Even though we are a small privately owned company, and are not required by law to do this, I like to do a quarterly update for all the people that read the blog and want to acheive greater success in life. It allows me a chance to talk about what worked, what didn't work, and why it matters to me and you. Without delay, let's get going.
Overall, MIG acheived solid growth in the quarter and is on pace to achieve our yearly goals. Both profit and acquisitions look good right now and assuming the economy holds up, things look even better heading into the rest of the year. We do have concerns of a correction or pullback in the 2nd quarter, however.
We will finish the first quarter of 2017 with holdings in 12 different companies. During the quarter we passed on 3 different investment pitches. All 3 centered around a retail environment. 2 involved restaurant concepts, one involved a retail store.
With the closing of many stores at major retailers, we do not have interest in anything that currently bases it's projections and growth off of people coming into the store. It doesn't seem to be working for anyone right now. If you absolutely have to be in retail, I would suggest Wal-Mart and Kroger. Both are aggressively expanding their online presence to take on Amazon. Wal-Mart specifically has changed it's focus on fresher, better food. Kroger is best in class.
We have no interest in regards to restaurants as well. There has been a major shift away from fast food for years, and until someone can figure out what the consumer wants (other than online ordering), we do not see growth occurring in these industries. There is a conscious focus on diet in America today. McDonald's, Burger King, and Wendy's aren't growing like years past. Casual dining like Applebee's and Olive Garden have been slowed as well. Too much competition and not enough transparency for the customer yet. Pink slime and unknown ingredients are just beginning to change the landscape I am afraid. People want to know what is going in their body.
We also believe all the hype around legal marijuana is way too early. While we do openly admit to being invested in the "weed" business, there are so many hurdles to overcome yet as it pertains to regulation and banking. Federal banks can not touch weed money as it is still illegal under federal law. Ignore all the hype and take small positions wherever you care to invest. A lot of hurdles left to overcome here. We will all be wrong before it sifts out and a market leader comes forward. It may be 10 years before anyone producing a marijuana product becomes a household name.
We do have holdings in several companies that have growth happening and we are excited to be in certain lines of business.
Affordable housing continues to be an issue in the current economy. With the rebound in home prices, more people are being pushed out of hot markets. We are glad to be invested in a company that is working towards that solution. More people come to America every year, they need housing.
We also see growth in drones and affordable, personal aircraft. While it is hard to imagine $250,000 being "affordable", it will open the doors to small families and flying. First adopters will have to be upper income owners such as business owners, doctors, and lawyers. This has a similar issue to marijuana, who is the name brand in this market?
We also have holdings in oil, gas, silver and gold. None of them has performed well this quarter, and a slow road to recovery is probable. Oil and gas is profitable at $50 per barrel for the right companies. Gold and silver are inflated on Trump and economical concerns. Both should have a place in your holdings, but I do not suggest being overly exposed yet. There will come a day when oil is king again. We are not there. Gold and silver are always important to own in physical form. Do not invest in ETF's or holding companies. Buy the real stuff and keep it tucked away.
The economy overall is continuing it's sluggish "growth". The market is fully valued and a pullback needs to happen sometime in the 2nd quarter. Companies can not continue to grow quickly in a slow economic environment. It's time for a reset and this can be very beneficial to you. This will open up some opportunities to buy things on sale. Have a list of what you want to own and wait for the opportunity.
Make 2017 memorable.
You need a small business to take advantage of every tax deduction and business expense that you can legitimately take. Don't have your own business? Let me tell you why it matters and why you need one now.
Most people have zero idea what their tax rate or tax bracket is. Let's assume you are a somewhat financially stable family that makes $80,000 per year. At the current tax rate (2016), you will owe 25% of that to Uncle Sam or $20,000 (this is also assuming you file married filing jointly which is the most beneficial). Because Uncle Sam so graciously takes that out of your pay prior to you getting your paycheck, most people have no idea that 25 cents of every dollar goes to taxes. This is your tax rate, 25%.
Now there are all sorts of deductions and loopholes that one can use on their tax returns to lower their tax bill. One is itemizing your tax return instead of taking the standard deduction. This is what the wealthy pay really good accountants to do. They itemize every single possible deduction so they pay as ;little tax as possible. Their effective tax rate is often less than 15% (and sometimes much, much lower). In fact, this Washington Post article points out that in 2012, the top 50% of earners averaged only a 14.3% tax rate.
