An Alternative Take on Investments with Chris Odegard

Updated: Apr 7

By: Thoughts of a Random Citizen Podcast





Thank you everyone for tuning into another episode of Thoughts of a Random Citizen. Today, I have an amazing interview with Chris Odegard. If you're tired or exhausted, or emotionally damaged from the stock market ups and downs, maybe you're looking for passive income and not sure where to start. I'll just say now this conversation with Chris is the place to start. I pound Chris with a bunch of little questions and he knocks them out of the park with amazing insight in how to invest in low-risk assets that yield solid returns.


He's living proof that these strategies work and for any who want to continue to invest, but again, can't stomach that current market volatility, this episode should be a breath of fresh air for you. Chris has said he allocates maybe 1% of his portfolio into the stock market. Even though I'm about the exact opposite of that, it just goes to show that when you hear investments, it doesn't only mean traditional ETF stocks and bonds.


Chris has a great take on owning and purchasing real assets which is why I played that clip. How he preserves wealth, all the same, if not better than traditional investments and by far and away, better than cash sitting by itself in a bank account. I hope you guys enjoy the conversation.


Chris, thank you so much for coming on and being a part of the podcast. I believe you're actually one of the first guests I've had on the podcast to talk specifically about investing with, so I'm really excited about that considering I love investing so much. I know you've recently wrote a book called Get off Your A$$ and Manage Your Money: Why You Need Alternative Investments, which before we get into that book and your alternative investments and financial knowledge, can you walk us through a bit of your background before the book leading up to now?


Yes. Thanks to you, first of all, thanks for having me on, happy to be here. Hope that I can provide some value and maybe some little entertainment to your audience.


That's right.


I used to be like most people, a conventional investor, and that means investing in stocks, bonds, and mutual funds through your employer's 401k. What I finally referring to is the 401k highway to mediocrity with retirement. It's so far away that you need a telescope just to see it. I was that guy. That's what I grew up with. Around 2009 in my mid-40s, I had this huge illiquidity event where I lost 55% of my assets and thousands of dollars per month in cash flow. In my case, it was divorce and lots of people can relate to that, whether it's divorce or whatever thing happens, and so all of a sudden, that highway to mediocrity was looking even worse than it was before.


Coincidentally, around that time, a friend of mine said, "Hey, Chris, you got to read this book. You got to read this book," so I bought the book and I just set it aside for way too long. Then one day I was flying somewhere, I said, "Okay, I'm finally going to read the book." The book of course was Robert Kiyosaki's Rich Dad, Poor Dad. Like millions of others, my mind was open to a new way of thinking about money and investing and so I did that pretty aggressively, and lo and behold, nine years later, I had made up that 55%, multiplied it many times over, and I fired the man. I never have to work if I don't want to.


I wrote the book and started the blog at theprolificinvestor.net to share just there's this completely other way of thinking about money investing that is so much better, so much more profitable, and it'll get you to retirement, financial freedom, whatever much faster. It is harder but the benefits are so worth it. That's my story.


What was the career that you had to enable the alternative investments?


If you've read Robert Kiyosaki's book, the Cash Flow Quadrant, I was an E, I was an employee. I grew up with a family of Es, none of us were entrepreneurs. It was just plain Jane vanilla stuff and so that's what I knew. I went to Embry–Riddle Aeronautical University in Daytona Beach, Florida to become an airplane mechanic, which I did. Then I worked at the Kennedy Space Center about the time the first shuttles were going off and then I moved out to Seattle and worked for Boeing. At the height of my career, I was the director of contracts out there and I wrote and negotiated the contracts for the sale of commercial airplanes all over the world to airlines and one royal family. It was a lot of fun.


It's easy to look back at a job on the last few years or whatever and it sucked or whatever but when I look at the whole time, it was really fantastic. Especially the contracts job was like an MBA on steroids. You couldn't learn what I learned in a classroom and I've traveled over 30 countries and just met people from everywhere and done big business, big-dollar business, and tough negotiations. It was just a blast.


I talk a lot about travel in this podcast. Before we dive into the financial stuff, what were some of the highlights of your travels? Maybe like your most favorite? Can you just walk through that?


Oh, sure. Yes. Walking on the great pyramids, on safari in Africa, walking on the Great Wall.


Wow.


Being in Majorca or the Maldives. I've been on just the most beautiful beaches all over the world, it's just incredible. Hong Kong is my favorite city. I lived in China for three years and I loved-- I've probably been to Hong Kong like 50 times. I love going, there's just such an energy about that place. I'm ready to-- if we get back to some more normalcy in terms of international travel, I'm ready to get on the road again.


