statement.
Marko Zlatic:
Absolutely. Absolutely.
Ken McElroy:
That means that he believes it’s going to go up.
Marko Zlatic:
Yeah.
Ken McElroy:
So we talked a little about what, uh, uh, about, uh, how people can do those kinds of things to build their own wealth in this new environment. Do you have any other things other than some of that digital?
Marko Zlatic:
So you, you may not like this, I don’t know your personal portfolio obviously, but you know, a famous quote is, you know, just like stop, just shut up and show me your portfolio. Right. Because that’s what you really believe in, you’re voting with your dollars. Right. So I don’t know what you invest in. I know you’re obviously, you know, very focused on commercial real estate, but for me at this point in my life, um, I recommend everyone just look at their finances as a pie, right? And for the people watching the video version of this, I’m kind of just holding up my fingers, making a circle. If you look at your entire net worth as a pie, I always assign certain weights to each one of my asset classes. So I’m not going to be, you know, like Donald Trump, for example, who made a majority of his income from real estate.
Marko Zlatic:
Um, I’m not going to be laser focused on one product type at the point in life that I’m at is I want to have a well balanced portfolio. So if any of those pieces does go to zero, I can still sleep at night, right? I’m not completely leveraged in one asset. So to answer your question in terms of building wealth, I think that everyone should have, um, early on in their early income earning years, be laser focused on something very specific that, that gets them, that bigger shovel and gets them that bigger income. But once you start, you know, making accumulating a lot of money, you want to start to diversify that intelligently. So what I do is I take certain assets, let’s call it real estate, precious metals, stocks, bonds, you know, whatever it is. And I sign a certain percentage to those things. And I know when I’m either overweight, underweight or at the right weight in my portfolio or my net worth. And that way it keeps me disciplined. And it keeps me from a full mowing, like fear of missing out. And some certain things like, oh, you know, a Bitcoin went to a hundred grand. I got to buy three Bitcoin right now. Right. So it keeps you disciplined and it keeps your portfolio in check if that makes sense. Yeah. Yeah. Well, it does.
Ken McElroy:
Cause I, I, I, one of the things that you said, which I actually wrote down is that, you know, that you have 12 and a half percent in Bitcoin. Yeah. And so that’s the point, right? Like you figure it out, what makes sense for you and, and you, you work toward those percentages.
Marko Zlatic:
Yeah. Yeah. For me, if Bitcoin goes to zero that’s 12, 12, and a half percent of my net worth, I can still sleep at night. No big deal. Right. Um, I’m sure, you know, this firsthand after 2008, a lot of real estate developers, you know, they’re very cash, poor, you know, over leveraged that kind of a thing. Um, just because that’s the nature of the business. And a lot of them went belly up after 2008, a lot of banks called their loans when they weren’t even do, you know, it’s just, it’s, I’m just trying to stay away from that stuff. Cause I’ve seen it firsthand. I’m sure you have as well. You have the battle scars. Well, cause
Ken McElroy:
Yeah. Cause obviously, so what we’re recommending here is a little bit of digital, a little bit of physical. Yeah. I have a lot of physical gold, physical, silver. I have, you know, real estate, you know, I have, uh, obviously investments in, in a number of other things. And so, so how do people decide how to allocate that? Do you do 12 and a half percent all the way around or, uh, you know, what do you recommend?
Marko Zlatic:
Yeah, that’s a great question. So it should definitely change depending on your age and also what stage of life you’re in. Um, so someone who’s, you know, 80 years old, their portfolio and their percentages is gonna look much different than me who’s, you know, in their early thirties, for example. So I think there’s major milestones is one is when you get your first big boy, big girl job, you can be more risky, kind of like in your late teens, early to mid twenties, and then the next stage in life, when you get married and want to have kids, if you choose to go that route, that should change it a little bit. And then also, you know, when you get into retirement age or forties, fifties, sixties, obviously it’s going to change then. So, um, th the reason I chose my percentages, like let’s take 12 and a half percent in Bitcoin, for example, is that simply my sleep well at night, uh, thesis.
