#183: Build Your Property Empire: A Holistic Wealth Strategy
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Welcome back to another episode of The Richer Geek Podcast. Dave Wolcott, founder of Pantheon Investments, returns to share insights on new investment opportunities, including private credit. Learn about alternative investments, tax optimization, and real estate strategies to grow your wealth. Don't miss this episode for expert advice and actionable strategies to achieve your financial goals.
In this episode, we're discussing...
Portfolio Allocation is Key: Focus on a few key sectors and diversify within those sectors to reduce risk.
Alternative Investment Strategies: Explore alternative asset classes like private credit, which offer high growth, are non-correlated to the stock market, and provide steady cash flow.
Uncertainty Creates Opportunity: Don't be afraid of market uncertainty. Look for ways to use uncertainty to your advantage and create certainty in your financial future.
Building Your Wealth Pyramid: Consider using Infinite Banking and whole life cash value policies as the foundation of your wealth pyramid. These strategies are non-correlated to the market, offer multiple benefits, and provide stability.
Define Your Certainty Needs: Identify what financial certainty means to you (e.g., emergency fund, passive income) and develop strategies to achieve it.
Resources from Dave
LinkedIn | Pantheon Investments | The Holistic Wealth Strategy
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Hey everybody, welcome back to another episode of The Richer Geek Podcast. We have Dave Wolcott back. We enjoyed his podcast, which was very successful about a year ago. We're going to talk about some new things. Dave Wolcott started his career as a captain in the Marine Corps. Thank you sir for your service. In 2000, if you remember, they wanted to have a child, but it ended up with three. So there's a bonus in the household, having three of everything now instead of just one. But we love talking to Dave, because he's with Pantheon Investments. And if you're in the Valley where I'm in the Phoenix area, you really know Pantheon and the success that they've had. He's the founder and CEO. He's passionate about helping entrepreneurs build wealth passively. We're going to get into that. What he's seeing in and around the inflation and the private sectors. So we're just going to dive into it, because we're probably going to have a lot to talk about. How's it going Dave?
Dave Wolcott
Doing awesome, Mike. Thank you for your service as well, brother, right? We're rolling in right after Memorial Day. So I always want to make an opportunity that's interesting. We talk about financial freedom all the time, right? Our brothers and sisters in arms are really the heroes that are fighting for our freedom every day, amen. So never take it for granted and be mindful, because a lot of people are paving the way for this amazing life that we live.
Mike Stohler
Absolutely, you know. And people who don't see that and say, "Hey, do what we did, go to the other places in the world." It's not so friendly or not so advantageous, and you learn really quick that America is the best, no matter what you think. Leaving off, what's new in your world? What's Pantheon doing? I'm hearing a lot of the groups are kind of holding fast, or where have you shifted? And ladies and gentlemen, it's just after Memorial Day. We're getting into an election year, and we don't know if the rates are going to drop. There's just a lot of stuff going on in the world and the United States. Let's kind of dig in and tell us a little bit about what Pantheon is doing now.
Dave Wolcott
Yeah, sure, Mike. I think that's really interesting. On my show, Wealth Strategy Secrets of the Ultra-Wealthy, we've gotten to interview some really great folks. Number one, Michael Sonnenfeldt, who's the founder of TIGER21. We've also recently had Charlie Garcia who runs R360, which is a community of over 130 centimillionaires. The average net worth is over 400 million. We spend a lot of time really dissecting billionaires, really looking at strategies right around, what is their investment thesis, right? And how are they really building wealth to stand the test of time? Because they've obviously been the most successful at it. And one of the things that I've found really fascinating, Mike, is that when you start to break down some of the portfolio allocations. For instance, in TIGER21 you can see that, on average, they actually only have exposure to public equities, like stocks, bonds, mutual funds, really of about 20-22% is where they hold that allocation, unbeknownst to what Wall Street will have you thinking, right? That you're going to put everything in stocks, bonds, mutual funds that actually only have a small allocation to that, and that's much more in a defensive type of nature, right? So I find that kind of interesting. Also look at the fact that they each have other key buckets, and as much as we're all real estate fans, real estate is one of our key sectors as well. Same thing, around 25% in real estate, and then they have 25% in private equity, 10% in fixed income, and then some other, various things. So when you're looking at, again, trying to just create that ultimate portfolio. What I've seen these really wealthy do is, they're really just picking a couple of key sectors and focusing on those sectors and then diversifying inside of that. If you are in real estate, for instance, maybe you're looking at different operators, different markets, different return profiles, right? So obviously, as we've had interest rate exposure that a lot of real estate assets are being challenged with right now, we have as an example, private credit. We've been focusing on private credit for the past few years, which is non correlated to the stock market. It's been growing at a combined annual growth rate of over 20% and it's basically factoring, or kind of lending, if you will, to small businesses who need income. And we're taking advantage of the fact that the banks have not been able to lend, right? With all of the banks kind of, having a liquidity crunch and kind of falling short. Now it's this other market that's really providing the lending for these businesses to grow. We've seen phenomenal growth there, which is a really nice cash flow play. We've also been focusing on the energy sector, quite heavily, in oil and gas, where you know, you can offset your active income by investing in energy. You can drive passive income. And they even have opportunities to do 1031 type exchanges inside of oil and gas, right?
