Feb, 2024

Win At Wealth! Expert Teaches Financial Terms & Formulas

Financial Terms - Money Investing Education Do you want to win at wealth, but financial lingo confuses you? Learn the glossary of money words from wealthy investor Rob Rowsell. Sit under Rob’s learning tree! Find out how to make smart investments that apply these financial terms and formulas.

Financial Terms For Wealth Wins

Rob jumps right in explaining financial terms and outlining his wealth glossary. The definitions, as well as useful formulas, are outlined below.

Net Worth

Simply put, your Net Worth is the measure of everything you own, minus everything you owe. The net worth formula? Assets minus Liabilities equal Net Worth.

Income

Rob groups Income into two categories: Active Income and Passive Income. He defines them as follows:

Active Income

W2 Income, 1099 Income, and Active Business Income are types of Active Income. Basically, if you work directly to earn money, we classify it as Active Income.

Passive Income

Rob defines Passive Income as money earned without directly working for it. Capital Gains from the sale of one of your assets is one example. Appreciation of one of your assets also counts.

Passive Residual Income

Some refer to this as Horizontal Income. Passive Residual Income could mean dividends from investments, rent paid from your properties’ tenants, or royalties earned from Intellectual Property. Regardless, this can be an outstanding income source, and one everyone should seek out, since it is literally mailbox money, arriving regularly in your account.

Financial Terms Continued: Vitality Factor

Rob then tells us about the Vitality Factor. This is formula is hugely important to understand in the financial world. In order to arrive at your Vitality Factor, you add your Personal Expenses to your Deductible Business Expenses. These factors add up to produce your TRUE Cost of Living, before subtracting taxes and charity contributions. An example of deductible business expenses for Rob is auto repair. When Rob owned several auto repair shops, he could write off his own automotive repair expenses. However, now that he has sold the businesses, those expenses are solely personal.

Horizontal Income Score

We talked about Passive Residual Income earlier, also called Horizontal Income. The Horizontal Income Score is a formula to best measure your ability over time to convert your Net Worth to your ultimate goal, Horizontal Income. When you divide your Horizontal Income by your Net Worth, you get your Horizontal Income Score. For example, you currently have a Horizontal Income of $100,000. Your Net Worth is $1 Million. When you divide those numbers, you arrive at a score of 10. That’s a great score, and it’s twice the average! The higher the number, the better. Remember, do your homework and exercise your advantages to reach your ultimate retirement scenario, Passive Residual Income.

Nest Egg Theory – Financial Terms Part 1 Concluded

Rob talks about the Nest Egg Theory a lot. This concept powers the most common retirement plan people subscribe to. This defines freedom as a number, specifically a big bag of money that we are filling up via our 401k’s and other retirement plans. Rob reminds us of the very real fear hiding behind this theory that we may live long enough that the money will run out, and we will have to return to earning w2 Active Income in our old age. This is why we work over time in order to invest our Active Income gains into sources that will generate passive mailbox money in our twilight years.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!

Dec, 2023

Winning the Money Game, Act 1: Earning Active Income

In this 4-part mini-series “Winning the Money Game”, Rob Rowsell details the start of the journey: earning active income, so you can then start investing said income. It’s all about you! Learn how to maximize your personal earnings, reduce your taxes (legally!), and control your personal expenses, and you’re on your way to winning the money game.

Earning Active Income – The First Step to Winning the Money Game

Rob kicks off the Money Game discussion by laying out three components to earning active income. These include maximizing your personal earnings, reducing taxes, and controlling personal expenses. When you all all of these factors up, they equal a surplus of cash to invest.

Maximize Personal Earnings

On your way to winning the money game, it’s no secret that you need to start small. Remember what your grandparents told you when you got our first job? It’s not what you make, it’s what you save! Well, it can often seem impossible to save and invest when you’re not making much. This is a tough economy, but there are many strategies to maximize your personal earnings in order to invest more. Whether you own a business or earn a W2, you are earning a regular check and can find ways to save a portion of it.

Legally Reduce Your Taxes from Earning Active Income

Money saved on taxes is an income stream! There are many legal ways to reduce your taxes owed, whether through deductions, business expenses, or other expert methods. If you’re not regularly meeting with your CPA, start now. Maybe you have reached the level where your CPA is no longer helping you, and you’ve outgrown them. Investing in a CPA who specializes in high income business owners will pay back dividends when they implement these strategies. Rob has learned firsthand in the real estate sales industry how to take advantage of tax benefits most business owners don’t know about.

Control Your Own Personal Expenses

Another phrase seemingly lost to time with our elders is live within your values. Capitalism is so refined in 2023. Every screen you turn to sings a siren song to you. Buy this, it’ll make you happier. You deserve it. When you have climbed the income ladder to the point where you can actually afford those things, it’s easy to give in. Living within your values is another income stream. If your truck is still running great at 150,000 miles, it will probably still run great at 200,000 miles. Trade secret: you’re happier with a vehicle when it’s paid off! This goes for appliances and mortgages, too!

The End Goal of Earning Active Income: Surplus Cash To Invest

Act 1 of winning the money game may be the hardest. Earning active income from a W2 or business owner wages may not yield enough on it’s own. If that is the case, you must explore your tax advantages and tighten your spending belt. You won’t regret the dividends you earn years down the line if you invest the surplus cash it generates.

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Jan, 2023

Bathtub Analogy – Income Streams Ideas For Business Owners

Rob paints a picture of a bathtub for our group members. The faucet has several income streams ideas coming from it. Rob lays out several examples of passive and active income. The “nest egg” plan of the IRA isn’t the best retirement investment plan. If you combine regular passive income and other investment strategies, along with your 401k, then you have a solid plan.

Income Analogy – Passive and Active Income Streams

Once the attendees draw up the bathtub running the income streams, Rob has them make blanks below with “active income” and “expenses” headings. He then lays out several categories of income sources by how they are taxed. W2, rental, capital gains are all different examples.

Active Income

Rob starts the discussion on active income by clarifying that the term could have different meanings to different real estate investors. To him, active income streams are defined by investing more than ten hours per month into them.

Active income streams obviously include conventional 9-5 jobs taxed with a W2 tax form. If you invest in rental properties, and do not employ a property manager, this investment is likely qualified as active income.

Passive Income Streams

In Rob’s businesses, spending less than ten hours per month on an investment qualifies it as passive income. For example, you could buy a plot of land, do nothing with it for over a year, then sell it. Whatever profit you make is passive income, since you put no work into clearing the land or building a property.

Passive Residual Income

Finally, Rob details passive residual income. He provides the example of investing in a single family home or apartment complex. The owner may not spend much time on maintaining the property, but it is a consistent, passive source of income.

Passive Residual Income Streams For Retirement

Rob goes on discuss passive residual income streams as part of a retirement strategy. Most of us contribute to an IRA account for our retirement plan. Ideally, you sock away enough money to live off of during your golden years, drawing a necessary amount each month.

He does not subscribe to this “nest egg” theory. The passive residual income streams of his properties, as well as interest from his retirement investments pile up to cover his living expenses. In the end, the main goal is passive income streaming in each month to provide security when he can’t, or just doesn’t wish to, work full time hours anymore.

Lastly, Rob provides the example of a business owner who owns a successful laundromat. It does much more business than its competitors. Rather than using the extra cash to educate himself and create passive income streams, he just spends it on a more lavish lifestyle. When he feels ready to quit, he sells the laundromat, and has a bag of money to retire on. This may or may not suffice to maintain the lifestyle he is used to. Without the passive residual income to supplement the money from the sale, his future is uncertain. He could outlast the nest egg and be a burden on his loved ones.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!