S02E60 Michael Ringel How should entrepreneurs invest their money?

S02E60 – Michael Ringel – How should entrepreneurs invest their money?

Michael Ringel – How should entrepreneurs invest their money?

If you’re an entrepreneur, you may be thinking you should put all your eggs in one basket. In other words, you should build your business and sell it for a big chunk of change. Unfortunately in most cases, that’s not how it works. In this episode, we talk about diversifying your income in stocks, funds, fixed income, and your own business. Please welcome Michael Ringel.

Payback Time Podcast

Payback Time is a podcast for investors. The goal of this podcast is to help make investing approachable and easy to understand. We will interview beginner and experienced investors and ask them to share stories on how they got started, what challenges they faced, what mistakes they made, and what strategy works for them today. The overall objective is to provide you with a roadmap that helps you become a better investor.

Full Episode

Key Timecodes

  • (00:39) – Show intro and background history.
  • (03:03) – When did he start investing in the stock market?
  • (05:28) – Understanding the math and science of investing as the key factor.
  • (06:41) – Why did he change his strategy in the ’90s?
  • (09:26) – Investing in individual speculative tech stocks.
  • (11:48) – The risk of bad advice from unreliable social media influencers
  • (15:32) – Deep diving into his strategies and principles for investing
  • (21:12) – Understanding his portfolio strategy.
  • (22:29) – What criteria does he use to choose companies to invest in?
  • (24:14) – The importance of research about companies and knowing the business
  • (25:38) – How to mitigate risks by understanding the business model
  • (26:26) – His tips for entrepreneurs building businesses
  • (30:40) – The importance of structuring service businesses to grow healthy
  • (33:29) – How to plan how to go out of business to retire or grow
  • (36:23) – The importance of structuring parallel passive income and diversified investments to achieve financial independence
  • (40:25) – The worst business or investment advice she ever received
  • (40:57) – The best business or investment advice she ever received
  • (45:42) – Guest contacts


[00:00:04.090] – Sean

Hey, this is Sean Tepper, the host of Payback Time and Approachable and Transparent podcast on business investing in finance. I’d like to bring our guests to hear authentic stories while giving you actionable takeaways you can use today. Let’s go. If you’re an entrepreneur, you may be thinking you should put all your eggs in one basket. In other words, you should build your your business and sell it for a big chunk of change. Unfortunately, in most cases, that’s not how it works. In this episode, we talk about diversifying your income in stocks, funds, fixed income, and your own business. Please welcome Michael Ringle. Michael, welcome to the show.


[00:00:41.640] – Michael

Oh, thanks very much. I appreciate it. Thanks for inviting me.


[00:00:44.690] – Sean

Sure. Glad you’re here. So why don’t you go ahead, kick us off and tell us about your background.


[00:00:49.510] – Michael

Sure. Well, I’m a recovering CPA, so growing up I was an entrepreneur. I had a lot of different businesses, and I love tracking my money. Right. So I had a lawn business, I had paper route business. I actually had a computer, an Apple two C in 1980. And I had a business where I went to local stores and got their mailing list. And I sat there as a kid typing in all the names. And when the store needed to do mailing, I printed the mailing labels for them because nobody had a personal computer at the time except me. So I had the entrepreneurial background. I went to school, learned and wound up becoming a CPA and realized that I really didn’t make a difference in people’s lives. It was just numbers based upon the past. So I went out and pursued my MBA from NYU, where I learned about the academics of investing, learned about entrepreneurship, and started a business with a couple of guys in New York in the 90s called let’s Talk Business. And what we did was we built support groups for entrepreneurs. It really was group therapy for business owners. I don’t know if you’ve experienced it, but most entrepreneurs, the number one issue that they have is they’re alone, they’re isolated.


[00:02:09.330] – Michael

Nobody talks to them about business issues or concerns, at least at that time. You work all day, you deal with the pressures of running and operating a company, and your spouse may be in a different industry and really can’t relate to what you’re doing or what you’re going through. Your friends work for corporate America, and they don’t understand it. So we built this support group for entrepreneurs, and it was just, like I said, group therapy for business owners. It was a lot of fun. Learned a lot about business owners, coached them through the growth of their business, the sales of their business, and decided that and in 2004, I really wanted to make more of a difference with them personally. So I got into the world of financial planning, helping entrepreneurs and business owners focus on the end in mind, which is the exit planning and been doing that for the last 19 years.


[00:03:02.480] – Sean

Sure. Excellent background there. Appreciate that context. I want to dive into your personal journey with investing first, and then we’re going to talk about your business a little bit, especially for entrepreneurs out there. You do have some good advice with their enterprise and what to do with it. But first off, when did you start investing in the stock market?


