There's a lot of talk about a forthcoming economic downturn and how to protect retirement investments.

People can't seem to wait for the bubble to burst. I even told founder and CEO Ryan Moran on his podcast, Freedom Fast Lane, that investors should take caution in the current market because real estate prices are incredibly high.

That's why it made perfect sense to talk to someone who's been through an economic meltdown holding a significant real estate portfolio, and have him share what got him through it.

Damion Lupo used a Visa credit card to pay for his first house. He bought up 150 homes in seven states in the five years leading up to the tsunami that was the Great Recession in 2008.

It was this experience that led Damion to realize that riding the wall street roller coaster isn't the best way to take control of his financial future. So he set out to solve this problem for himself and others by establishing a financial technology business called Total Control Financial.

Here are three important tips from Damion to take away from this episode:

  • Why you should look into alternatives to the traditional 401k;
  • What having total control of your financial freedom should look like; and
  • Why we shouldn't wait until we're at retirement age to create and live the life we want.

How services like Total Control Financial differs from a traditional 401k

The 401k

A 401k is a tax-qualified pension account that allows you to make retirement savings contributions that are sometimes matched by your employer (which can feel like free money). It’s deducted from your paycheck before tax and is limited to a pre-tax annual contribution of $18,000 (as of 2017).

Often people assume that by contributing to a 401k they are getting a tax break. However, the tax is paid when you reach retirement age and want access to the funds.

This capital is then used by the Wall Street system to pay brokerage fees (typically 2-3%) over the lifetime of the fund. As the investor in your 401k, you are taking on the risk of investing and have limited options (stocks, bonds or mutual funds) of where your money is used.

What Services like Total Control Financial do that’s different

Alternative investment plans give you flexibility over the use of your funds. You could choose to invest in a traditional mutual fund, or something completely different like rental property or a range of alternatives that most people don’t think of as retirement options.

Also the idea that you’re saving on tax is a common misconception - taxes are likely to go up and you will take a big hit when you come to withdraw your funds from a 401k. However, if you pay taxes on the money today and start investing it strategically, it’s never going to be taxed again and it starts to grow.

This starts to get really interesting if you starting thinking about real estate - because of leverage.

For example, you purchase a multiplex for $500,000 with $100,000 as a down payment and borrow $400,000. When you sell that multiplex for $1million or $2million for example, everything you earn at that point is tax-free.

What is a Qualified Retirement Plan (QRP)?

Sometimes you hear of this as a ‘solo 401k’ or ‘solo k’, they refer to a qualified plan that is tax advantaged. There are certain rules on what you can or can’t invest in, and you receive a number of tax benefits.

How does a QRP program work?

It’s a simple process. For example, you have $100k sitting in an IRA:

Firstly, they set up your QRP plan. You then go to the bank of your choice and set up a new account. You move all the money currently held in your IRA to this account - tax and penalty free - and you’re given a check book to begin investing the way you want to.

As with a normal IRA or 401k, you can withdraw all the funds when you are 59.5 years old.

You can also write a check for up to $50,000 as a loan to yourself for whatever you wish, to be paid back over five years with interest, so you are able to get some access to the funds ahead of time if desired.

Remember though: If you fail to pay this loan back you’ll be forced to pay taxes and penalties on it.

What are people investing in through this QRP programme?

Common investments are in land and property - these can be anywhere in the world, not just the United States.

Also common is loaning out funds to folks making real estate investments as a hard money lender. This is popular because there is very little management involved.

Another popular option is to invest in startup companies - even through Kickstarter.

Does Total Financial Control offer any guidance to investors?

Damion wrote a book called “The Total Control Guide to the QRP,” which offers education to investors.

There is also a space on their website where investors are able to engage with each other to learn about what can and can’t be done within the system.

A team of attorneys are on hand for free to Total Financial Control customers as well as coaches and mentors with decades of experience available to advise.

Who is qualified to invest in these plans?

Damion says that the biggest qualification is somebody that is responsible and willing to take ownership of their investments.

The next question, says Damion, is are you willing to be a good investor? By taking part in the programme, you become self-employed and take charge of your funds and earning potential. Like a side hustle.

The only people that aren’t eligible for the programme are W-2 employees who have no rollover money from a previous job, and will, therefore, have to wait until they leave their employer before starting a QRP account.

But Damion finds that W-2 employees often have in-service rollover options to move their funds from a 401k into a QRP and begin investing in alternatives.

How Damion started Total Control Financial

Damion has a precious metals company and a number of years ago a client purchased metals using QRP money. This was something he had never come across and it opened up a whole other avenue for buying and selling his product. It eventually led to him writing a book on the subject.

In 2013, he had a conversation with his father just before he passed away, who expressed regret for not having done many of the things he would have liked to during his life. As a result, Damion was driven to help people take control of their lives and take more risks - to remove themselves from financial bondage.

Vision statement

When setting up this company, he had a clear vision and set of values that drive the direction and focus of the business with a moral compass. Those six values are:

  1. Growth
    It’s important for Damion’s team and clients to always be growing.
  2. 10x
    Tied with growth is the idea of challenging yourself to think big to discover new opportunities.
  3. Candor
  4. Transparency
    These two are also tied together. They’re about being open. Openness leads to:
  5. Relationships
    The team is dedicated to long-term relationships and being ‘in it together’.
  6. Self responsibility
    If we are not responsible for every piece of our lives, we are abdicating control.

Damion’s views on retirement

In his view, the idea of retirement is an archaic idea similar to shooting a tired farm animal or burying an old tractor. There is a feeling that after the age of 60, you have no value and so are pushed into retirement.

But these are the years when you are hitting your stride, you have acquired wisdom through years of growth.

The goal for many appears to be working a career you don’t enjoy to reach retirement age so you can lead the life you would like. But when you are doing something you enjoy throughout your life, he says, retirement seems like a dumb idea.

As we continue to move forwards into the gig economy where a large portion of people are self-employed, we are becoming more empowered to spend our lives living the way we want to.

Learn more about Damion and Total Control Financial

The Total Control Financial website is full of resources to help build confidence in investing.

Making mistakes is an important part of growth, so don’t fear them. It’s best to find people that are already investing successfully and connect with them to leverage their experience so that you are not working solo - investing is a team sport and a path to new found freedom.


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