Just veering off of it here, has it been more difficult with Hong Kong in light of recent events?


I haven't been there since COVID. I went back-- my daughter was living in Seoul and so my girlfriend and I flew up from Seattle up to Vancouver, got on a brand new 787. Flew into Seoul, spent Christmas there, and then flew over to Hong Kong on the 747-8 and had New Year's Eve in Hong Kong. That was probably, oh, 2017, maybe. I haven't done any international travel since then. It's all been domestic on motorcycles and Corvette's across the US.


Well, there you go. That's not too bad, though, and there's worse places to be stuck.


No, it's not a bad substitute.


Getting to your book, Get off Your A$$ and Manage Your Money: Why You Need Alternative Investments, you designed a pyramid of how you recommend investment allocations. In the shadow of the pyramid is traditional investment stocks, bond, mutual funds, et cetera. Can you elaborate on why you've thrown those specifically into the shadow of that model pyramid?


Manage your Money book cover - Chris Odegard

Yes, it's a little bit of humor and making fun of conventional investments because the pyramid you're talking, call it a pyramid or ladder, it's something you get on and you climb. Well, the conventional investors aren't even on the ladder, they're in the shadow where it's dark and damp, and there's just no fun down there. There's nothing good happening down there. There's mold growing, you know what I'm saying when you're in the dark, in the shadow, all the good stuff happens on the pyramid. You got to get on it and start climbing, and the sun comes out, and the air is cleaner, and their ROIs are better. I think it's true but just a little bit of making fun of the whole situation.


Oh yes, and when you've walked on the pyramids yourself, why not?


I want to correct one thing you said there. All those different investments that are on the pyramid, that's not an asset allocation. Those are just examples of alternatives and they're not in any particular order or anything. You could start on that pyramid at the middle or the top or anything.

Okay. Cool. One thing in your book that I really wanted to question you about was the concept of a family bank, or I don't know if that was actually in your book, it might have been on your website.


It's on the website, yes.


Can you walk us through the formation process of this bank, who qualifies, and the concept in general?


Yes. Well, it's way easier than that. There's a good statistic that I have that about 34.5% of the average American's income goes to interest to other people. Think about that. If you make $100,000 a year, $34,000 is going out to credit card interest, student loans, home mortgage interest. That's a huge amount. What if you could bring that? What easier way would there be than to just keep that interest inside? A family bank is nothing more than opening up a checking account or a savings account or taking an account that you already have that you don't really use. Some people might have a couple of savings account, and they don't really have activity so you designate one of these accounts as your family bank.

Then you start to fund that bank, and you can fund it with, oh, I've got an extra $1,000, or an extra $5000, or $10,000. Or you can just start by setting up a recurring automatic deposit into that bank and then pretty soon, let's say, you've got $5000, all of a sudden, you've accumulated $5,000 in that bank, and maybe I'm dating myself here. Then your first child, turns 15, or 16 and they need a car to drive; today, you probably can't get much of a car for $5,000 but back when I was younger-


Used car.


Yes, a used car. You go, okay, instead of going to the bank to get a loan, you withdraw that $5,000 to pay for that car and you set up an amortization schedule just like you would. What's the going rate for used cars? You go to your credit union bank and say, oh, it's about whatever. It's 4% and you can do it for 60 months. You start paying yourself back at that rate, or whatever the monthly payment is, but you set it up. Now you're keeping that interest that would have gone to somebody else to yourself, and it's no more complicated than that.

Some people would say, the question will be, "Well, if I could pay cash for it, why wouldn't I just pay cash?" If you have a loan to a bank, you will find a way to make those payments but if you pay cash, the money that you save in interest, you'll never end up saving that anywhere, it'll just get spent. By paying yourself back, you put that principal and interest in pretty soon now you've got your $5,000 back, and with interest, all of a sudden, you've got $8000 and the next big expense comes along, you need a roof on the car, you need a new washer and dryer, whatever, and all the money that comes out of that account comes out in the form of a loan that gets paid back on some schedule.


Okay, so it's like a financial discipline strategy, essentially?


Yes.


Because you are, I guess in one way paying that cash but you're just structuring the loan yourself, correct?


