How To Become A MILLIONAIRE In 2023: BUILD WEALTH Starting With $0 | Jaspreet Singh | Transcription
Transcription for the video titled "How To Become A MILLIONAIRE In 2023: BUILD WEALTH Starting With $0 | Jaspreet Singh".
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Everybody in America should be a business owner. However, not everybody should be in the business of starting a company and not everybody should be in the business of operating a company. So what does that mean? Well, you can be a worker and a owner, right? This concept of equity, you have to understand this because wealthy people are working for equity, they're not just working for a salary. Bringing this back to the idea that there are habits that keep people poor, so one of them is living and thinking in cash. And so if you're storing your money in cash, you're not buying assets, like you were talking about earlier, things that you purchased that give you money, the company that you're talking about building now, the company that I built, those are assets, apartment complex and asset potentially, there's actually some complexities there. But buying into the stock market, right? Assets. Right. So if you're thinking in cash and cash supply is being inflated, then your buying power is going down. So you're going back to your point about the poor getting poorer. So we're pulling down their buying power. And then also just the way that you start thinking like an entrepreneur about like, I don't have the upfront capital, this is another mistake people make. Oh, that's okay for people that are already rich, they can do things that I can't do, but you weren't thinking that, right? So you, I'm sure, went to people and they said, okay, cool, give us up from money, you didn't have it, so you go on to the next person. But because you keep going until you find the person that's like, okay, word, like come in, throw your party, I'll take half up front, you even find partners, again, paying them in equity, you're paying them with future money that you don't currently have. Right. Like that one thing alone is a huge habit difference between people who think, I trade time for money, right? I go and I work, I give you my time, you give me that money. Nothing wrong with that and it's the path that most people will take. Right. But for people that really want to understand what we're about to go through, because this could be nothing. And a year from now, we look back on this video and we think, "Phew, thank God that it didn't get as bad as it could." Right. But we could also be headed into a recession, like a deep global recession that could last a year or two years or more. Sure. So getting people to think more entrepreneurially, like you're laying out in the story, I just want to to orient people to the fact there's nothing necessarily different about you. Anybody can think like that and get the kind of results that you end up getting. I think it kind of goes back to what you were saying, it was before we started rolling, where you said you were dumb and so you asked a lot of questions. For me, I said, I was dumb because I don't really care about risk. I never even looked at risk. For me, it was opportunity. That's all I saw. And it was just a way for me to get started. And I was called stupid and dumb all the time. And nowadays, if I'm not called stupid, it's probably not a crazy enough idea. And so that's kind of exactly what you're saying. I started making this little bit of money and started to grow and I had some cash in the bank. And now I started reading these books and they talk about investing in real estate. I was like, all right, let's try this. So I was 19 at the time and I started looking at real estate investment properties. And again, I didn't know what was normal. And I took my MCAT on August 22nd, August 23rd, I closed my first real estate investment property. It was a small 1000 square foot condo, water foreclosure, and I bought it for eight grand as I told price to condo. And that same condo sold for 150 grand just a few years prior. And that condo then started paying me $600 a month. And now you talk about extending time for money. See, in the beginning, I didn't understand that concept. Because when I was working in this event planning company, it was just me. If I didn't do everything, nothing was going to happen. But then this real estate investment property changed the way I thought about it. Because now all of a sudden, this asset, I bought this condo.
Understanding Wealth And Investments
Pay Could Have Gone To The Owner And Then Salaried The Worker (03:38)
It's paying me money. And I don't got to physically go host a party. I don't got to go flip pretzels. I used to work on T.N.s pretzels as well. I don't have to go and do something. It was just there. I owned it. And now this condo is paying me for just owning the asset. And now all of a sudden, I started thinking different. I started to get a little bit upset because I was like, "Well, why was I never taught about this? We're not taught about investing. We're not taught about financial education.