[00:03:23.920] – Michael

It’s a great question. I was thinking about it this weekend. I started back in 1985. So I took all this money that I made from mowing lawns and from the other businesses that I had. I read Money magazine, I read anything I get my hands on at the time. And I heard of this one mutual fund called Magellan. It was Fidelity Magellan, run by gosh, I forgot the gentleman’s name. Anyway, it was like the biggest mutual fund out there. It had a track record that was awesome. And so I was in college and I put all my money into this one fund. Not really understanding about global diversification or picking stocks. I just said, this is the one fund that everybody’s doing. And it was 1985. And then 1986 was Black Monday. I lost half of my money in one day. And I remember sitting in the campus center at Albany University and SUNY Albany going, how could you lose half your money in one day? I just didn’t understand it. And I was an accounting major at the time, but not in the markets and not understanding how markets work. I did what most investors do when markets go down is they panic.


[00:04:44.750] – Michael

And I panic. And I took the loss, not understanding history, that markets come back, right? I did. What most people do is they either fight or flight. And I flew. And I didn’t understand that I could have probably recovered all the money, that I didn’t lose the money.


[00:05:04.150] – Sean



[00:05:04.520] – Michael

The account was just down. I lost it when I sold. And I didn’t have a coach to tell me that or prove to me, using math and science, that here’s what happens when markets go up. Here’s what happens when markets go down. And I said, I need the money, I can’t lose any more. And I sold. It probably the best and worst lesson I’ve ever had when it came to investing.


[00:05:28.390] – Sean

That is a good lesson. There’s a lot of people that they’re in the same position where they see their countdown with like, oh, boy, before it goes down further, I better sell. Right? And have to have that discipline to hold strong, hold the line and watch this come back. And in many cases it does. You were holding a fund, so it’s a little safer than individual stocks, which is what we’re into with Tykr, right?


[00:05:56.050] – Michael

And it was what I’ve learned over the years. It’s the math and science of investing that when you learn, it really helps you understand that markets do go up and markets do go down. And what I learned was it’s human behavior which really dictates if you’re going to win or lose, right?


[00:06:15.880] – Sean



[00:06:16.550] – Michael

That is the one thing that’s really hard to control. And unless you work with a financial coach to help you through that and understand what happens when markets go up and down, people tend to panic and make really bad choices that can have devastating consequences on their finances forever. Thank goodness I had many years to recover from that one mistake in 1985.


[00:06:42.450] – Sean

Now that’s good. Thanks for sharing that. So let’s continue here and we had Black Monday and then we move into the 90s. Did you change your strategy a little bit over the next decade?


[00:06:56.130] – Michael

I did, based upon what I learned in school. So I mentioned I got my masters from NYU and I took courses in finance and investing and I was taught the principles of investing. I was taught the academics of investing. A little bit different than kind of what you’re doing, which is individual stocks. We were really looking at more of funds, how markets work, market timing. If you do have individual stocks, how do you build a portfolio based upon, for example, diversification? Right in the did what most people did was I bought individual stocks, internet stocks, because I knew a lot of companies, I did a lot of speculating and gambling. I bought stocks at two. They went up to 95, 100. And I remember sitting in my new home in 2000, it was March of 2000. I had a stock, I purchased it to, it was at 100 and somebody said to me, it’s going to go to 250. And I didn’t sell it at 100. And my whole concentration of all my equities was in large US companies or Nasdaq companies, like most people, because the five years proceeding saw a huge growth in the markets and a huge growth in technology companies.


[00:08:22.960] – Michael

So what do you do? You jump on the bandwagon, right? It’s like a hurt it’s called hurting bias. Everybody’s getting involved. Kind of like what happened recently with Crypto. Everybody’s getting involved. You feel you’re missing out on something if you’re not part of it. And then in March of 2000, the tech bubble happened and my stock went from 100 to wallpaper, sold some on the way down to help pay for things in the new house. But I didn’t take my profits, I didn’t take the gains, I didn’t reinvest and diversify. I did all the wrong things just because like most people, you kind of get greedy and you say, well if it’s at 100, why won’t it go higher?


[00:09:09.330] – Sean



[00:09:10.930] – Michael

Again, human behavior dictates that we run away from pain and go towards pleasure. And as markets go up, that’s where the pleasure was. And you don’t think that market is ever going to go down, but they do. And so got hurt again.


[00:09:27.110] – Sean

So lesson two hits. We invested in individual speculative tech stocks.


[00:09:33.470] – Michael

All speculatives.


[00:09:35.530] – Sean

Oh, boy.


[00:09:36.540] – Michael

So no diversification. So no large US, no small US, no international companies. I worked in New York City, in Silicon Valley at the time. I was running these support groups with all these entrepreneurs who basically said, invest in our company, invest in our company. So my portfolio was not diversified. It was against the academics of diversification of a portfolio. Even though I learned it, I decided that I was going to just speculate and gamble like most people did at that time. And the nasdaq went down. I think we lost like, 60 or 70% of our money.


[00:10:17.220] – Sean



[00:10:18.550] – Michael

Kind of like what’s happening again today.


[00:10:20.740] – Sean

Okay. And in that case, those businesses, I assume, either went under or they never actually recovered.


