Interviewer: All right, so the name of the report is “Hyper Retirement: The Specific Investment

Formula for Retiring in 5 to 10 Years.” Now, the reason that this report is being
created and is called “Hyper Retirement,” because we're not talking about
someone who's starting when they're 30 and they have another 30 years to retire,
right, or 20 years and another 40 years of time to save to retire, right? So this is
condensing that to a 5 or a 10-year period. So first off, is that possible?

Interviewee: Yes, absolutely, it's possible. And the way it can be done is through a very specific
formula which leverages the learnings from some of the richest investors in the
world. So one thing that has been clear over the past century is that 95% of stock
market gains have come from reinvested dividends. So the way most investors
deploy capital into the markets is they buy at a certain price and they hope to sell
at a higher price. And it turns out that if you look at the entire gamut of stocks,
only 4% of those stocks over the history of the market have actually been
responsible for the gains in the market. Where most of the gains come from is
actually the reinvestment of dividends.

And the reason so few stocks are actually responsible for the gains is that you get
a lot of situations where stocks will go to zero. So a lot of the airline stocks, for
example, over the past century, started out when public and lost their entire
market capitalization, and so they really hurt the overall stock market indices. So
what you want to do is first focus on dividend-paying stocks and then you want to
find higher yield stocks. And if you look to your bank account, it's going to be
hard to find anything with a savings rate even around 1% these days. So where do
you begin?

Well, start with some of the richest investors in the world. So somebody like
Warren Buffett has recently purchased a company called STORE Capital, ticker
symbol, S-T-O-R, and STORE has pretty nice dividends. The reason he bet on it
was clearly that he's expecting appreciation over the long term. Essentially, it's a
real estate company or a commercial real estate company that benefits from
leasing out to some of the best known retail outlets in the world. The yield is just
about 5% these days and for any investor who is looking to generate some decent
returns, 5% may sound certainly a lot better than a bank account, but maybe not
stellar.

So how do you improve upon that? Well, the secret is to then add call options to
the existing portfolio. So whatever position you're holding, if you have 1,000
shares of STORE or 100 shares of STORE Capital, the next thing to do is then sell
call options at regular intervals. And what that means is that you can, by selling
regular calls against your stock, turn what is a 5% return annually into double
that, 10% or more. You can get 10%, 11%, 12%, even as much as maybe 15% if
things go your way.

So when you look at compounding returns over a period of time, say a 5 or a 10-
year period, it is possible to generate 15% annualized returns – those returns are
 not out of reach of a lot of individual investors. In fact, Warren Buffett has said
that if he were investing these days, he could generate 100% return in his
individual portfolio. He cannot because he's got billions upon billions to manage,
so there's a law of large numbers counts against him. But for the individual
investor, there's an opportunity, which is they're not restricted by large capital
amounts, so they can actually generate these higher returns by doing things that he
cannot do.

If you're going to your broker and you're selling 5 or 10 call contracts, that's easily
possible. If Buffett were going and trying to sell 100,000 contracts, that's a
problem for him. And so you're not restricted by those constraints and as a result,
you can grow whatever size portfolio you have right now by leaps and bounds,
maybe a double, maybe a quadruple by doing some simple things well – buying
dividend paying stocks and selling calls against them..

Interviewer: So we're talking to probably, you know, a man or woman in the U.S. right now
who is either 40 years old, 55 years old, I would say. So what's the average
amount that a 40 or 50-year-old would have in savings in America right now?

Interviewee: Well, let's start with a baby boomer because that's probably the most instructive
demographic right now and maybe the most pivotal. So a baby boomer, somebody
who was born right after the war, right around 1946 or so, and for the 18 to 20
years after that, there was a spike in babies born. What that meant was this huge
demographic shift in the U.S. which led to more consumption, more production,
more wealth.

At this point in time, this year in 2017, the average baby boomer has about
$186,000 or so saved. They have about $1.1 million in average wealth. So what's
happening this year, starting in 2017, is the first of the baby boomers are going to
start retiring and what that means is by law, in their retirement accounts, they
must withdraw at least 5% of their savings. What that means is that there is almost
certainly a downward pressure on markets as a result of the flow of selling, which
is beginning this year and will continue for about 20 years.