Right, yes. There is no third-party separate bank, it's just an account and you borrow money from yourself. Think about this, if you were a young family starting off with kids and you started doing this from the very beginning, you start off financing little things, and you're doing cars, and you get a boat or whatever. My daughter is a therapist out in Las Vegas and she's self-employed so she's not a good candidate for a loan because she's got some flexible income. Well, what if I'm to the point where she could come to me and say, "Dad, I'd like to buy this $250,000 condo, can you be the bank?"

I could arrange that, given enough time, I could put that money aside but really, it's not loaning her money at the typical 30-year fixed rate. It really isn't a good investment for me because I can get some more but I'd say, "Okay, here's the deal. It's on a five-year balloon so in the next five years, you need to get your credit and everything in order so that you can refinance and take me out of this loan, right?" Think what that would do over generations if you just kept all that money in the family?


Yes, absolutely and financial discipline and just that strategy itself, that's so important in regards to money because that's really all it is, it's discipline. One of the things you also talk about in your book that I really want to talk about is passive income, and I love passive income strategies. One thing, though, I've never considered that you actually talk a lot about was ATMs. It's something that you reference it quite a bit. For those who might not be aware of this idea, can you elaborate on it a bit for us?


Yes. Let's talk about something called a syndication. A syndication is just where I would like to buy that $40 million apartment building but I don't have $40 million, or I don't have the $10 million down-payment that I need to get the loan. I go out and get 100 guys or girls, whatever, investors and we each put in some amount of money, and we form a company and we go buy that thing together. Now we all get the benefits of the ownership, we get the pass-through tax benefits and you can do a syndication for anything. You could buy a shopping mall, you could buy up an apartment building, or you could buy ATM machines.

I own ATM machines all over the country, I've never seen them, never touched them, never will. They are all managed by a third party and there are three players in the ATM space. You've got the person that owns the real estate that you're going to put the ATM. You got to have an arrangement with that person, and then you have the person that owns the ATM, in this case, me. Then you have the companies that do all the maintenance, insurance and putting the cash in the machines, and if they're not performing well at one location, they move them to another.

Those are the three parties and every time you go to an ATM machine, and you pay that surcharge of, it's probably averaging around $3 depending on your location, those three parties get some percentage of that fee. Now, if I owned these things directly, and I was to put them in my pickup truck and move them here and move them there, I would get a different amount of money every month from each machine because there would be a different number of transactions.

The way that I do this, or the way that I participate in this is, I'm just wiring money to a company that's going to go out and buy these things. I have ownership of these things by serial number and hundreds of ATM machines that are all managed together and I get what's called a blended return. They look at all the stuff and they say, "Look, if we meet this average amount of transactions across the whole thing, I can pay Chris this X amount of fixed dollars a month for the next seven years."

It's a really great investment and it started before COVID and it just gives me a predictable monthly cash flow for seven years. At the end of seven years, it's like a used car; it's outdated, you sell it for whatever it's worth and then you move on. Unlike an apartment building that produces cash flow, you don't still have this appreciating asset at the end that you could sell. This is a depreciating asset. If you spend all the money that comes off these ATMs for seven years, you just have to know that there's nothing left, that money's all gone. [chuckles]


Yes, absolutely. Well, for some of those seeking passive income, that's obviously a great route, and for the innovators out there, something that just popped into my head would be doing this with some Bitcoin or crypto implementation where you essentially have the ATM but instead of fiat currency- it would print out fiat currency, but you obviously would withdraw via crypto, a unique, innovative implementation. I know that they actually have those in Australia, I've seen a few. I was looking at some of the returns and obviously, you have to give a lot to the people managing it. Do you think that there is if people are interested in a side hustle, any potential in managing them yourselves, or is just too much?


Yes, there are certainly people that do that. That's not really passive income. If you own a piece of rental real estate, or if you own a portfolio of ATMs however that many be, you've got a job. You've got a small business in running the rental or managing those ATM machines. There's nothing wrong with that, it just depends on whether you want to have a job, or do you want to have what we used to call mailbox money or passive income.


I've never actually heard that term. That's great. Shifting gears a bit, you released something else on your website that I really liked and you said that, Trump paid $750 in taxes and you paid zero. Ignoring politics, obviously, because the mention of him is rough sometimes but you said that 95% of the tax code is written to tell you how to pay less taxes by adding benefit to the economy. Can you elaborate on this?