Mike Stohler
Yeah, that's very interesting. And I think we're all seeing it, all the syndicators, all those people that, we're finding that the banks, I have really drawn back, and they're like, "Yeah, you know what? How about 40% LTV? 50% LTV?" They're trying to limit their exposures. And that brings us to more the private type of a lender, or these investment clubs, really big, some of the insurance companies, some people, and some different types of, I guess, banking type of strategies are out there, because the regular banks, especially the institutional banks, just aren't. They're not willing to do things just like you said. When you're doing this type of private credit, walk us through some of the listeners that may not know what that involves, and what you're doing inside of that space.
Dave Wolcott
Yeah, absolutely, Mike. Essentially, what we're doing is picture your hometown restaurateur. He might have three different locations. He's doing quite well expanding. You go in there every Friday night, it's really busy and it's buzzing, and he wants to open up that fourth location. And if he's to go to a traditional bank. It might be extensive paperwork. It might take six to nine months to actually get funding for that additional location. They might not even give him the right credit. He doesn't have the credit rating right because maybe he didn't get a college degree. He's a restaurateur, right? But he's been a successful business owner. He's proven that. And what we can do with merchant cash advances is provide that funding in a very short amount of time, with an extensive underwriting process, we can actually provide the funding that he needs to start building out that location, get things up and running, and then we'll typically pay back that funding in a very short amount of time.
So the average loan size is only seven months long in duration, and as they start to pay that back, what's really, neat for you as an investor and really de risks this whole thing is that you're actually being paid as part of the receivables directly from clients. When they start making credit card swipes and everything, we actually receive funds first before it goes back to the business owner. Therefore we can start accruing principal and interest, literally on a daily basis. And they do pay. The business owner does pay a premium for that funding, sometimes in the range of over 30% but for them, it's great, because they get access to that capital, they can turn on that new revenue source in a short amount of time, and then our investors are happy, because we can do steady, double digit cash flow returns that pay out on a regular basis. And then you can add velocity by as soon as those funds literally come back, you can actually just redeploy them into the next opportunity.
And then, from a risk perspective, what I really like about this, Mike, is that we diversify literally across 15 to 20 different industries. You name it, transportation, retail, pharmaceuticals, medical, like, we're never all lumped into just one industry. And furthermore, we never take more than a 5% position in any one of the loans, right? If there is any risk of default or anything, we have a very small exposure, and then most of the loans have personal guarantees to them. They may be collateralized by the business owners, equipment that they have, or things like that. It's been a very attractive asset class, and it's well needed, as we talked about with the banks lending a lot less, and we just still have a lot of small businesses that are really growing?
Mike Stohler
Yeah. It's almost like, you hate to see angel funding or things like that, but you really are. It's like, the last, where do I go? Where should I go? Then all of a sudden, these angels appear, at least give us an opportunity. And I think that's fascinating. How did you even think about getting into something like that, because I had never heard of this type of private credit thing ? Did your company just say, "Hey, how can we diversify ourselves and just kind of something just kind of holistically came about?"