[00:10:27.970] – Michael

They never recovered. You’re talking about companies like, I don’t know if your audience is old enough to remember these companies like Enron and WorldCom and MCI. CMGI was also big. And I also think the problem was that if you take a look at the media and the publications at the time, you’re online checking out of the grocery store, and you pull up Money magazine, and Money magazine says, the ten best stocks for 90 99.


[00:11:00.440] – Sean

Yeah, right.


[00:11:01.780] – Michael

And you go, oh, they must know something. I’m going to buy those ten stocks.


[00:11:07.070] – Sean



[00:11:07.560] – Michael

Now, in 2000, there was a different ten stocks to buy.


[00:11:12.150] – Sean



[00:11:12.670] – Michael

And then when you look back at the data, what they recommended right. Actually, I think nine out of ten those companies went out of business. So, like most consumers, you know, you you just look at the media and go, wow, you know, this is what they’re saying. They must know what they’re talking about without doing any research, you go, I’m going to put my money there. And that’s how myself and a lot of other people lost a lot of money because we relied upon, you know, the media.


[00:11:42.740] – Sean



[00:11:43.460] – Michael

I don’t know if you’ve experienced that before, but, you know, that was my experience with investing in money at the time.


[00:11:48.870] – Sean

No, my journey was a little different, and I’ll dive into that, just go high level. But I love your comments there because so many people get caught up with, like, posts on Twitter or Reddit or YouTube videos of these influencers, as they say, and they’re getting really bad advice. They don’t have any ideas on what the type of businesses they’re investing in, how does it make money, what’s the sustainability, all those things. And it’s really to. Like I tell our audience, if you see an article from a really reputable publication, don’t trust the publication. Find out who that analyst is, what is your business background, what is their experience? Because, for example, I love the Motley Fool Money podcast. Chris Hill, he’s a great guy, but every time these guys say something, I always go over the Tykr and find out the truth here of what are the financials really look like. But just so you know, my background is software engineering. 15 years. Had a small business between 2006 and 2010 and that went through a merger. And then from there I started working for large corporates. That’s also when I started investing, but I started angel investing in more private businesses, and it was kind of awash over five years.


[00:13:07.290] – Sean

Made some money, lost some money. But I’m like, I could be doing this for the next 20 years. I’m not going to go anywhere. Let’s make some real progress. So that’s when I literally went to Phil town. Who his strategies are based on Warren Buffett, Charlie Munger. He’s got a few books that are big help, but he talks about the four Ms, which I think you will appreciate, which is the first M is the margin of safety. That’s the math part of investing. And then you have the meaning, mode and management. The moat is or the meeting is the business model, the industry, where is it going to be the competitive advantage, and management as the CEO. But if you can put all four together, your chances of making money become really high. But it does take a little bit of homework.


[00:13:54.970] – Michael

It does take homework and people don’t have the time to do the homework. So what they do is they turn on Jim Kramer on CNBC, and they don’t really understand that he’s in the business of selling eyeballs or in the business of getting people to subscribe to the user to watch him. So all the crazy antics gets people hyped up and they make bad decisions. And the problem is that as a financial advisor and coach, I see the ramifications of making a bad decision with your money 15, 2030 years later, and nobody thinks about the opportunity cost of losing money.


[00:14:39.080] – Sean



[00:14:39.800] – Michael

And, you know, it just a lot of people tune into that and they listen to him and others, but like you said, not really understanding what their business is about. I mean, the magazines you mentioned, when somebody writes an article, it’s to attract people to the magazine, to sell more magazines. Whether the device is good or bad kind of really doesn’t matter for the magazine or the publication. They just want to sell more magazines. So, yes, you have to do your own research, and you have to choose between what I call what your screen is when it comes to investing. Are you going to speculate and gamble with your money or are you going to implement empirically tested Nobel Prize winning strategies? And philosophies? The ones that I learned in school are not really applied in practice today. Some firms do it, but most don’t.


[00:15:33.090] – Sean

I’m curious, what are some of those strategies that are not used that you were taught in school?


[00:15:38.110] – Michael

So the principles when it comes to investing me, number one is owning stocks and using fixed income to be able to manage volatility. So most people don’t know the amount of risk that they’re taking for the potential return. People talk about modern portfolio theory and they talk about Harry Markowitz, who won the Nobel Prize in 1991 for his work in this. For example, take a look at the S and P 500, right? The S and P 500, which is just 500 of the largest US companies. People invest in it because familiarity biased. They know it, they see it on the news all the time and it’s tracked. So what they do is they say, wow, here’s 500 companies, I’m going to invest. Now, number one, it’s not diversified, right? Just like I made the mistake in the 90s thinking I own 500 companies. But they were all within the same industry, they were all within tech. Putting your money in the S and P 500, the average return going back to 1926 was about 10% a year. If you were coached not to sell when it went down or up, you just held onto it, which most people don’t do, right?