The second thing that the wealthy do is to own a business that can legitimately deduct expenses that the average person doesn't. Owning your own business means the expenses of running the business are deductible against the income of the business. Can you personally deduct health insurance on your taxes? A business can. Can you personally deduct office supplies? A business can. A business can also deduct retirement contributions, payroll, and bonuses against the business income. I will have a lot more to say about this soon.
The point here is that working for yourself can and will offer big benefits if you can make it work.
The tax benefits are just one reason that you need to own your own small business.
I will expand on this in the future for sure.
I am frequently asked questions about money and money saving ideas all the time. Below is the first round of questions that I receive a lot of similar requests.
How do I start saving money?
The easiest way to do this is to sit down and write out a budget. I have a form here that you can use to start. I suggest that you keep track of everything for 60-90 days prior to trying to enforce a written budget. Extra expenses pop up and sometimes there is no budget that allows for these things. Only having a written track record will help plan in the future.
How do I start a budget?
The easiest way is to use the form I linked to in the previous answer. Keep track of EVERYTHING you spend for 60-90 days. This will allow you to identify patterns of behavior, as well as odd items that can wreck a budget. Don't be too hard on yourself. We are all human, and we have ALL messed up with money.
Do you use credit cards ever?
I am not a Dave Ramsey disciple, sorry.
Much love and respect for Dave, but debt used properly is a major boost to wealth.
Yes I do, and only in smart ways. Remember my approach, good debt vs. bad debt (see page and article here). Using credit cards to gain rewards or discounts is a smart financial manuever. Not only do you buy free time, but often you can gain big savings too. I will suggest remembering one key thing. If you do not have the money in the bank to pay for it, DO NOT BUY IT!
I know people that play the credit card game and save thousands of dollars per year by cashing in points and rewards and paying for all expenses on a credit card in order to get cash back. I am no where near that level personally. I use a debit card for 99% of all transactions I do. I don't like having a bill to pay later down the line. Plus I like to spend extra money in my accounts from time to time on toys!
What is the best way to make more money?
There are 2 approaches to this. Make more at your current job/career, or pick up something on the side and try to make it pay off.
Your goals need a starting point and you are the best decision maker when it comes to that. Can you pick up more hours and make great money where you are currently? Can you make more money by switching jobs/shifts? Is there another company paying more for your services? All of these are legitimate questions.
Assuming that you can not just make more by working more, then it is time to consider a "side hustle". I wrote an article on that here. Consider an extension of what you do currently during the day. Bookkeeping and medical transcription come to mind as things that can be done from home. Don't be afraid to start a business and get some revenue flowing.
What websites help you save money?
This is going to be a whole section of the website. There are far too many to list here in a brief blog post.
It's easy to get sucked into the trap of spending your entire tax return and having nothing to show for it later. Follow my 3 quick tips below to maximize your refund.
The number one thing is to pay down some of your debt, and hopefully all of your "bad debt".
The only debt that we advocate having around is the easily affordable home mortgage. What is easily affordable? 1/2 of the lowest earners income AFTER tax.
You have to treat yourself in life. It is ok to spend a portion of your refund on some fun things. Plan something together as a family, or split it equally amongst partners and let each other have a field day with it. Remember, you can not comment on how the other half spends their money. That is why it is called a "field day".
It is always prudent to save some of your return. If you do not have an emergency fund of 3-6 months of expenses then get one started now. Make sure you have a budget written down that shows all the monthly income and expenses. If you don't, I suggest you download one here.
Let's be honest.
Money doesn't grow on trees.
Sometimes there just isn't enough money coming into your household and there isn't a whole lot you can do about it. Certain jobs and careers can be time suckers that don't allow you to work a traditional "second job". This is when you need a side hustle.
A side hustle is simply a non-traditional job where you get paid to do something in an unconventional way. Some of the biggest companies in the world started off as side hustles for women. Think Avon, 31, Pampered Chef, etc. There is nothing funny about the amount of money that one can make doing this. There is really nothing funny when this becomes a full time job for people. They can make large sums of money quickly!
Side Hustle Nation has a great article on 99 Different Side Hustle Businesses you can start right now. I suggest you go check it out now and see if one of these can replace that old boring job you have to go to every day.