Dave Wolcott
Yeah. It kind of goes back to what I was saying earlier, right? In terms of constantly studying, really the investment thesis and portfolio allocation of the ultra wealthy, and how have they been doing things? And again, we find that by having a mix of, like, three different sectors, can really give you the right amount of focus so you can get smarter about your sector, you can get access to actually better deals, and you're going to be able to reduce your risk a lot more, because you have some kind of diversification there, versus, let's say, we all like real estate, but if you're 100% into real estate, you've got interest rate exposure, right? Or if you're 100% into stocks, bonds, mutual funds, you're completely correlated to the markets, and you just don't really have the control. So we found private credit is actually one of the top asset classes a lot of billionaires look at, and it fills that role, Mike that we were talking about earlier, which is that fixed income spot, right? So just putting a percentage of your allocation to low risk, predictable, passive income, you know that's coming in on a regular basis that you can completely count on,
Mike Stohler
Yeah, I think it's huge. You look at other people that are like, you're saying real estate only. It's like, I have some hotels that are coming due for an interest rate swap. It's renewing it, maybe a 10 year loan, but it's hit five years and it's all of a sudden it resets. And you're like, "Oh, man, we have to start now to plan on a pretty sizable bump." We're seeing a lot of different people that are in real estate, multifamily, hotels, whatever it is, retail, we're having to worry about that, and so do our investors. Ladies and gentlemen, if you want just it seems like a little bit softer to get into it, little less risk. You don't have to worry about this interest rate swapping or anything like that. Dave, how does someone, if they're interested, you go to pantheon.com How do you get involved in something like that? If we want to join you?
Dave Wolcott
Yeah. It just would be at our website, pantheoninvest.com and you can just opt in to our investor list and get that and you know, we have a ton of resources. We've done a webinar, this particular opportunity as well. Literally, some very big institutions are on this same platform. It's got a six year track record of success, including going through the entire pandemic.
We've gone through extensive due diligence. We've been running it for almost a year now. They have seen very good results. That's really the best place. But we always like to start Mike with just really helping investors, really understanding why you're investing, right, like and let's talk about strategy first, right? Rather than kind of picking the shiny object and chasing after this opportunity or that. But let's strategically take a look at your portfolio allocation. How are you based? How can we optimize the existing assets that you have? And we're always looking for three different things. Mike, we're looking for cash flow, we're looking for tax efficiency, and then we're looking for some forced depreciation.
Now in this case, this opportunity is heavy on the cash flow side. It doesn't have any particular tax benefits to it. However, what we do is in the planning, you know, you look at different offsets, like where you can drive some oil and gas or something, for instance, and pair that with the cash flow here, right? And in real estate, obviously, you might be able to get all three of those, but right now, it's very hard to draw income out of that. So sometimes by actually separating those, but planning them together, you can still yield what we call really an asymmetric type of profile, where you get the biggest amount of yield and the lowest amount of risk.
Mike Stohler
And does it kind of the same, you have to be an accredited investor. Is there minimums, someone clicks on it before they click on it, is the qualifier for someone who wants to get involved with Pantheon?
Dave Wolcott
Yeah, this is an accredited investor opportunity, you know. I mean, frankly speaking, if you're not an accredited investor, the best thing to do is try to figure out how you can get there. We can help people try to figure out ways to get there faster. But once you get into that world, you start to see really good opportunities, right? That others can't see. And we try to take that a further level, whereas we're trying to identify opportunities in the market that are really invisible to others. So based upon our relationships, based on our reputation, we get invited into circles where we can basically see these opportunities. Like I said, there's other large institutions working with this same sponsor but we were able to get allocation, but we can actually improve the investor returns because we don't have the overhead that those institutions have, right? So it's great to be able to pass that on to the investors.
Mike Stohler
Absolutely. And ladies and gentlemen, Pantheon is not something new. You've been around for a couple decades now. if we kind of back up a little bit, people are typing in, who's Pantheon? You've been around, is it not 20 years or over 20 years?
Dave Wolcott
It's been five years this, Mike since I created Pantheon. But I've been investing 25 years now, as an LP myself and I spent time creating all of these relationships building out our intellectual property, which is in my book, The holistic wealth strategy and in building solutions to to really, I think Mike, well, our primary drive is really to help that limited partner investor. How can you take your financial goals and cut that time in half and reach them just that much quicker, right?
Mike Stohler
Yeah.