Yes. There's a book that everybody should read. Let me back up. If you're an investor, unless, you know, the average stock investor, the S&P 500 over its history has delivered about 9.8% average annual returns. It's routine for me to get returns in excess of 20%, and it's really weird when you think about it, but if you're getting 10% on an investment, you say, "Well, I'd rather get 20%." How do you go from double the return on investment? Well, the easiest way is to keep more money in your pocket in the form of taxes. It's the low-hanging fruit if you will.

There's a guy named Tom Wheelwright, who a lot of people refer to as the smartest tax guy in the country. He wrote a book called Tax Free Wealth. If anybody wants to know how to- that is one book they should read. Tom would say what I said, or I got it from him I should say, that 90 plus percent of the tax code is telling people how to pay less taxes. The government uses the tax code to modify behavior.


For example, the government thinks that having married people having babies is important for the country. Guess what, if you're married and you have children, you get tax breaks, you pay less taxes. They also feel that people to have a roof over their head, whether it be an apartment or a single-family residence is important too. If you build or rent property, you get huge tax benefits in the form of depreciation, and now for one more year, 2022, something called bonus depreciation. If I were to put $100,000 into an apartment syndication, I would actually get $100,000 negative on my tax return for that year, so the next $100,000 that comes to me of the same type of income it's tax-free.


Wow. Geez.


In energy too, and it's switching from fossil fuels to more greener fuels but the reason that I paid no taxes in that year is because I strategically made an investment in some coal processing units. We need energy to run the country, like it or not. We need energy in some form and so those people that go out and drill or refine petroleum products, they get some of the best tax benefits.


Is that still today? I know you said you did that a few years ago or whenever that was. Has that inverted into some form of green tax benefit?


It's interesting that with all the talk that there is about green energy and solar and all that stuff, the tax benefits, to my knowledge, have never kept up because investors will go where those tax benefits are. I think it's shifting but I don't think it's quite moved all the way over in that direction. Although I was just listening to a podcast this morning and it talked about how President Biden shut down the Keystone Pipeline and shut down some nuclear plants. He's really putting a damper on the traditional energy sources, which is driving up energy prices.


Oh, yes. I thought nuclear was zero emissions. Why would he be shutting--? Obviously, this is going, it's just shocking to me.


I think France gets about 50% of their electricity from nuclear power. In the United States, it's very small. We had an accident here called Three Mile Island like 40 years ago and from that point forward, there was just no more building of nuclear plants, so it's really tragic.


Obviously there are some dangers to 'em, but when there are zero emissions and they're super powerful, but anyways, that's often to another topic in and of itself. I'm curious to see what you think talking about the economy in regards to inflation in the next 10 years. Do you see hyperinflation, and obviously this is speculation, but I just wanted to pick your brain about it a bit.


I'll make the disclaimer that my crystal ball is as good as everybody else's. I listen to lots of different sources of information and try to figure out how I'm going to do my investing based on what I think from all the things that I hear and I don't think it's going to be universal. I don't think everything's going to go up in price or everything's going to go down in price.


When you think about technology is doubling about every eighteen months, and technology is all about delivering more to the consumers for less, so it's driving prices down. I'm an older guy where it used to be making or receiving long-distance phone calls was inordinately inexpensive. If you were out in the yard and somebody called, you said, "It's long-distance, it's long-distance. Get in here and get on the phone and get this over with because it's costing us $2 a minute."


Technology is driving down-- There's an incredible deflationary force through technology and that's because a lot of technology is also eliminating jobs. That's one thing that's happening. Then another thing that's happening is the government is, with all the money printing, it is pumping up asset prices at the stock market. You got a deflationary force on one hand and you got the government trying to push up asset prices, and then you have market forces.


I'm a big investor in apartment buildings and the value of apartment buildings and the rents are going up like we've never seen before because there's a huge shortage of housing in the United States whether it be single-family rentals or apartment buildings. I'm betting on that and putting a lot of money into apartment buildings. It's unfortunate if you're a renter, but the people that get ahead in the world are the people that own things. If all you are as a consumer and inflation is going up, then your buying power is just going down every day. If you own the things that are going up in value, whether it be stock market or real estate, that is going to your positive side of your ledger. That's a long way of saying, I think it's going to be a mix.


I know that you had briefly said for a moment how you safeguarded your assets. Is it primarily then just the stock in apartments or is there any other alternative safeguards that you have? I'm assuming it's quite diversified, but any that you'd like to recommend?


I've invested very little in the stock market. Maybe like 1% of my portfolios in the stock market, so I'm not a big believer in diversification. My main investments are apartment buildings, ATM machines, self-storage, and believe it or not, cash value life insurance is a great foundational investment that I think should be part of every serious investor's portfolio.

