Twanda Black: Good morning. Thank you so much for joining us. And in 2018 we’re trying to get this money thing together. Our wealth strategists joins us this morning, Steven LaBroi from the LaBroi Insurance Group. Good morning, Steven.

Steven LaBroi: Hey, good morning Twanda. I appreciate you once again.

Twanda Black: It’s my pleasure. You know what? We gotta come up and I gotta help our people do that. Today we’re gonna talk about the money pyramid. I’m like pyramid.

Steven LaBroi: Well, not that type of pyramid. I know that some people look at pyramids as something negative, but what we do, we use the pyramid, which in Egypt times pyramids are strong and we use it as a training mechanism to show you how to build a financial foundation.

Twanda Black: Wow. Okay. So do you start on the bottom as the foundation of the pyramid or do you start at the top?

Steven LaBroi: Well, again, we looked at the pyramids in Egypt and we say, hey, the strongest point of any pyramid is the bottom.

Twanda Black: Exactly.

Steven LaBroi: It’s where the base is.

Twanda Black: Mm-hmm (affirmative).

Steven LaBroi: And it’s, a lot of times that’s where you can have guarantees ’cause you know what’s going on at the base. And that’s where we built this graphic to teach people, our clients how to actually build a strong money foundation or a financial foundation.

Twanda Black: All right. So let’s talk about the base part first. What is the foundation of a money pyramid?

Steven LaBroi: Well, the way we look at it, we look at it what is predictable and what is guaranteed. And we look at the base of a financial foundation as a place where there is no risk or extremely low risk, but in also, there’s probably low reward, but again, it’s guaranteed. So you know that your money is gonna be there. An example would be a checking account or some people cash their cheque out and put their entire cheque under their mattress.

Twanda Black: Their still doing that really?

Steven LaBroi: Yeah. So you’d be surprised at some of those stories that I hear.

Twanda Black: Wow.

Steven LaBroi: People will keep money with them in their pocket all the time. And we look at that as the base of the foundation because guess what, if it’s in your pocket it is guaranteed. The only risk you have is if you get robbed.

Twanda Black: Somebody hit you in the head. That’s right. That’s not funny but it’s real. That’s the reality of today. It really is.

Steven LaBroi: That’s right.

Twanda Black: It really is. So where do we go on the next layer from the foundation?

Steven LaBroi: What happens is, you have to rest your money somewhere. And so we always say people put their money somewhere. It’s just, it’s not arbitrary. The next layer we look at is guaranteed and predictable, but also, the potential of being tax free is, we say permanent life insurance, annuities things like Roth Ira and I hear a lot of people talk about them because they’ve been pretty popular over the years.

Twanda Black: Yeah.

Steven LaBroi: But in addition to that it would be permanent life insurance because those contracts, as we’ve talked in past muffs, are cutting tracks. So they are predictable and they’re guaranteed based on what we signed. So that’s the next layer in the financial foundation so that you understand where those dollars fit.

Twanda Black: So when you talk about permanent life insurance, what does that mean?

Steven LaBroi: Oh, that means that products like a whole life index, variable universal life, those are considered permanent life insurance products. Which means that they also earn some type of potential interests. They potentially get dividends on your money. So when I say, they are predictable, that’s usually a part of the illustration that shows you what the potential is, as well as the use of your money, which a tax code is favored based on the IRS tax code 7702, that they’re tax free use and tax free growth of your money. We say that is the next layer of the pyramid because again, the base of the pyramid is the strongest point and if you can predict and you know that funds are there and they’re guaranteed and you know what’s gonna be there, then that’s your strong point of where your money sits.

Twanda Black: Okay. All right. I’ll get moving on up that pyramid. Where do we go next?

Steven LaBroi: Well, what happens when we move up the pyramid we talk about products that are taxed. We talk about products that are simply taxed that are growth on CD’s, money markets, savings accounts, even interest bearing checking accounts. They are checking accounts out there that banks and credit unions provide. And even some banking instruments that are online or even banking instruments that insurance companies provide, that when the growth happens they’re taxed. So we say that the risk gets a little bit higher, the reward gets a little bit higher and so when you’re talking about taxed instruments, we’re talking about sitting on top of that next layer of foundation because there is potential loss in those products and even though the loss could be nominal, that’s where we go on that next layer where you have some risk and reward.

Twanda Black: Oh, okay. That’s good. Come on up to the next level.