So if you are relying on a financial advisor, you're in your 40s or you're in your
50s and you are relying on your financial advisor, what they would almost
certainly do is invest your money in a mutual fund, which is going to charge you
maybe a half a percent, maybe three-quarters of a percent in fees. They won't
show that to you, that gets charged at the fund level, you don't see it and so it just
hurts you in the background. It's like a little parasite, it just kind of eats away at
you without you even knowing it.

On top of that, your financial advisor is going to charge you a management fee
which is maybe going to be typically about one and a quarter percent. So your
total fees are going to be about 2% and that's going to, over the course of the
next...let’s say if you're 40, you're looking at the next 20, 25, 30 years, over a 30-
year period, that 2% annually is going to hurt you tremendously.

So if you're starting out, let's say with $100,000 today and you say, "Hey, I want
to turn that into $1 million," well, if your portfolio grew at just 8%, now we've
already just spoken about how to get about 12% to 15% a year, but forget about
that. If you could only get half of that, maybe just around 7%, 8% over a 30-year
time period, that $100,000, if you take full control of it, will turn into $1 million
growing at a rate of 8% a year.

If you paid fees of 2% a year it would grow to just over half a million. And paying
2% fees is easy when you add the cost your financial advisor charges plus mutual
fund expense ratios.

So what's the number one thing you should do if you're in your 40s and your 50s,
you're looking out for the next 15, 20, 25, 30 years...Even if you've got, let’s say
$100,000, you want to turn it into $1 million, what you want to do is, number one,
do not pay fees to a financial advisor or to a mutual fund, certainly not high fees.
There are many ways, if you really want to have your hand held, you can go to a
robo-advisor and get fees as low as zero. Schwab Intelligent Porfolios will offer
zero fees, for example, right now for managing your money through its robo-
advisory service. But the number one thing you really should do, because nobody
cares about your money more than you do, is to invest. Take control of your own
investing, look for the high dividend paying stocks, sell calls against them.

What most investors don't realize is that even though selling calls or entering into
the options game is a little bit like venturing into the unknown at first, it's actually
a lower risk way of investing than just holding stock. So the way to think about it
is if you are buying, let's just call it STORE Capital and it's at $23 a share, so for
just a few hundred dollars you can actually own a few hundred shares or a few
thousand dollars you can own a few hundred shares. And if you are looking at the
5% yield, what that tells you is after year one, essentially, you've got 5% of your
money back excluding taxes. At the end of year 20, you've got your entire money
back in a retirement account, assuming the dividend stays the same. So that's 20
years to double your money.

But with covered calls, you end up lowering your risk even further. So not only
are you getting 5% back year one, maybe you're getting 10% back or 12% or 15%
back. Now it means that over the course of a 7 to 10-year period, you're able to
double your money and that means that if you can turn $100,000 into $200,000
over the course of 10 years, you can turn $200,000 into $400,000 over 20 years,
you can turn the $400,000 into $800,000 over 30 years. So the power of
compounding starts to tremendously affect the portfolio and in very positive
ways.
Interviewer: Amazing. Can you summarize that again? So what's the specific formula that you
just went over?

Interviewee: So the real secret or the secret formula is the magic of compounding that almost
nobody understands and this is...When most people think about compounding,
they think about exponential growth, meaning the $100,000 turns into $200,000 in
10 years, $200,000 turns into $400,000 in 20 years, and 400,000 turns into
800,000 in 30 years. So each decade, more and more and more money is made.
The first decade, you're just making $100,000 in gains, second decade $200,000,
the third decade you're making $400,000.

But what Buffett and the other billionaires really understand is that what you want
to do is invest in a retirement account, and the reason for that is very powerful.
That if you were to compare two investment accounts and let's say that you decide
that you're going to cash out your gains every year and I decide I'm not going to
cash out the gains, well let’s see how it works out.

If each year, we both make 15% and one of those accounts is taxed every year at
the short term capital gains rate and the other is not, what it means is over a long
period of time - because I'm the buy and hold investor, I'm not selling every year,
and you are deciding to lock in your gains - what's happening is over a long
period of time, I end up with about six times more than you. Now, that may not
seem huge when you think about it as, well, it's only a factor of six, but when you
think about it as if you could end up with let's say $1 million, but I could end up
with $6 million, which one of us is going to be happier upon retirement?