[00:16:54.000] – Michael

They trade because they go to a party and somebody says, hey, you should move your money from here to here, or my friend said, you should invest in this company. So they don’t have any philosophy or strategy, they’re just gambling. They’re just saying, I went to a party and a friend of mine told me to buy Bitcoin, so I bought Bitcoin, right?


[00:17:13.710] – Sean



[00:17:14.270] – Michael

And when you take a look at it, if you created a diversified portfolio so the S and P 500 has about 18 what they call standard deviations or units of risk. And what Markowitz proved, right, and won the Nobel Prize in 1991 for was that with a well diversified portfolio, you can expect a higher return for the same level of risk or you can get the similar return for less risk. So what I find is people don’t analyze their portfolios, they don’t know the amount of risk that they’re taking and they’re not well diversified. So number one would be owning stocks and balancing with fixed income. Most people really are tilted towards large US companies in portfolios. And number two, they don’t diversify into other asset classes. For example, when I take a look at people’s portfolios and we have a tool called an MRI, where we look behind what they own, I would say on average, 50 to 70, 80% is large US companies. They do not own any small companies, they don’t own value companies, they don’t own international, they don’t own international small and academically. It’s been proven that statistically, over time, those asset classes outperform large US.


[00:18:37.750] – Michael

Now you’re taking more risk in those asset classes, right? So you have to look at the risk reward. But if you build a portfolio property, there’s about a two percentage increase by adding those to your portfolio over time. And so now it’s owning stocks, balancing with fixed income globally, diversify, and then most people don’t rebalance their portfolio. And what I mean by that is, if you take a look at your entire portfolio, all the equities you own, all the fixed income, when markets go up, what you want to do is you want to sell what went up and buy what’s on sale, what went down.


[00:19:14.550] – Sean

Yes, right.


[00:19:15.830] – Michael

But it’s human nature not to do that. So, for example, in I think it was April of 2020, right before COVID hit, or actually during COVID stocks tanked, the bonds increased. And if you opened up your statement and you saw that stocks went down significantly, most people’s inclination is to sell the stock because it went down again. That’s bad. By what went up, which was fixed income. What we did is the complete opposite. We sold the bonds that went up, we bought into the low of the market, and over the next 18 months, the market during COVID significantly improved. It went up. In fact, small and value companies led the charge. Most people don’t own them. They didn’t capture that extra return in their portfolio.


[00:20:04.440] – Sean

Right. Let’s take a quick commercial break. Investing in the Stock Market I’m sure the top questions that come to mind include how risky is it? And can I actually make money? Everyday, people like you or I or otherwise known as retail investors, are flooding to the stock market because a friend told them, or maybe they saw something on YouTube, heard something on a podcast, or maybe read something on Reddit or Twitter. Really? The list goes on. There is one big problem that new investors face. In most cases, it can be hard to know the difference between a good stock and a bad stock. And when they finally buy a stock, they feel anxious, hoping they don’t lose money. Fortunately, there is a solution that can help you reduce and even remove the anxiety and fear of investing. I would like to introduce you to Tykr, a platform that makes investing easy for anyone, especially beginners. It literally does all the hard work for you. It helps you find safe stocks, and more importantly, it steers you away from risky stocks. We do offer a free trial. Go ahead and visit Tykr.com, that’s tykr.com again. Tykr.com. All right, back to the show.


[00:21:13.050] – Sean

Now with the small, are you going towards index funds and ETFs of like a bundle of small cap like tech stocks?


[00:21:22.430] – Michael

Yeah, we are. I mean, we use a structured portfolio in our portfolios. We use a company called DFA, which is dimensional funded.


[00:21:30.520] – Sean

Yeah, dimensional.


[00:21:32.090] – Michael

So we use them because they capture those market segments and you can pick and choose which ones you want to participate in. But yeah, that’s how our clients invested in those segments.


[00:21:45.180] – Sean

Got it. I assume this is not only your customer strategy that you help them with, but you also use the same strategy yourself.


[00:21:52.580] – Michael

I wouldn’t offer anything to my clients that I personally don’t do.


[00:21:56.490] – Sean

Right on. Nice.


[00:21:58.090] – Michael

I have to wake up every morning and live with the ramification. Yeah. So I think once in my tight career, actually a client asked me to see what I own and I showed them whether it be from the investments or for the life insurance. So we do a lot of protection planning and what we do is we use permanent insurance as the bond portion of our portfolios for a lot of reasons. And I show my clients what I own because I can’t.


[00:22:28.100] – Sean

Transparency on your own? Yeah. Transparency is key. And that’s one thing with Tykr. I also show my portfolio as well, which is highly focused, not diversified, but it’s in stronger, financially strong companies. We do, I will say this with individual stocks, small cap we do try to avoid. There is a ton of risks there because it could end up in the same situation you had in the early two thousand S. It could be, I’m going to add.com to the last name and here we go, we’re going to the moon. But the financials are garbage.