Start Working Towards Wealth Instead of for Wealth (04:01)
We're not taught about wealth." And that's talking about now money habits. Well, the next habit you got to understand is you got to be able to ask questions. Because if you don't understand the way the system works, you're never going to be able to answer or ask the right questions. Because the way that the system works across the board is, in a company, you have the workers, then you have the owners. It's kind of like an overlap. And sometimes the workers are the owners, some of them, kind of in the center. But the workers are the ones that are not working every single day. You get your salary. The owners aren't working for a salary. They're working for equity, profits. So they're hoping that now the workers will be able to drive up the profits. So now the valuation of this asset is higher. Now, when you have the sort of inflation, who hurts the most, the workers? Your incomes don't grow to keep up with inflation. However, the asset value, which is now the value of the company, disproportionately gets benefited because now this money gets printed, it gets created out of thin air, it flows into assets. And that makes the valuation of companies, for example, to go up. So now you have these two things, right? You have the workers and you have the owners. This is how this works. So it depends on what companies get that money. How did they decide? So this is the first time ever that they decide to buy company stock. How do they pay? Money TMs. Those bonds are. How does the Fed decide? I have no idea how they decide. However, let's think of it this way. So stimulus checks went out, right? People get cash. You feel wealthier in the short term. Bank account goes up. Some people took this cash, maybe they paid off some debt. Maybe you go and invested this money. But a big chunk of people took this cash and then they went out and they spent it. Well, if you need this money, well, yeah, and you had this whole range, right? Some people really needed it. Some people went to Walmart, they went to Kroger, they went somewhere and they bought groceries. But still the money, where did they go? They went to Walmart, Kroger. And those companies have bigger profits because I was money. It was printed. It goes into the hands of people and then it flows to the corporation. Other people went to Louis Vuitton, they went to Gucci, they went to the Apple store, they went to Lululemon. Again, who does that benefit? So the money was printed out of the near. Somebody has to pay a price for that. The regular person, average people, they have to pay now higher taxes, which is inflation in this case. Yeah, it's not a true tax. They'll be confused by that. But they're invisible tax. Right? It lowers your buying power. Lower your buying power. The tax. And then where does all the money flow? It flows now to whatever you buy. The wealthy, the rich. And so now what do you want to do? You know, go back to that system. You're the workers and the owners. Everybody in America should be a business owner. However, not everybody should be in the business of starting a company and not everybody should be in the business of operating a company. So what does that mean? Well, you can be a worker and an owner, right? This concept of equity, you have to understand this because wealthy people are working for equity. They're not just working for a salary. And so what you want to do now is you want to understand, okay, I'm working every day to get paid. Now, what are you doing with the salary? Either you can take the salary and go out and spend all of it, or you can take some of the salary now and work to build equity. Maybe that's in stocks. Maybe that's in real estate. Maybe that's in your own company. So if I buy stocks, I'm buying equity. You're building equity. You're literally buying ownership in companies. If you go out and buy a share of McDonald's, you become one of the owners of the McDonald's company. And now when the McDonald's valuation goes up, you get to share that because of price of your stock, the value of your stock goes up. Do you know the Wall Street Trapper? I do. I've saved his videos with you. Dude, he's so dope. So he talks about if I'm going to wear it, I'm going to own it. Yeah. So if I'm going to wear Louis Vuitton, then I'm going to own Louis Vuitton stock. And that's so smart. Like, just here's the, like, I know what this video would have sounded like to me. If this was the first video I encountered, it's so heavy. It's just like, oh my God, these ideas are so complicated. So going off of what you're saying, let's give people a waypoint here just to help them anchor. So we've got a few really important ideas. So one, there's a saying, the hidden taxes, you call it, which I love that idea. So you've got inflation. Now the government is trying to help you. I'm not even going to say that there's anything sinister. They really were just doing their best. Sure. We got hit by the pandemic. Who the hell knew what the way out was going to be? They work with the Fed. They pump just a lot of money into the system. So we end up having what was looking to be the greatest global depression since the Great Depression in 1929. But it only lasts for two months, because we end up injecting all this money into the system. Right. So cool. The catch is that the way to get that into the system, it can be give people money directly, which they did, but the people that really need it, they're going to buy groceries. So it doesn't, they're still trading time for money in essence, right? Because they haven't broken that cycle. If the government's not giving them money, they don't have anything. Then you've got people, I'm talking averages here. You've got the middle class, they're going to Louis Vuitton. Oh, word. Like I've already got my groceries taken care of. So now I can go buy that handbag that I want to do a little Instagram flexing, whatever. So they didn't help themselves out. But then you've got the wealthy or the educated. That's probably a better way to think about it. You've got the financially educated. Because they're educated, they owned assets already, which is the easiest way, the traditional way, for the Fed and the government to pump money into the system, is to buy assets. So they're going to buy these bonds just to keep it really simple. This is overly simplified. But they're buying these bonds. So now you've got people like me, who was not a good investor, but I can afford a money manager. And so the money manager is like, "Yo, you need bonds.
Money Habits: Workers vs. Owners (09:53)
Not now, this was before." So I buy the bonds. So hey, now I'm backed by the government, because they know that they can print money out of thin air. So now I'm getting this return on my money. My money's protected. Instead of being deflated, they're buying my assets. So now I want people to know the wealthy, some of them, myself, because I was not financially educated as of two years ago. I'm only just now getting that way. So I've been a good entrepreneur, a bad investor. But because of that, the system is, I'm learning about it by asking all these dumb questions. And I'm really seeing how it works. So it's not like I was doing something nefarious for me to get richer during this time. It was just like, "Oh, I need assets. Break the time for money equation. I've got all this risky money in building my business. I wanted a more sure thing." So then the bad thing happens. My sure thing gets taken care of by the government. And now it's like, "Oh, it looks like the rich are getting richer. It's just education." So now getting into money habits, the other thing that you talked about is, while your friends were spending their money at a party, you're spending money on building a business. Right. Like that fundamental difference of spending it on fun shit that goes away or equity, in this case, your own company, is a world of difference. So I just want to anchor everybody background to those like money habits you've got, what all my mom would have called, "pissing money away," right? Literally an alcohol. You're just pissing that money away. Or putting it into something that's going to go to work for you.