Everything I talk about, there's an article on my website about, in one of the blog articles. If you want to look in there, I talk, I got an interview with an insurance guy that puts together my cash value life insurance. I talk about the family bank, there's an article about me paying zero taxes, how I did it, and all that stuff, so the details are all out there.


The Prolific Investor logo - Chris Odegard's Blog Picture

We'll obviously have all of your stuff, Chris's stuff, in the show notes. It also just goes to show that investments are a unique category if you can even call it that, a unique asset that applies to a lot of different things in life. While I'm in the stock market and in some alternative investments, you're in all alternative investments. It's crazy that there's no one way to win when investing, something definitely to keep in mind.


Moving on to alternative investments specifically, in your book, you said alternative investments require a bit more work than a conventional investment. Now, for the people listening out there who are for that side hustle or looking for that, what are some cautions that you would suggest they know before jumping into the alternative investment space?


Conventional investments are your stocks, bonds, mutual funds, ETFs, and all of those, all the things that are publicly traded. In order to get your company or whatever it is on the stock market, it's a pretty rigorous process to go through the SCC and get listed on an exchange. The SCC has done the vetting of the investment for you so it's not that there are not bad players in the stock market. We've all heard what Volkswagen did with the emissions and Wells Fargo opening bank accounts, and there was Enron. It does happen in the stock market, but it's easier to happen in the alternative space because they're mostly private deals that are completely unregulated.


If somebody wants to set up a syndication, anybody who's got $15,000 to have a lawyer do the legal work to set up all the paperwork to do one of the syndications can say, "Hey, I'm a syndicator. Would you like to buy into my fund? We're going to go out and buy some apartment buildings," and then they run off with your money, so it's easier that's something you got to be careful of so you really have to pick and choose carefully.


In today's world, if you get a job with an employer who has a 401k, in many cases, they will automatically enroll you in their 401k plan. They will pick how much of your paycheck goes into the 401k plan and which mix of stocks funds and mutual funds you buy. You can't do that in the alternative space. There's no portfolio. You have to look at what's out there, figure out what's a good match for your interest and your risk tolerance, and that kind of thing.


For that example, you said, hey, we have this syndicate and we want people to invest in apartment buildings, and they run off with your money. Is there any way that if somebody was in that scenario, they can find a way to recoup that money?


Well, I know of one particular situation where there was an investment that was a Ponzi scheme, the oldest trick in the book, and this guy was very good at it. He was arrested and he's in jail and there are multiple lawsuits going on to recover assets of the investors. How that's going to work out, how much sure going to get back I don't know but it's usually not a very high percentage of what you invested. It's really something that you want to avoid.


Yes, and for any Ponzi scheme, one of these out there, maybe don't. It's not- and I guess if you're interested or don't know what a Ponzi scheme is, really quickly, it's pretty much a pyramid scheme. It's one top-level investor gets some investors to find more investors who then have to find more investors, all at the promise of an underlying business that isn't really anything besides taking money from the newest investor and paying all of the previous investors until it gets to a point where there are no more investors and they just happen to liquidate and quit their business operations that never really existed.


Something to be aware of, if the core of what somebody is trying to get you involved in is acquiring more people to invest after you're being required to invest, maybe red flags, steer clear, but anyways, moving on. I'm curious to your approach on investing in small businesses as an alternative investment class. For those who might not be aware, are you assuming that an investor is already an accredited investor when approaching these small businesses, or?


Most of the stuff that I do requires you to be an accredited investor. If your audience doesn't know, that means that they have to meet an income or net worth threshold. They have to have an income of $150,000 a year as a single person, or $300,000 as a married couple, or have a net worth of a million dollars, excluding their primary residents. That's an SCCE thing, the reason that that's in place is because the SCC knows that these are unregulated things. Their thinking is that, well, we need to only let higher income or higher net worth people into these deals because they can afford the loss and maybe they're smarter, not necessarily, and so a lot of the private businesses that I have invested in have required you to be an accredited investor.

The thing I'll say about- the majority of small businesses fail. My advice would be to make those investments. If you want to go down that path, this is a high risk, high reward with these things. If you want to do that, I would do smaller investments across a number of companies instead of big investments across one or two or three companies, because if they all fail, then you are out, so it's risky. I made the mistake early in getting too wrapped up in these new companies and so I do it differently now than I did when I started. [chuckles]


Absolutely. What kind of process do you go through if you're interested in these small businesses in reaching out to them, how do you find them?