[00:23:03.230] – Michael

Right. There has to be a filter which the company has to go through in order to be a company that you invest in. And you’re right. Eugene Fama won the Nobel Prize in 2013 for his work in investing. And one of them is stocks over time have a higher return than bonds because bonds are safer. Kind of makes sense. Higher risk, higher return. Same thing for small companies. As you mentioned, small companies have a higher return than the S and P because of the risk. Which is riskier investing in McDonald’s or Mike’s Burger shack?


[00:23:42.610] – Sean

Yes. All right.


[00:23:44.710] – Michael

So you’re going to get rewarded for that risk that you’re taking. And same thing for value companies that are distressed. You’re going to get a higher return because you’re taking higher risk.


[00:23:55.920] – Sean



[00:23:56.440] – Michael

So if you build the portfolio properly, you can capture those returns. You’re also going to do, like you mentioned, your research. You’re not going to invest in Mike’s Burger Shack, you’re going to invest in maybe five guys or more of a well known company that’s smaller, not me. Who’s opened up a burger place on the corner.


[00:24:14.930] – Sean

Exactly. And we try to set the tone. There are investors around the globe that want to find like, hey, I want to find the Apple of my country and we have to set the standard that, well, let’s take a look at that. So you want a company that’s in your country that also has distribution centers and supply chain and manufacturing plants in another 50 countries. Walk me through this. Well, when you walk through that, that doesn’t exist. There is only one Apple, right. There is only one Microsoft. So you got to look at more than just the business name and how they make money, but what are all the little facets of supply chain and manufacturing around the globe? That really allows that’s. A hardware example, software. You can be a different beast, but still you need a global footprint, some recognizable name, and some momentum. And now we’re getting in the ballpark.


[00:25:06.280] – Michael

Yeah. It takes a lot of work, and most people don’t have the time to do that type of research, and they don’t know everything that’s going on in the company because they’re not there.


[00:25:16.710] – Sean



[00:25:18.310] – Michael

A lot of times, like you mentioned before, it’s based upon your research. You do the education you have, and along the way, people do make mistakes and you have to minimize your risk involved when you make those investments.


[00:25:31.680] – Sean

Yeah. That’s the key thing. Risk is one thing we like to do, is mitigate the risk with our investments. We got a scoring system in Tykr that higher the score. The safer the investment, the stronger the financials. And there’s a lot of stocks in Tykr that are overpriced and really low scores. And some people will send me an email and be like, hey, I thought this was a good company, because so and so on this publication said it was good. I’m like, we know the truth now. This is pretty risky stock.


[00:26:03.730] – Michael

Yeah. And yeah. Going back to the media, people really need to understand what their business model is right. To sell advertising, to get eyeballs, and people to watch or to buy. Right. What you’re doing is more of the research that people really need when it comes to making choices with their money.


[00:26:25.450] – Sean

Yeah. Right on. What I’d like to do next is transition to the entrepreneur. So you have some great tips for entrepreneurs building their business and what they should do, what they should start thinking about for the long term, especially their exit strategy. Can you talk about that a little bit?


[00:26:44.040] – Michael

Yeah. In my experience, there’s 100% probability that you’re going to leave your business someday. We all know that.


[00:26:51.090] – Sean



[00:26:51.330] – Michael

It’s either going to be on your terms or somebody else’s terms. So most business owners, the most important day when they in their business life cycle is the day they get into business. The second most important day is the day they get out. And you should start strategically planning your exit on day two of your business. Enjoy the first day, you open the doors. But day number two, you got to start thinking about the end in mind. If we go to Stephen Covey, who wrote The Seven Habits of Highly Effective People, he talks about thinking with the end in mind. Well, what do you want the business to look like? How much money do you need to get out of the business to live the lifestyle that you want to continue to live once you transition the business? So that’s the best time to do it. The second best time is today. What entrepreneurs need to do is they need to take a look at what they want when they get out of their business? How much cash flow do you need to live the lifestyle that you want to live? How much money do you have on your personal balance sheet, and is there a gap between the two?


[00:27:56.180] – Michael

And if there is a gap, determining the value of your business? Now, it’s fascinating. Most people know the value of their portfolio. They know the value of their IRA. They can go on to Zillow and get an approximate of what their home is worth, but they have no clue of what their business is worth. And the reason why only around 2% of business owners actually get a business valuation is because typically, it’s expensive, it’s time consuming, and entrepreneurs think that their business is worth a lot more than they think it is.


[00:28:29.890] – Sean



[00:28:30.290] – Michael

It’s my baby. It’s worth a ton of money. So what we do when we do exit planning with entrepreneurs is we have software that gets big data, and we could take three years of tax returns and business financials and get a really good approximation of what a business is worth and be able to benchmark it against other people in your industry. It’s very similar to Zillow for real estate. You type in your address, it goes out there, it pulls big data, pulls comps in the area, and says, here’s about what your house is worth. The only problem is that your house, and just like your business, it’s only worth what somebody can pay for it or someone’s willing to pay for it.


