Missed Fortune founder Douglas Andrew continues to emphasize the importance of liquidity to clients. Andrew learned his lessons the hard way, and through the concepts and strategies of Missed Fortune, he is now able to help others. Today, he speaks to Oceans2003.org about the value of leverage in building liquidity.
Oceans 2003: You have spoken in depth in the Missed Fortune books, workshops, and videos about the importance of having access to money when you need it.
Missed Fortune Founder Douglas Andrew: Yes, I learned early on that liquidity is the key to financial success. No matter where my money is, I want to have access to it when I need it.
Oceans 2003: Many people have lost quite a bit of money on investments and now have chosen to put that money in savings accounts. How do you feel about that?
Missed Fortune Founder Douglas Andrew: In 2008, quite a few people lost money on IRAs and 401(K)s in just one year. Many Americans lost as much as 40 percent.
Oceans 2003: Those people moved it to a bank account where they earn very low interest.
Missed Fortune Founder Douglas Andrew: Yes, in many cases, people who used to earn $60,000 a year are now earning only $6,000 a year. That’s why so many people lost their future and had to put off retirement. Missed Fortune is now trying to show those people that leverage is good.
Oceans 2003: What is leverage?
Missed Fortune Founder Douglas Andrew: Leverage is the ability to own and control assets with very little or none of your money tied up or at risk in those assets. This makes it possible to earn at least 100% greater rates of return.
Oceans 2003: 100% greater rates of return? How is that possible?
Missed Fortune Founder Douglas Andrew: As an example, if I separate real estate equity at four percent interest and I’m earning eight percent predictably, eight percent is 100% more than four percent.
Oceans 2003: Eight percent seems high. Where does someone find eight percent interest?
Missed Fortune Founder Douglas Andrew: Missed Fortune covers this thoroughly in our workshops. But briefly, if on a million dollars of real estate mortgages, I’m paying $40,000 in interest but I’m making $80,000 by staying liquid and leaving my money in an account that earns eight percent, I’m making 100% more than the cost of those funds.
Oceans 2003: That sounds like what banks do.
Missed Fortune Founder Douglas Andrew: Absolutely. Missed Fortune compares it to a bank, which borrows your money at one to three percent, they loan it back out at four to six percent, making 100% returns.
Oceans 2003: Even if an investor isn’t making 100% greater return on funds, you state in your Missed Fortune videos that you’d still recommend keeping those assets liquid.
Missed Fortune Founder Douglas Andrew: I’d do that just for the sake of liquidity, and that’s the theory behind Missed Fortune.
Oceans 2003: So leverage isn’t a bad thing when combined with liquidity?
Missed Fortune Founder Douglas Andrew: My belief is that leverage with liquidity is dynamite. It’s the lack of liquidity that gets people into trouble when they’re leveraging.
Oceans 2003: Thank you for speaking with us today, Mr. Andrew. Missed Fortune offers regular workshops, as well as online videos and books to help individuals leverage assets and remain liquid. For more information visit www.missedfortune.com