Marko Zlatic:
Okay. So what I mean by that is if it goes to zero, I can still sleep well at night. I don’t care. Um, you should be your only exposure it should be, or your position size should be whatever allows you to sleep well at night. Okay. And it’s okay to take risks early on, because you have so much more time to make up for those losses, if you do incur them. Um, so it’s nice to be risky upfront, but once you get into, you know, sixties and seventies, eighties, you know, retirement age, obviously you should dial that back a little bit. Yeah. Uh,
Ken McElroy:
Because the reason why I ask that is I have a really good friend. That’s a doctor that has, you know, has massive student loans. I think it’s close to $400,000 in student loans, you know, to, to be a doctor it’s just horrible. And so they can’t get behind it. And so believe it or not as a doctor, they weren’t able to buy a home yet. Like, because they’re kind of anchored to this student debt. What they’ve done is they put a ton of money in Bitcoin. And because it’s gone up so much in the last few months, you know, they’re like, see, you know what? I’m like, I’m like, listen, please, you know, just be careful. Uh, you know, I’m not seeing, I hope it goes up for you and I hope you could pay off all your dad. And I hope, you know, everything works out for you, but that’s, that’s kinda what you’re talking about. Right. Cause they’re like going all in.
Marko Zlatic:
Yeah. If your position size is too big, um, you know, you, you will know, you should just reduce that position to where it gets more comfortable to where you don’t have to check the price every, you know, 10 minutes. Like every time you go to the bathroom, people are checking Bitcoin price, you know? Um, so yeah, to, to kind of just reiterate the point is I think that, um, slow and steady wins the race later on in life. But in the, in the beginning, you have more ability to take on more risk and that’s when you should be hyper-focused on getting your income up as much as possible. Yeah,
Ken McElroy:
For sure. I told them, I said, listen, when I go to Vegas and I have, you know, I’ve won a bunch of money. I go, I pull my original investment off and now I’m just playing with house money. I go, then I’m good. You know, so if I, you know, if I got 10 grand out there and it goes up to 30 or 40 or whatever, I just pull that tends to get in my pocket. And I’m like, okay, so now it’s all house money. And if it goes to zero, I still got my 10. And that’s what I was trying to tell him, you know, he’s like, oh, well, it’s going to go to, you know what 80 I’m like, okay. Well, I hope you’re right.
Marko Zlatic:
Well, that’s so funny you say that. Cause my wife and I are the same way when we go to Vegas, we’re on the craps table, you know, it’s like, like say we put on a couple hundred bucks just for fun and have some drinks, whatever. And it hits, we’re like, okay, put the 200 bucks away, then we’ll let the money right off the table. Some of my investments, uh, some of my speculative investments, like let’s look at like AMC or GameStop or whatever. Um, that was fun a couple of months ago. Um, but you know, I made, you know, multiple hundreds of percent on some of those bets and I took my initial cost basis out immediately and just let the rest ride. So, um, I wasn’t really affected by what happened with like Robin hood and all that stuff. But yeah, I always try and play with house money when you can.
Ken McElroy:
And that’s what I do with real estate too. As you know, that’s a cat, that’s called a cash out refi, by the way, you know, and then once you have your cash back, you know, then the property or whatever it might be, you know, produces that passive income, or you’re just playing with house money, but you’ve got your original investment back. And I think that’s kind of the point here is, is diversify and, and, you know, invest wisely. Don’t, don’t put it all on blast. Yeah,
Marko Zlatic:
Absolutely. Yeah. If you want to get that rush, you can go to the casino. Right. Right.
Ken McElroy:
So, Marco, Hey, thanks man. It’s been some great convo. Great to see you again. I can’t wait for another trip out here. And when I get out to, uh, Ohio, I’m going to definitely look you up and, uh, I just appreciate your wisdom and your videos and all that stuff. So thank
Marko Zlatic:
You. Yeah, my pleasure. Can I definitely want to get you on my podcast or main channel as well. I love chatting with you. I love talking shop with you in Scottsdale. Um, yeah, whenever you’re up in Northeast, Ohio Cleveland area hit me up. Uh, I recommend coming in spring and summer, not in a winter time. Uh, so feel free, but yeah, if you guys want to check me out whiteboard finance.com, just wait for finance on YouTube. Thank you so much for your time.
Ken McElroy:
Hey, my pleasure, Marco. Good, good chatting with you.