[00:29:16.280] – Sean



[00:29:16.720] – Michael

It doesn’t matter what you think it’s worth. I had a Volvo S 80. That 210,000 miles on it. It was a 2010. I love this car. My wife hated it, and the air conditioning went, and the tires were going. But I love this car. And to me, it was worth a ton of money. It wound up costing me money to I wound up donating it to a veterans organization, getting her production. My wife just wanted it off the driveway. But to me, I love this car, and it’s worth a lot of money. But in reality, it had zero value. And a lot of entrepreneurs think their business is worth a lot of money only to discover that if you don’t have what we call value drivers like a diversified client base like systems to run the business putting in place locking in the employees of the business because they are the biggest asset of the business. If it’s just you or a handful of other people, it may not be worth anything. But that could be okay too, because if you pull money out of the business strategically over the next 15, 2030 years and build up your personal balance sheet, maybe you just close the doors one day.


[00:30:33.880] – Sean



[00:30:34.810] – Michael

What a lot of people in the service business do is they die at their desk.


[00:30:41.150] – Sean

Yes. That’s it. And I want to dive into that. And I love this topic because I. Do see a lot of people who are entrepreneurs and they’re creating a service business, which is fine, but they’re putting all their eggs in one basket. They refuse to invest in the stock market or even buying fixed income vehicles like bonds. And they just say, hey, I’m just going to keep building my business and putting everything in my business. And then they get to like 60, 65, 70, and they can’t sell the business. And one of the big reasons why is with a service business, especially most people don’t want to buy a job. Why would you buy a job when you can go get a job and not spend any money?


[00:31:21.130] – Michael



[00:31:21.710] – Sean

Right. So are you running into that a lot?


[00:31:24.320] – Michael

Oh, all the time. If you think about, I had a client who was a doctor and he didn’t want to do any estate planning whatsoever, like refused. And unfortunately he got sick and he passed away. And I was helping one of his relatives deal with the business and he had over 5000 patients. So a doctor with 5000 patients. And I did some research, I called some people I knew and I asked them, what do you think the business is worth now? And they said, it’s worth a discount on the equipment. And I said, what about the 5000 patients? They said, unless you have a transition from doctor to doctor or from CPA to CPA, or from architect to architect service businesses, the clients you have are worth nothing.


[00:32:12.120] – Sean

Yes, right.


[00:32:13.610] – Michael

Same thing for lawyers. You settle a case, you’ve got a customer, but you don’t have any systems. I was helping a lawyer say, look, you need to develop systems. Here’s your marketing system, here’s your client attraction system. That’s what you’re able to sell.


[00:32:32.910] – Sean



[00:32:33.570] – Michael

You’re not going to sell the clients. And I think you brought up a great point, is that the business is just one asset on your personal balance sheet. That you need to strategically move money from your business balance sheet to your personal balance sheet and invest in stocks and invest in bonds and invest maybe like you was mentioned before, other companies and be a venture capitalist and invest in real estate. Again, we talked about diversification before. You can’t have all your eggs in one basket.


[00:33:04.110] – Sean



[00:33:04.800] – Michael

What if COVID hits?


[00:33:07.070] – Sean



[00:33:08.430] – Michael

Nobody saw this coming, right. What if you were in the print media business and there’s no more print media?


[00:33:17.200] – Sean



[00:33:18.000] – Michael

So I agree with you. A business is just another asset on your balance sheet. And if you’re concentrated in just one asset, then you have a lot of risk.


[00:33:27.830] – Sean

Oh man. I like your phrase. I’m going to use it, I’m going to tell you right now, I’m going to use it more and more, which is die at your desk. Because I’ve seen people who are there working well under their seventy s and they’re still working. I know one strategy that he’s not an uncle of mine, but he’s a relative that he’s been a CPA for 40 years and could not find somebody to build the business. They do about a million a year. I think they have about five or six employees. And nobody would buy the business because it’s a service business. But he thought of an alternative strategy, which is, let’s bring on somebody who wants to run this business, and we’re going to do a ten to 15 year schedule where I’m going to work 30 hours a week and pair that down to 20 hours a week. So I’m going to be part time, so kind of part time at or 15 years or so. And then after that, I’m out.


[00:34:22.210] – Michael

It’s a great plan. I mean, it’s interesting. In selling a business, in transitioning a business, there are three things you could do. You could sell to an outsider, you could die at your desk, or you can sell or transfer to an insider. So what you’re talking is an inside strategy. Right now, there are certain tax ramifications of that that I hope he took into play. But it’s a great plan, I mean, to have somebody inside to transition the business to so that eventually you could transition out. The problem is people wait too long. Yes, they wait till they’re sick. They wait till they can’t work in the business anymore. Now, I know that a lot of entrepreneurs stay in their business too long because they have the mental acuity and the stimulation they get from the business. My uncle, he’s 75 years old. He was an entrepreneur who happened to be a dentist. So growing up, I watched him buy and sell practices because he could see a practice, see how undervalued was buy it, build it up and then sell it, versus a dentist, which is somebody who’s a technician who just is phenomenal at dentistry, right?