Dave Wolcott
If you're following your financial planner, the time it takes for you to double your money, I mean, you're closer to every 10 years, maybe 8 to 10 years, if you're lucky, right?
Mike Stohler
Yeah.
Dave Wolcott
We try to cut that in half and it takes basically exponential type thinking to be able to get there. You cannot do it on a linear based thinking model. So we use lots of different leverage points, different strategies, everything from reducing your biggest wealth destroyers that are out there, tax optimizations, in different strategies. But again, this is all to support your goals, because at the end of the day, you're never going to win someone else's race. You want to win your own race, right? So you should define what your own chess board looks like and play to that.
Mike Stohler
Yeah and let's get into The Holistic Wealth
Strategy
a little bit. We talked about it a year ago. How's that book doing? Anything else you want to dig in as far as the book and what it entails, and how someone can learn by reading it?
Dave Wolcott
Sure, Mike. I think people are getting a lot of value by really having a framework around how to grow their wealth, like the ultra wealthy, right? To be able to reach that financial independence goal, again, that much quicker, because the entire space of a lot of this private investing has been, frankly, quite opaque, right? And it's kind of opaque on purpose, right? And you hear things like the rich are getting richer, right?
Mike Stohler
Yeah.
Dave Wolcott
And why is it that they're getting richer? Because they know certain things that we don't know. Now, for instance, it's a great point, right? We have a Mastermind community, and the types of discussions that we are having in this community are really you just cannot find anywhere else. So we have very seasoned accredited investors, investors that all come together are like minded, and we're doing financial engineering about how we can actually, again, reach goals quicker, what investments work, what don't, and all these different types of strategies that you're just not going to get anywhere else. So you've got to have a community, you've got to have education, and then we talk about that in the book, and putting that all together in a framework so it's flexible enough to work with you wherever you are on your journey, but also just give you some structure so that you can kind of make progress along the journey.
And is this Mastermind online, or is it here locally?
So we have We meet twice monthly on Zoom, and then we have an annual meeting in Sarasota, Florida. We just had ours in February. We had some amazing guest speakers. Everybody got together. And some of the guest speakers are amazing. We just had a sent a millionaire talking about, specifically about this, about portfolio allocation last month, and you're having a one on one intimate discussion with a group about different strategies and things like that. I mean, it's very powerful.
In June, we're going to have a proactive CPA talking again about advanced tax strategies that people can do to offset W2 income, reduce their taxes, all of those types of things. So always bringing in a super high level of folks, and then creating that community where you have accountability, you stretch your mind, and then, build some great relationships along the way.
Mike Stohler
And what's the name of the Mastermind?
Dave Wolcott
The Pantheon Mastermind and virtual family office.
Mike Stohler
There you go.
Dave Wolcott
So we have a virtual family office as well. It's more of a done for you type of model. So where people realize that there's either too much complexity or they don't have time with their wealth management solution, then we have an offering for that as well.
Mike Stohler
I get a lot of people approach me and they say, "I don't understand the tax strategies. All I know is that the rich never pay tax." The same old stuff that you hear about the rich don't pay any taxes. The poor people pay the taxes. And I'm like, "Well, no, we pay taxes. We just have the platforms to either deduct it or depreciate it." So get in a little bit if our listeners are sitting there saying, "Okay, we've heard Dave talk a little bit about tax strategies and ways of offsetting." Enlighten us a little bit about what you're talking about within the community.
Dave Wolcott
Yeah, Mike, I was just funny enough. Just the other week of spending some time with Tom Wheelwright. If anyone doesn't know, he's Robert Kiyosaki's original, Rich Dad advisor. He is such a phenomenal resource when it comes to taxes. If you haven't read it yet, Tax-Free Wealth. His book, Tax-Free Wealth is such an eye opener.
And what people need to realize is that you need to basically switch this entire paradigm shift of thinking that taxes are a penalty. It's something that I have to pay for, right? There's 5,999 pages in the Tax Code that are all actually a roadmap of incentives for business owners and investors, but you need to know how to partner with the government to be able to access those so when we think about real estate as an example, and we're doing multifamily, we're actually partnering with the government because we're creating housing that's really needed in this country.