Steven LaBroi: All right. Next level is something that a lot of people talk about that is promoted so much in our economy today. And that is stocks, bonds, mutual funds, the IRAs, the 401ks. I say that’s next level and then our skeleton graphic, we say that next level because the risk gets a little higher, the reward gets a little higher, the tax implications are there, penalties are laden there. You have to really understand those products. A lot of times we take our income and go straight to those products that we missed the other layers. And that could, we show that as an inverted pyramid, which is not as strong, but in essence, the next layer is where you can earn some money. But then we always say when you profit, you try and move some of those dollars back into your base.

Twanda Black: Mm-hmm (affirmative). And I know that for most of us, baby boomers are under the baby boomers are getting ready to retire especially stocks, bonds, mutual funds, 401ks or IRAs are so important and we need to understand them better and know what we can and cannot do with them that will affect us in the long run, especially when at tax season, you know?

Steven LaBroi: Yeah. It’s very important that and I’ll talk about this as well, is very important that we read the definitions. In most instances the companies that have these products, the banks, the investment companies, the organizations out there that you seek these products from, they give you product information, they give you some product benefits, but we need to really understand the definitions.

Twanda Black: Yeah.

Steven LaBroi: Because they have a lot to do with our base which I call our lifestyle, all right. Emergency and our retirement money. And knowing the definition gets us to a point where we can be very prudent as though where we place our dollars in and where we take them out.

Twanda Black: Mm-hmm (affirmative). ‘Cause it will affect you one way or the other.

Steven LaBroi: Yes.

Twanda Black: Yeah. And some of those moneys have to stay till retirement, but you can use some of those moneys in the meantime as well.

Steven LaBroi: Yes. Yeah, and that’s a part of knowing the products and knowing how they fit. There are products where you can use money throughout the time in which you’re putting them away. In essence, you have to also know if using some of those dollars in certain product take away from the investments. We know that in some instances with permanent life insurance, when you use some of the dollars, it doesn’t take away from the investment or from the life insurance growth, I apologize. The life insurance growth, if you use some of the money’s in the 401k, it could take some of the dollars away from what you have in the products that you use for growth. So it’s knowing those particular products, the definitions, but at the same time understanding what we call is, your financial foundation because a major part of your foundation is your lifestyle, emergency dollars as well as your retirement dollars. So you have to have that as a part of your everyday living.

Twanda Black: Well, where do our savings come in on this? I know that for a lot of us, IRA, 401ks that might be your savings for retirement, but what about your other savings that you’ve set aside and maybe that you do on a consistent basis?

Steven LaBroi: One of the things that you have to do that we always talk about this is, well, let’s create a spending planner. We have to know if we’re living below our means because we can assess dollars that we call surplus dollars, that we can break out into savings. Savings is comprised of, as mentioned in the past, is comprised of emergency, lifestyle and retirement. Their percentages of that, that creates the whole. So we create savings dollars, we file it, we can live below our means and we put those dollars in that category. We break them out between lifestyle, emergency and retirement and then we start to forecast what retirement’s gonna look like for us. And that’s why we show this money pyramid because we want people to see where these dollars fit on a continuum and then how to break them out when you start thinking about how they relate to you and your life.

Twanda Black: So at the top of the pyramid, what’s there?

Steven LaBroi: Wow, at the top we always say is the high risk area. And in today’s world we say high risk is options, commodities, derivatives, some people really don’t even focus on because they take so much money to get involved in hedge funds, maybe people have heard of. And then there’s this one term that’s being thrown around now is cryptocurrency.

Twanda Black: Crypto that’s right.

Steven LaBroi: Cryptocurrency. I mean, it’s an industry that’s coming of age. It’s been around for about eight, nine years and major corporations are discussing it and researching it, small entities are researching it. I mean, there even network marketing companies that are marketing it. But the issue is that it is still speculative. It is still not the transactional currency of today. It could be of tomorrow. And on our pyramid we show it as being very high risk, higher reward.

Twanda Black: Yeah.

Steven LaBroi: So in essence, if your base is in order, then you can take small percentages, if you choose to speculate and you can go into the higher layers of investing or taking a risk in terms of putting your money in these areas of growth. So that’s why we call it the money pyramid is because in a triangle pyramid, the base is the strong point. And as we just talked about these layers going up, you wanna take smaller percentages to put in those layers. And as you build your base the percentages are the same, but the amounts are larger that you’re able to put at risk and creating strategies so that when you profit from those risk, you could actually bring that money back and grow your base, because the one thing we do know Twanda is that we got to have money every day.