[00:35:39.760] – Michael

I mean, there’s a great book called The EMyth by Michael Gerber, and if your listeners haven’t read it yet, it’s a phenomenal read. You can get it on Amazon. And he talks about most people are just technicians who are really great at what they do and then have what he calls an entrepreneurial seizure. You know, why am I working for this firm and then billing me out at 250 an hour when I could do it myself, right? So they leave, and then they go, oh, I have to now do marketing, sales, PR, technology, HR compliance. Oh, by the way, I got to service clients as well. So a business is just an asset on your balance sheet. You need to have other assets to diversify your portfolio.


[00:36:23.850] – Sean

And I think that’s a great key takeaway here before we transition to the Rapid Fire round. Any entrepreneurs out there? It’s great, wonderful. Go create your own business. But in parallel, you should be investing, in our case with Tykr. We’re a big fan of the stock market, but of course, you mentioned, individual private businesses is great. Real estate is another good way to create ongoing cash flow.


[00:36:48.930] – Michael

Being a financial advisory coach, I see too many people in their late sixty s and seventy s who wish they would have done more proactive planning earlier. And now we’re living with the consequences of those mistakes that we talked about today.


[00:37:07.670] – Sean

Right on. Let’s take a quick commercial break. Hey, this is Sean. I’d like to say thank you for taking the time to listen to this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for taking the time to listen to this one. I have a quick request if you have a moment. Could you please head over to Apple podcasts and leave a five star review? The reason is the more ratings we get and the higher those ratings are, the more Apple will shares with the world. So thanks in advance for doing that. And then I have a quick comment. If there are any questions you want me to ask the guests, please head over to our Tykr Facebook group. You could drop a question right there. I’ll go ahead and make a note and I’ll do my best to ask that question on the podcast. All right, back to the show. All right, well, let’s transition to the rapid fire round. This is part of the episode where we get to find out who Michael really is.


[00:37:57.780] – Michael

Oh, boy. It’s a lot of pressure, right?


[00:38:00.620] – Sean

If you can try to answer each question in 15 seconds or less. Here we go. All right, what is your favorite podcast?


[00:38:08.430] – Michael

Well, besides this one, I listen to Michael Kitsis, who’s more for financial advisors. I listen to anything by strategic coach and dan sullivan. He’s phenomenal, what he does, and anything that has to do with business growth.


[00:38:28.110] – Sean

I just love listening to nice, good recommendations. All right, what is a recent book you read and would recommend?


[00:38:35.910] – Michael

Recent book I just read, I would say I read Main Street Money by Mark Matson. It’s a business book. I like Jeffrey Archer books, but only on vacation because that’s the only time I read for pleasure. I just ordered a new book that I read before called The Night in Rusty Armor, and it’s about peeling off the layers of armor that are holding you back from going forward. I read that 20 years ago, and I was at a conference the other day going, I need to read that again. And the 12th angel by Ogman Dino, which is one of my favorites.


[00:39:12.970] – Sean

What’s that about?


[00:39:14.230] – Michael

Oh, gosh. AG Mandino is an inspirational writer.


[00:39:17.830] – Sean



[00:39:18.320] – Michael

And the 12th angel, if I recall, it had to do with a little kid in baseball, and the premise was never, never, ever give up. Ever. So it was a nice thing.


[00:39:31.040] – Sean

I’m going to Amazon right now. I might have to add that. Yeah, I’ve got the book right here. Nice I’ll check it out. Yeah.


[00:39:37.980] – Michael

In fact, thanks for asking that question, because I forgot about that book, and it just popped in my head. Now I got to go read it again.


[00:39:44.060] – Sean

Sure. All right. What is your favorite movie?


[00:39:48.880] – Michael

Animal House.


[00:39:50.140] – Sean

Really? All right.


[00:39:51.900] – Michael

Hands down, I memorized it as a kid. You never want to sit with me when we watch it together because I know all the lines. In college, I was taking a law class and needed some filler in between, I guess, a courtroom scene. And I wound up doing a monologue from the courtroom scene in Animal House. The class was cracking up. The teach had no idea what I was doing, but wound up getting an A because everybody applauded what I did.


[00:40:19.740] – Sean

Nice. Nobody used some great material. All right, I got a few business questions here. What is the worst business or investing advice you ever received?


[00:40:34.170] – Michael

The worst advice I ever got was just buy tech stocks, don’t diversify. Lost half my wealth in a very short period of time, as you mentioned.com. Bubble.com, bubble. Like most people at the time, we were riding high but not realizing that the fun can end.


[00:40:57.650] – Sean

All right, let’s flip that equation. What is the best business or investing advice you ever received?


[00:41:03.530] – Michael

The best business advice ever received is that it’s never, ever, ever too late to start a business. Ever. I’m a big fan of Gary V. I watch all of his things. I think he’s very motivational. He’ll talk to 20 year olds. He’ll talk to 55 year olds and tell him, it’s never too late. I’m 55. And he tells people, your life expectancies know the 40 years. Why are you sticking in a dead end job for? Go out and build something.