Despite interest rates, we still have a big shortfall in terms of housing. When you invest in oil and gas, I mean oil and gas supports our GDP, it supports our nation's defense, basically everything in every industry. Therefore the government provides a big incentive to do that. When you start to understand how the tax code is laid out, then you can start to make investment decisions that align with that, you can start making decisions around your life and how you maybe drive or operate your business, right? That always can be tax advantaged, right? But it all starts with that education. And I think Tom is one of the biggest thought leaders in the space when it comes to changing that mindset around what is possible for taxes. So definitely read that book, which is really excellent.
Mike Stohler
Yeah. And ladies and gentlemen, that is it. I love how you put that you're partnering with the government. It's not that the IRS is not this big bully that this bad thing. We need to pave the roads and build the bridges and do all this sort of stuff, and they get that through the taxes. But like I said, I love how you said you're helping the government. You're helping the people. By giving housing, by allowing small business owners to succeed, you're giving back. And by doing that, tax strategies that are out there allow you to take some of that out, you know, by depreciation and things like that. That's a great thing. Before we leave, what are some of the key takeaways that we haven't hit on that you'd like to inform our listeners as far as what you do or what you really want our listeners to get out of today's episode?
Dave Wolcott
Yeah, sure, Mike. I think we hit on some pretty good points. Just to summarize for listeners, number one, really think about your entire portfolio allocation strategy, right? Make sure you have focus within that, and then you have diversification inside of that, right? That's really key. We talked about a new alternative sector that many people may not have heard of before, which is private credit, again, a high growth industry, non correlated to the stock market, and steady cash flows. So great asset class to get into. And then something else that I can point out, and is kind of having some reflection recently with the upcoming election, and just always some uncertainty around the market and what's happening, and I think we're always going to have that, right.?I mean, whether it's an election year, whether there's wars going on or anything, right, there's always uncertainty. Mike, but I would encourage investors to really start to think deeply about what does that really mean to you? So don't subscribe to the hype on the media and say, like, the world is falling apart. Like, what are we going to do? Go stockpile in the basement,our food and shelter things. But look for opportunities where you can take uncertainty and create certainty.
Okay, so if you're concerned about potentially losing your job because you're losing your income, right? Then I would look at something like infinite banking, and I think we talked about that last time. We also help our clients with infinite banking, because one of the reasons I love this solution much is it is non correlated to the market, and it does multiple things with $1 you can borrow against it, you can give it to your heirs, tax free. You can do anything you want with it. It's got asset protection, right? And so it's a very sophisticated strategy that a lot of wealthy have been using very successfully. But as I think about building my wealth pyramid, think about using infinite banking and a whole life cash value policy really as that foundation right to your wealth. Because you know that this is not tied to the markets. It's been with insurance, mutual insurance companies that have been around since the Civil War, right? So they're even more solid, more stable as banks are more stable than banks, right? This is a really important way to be able to create that certainty for you. If you're looking for that certainty, what is the certainty you want? Do you want 12 months of income that you have as a reserve? What does that look like, right? And then find a way to do that.
Speaker 1
Yeah and that's perfect. Ladies and gentlemen. Again, it's Dave Wolcott, Pantheon, P, A N, T, H, E O N, Investments or pantheoninvest.com. Dave, where can people find you if they want to know a little bit more, are you on LinkedIn, you're on social media?
Dave Wolcott
Yeah, I'm everywhere, but if folks would like a free copy of the book, the best place is to go to holisticwealthstrategy.com and get a free copy of the book. And if it resonates, connect and glad to help.
Mike Stohler
Perfect. Dave, thank you so much for coming on again The Richer Geek Podcast and teaching us all about this new asset class that I didn't even hear about, and I'm taking notes as we're doing this podcast on private credit. Thank you so much for coming on.
Dave Wolcott
Thank you, Mike. Appreciate the opportunity.
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ABOUT DAVE WOLCOTT
Dave Wolcott, a former Marine Corps Captain, shifted his focus from traditional financial planning after his triplet birth in 2000. Driven to understand how the ultra-wealthy build their fortunes, Dave spent two decades as an entrepreneur and investor. He founded Pantheon Investments, created The Pantheon Holistic Wealth Strategy, and authored The Holistic Wealth Strategy. Today, he helps entrepreneurs achieve wealth through superior real estate and alternative investments, while hosting the podcast Wealth Strategy Secrets of the Ultra-Wealthy.