“The size of your success is measured by the strength of your desire; the size of your dream; and how you handle disappointment along the way.” – Robert Kiyosaki
Today, I want to talk to you about my friend George Gammon.
He has an amazing strategy that he calls the 10-80-10 strategy.
This strategy involves giving yourself cashflow, owning assets, and protecting yourself during inflation.
It also gives you liquidity and upside for riskier types of investments.
I think you’re gonna love it!
Before we start, I want to give a quick disclaimer:
I am not an investment advisor.
More importantly, I am not your investment advisor.
These are just my opinions and for educational purposes.
George’s 10-80-10 Strategy
It’s always important to have some sort of strategy when it comes to your finances.
If you don’t have a plan, then you’re really planning to fail.
A lot of people simply go to their investment advisors and ask them to take care of their money.
There’s not really a plan.
What we’re talking about today is different from traditional plans with stocks and bonds.
The 10-80-10 rule says that you have 10% of your investable net worth, you put it into gold.
I would recommend gold and silver.
George loves gold a lot, and there’s a lot of reason for that.
It’s been synonymous with money for 5,000 years.
Investing into gold and silver gives you liquidity.
80% goes into cash flowing assets.
This can be real estate and other assets that pay you to hold them.
The last 10% goes into riskier assets.
This could be something like Bitcoin.
I’m not a huge crypto fan, as you can see from my video about the subject here.
We also did a virtual panel about this with George and a few other experts.
Let’s get a little more into detail about why this strategy really works.
Why This Strategy Works
The 10-80-10 rule is not wishful thinking.
A lot of times we go with the flow or take after the actions of others.
It’s easy to give money to an advisor and give them full control.
We hope that the stock market doesn’t crash by 30% or 50%, which has happened historically.
The 10-80-10 strategy has a lot of benefits that circumvents this.
Let’s look deeper into each step.
1. 10% in Metals like Gold or Silver
Again, George really loves gold.
We’ve looked at gold as money for 5,000 years.
Metals provide two things that are really positive.
The first is insurance.
Putting money into gold or silver can protect your wealth if they print too many dollars and your dollars become worth a lot less.
Metals such as gold will hold their value because it is very difficult to create gold.
The gold supply only increases about 1½% per year.
You can’t just go out and make more.
There’s also a cost to go get it.
Gold is actually a great hedge against inflation and hyperinflation.
The people of Zimbabwe, Argentina, and Germany have all experienced hardships when their economies fall prey to hyperinflation.
It’s not outside the realm of possibility that hyperinflation could happen here in the U.S.
Investing in metals could protect you from that same fate.
Investing in gold also provides liquidity.
What do I mean by that?
Robert Kiyosaki says savers are losers.
If you hold on to cash during times of inflation, the value of our dollars are worth less.
Having liquidity is important.
If you buy gold or silver, you can take possession of it.
You can have it stored somewhere.
You can sell it quickly.
Another thing you can do is use third-party vaults outside the banking system.
If you store gold or silver there, they will loan you against the value of your metals.
That means if you have $100,000 worth of gold stored in a vault, you can borrow $75,000 against the value of that.
They’ll give you decent rates and it’s a way you can get liquidity.
It’s kind of like a home equity line of credit, but it’s tied to gold and silver.
Pretty cool, right?
2. 80% in Cash Flowing Assets
This is the lion’s share of this strategy.
Multifamily real estate, self-storage, and other types of assets pay you to hold them.
The first thing cash flowing assets provide is protection against inflation.
As rents and costs rise, the value of these properties also tends to rise over time.
It’s not always a one-for-one, but the value does tend to rise.
There’s some long-term inflation protection that comes along with that.
That’s a great inflation hedge right there!
You also receive cash flow from these assets.
So as you hold them, as they rise in value, you receive cash.
That all typically rises over time as well.
There’s also a lot of tax advantages that come with putting your money in cash flowing assets, particularly in real estate.
3. 10% in Risky Investments
When we say “risky” we mean something like cryptocurrency or stocks.
Something that has upside potential and has the ability to increase substantially.
These investments can double triple – maybe even go 5-10x what you first put in.
Maybe there’s venture capital or stocks or startups that you believe in.
Having some upside is really, really helpful because you’re able to capture that increase in value.
This really is an awesome strategy.
Now, let’s talk a little bit more about how to actually implement all of this advice.
How to Implement the 10-80-10 Strategy
How do you actually implement this strategy?
We all have lots of great ideas!
We love watching videos to get educated on how to increase your wealth.
But unless you actually take action, nothing is going to change in your financial life.
We have a couple tips on how to get started on the 10-80-10 Strategy.
We talked about the 10% invested in gold or metals.
With these kinds of investments this question usually pops up:
Do you actually own physical metals or do you own ETFs?
ETFs can be good short term.
But there are a lot of challenges that go hand-in-hand with that.
We did an event about the different aspects that go into owning metals that you can check out for a more in-depth conversation about all of this.
We’ve talked about the largest portion being 80% in real estate.
This could be multifamily, self-storage mobile, home parks, or other types of cash flowing assets.
How do you find out about these great deals?
That is a really good question!
We did another video talking about how you find great deals in cash flowing assets, particularly in the multi-family space.
If you live in a large or mid-sized metro area, you can find meetups that talk about real estate.
You’ll meet other investors when you go to these events.
Ask those people what worked for them.
Who did they invest with and who should you avoid?
What was their best and worst deal?
You’re not pitching any ideas to them.
You’re talking to another person as a peer.
I go to at least 12 conferences a year.
Podcasts are another great way to find deals.
We do a real estate podcast called the Mailbox Money Show.
As for the last 10% in riskier investments…
There’s all kinds of stuff you can do!
We talked about cryptocurrency, stocks, gold mining stocks, and venture capitalists.
I’m working on a house flip right now.
There’s lots of different things you can do, so pick one that you’re passionate about!
Now I want to hear from you!
What’s one action that you’re taking to grow your wealth?
What do you think about the 10-80-10 strategy?
Let us know in the comments below!
And before you leave, make sure to check out our special report about investing. It compares the stock market to real estate, and it also includes how the pandemic affects your investment future.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