And so the real secret is that when you hear somebody like Warren Buffett talk
about how he buys and holds forever, really what he's saying is that he doesn't pay
much in taxes. He’s saying “I don't pay taxes at the end of the year, I don't pay
taxes next year on gains, I don't pay taxes if I can at all avoid taxes.” If you're
holding a brokerage account, which is a taxable account, the secret is you just
keep holding your stock. But if you want to make sure that you absolutely, with
100% certainty that you don't pay taxes until the end, at some point you have to
withdraw your funds, but if you don't want to pay them until the end, choose a
retirement account which is not taxed until you take withdrawals in retirement.

Interviewer: So, all right, so say I'm 50 years old, I've got $150,000 that I can essentially play
with now, the rest of my "wealth" is tied up in my home, so, you know, I'm not
looking to sell and rent or anything like that, I want to stay were I'm living. I've
got $150,000, my goal is to retire when I'm 60. I am employed so I'm continuing
to make money, the same amount of money between now and then, what's my
best case scenario by the time I'm 60 and I want to retire? And then my second
follow up question is, with whatever you believe my best case scenario is, how
much can I continue to extract from that to maintain some level of a quality of life
from 60 and beyond?
Interviewee: Right. So if you're about 50 years old, you've got $150,000, you're looking out the
next 10 years, and you're trying to figure out how to maintain the same quality of
life, a couple of things are in your favor. So one is that as you start to enter into
your 60s, you will enjoy the benefit that most millennials probably will not, which
is that Social Security is going to be around for you. So what you care about is not
really how much you're earning, you really care about how much goes into your
pocket at the end of the month.

So assuming you're working right now, you're paying taxes. When you get to 60
or so and you're retiring, you're no longer paying those same taxes because your
income level is going to be lower, your tax rate is going to be lower. So you've got
a couple things working in your favor: lower taxes plus Social Security. But how
do you get there? How do you turn the $150,000 into more? How do you double
it?

Well, the easy way to do that is to find either high yield stocks or indeed high
yield bonds. There are lots of companies out there which are offering very high
yield bonds which are based on sovereign nations. So you could, for example, you
don't have to buy the bonds of the U.S., which are stuck at very low rates, you can
buy the bonds of foreign nations. For example, in Europe, there's a lot of countries
that have higher yield bonds. And you don't even have to do this, you don't have
to go to Greece, or Italy, or any of these countries to buy these. You can buy them
in an ETF on a U.S. Stock Exchange. So they're easy to buy, easy to ferret out.

Another thing you could do is say, "Look, for most of my life what I've probably
been is a borrower. I probably borrowed to buy my home, buy my cars, pay for
tuition for college, whatever it might be," and at this point, you already have some
money, so why not make it work for you the same way that the banks made their
money work for them which cost you during your life time? The way to do that is
consider going to a peer to peer lender, for example, at Prosper.com. And what
you'll find at a company like that is there are doctors, dentists, etc., high earning
professionals who have very high credit ratings who may be just graduating from
college, or a residency program or a fellowship or something like that and they
actually have really high potential, but they also have a lot of debt and what they
don't want is to be paying very high interest rates on debt. So they go to a
company like Prosper, they refinance, and maybe they're paying 7%, 8%, 9%,
10%.

So what that means is you can actually loan to them directly and for every
$10,000, at the end of the year you can earn an extra say $1,000 on that so you
can bring back $11,000. Well, it turns out that compounds very quickly over time
and by the time you get to 60, you've got double your money. So you’ve got
maybe $300,000 and at that point, the key thing that you want to do is not really
eat into that capital as much as possible, you still want to invest it and that's okay
because your lifestyle is going to be pretty similar, but you don't have to pay as
high tax rates. So you can essentially pay for the things that you need, invest the
 bulk of what you still have, and enjoy the lifestyle that you still want while having
your income supplemented by Social Security which you can't dip into at this
point without penalty.

Interviewer: Okay, understood. So let me see here. The old rule for retirement investing is it's
better to buy and hold for the long term, but does the data back that statement up?

Interviewee: It does, yeah. So if you're looking at almost the number one mistake that investors
will make when planning for retirement, what they typically do is they buy and
sell a lot and they have a tendency to feel like when they're trading a lot, they're
probably making more. And the data actually suggests that the more you trade, the
less you make.

