When I (Mitch) turned 15, my Dad helped me get my first real summer job – picking tomatoes in the hot West Tennessee sun.  So on my first day, I showed up at 6:45 a.m…,wide-eyed as a crew of non-English speaking grown men and I loaded up on an already burning hot flat bed truck to head out to the fields.  I quickly found out that although we all essentially did the same job, we weren’t all paid the same (I was near the bottom at a whopping $3.35/hr).  One of the guys who had clearly been doing it a while was making almost $5/hr!  When we asked the foreman later why he got paid so much more he said, “Because he’s the best employee.  He shows up every day, doesn’t cause me extra work, and picks more tomatoes than anyone else. It’s that simple.  So, when I decide who gets the most money, he wins.”

I thought of this story recently as I heard Tony Robbins, the celebrity life coach and author, encourage everyone listening to his podcast to build up multiple revenue streams and treat them like employees. Per Tony, “Most people never put their assets to work for them, and no matter what they do for a vocation, those assets are like employees working around the clock on their behalf.”  One of the recommended “employees” is publicly traded stocks and bonds.  Many of us have the luxury of this great employee working on our behalf and enjoy sharing the fruits of its labor.  However, many still don’t take advantage of this great “employee” to the extent they could.  For example, we are often asked about real estate or rental property as an investment.  There are many answers to this and each situation is different, but one consideration is which asset is going to work best for you with the least strain and upkeep.  We like real estate as an asset class at E|Financial Alliance and own some ourselves. However, it can be a high maintenance “employee”, and unless you are a real-estate professional, builder, or plumber/electrician with expertise, it can end up being more of a liability than an asset.

According to the Federal Finance Housing Agency, the average appreciation on real estate nationwide was 3% over the last 15 years.  Even in a hot market like Nashville, the net was 4.6%.  So, a $200,000 home in 2003 would be worth about $390,000 now.  That’s not bad, but comparatively, $200,000 invested in the S&P 500 Stock Market index would be worth $742,000 over the same period!  Dimensional Core Funds would come in at $861,000, and that’s without a single HVAC, plumbing repair, or property tax bill.  Real Estate, CDs, and even gold have their places in a diversified portfolio, but when you are looking for another “employee” to help you build wealth long-term, make sure it’s consistent with your financial plan, doesn’t require extra work, and picks the most tomatoes (or dollars!).

Welcome: Carli Cannon

Please join us in welcoming Carli Cannon to the E|Financial Alliance team as Client Services Coordinator.  Carli recently graduated from Williamson College with a degree in Organizational Management, and we are so pleased to have her join the team.

As always, at E|Financial Alliance, we are grateful for the opportunity to serve your families and businesses together.

Mitch & Destin