Twanda Black: That’s right. You can’t live without it, literally.

Steven LaBroi: No, you just can’t. I mean, it’s one thing that we try and bring to light because companies will definitely promote their products and as I always mentioned, institutions that are out there are all for profit. They have either stock holders or there are small concerns that they’re trying to create profit. So we have to understand their products or understand the definition behind the product, so we know exactly where we’re putting our money, because as I mentioned, most people we rest our money somewhere.

Twanda Black: Yeah.

Steven LaBroi: And we expect it to work for us.

Twanda Black: That’s so true. It’s great information. Can they find that pyramid on your website?

Steven LaBroi: Yes. I’ll tell you, I can, I will send that graphic copy to anybody that reaches out to millennialbankingconcept.org.

Twanda Black: Okay.

Steven LaBroi: Or on our Facebook page, Millennial Banking Concept. I will send you a graphic copy that you can have and you can look at and if you need explanation, certainly reach out to me and we can talk about it and share it with you or with the group, with your organization and we can just have these discussions because it’s all about making sure that your money works for you.

Twanda Black: Absolutely. We give you money mastery rules and what’s the next rule on our money mastery list?

Steven LaBroi: Well, its ironic that you said that. The next rule is know the rules. As funny as that seems but it’s-

Twanda Black: That’s number five, know the rules.

Steven LaBroi: It’s really the important part.

Twanda Black: Mm-hmm (affirmative).

Steven LaBroi: Yeah. You gotta know the rules. I mean, what I always try and communicate is that, it’s our money. We go to work for it and we go to school to make income, we try and create more income as a part of helping ourselves, but we don’t take those few minutes extra it takes to learn about the money that we make.

Twanda Black: Mm-hmm (affirmative).

Steven LaBroi: So knowing the rules, begin to learn a bit about each product or area that you’re interested in place in your money. Do the homework before you go talk to the professional. Most times people now, when they go to the doctor, they’ll look online and they’ll bring some kind of internet definition into the doctor. So do that whichever financial professional so that you can continue to learn. Another thing is take your time and learn a little bit at a time with each one of these products or services so that you know the language. When you’re in situations where you’re talking to someone and they’re talking their company language, you wanna have some understanding of it.

Twanda Black: That’s right. It’s just like the Bible, you can’t go to church without your Bible and you sit there and the preacher is preaching to you and what if he’s not preaching with integrity and what is in the word, but you just don’t know to word, so this is the same thing. You gotta know for yourself, basically.

Steven LaBroi: That’s right.

Twanda Black: You gotta get that information for yourself.

Steven LaBroi: Yeah, don’t trust [crosstalk 00:16:15] know the rules for you.

Twanda Black: Mm-hmm (affirmative).

Steven LaBroi: So I’m with you on that. We study everything else, let’s study a little bit about money.

Twanda Black: Yeah.

Steven LaBroi: Yep. And do first things first. Remember make sure the base of your pyramid in this instance, our financial foundation is in place before putting money at risk. What I always say, don’t take your rent or your mortgage money to the casino.

Twanda Black: And you know people do, right?

Steven LaBroi: Yeah. And I beg people don’t do that, because the risk is too high and some people win but a lot people lose.

Twanda Black: That’s right. Most be people lose.

Steven LaBroi: Yes. And the other rule of thumb, if I can say this in terms of know your rules, always give yourself at least 24 hours to make a financial decision. Don’t make quick decisions until you read and reread what you’re doing or learn as much as you can. There are always other deals. If you live long enough, there will be another deal.

Twanda Black: All right. Now, that’s the truth. That is the truth. We’ve been talking about the money pyramid today with our wealth strategists, Steven LaBroi. Steven, tell folks how they can reach you.

Steven LaBroi: Yes, please reach out millennialbankingconcept.org, that’s millennial, M-I-L-L-E-N-N-I-A-L bankingconcept.org. Phone is (202) 544-6226 and we’re definitely on social media, Facebook, Instagram and so please reach out. We’d love to chat with you and see if we can help you build a financial foundation using our graphic, the money pyramid.

Twanda Black: All right. Well, thank you so much for joining us today. We’ll talk about another great subject on next month. Our wealth strategists, Steven LaBroi of the LaBroi Insurance group. Thanks you, Steven.

Steven LaBroi: Thank you.