There are very few individuals or companies who can buck that rule. Goldman
Sachs has a history of proprietary trading and other firms where they'll make
money pretty much every day of every quarter of every year, but they're very
specialized in what they do.

As a general casual retail trader, what you want to do is actually keep holding the
positions you have for two reasons. The first is that the commissions costs you're
going to be paying are going to add up a lot and what a lot of investors find is if
they're trading very frequently, at the end of the year, the cost of commissions can
amount to as much as 10% or 15% of their overall profit, sometimes even more.
So you want to reduce that as much as possible.

The other thing is you can look to free commission stock trading brokers. So
there's a lot of brokers out there right now, they don't charge a dime for you to
enter and exit. That's a good way to save on cost. The other thing is that if you do
look to the long term and, as I mentioned earlier, if you avoid the cost of taxes on
an annualized basis, which means that you have to essentially get comfortable
with a little bit more volatility in your portfolio.

It's nice to sell at the end of the year, lock in the gains, feel like you captured
them, but the reality is you're going to sell your positions, you're going to hand
over a big check to the government, and you're going to start out the new year
with even less than you otherwise could.

So just leave your positions in there and over a long period of time, again, the
magic of compounding works in your favor to the point where if you were to
compare two portfolios, in which say, you know, one is being taxed and one is not
taxed at the end of each year, over a 60-year period what we find is the one that is
not being taxed until the very end makes a return 6 times greater than the one that
is taxed each and every year, assuming a 15% gain every year, which is what
we've talked about here.
Interviewer: Very interesting. What if they're in their 30s? What would you be doing
differently if they’ve got a little bit more time, an extra, you know, an additional
10 years, 20 years before they need to retire? So they’ve got, like, 30 years.

Interviewee: If you've got a longer time horizon, the nice benefit is that you can take on more
risks than you otherwise would. So that can play out in many forms. One of them
is in the equity market. Instead of buying bonds and enjoying a pretty low yield,
you can buy equities that have historically enjoyed much higher yields. If you
were to look at Facebook just this year, that's up 40%.

You look at companies like Google since they came, since inception, Google's up
1,000% plus. And companies like that are...they're going public regularly. So what
happens typically, and what happened with a company like Google was when it
came public everybody was negative about it. It dropped 20% right away, very
negative press.

Same with Snapchat right now. Comes public, very negative press, drops on the
backdrop of very negative sentiment. But somebody who understands a business
model well would look at a company like Google and say, "Well, it's got these
amazing network effects. For every incremental click, it makes extra money. It's
my go-to place every day which I use to search for things online." And
increasingly a thesis forms where you realize this is a company that's going to be
around for a long term.

Right now, a company like Snapchat is absolutely panned. Every analyst seems to
hate it, there's negative news articles all over the press, it may not be appropriate
for a 62-year-old investor to buy, but if you're 30, could you speculate on a
company like Snapchat that has a few hundred million 16, 17, 18-year-olds who
are absolutely fanatical about it because it does things that Facebook doesn't do,
because their grandma is on Facebook? Absolutely.

It leads to much greater upside. So those 1,000% returns, you don't even need that
many of them and you've got this huge upside potential. So equities, historically,
even if you only bought the general market, you would almost, certainly, over any
long period of time enjoy greater returns than if you're to invest in bonds.

But if you were to choose a concentrated portfolio of, say, 20 or 30 stocks, pick
the ones that you use every day. Pick the ones where you're the customer, like the
Google's, the Amazon's, and the Netflix’s. These are all the companies that have
skyrocketed higher because the likelihood is if they made you a happy customer,
they probably made millions of other people happy customers and as Warren
Buffett has said, there's never been a company in the world that has had millions
of happy customers that has gone out of business. So make your customers happy
and you'll make money.
And similarly, if you're buying a stock, really what you want to do is focus on the
company. Is it making its customers happy? Are they recurring? Is there high
customer lifetime value? Yes? Well, then that's probably a pretty good bet for not
just the 100%, 500%, but 1,000% and 2,000% returns.