Well, the way that I found most of my investments is by being part of some investor mastermind or group, and I've been part of probably three of them over the past decade. This is just somebody says, hey, we're a group of investors and in one case, it's a guy who has a podcast and he also has a group and you pay a membership fee and we have biweekly Zoom calls, and we talk about what's going on with taxes and what investments are out there. Some of them are more focused on small businesses or real estate or whatever. This is part of why it's harder with alternatives. You've got to put yourself in the right company, in the right group, you've got to--


Do your due diligence.


Yes, and it's why it's so much harder because you have in my book, there's a checklist. There's a link that you could go to in the front of the book that takes you to an action guide and I've tried to lay out how you go from being a conventional investor to an alternative investor and a lot of it is education. You've got to start reading books. You've started listening to podcasts and oh, there'll be seminars and classes and you've got to travel to different states and go to them, and over the course of time, you'll figure out what interests you and you'll meet people.

The most important thing to do is when you're getting ready to go into investment, you need to talk to other people who have done business with that fund or that company and see what their experience was because the guy or gal, who's trying to get you into an investment, some cases they're salespeople and you need to get referrals from other people that had positive experiences.


Yes, really good insight there, and then just to maybe not discourage everyone, I think I was looking up this specifically for this question right before we got on here and I think you can back me up on this. If you're a private company, you can take on 35 non-accredited investors before there's like a cutoff, is that right?


I don't know the details of that. I know that, let's just go back to the syndications. Some syndications will take a certain number. They will take accredited investors and a certain number of non-accredited investors, but that's up to whoever's putting that deal together. In some cases, I think it's more expensive and there's more things that the syndicator has to go through to allow not accredited investors in, and I think sometimes the philosophy as well. Okay. Why do I want to go through that? There's no shortage of accredited investors who want to invest with me, and then you have other people that are really like, look, I want as many people as possible to have access to this and I'm going to go through the process so that I have a fund that anybody can invest in and I've seen both of those models. I don't know the answer to your question specifically.


No, that's fine. I think that that's accurate, but I just wanted to maybe not discourage people who are like, dang, I can't invest now in small businesses.


Even though I would say there are more opportunities and it's easier when you're a credit investor, there are other avenues for non-accredited investors, and look, everybody has to start somewhere and it should it be something that you aspire to.


Absolutely.


One of the ways in real estate is you could go out and buy a single-family rental or duplex or triplex and manage it yourself and hire a property manager. Now you've taken on a second job. Or, throughout the country, there are what are called turn-key rental providers and there are some really good ones out there. What they do is they focus on a specific market and they go, okay, this is a great cash-flowing market. Let's go out and build or acquire houses that we're going to sell to landlords. They'll go buy these places and they'll do the improvements and make them durable for tenants and they have their own property management company. They'll put a qualified tenant in there and then you show up with your down payment and your bank loan and you buy what's called a loaded rental. It's a rental that's already got a paying tenant in it, along with a professional property manager who specializes in single-family rentals in that market.


That's the easiest way to get started. If you have a property management company, they're going to do all the things, but there'll be some it'll be set up and something might be like, okay, any expenses under $500, pay them. Anything above $500, I want to know about it and have a say, so you're going to be more involved than if you just wired your money off to a syndicator but it's a way to start climbing up that ladder.


Absolutely, and then I know they have things like crowdfunding and stuff too that is becoming more mainstream. Talking about other alternative investments, I know you mentioned precious metals as one on your pyramid. Are you diversified in precious metals or not really? Is that not something that you--?


I like buying silver and gold coins and this is really an amateurish way that I do, and I have a friend, who's really into this. He follows this very closely and when he thinks it's a good time to buy, he'll buy and I say let me piggyback my order on yours. It's almost more of a hobby. The coins are really cool, they're really pretty. It's nice to have them in there. If the zombie apocalypse comes, you'll be able to trade, buy stuff with your silver coins, so I do that.


I traded the same way with my gold and silver allocations, mostly gold. I just like to buy it for the collectibles because they're cool and then it's a safe investment for later. At the end of the day, I don't understand the mindset of owning a piece of paper which is backed by a gold company, but if a shit hits the fan scenario occurs, that piece of paper that says you own gold isn't going to be much different than the piece of paper that is the dollar. If it's the worst case, which is obviously unfortunate for everyone, you want that actual physical gold. Otherwise, as a hedge against inflation, sure but otherwise, don't expect them to take your piece of paper and return gold.