[00:41:30.670] – Sean



[00:41:31.790] – Michael

So it’s that type of motivation that I think the world needs is that you are good enough. Right. It doesn’t matter what people just say about you. It’s that you need to have the self confidence to go out and just take a risk. And it can be a calculated risk. It doesn’t have to be an all or nothing and go out and build something for yourself and build value for other people.


[00:41:51.750] – Sean

Yes. That’s great advice.


[00:41:55.710] – Michael

I think the other thing is, and I know it’s a little more than 15 seconds is that when you provide value to other people, that’s when you’ll make money. If it’s just about the money. Just about the money.


[00:42:08.220] – Sean

I agree. Put really put a big emphasis on the customer. Solve their problem, remove their pain. Yeah, yeah.


[00:42:15.420] – Michael

The problem is that in my business, too many people are just selling stuff to people.


[00:42:20.110] – Sean



[00:42:20.800] – Michael

They just are. And I’ve come across it so many times. What we do is, here’s your strategy. If you like the strategy, there are financial products that fulfill your strategy. And I was on a podcast a while back. Somebody asked me my favorite quote, and it was something is worth what it can do for you, not the price you pay.


[00:42:40.130] – Sean



[00:42:40.530] – Michael

So everybody looks at the cost of things, but if you want results, things cost money. They look at fees, they look at, you know, it’s what is it going to do for you? And to me, that that’s the most important.


[00:42:53.060] – Sean

Yeah. Right on. All right. And last question here is the time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?


[00:43:03.520] – Michael

OK, 1980. Take all your money and buy Apple.


[00:43:08.490] – Sean

Right on.


[00:43:09.850] – Michael

I mean, I used and I had an Apple to see. It was in my I was the only one who had one. Nobody had personal computers at the time. My dad was a college professor. They gave him one for a project and I had one. And I didn’t understand the value of buying into the company that produced that product.


[00:43:29.600] – Sean



[00:43:31.330] – Michael

Don’t get me wrong, I probably would have sold it after making some profit anyway, but I would say, buy Apple and hold it. Hold it.


[00:43:39.960] – Sean

Yeah. I love stories like that. Motley fool has asked questions like that and people be like, gosh, I wish I would have bought Amazon in 2000 for, like, I don’t know if I was around a buck or $2.


[00:43:54.570] – Michael

Yeah, but you can’t look back. I try to teach my girls. I have two girls aged 22 and 20. We’ve got six foster puppies here, the dogs. And that’s what we’re passionate about. And it’s like, look, we all make mistakes. Learn from the mistakes, move on from there, make more mistakes. I think people are afraid to make mistakes. Right. Because nobody wants to. It’s a fear of not looking good.


[00:44:22.470] – Sean

Yeah, there’s that.


[00:44:25.350] – Michael

I’ve been in other businesses that have failed, and you just learn from them and move on. And it’s still hard, even to this day. But I would say to anybody who’s thinking about it, go start the business, see what happens. It might be a success, it might be a failure. Learn from it, start another one, and just keep going.


[00:44:44.000] – Sean

Right. To piggyback on that. One of my favorite quotes, and I’m going to paraphrase it here for Michael Jordan, is something like, I’ve lost X amount of games. I’ve missed the final potential winning shot that led to a lost game y amount of times. I’ve missed this many free throws and all the failures, and I fail. And that is why I succeed. And it’s like that drive and fortitude to just push back and realize, oh, that’s not a failure, that’s a learning experience. And I’m just going to get better and better and better. I love that.


[00:45:23.050] – Michael

Yeah, I think you hit the nail on the head. It’s a failing experience, you’re not a failure.


[00:45:28.490] – Sean



[00:45:29.050] – Michael

And I think it’s a very big distinction between the two. It’s like entrepreneurs or serial entrepreneurs know like you said, learn from your mistakes, take it into your new venture. That’s it.


[00:45:41.950] – Sean

Right on. All right, if the audience has any questions for you, where can they reach you?


[00:45:47.200] – Michael

Sure. My email is Mringel at strategiesforwealth. F-O-R wealth. I’m on LinkedIn, Facebook, and my number is 917-734-4748. That’s my direct sell comes directly to me, and I’d be more than happy to have a conversation with anybody who wants to chat.


[00:46:11.770] – Sean

Awesome. Thank you so much for your time, Michael.


[00:46:14.060] – Michael

Hey, thanks very much. I appreciate it.


[00:46:17.110] – Sean

Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. Also, if you have a moment, could you please head over to Apple podcast and leave a review? The more reviews we get, the more Apple will share this podcast with the world. So thanks for doing that. And last thing, if you do hear any stocks mentioned on this podcast, please keep in mind this podcast is for entertainment purposes only. Please do not make a buy or sell decision based solely on what you hear. All right, thanks for your time. We’ll talk to you later. See you.