Another thing you could look to do is go to a place like Coinbase.com and

probably in the space of about three minutes on Coinbase, you can buy
cryptocurrency. Now, cryptocurrencies are wildly volatile in the short term and
they've been known to jump up thousands of percent. Something like Ethereum,
just in 2017, is up about 1,500%. So we know that cryptocurrencies are on a wild
rollercoaster ride, but if you do a little bit of homework and research Bitcoin and
Ethereum and Livecoin and some of the other hundred plus cryptocurrencies,
there's even almost like penny stock cryptocurrencies out there.

If you look at these, you'll find that over the long term, the future is in currency
payments that are digital. For example, back in 1800, in England, people were
still using tally sticks. That means that two people would essentially break off a
stick and somebody would buy or if they were borrowing, they would draw a little
notch on a piece of wood and currency was tracked that way. Historically,
currency can mean everything from trading cattle, to wheat, to anything else.

So these days, what most people know of as currency is cash and what they don't
really remember is that cash is actually a pretty new form of currency. And cash
disrupted the tally stick and similarly, cryptocurrencies are disrupting cash. So
when you look at a teenager and see how they spend and how they pay for money,
they don't often necessarily dip their hands in their pocket for cash. They're often
on an iPhone and they're paying with Apple Pay or they're paying with Samsung
Pay and that, increasingly, as that generation gets older and older, that's where the
future is going to lie.

So a good way, as a 30-year-old, to look out to the future and see where the
opportunity is, is look to consumer behaviors. How are the young people paying
for things? What are they buying, etc.? And there are massive opportunities in
those spaces. You'll see billionaire investors like Richard Branson investing in
things like block chain. So if you're keen to see where the future is, go read up a
little bit about block chain and you'll see that there are a lot of companies that
have massive potential in that area along with 3D printing companies.

But ultimately, what you want to do is have a pretty core portfolio of stocks that
are not going to drop over the long term, so they're going to be around for the
long term. You don't want the airlines that can go to zero, you want the Google’s
and Amazon’s and so forth that have global reach expansive networks, global
distribution like a Coca-Cola and so forth. And then you want to have a smaller
portion of your portfolio in more speculative opportunities which have not just
opportunities to rise 1,000% but maybe 5,000% or 10,000% like the
cryptocurrencies.
Interviewer: Excellent. Let's summarize if we could. And thanks for giving insight into, you
know, those people who have a little bit more time. But going back to our target
market, the 50-year-old who has some money, obviously you need some money if
you're going to invest it, right? So they've got some money, $100, $200, $300,
$500 million, right?

So what you're saying, it is absolutely possible in a 10-year period to safely

double your nest egg, right? And then from there, essentially, continue to invest in
a way that's safe and you can live off of that for a long, long time. Correct?

Interviewee: Exactly. And I think that's the key point that even if you're starting with $150,000,
you should know that in 10 years, that $150,000 there's almost no excuse for not
turning that $150,000 into $300,000. But the easy perspective is to look at that
300,000 and say, "Oh my God, I'm at 60 and maybe I think I only have
$300,000." That's not true because in the first year, you're going to be spending
money, but most of that $300,000 stays invested.

So the $300,000 actually keeps growing and growing and growing. And so you
actually can end up in a place where if you're in your 70s or 80s, what you
thought was a small amount today ends up actually as a huge amount over time
even though you're spending it in your retirement years.

Interviewer: Excellent. And are there any resources you could point our readers to help them
learn any more details about these strategies? Ideally, some free resources or
websites you could point them to?

Interviewee: I think that...Yeah, for those who are looking, for example, for the younger
audience looking to learn about, let's say, some alternative investments, such as
cryptocurrencies, go to coinbase.com. For a slightly older person, who's looking
to be a little bit more conservative with their money and looking to actually flip
the borrower-lender paradigm, go to prosper.com. And then for those who are
looking to search for high yield positions, such as STORE Capital, Yahoo!
Finance has a ton of great screeners.

So if you just go to Yahoo Finance or Google Finance, both of them have

screeners that search for dividend-paying stocks. And search for those that are 4%
or 5%, make sure they have options, you'll see free options chains on Yahoo!
Finance or Google Finance, and if you can look to sell calls and generate an extra
2% or 3% every month or two, you're going to look to easily gain that 15% a year,
which is the key number.

Interviewer: Excellent. All right, thanks so much for your time.