Moving onto another alternative investment which I've spent a lot of time and money, I'm not sure if you are well versed in this, is cryptocurrency. Before we dive into that, are you invested in the cryptocurrency? Is it something that you see moving forward in the next or in the near future?


I have a weekly trade. I'm very bullish on Bitcoin. I think it's here to stay. I think it's going to continue going up in value and at some point, it will stabilize. I dollar cost average in every week at a certain dollar amount and that goes up and down based on how much I can afford at the time. I know there's money to be made in all of these altcoins, but that's like day trading and speculation. I'm an investor who wants passive income. Day trading is just another job. Once you stop day trading, the money stops coming in and I avoid jobs like the plague. That's why I like buying the Bitcoin.

I read a book recently called Layered Money and this is really interesting. I think this is his term. This is the way that he talks about it. He said, "For forever, the only first layer of money was precious metals." Just to say, gold and silver. Then when United States was on the gold standard, you had a piece of paper, a dollar, or a silver certificate. You could take that dollar and exchange it for gold. The gold was the first layer of money and the piece of paper was the second layer of money, and with every other layer that's not first layer, there's something called counterpart risk. Somebody has to perform in order for you to get the value.

What he says is that cryptocurrency is the first layer of money that has ever been around since gold so this is a big once-in-a-lifetime kind of change. Think about people-- Some people are almost evangelical about it. Like it's the next coming of Christ. You think about if you're in some third-world country where the monetary system and the banking system is not very stable, so you're trading your time for that currency and that currency might be worth half tomorrow what it is on the day that you earned it. Anybody who's got an internet connection can now exchange their dollars in local currency to something that at some point in time, will be more stable.

Some people think it's like a great equalizer in terms of financially across the globe. If you want to carry your wealth from one country to another, or maybe you need to escape a country, you've got a thumb drive and you've got your whole asset base in there. It's a real interesting thing. It's like with the guy that wrote this book, where he talks about technology doubling every 18 months. I feel like we are seeing things that in previous times you would see once in a lifetime, and we're seeing these. In our lifetime, we've seen the internet. Now, we're seeing Bitcoin. Things compressing and wishing life could--


We had hand phones right before-- It's insane.


I used to think my parents and my grandparents saw change in their lifetime, but it's nothing compared to the progress we've seen.


Oh, yes, and it's just becoming more rapid and rapid as everyone understands the intricacies of building on the internet, I guess. Well, I was going to ask you to try to convince my friends or family that I've had a difficult time convincing, to get in. I've told them everything I can about crypto in general, but it seems like you've already done a decent job on that. If you could, though, speaking of the three most talked about aspects of the crypto industry, being blockchain technology, the decentralized nature, and the store of value, which do you see those being the one that maybe propels this industry into mainstream financial adoption?


Well, I think there's one more and that is the fact that it's, this stuff cannot be manipulated by anybody. Even if we end up having a US dollar Fed coin, with Bitcoin, the fact that there's only going to be, what is it? 33 million Bitcoins or whatever the number. I can't remember what the number is.


It'll be just under 21 million, depending on--


Anyway, nobody can go in and manipulate the supply. As people see what's happening with-- All currencies are being devalued every year by governments printing more of it. If you are just sitting on-- One way to guarantee that you're going to lose money is by not investing. If you just sit on your money and having it even in the bank account, you're essentially getting zero, in today's environment, you're actually losing 6% a year of values.


What they say is 6%.


Right. Then the real number is something other in the upward direction.


One of them, I think I've said this on a previous podcast, but they've the money supply by like 25% in the last 18 months and that was a few months ago when I saw that but somehow it's only 6% that we're losing.


Right. I want to go back to something I said before but see, there's money to be made in every market cycle. Like I said, if you're just a consumer and you're spending, then you're getting killed by inflation but if you go out and buy the assets that are going up, whether it's the supply and demand issue or it's because the government's manipulating the stock market, then you are benefiting from that. You got to get on the right side of that equation or the correct side, whether it's on the right side or left side. I don't know. [chuckles]


Absolutely. Lastly, is there a major difference in the timeline of an alternative investment compared to a conventional investment? Then on top of that additionally, is there a quicker or longer ROI or return on investment from those investments?


The ROIs are higher. [laughs] You get your money back, you get your principal back quicker. I'll give you one example. I invested in a-- I don't know. Probably maybe three years ago or so, I invested in an apartment building in Atlanta, Georgia, and that apartment building is going to be sold this year, so the average annual return on my investment is 24%. Take something and say, okay, 24% compounded 24%, compounded for three years, how much quicker are you getting to where you want to go, and how much quicker are you building your wealth when you're getting those type of returns.


That's before you consider that that piece of real estate came with depreciation that was passed on to me. A lot of the income that's coming back from that, I can actually tell you that I will pay no taxes on that.


Wonderful. Can you actually elaborate on that specifically?


When you buy a-- Let's say, I'm making my first $100,000 investment in an apartment syndication, and I have bonus depreciation of $80,000. That means that the next $80,000 that comes to me from apartments is tax-free. Well, the first couple years, I'm not giving a whole lot of income from that investment, so that $80,000, it's just a bucket that gets carried forward to the next year, and the next year, and the next year. Now, I've got this big buildup of unused depreciation, and when this investment comes in and I have $50,000 of profits, I subtract the $50,000 from the $80,000 that was carried forward, and I pay no taxes.

What you do is the way you keep that train, we call it the golden hamster wheel, how do I keep that going? I just continue to invest in new real estate every year and keep gaining depreciation that gets banked and then as the profits come in, I'm just continually buying new assets to wash out the income that comes from the apartment buildings when they've matured and get sold.


Are there any other-- I know you mentioned ATMs being one of them. Any other major depreciating assets that you can use to implement that strategy?


ATMs have the same thing and any type of real estate, any self-storage. Any type of real estate comes with depreciation. I use ATMs. I just call it business equipment. Business equipment comes with depreciation. If you got into a situation where you were-- If you bought a brand new pickup truck and it was associated with your business, guess what, you get depreciation. Hard assets, you don't get that in the stock market.


Yes, absolutely. That 24% annualized which is-- I love that number. Over the last three years, that just spells out the previous thing we were just talking about to a tee of being invested in real assets while the government decides to print as much as they are. Chris, this has been amazing and extremely informative. I really appreciate your time. I do always ask one thing to all my guests. If you could take all of the knowledge you've learned throughout the entirety of your life and narrow it down into one thing and tell someone that one thing, what would it be?


Wow, that's a tough one. I would say have childlike curiosity. When somebody says to you, "Hey, it's possible to pay zero income taxes." Guess what most people do, "Too good to be true. Not going to look at that any further. What do you mean you routinely get 20% to 30% annual returns before tax benefits? Sounds too good to be true. Must be too good to be true, so I'm not going to do that." If I had had that attitude over the past 10 plus years, I would've left so much money on the table. That goes along with being open-minded. Look, be curious about what's out there in the world, and don't just dismiss something that somebody tells you because it's so different than what you're used to. That would be my one thing.


I absolutely love-- That sounds like coming from the mouth of a traveler, to be honest. Well, Chris, thank you. Where can people find you your book or get in contact with you?


If you go to the website at theprolificinvestor.net, there's a handful of ways you can interact with me there. There's a conventional wisdom quiz. If you take this 10-question quiz, it'll ask you some things. They're usually yes or no, true or false, and you'll have your answers and then you'll get my answers and I think it'll be pretty interesting. There's a cup of coffee there and you can schedule a free virtual 30-minute coffee with me. I set aside Thursdays. If anybody wants to have a Zoom call with me and talk about alternatives, we can do that.

There's 40-something articles on the blog site. I'm on all the social media sites and you can get to them from there. Some of the articles I'll do a video as well. Sometimes I'll do a video in lieu of an article. Of course, right there in the screen is the flashing star that says, "The book is out. Get off Your A$$ and Manage Your Money: Why You Need Alternative Investments." That'll basically take you to an Amazon link. If you go directly to Amazon, the quickest way is just to type in my name, Chris Odegard and that'll bring up the book quicker than if you type in, Get off your ass and manage your money, it might take you a while to find it. Yes, everything is at theprolificinvestor.net.

For people who think they want to make this move, that's why I wrote the book to really lay it out for you and explain it and give you an action guide that you can follow to try and to make your path a lot straighter and more efficient than mine was.


Yes, absolutely. I've read probably about the first 40% of it and it's very well-written. I'll throw that in there. Yes, absolutely. I'll throw that in there, along with some of the other books we mentioned as well, if anyone else is interested, and then along with the website.


Yes, and please leave a review.


Absolutely. Chris, thank you so much. I appreciate your time. Thanks for coming on.


That was great. I enjoyed it. Thanks a lot, Hugh.