The real estate business taught that the key to wealth is that equals freedom (11:24)
In your case, it was a business. It was a real estate. Yeah. If people can just grab that fundamental difference, like of, "Hey, start thinking about the world in this different way, they're going to be a huge step forward." And it's all a learning process because I don't drink, I don't smoke, I never drink. But for me, it was the only way that I knew to kind of start making some money. And so it's how you start and you learn. And each one of the things that you kind of do, you're going to learn something new and you're going to be able to apply that to the next thing. And it really is that shift. I call it the minority mindset, thinking differently than the majority of people, because it's doing something different. Most of us are taught just to be consumers.
The importance of thinking differently than the masses in order to generate wealth (12:03)
We're taught to go buy cool things to flex. Exactly. And that's it. We're never taught to do anything else. And think about the last time your teachers taught you about the importance of investing your money. They don't know how to do it either. They couldn't help to teach me. And so that's where you have to be willing to go out of your way to learn how some of these things work. Because if you don't, you're just going to be a pawn in the system. And it's very unfortunate. It sucks. And this is where I'm trying to help provide that education, because these are things I never grew up learning. These are things that I wish somebody would have told me. I see it as so many people. I used to guess teach in Detroit public schools. And these are good kids from rough areas. A lot of times don't have two parents in the home. Sometimes don't even have a parent in the home. There were some kids who didn't have or mom's not around. It was raised by a gang just because there's no parents. And so they provided them shelter. And it's crazy because you get stuck into a system, a cycle. Because you don't have any way of learning or seeing anything else. And one of the first times I was there, I asked the kids, how many of you guys have a job? Most of them raise their hand. Most of them have an income. And they're in high school, right? They're going to school and they're working. And next question is how many of you have a bank account? Nobody. Not a single person had a bank account. Jesus. So it was like, how do you guys, what do you do with your money? And so we get a check, we go to the liquor store, we cash the check. Now the liquor store owner is going to take one to 10% of that check. And then what are you going to do? You're going to buy a candy. You're going to buy a pop. You're going to buy a bunch of dumb stuff on your way out. And now you're left with only half of your check. And now what do you do? It's just, I like to call it net zero thinking where if I have cash, I need to spend it. I have $500 on a bank account. I got to make that zero. If I have $1,000, I got to spend it. Because we think, oh my God, if I had 10 grand, I would go on this nice vacation. If I had 50 grand, I would buy this car. We think in terms of, it's the consumer mindset of if I have this money, I need to spend it. But this is where we have to break out of that and understand what can we do differently. And instead of just spending all of this money, and it's more, it's more difficult now because of the higher cost of living. But it's so much more important now than ever where you got to create this margin. I call it like an equation where your wealth is really, you take your income minus your expenses. And that's equal to your investments plus your savings. So you take your income, whatever money you make, you subtract your expenses, your houses, your home, your clothes, your car, whatever your expenses are. And if you have some money left, either this money is going to be saved or it's going to be invested. Well, if you have some money left, you're already doing something that a lot of people are not doing. You're more than the majority of people right now. I just read a study yesterday. Seven out of 10 Americans across the board are living paycheck to paycheck. 50% of Americans that are making $250,000 a year are living paycheck to paycheck. That's crazy. It's not how much money you make. It's what you do with the money you make that is so important. And so now if you have a buffer, you're already better than the majority of people. Now the question is what do you do with it? Well, we're taught to save it, save all of it. So your investments are zero and your savings, you're trying to grow that thinking that you're trying to become wealthy. But you're never going to be able to out save inflation. Your savings are literally making you poorer each and every day. However, you don't want to just not save any money. You got to be strategic with it. What I like to say is there are three reasons why you should be saving money. You save money for an emergency, have somewhere between three to 12 months worth of expenses, depending on your risk tolerance. Save money for a big purchase. You want to buy a car. You want to buy a house. You need some cash to do that. Save money for an investment. If you're not saving money for one of these three reasons, you are saving your money the wrong way and it's making you poorer each and every day. Now you didn't say save for retirement.
Social Security will not fund your retirement (16:01)
You invest for retirement. Now you're taught by retirement. The time we're about to face a big retirement crisis because traditionally retirement was what people like to call a three-legged stool. You had your social security, you had your pension, and then you had your own investments. Or your savings. A lot of people like to do. Pensions are something you only read in history books anymore. They're a thing of the past. So those don't exist anymore. Social security is running into a very, very, very big dilemma because right now if you are under the age of 45, the social security money that you're paying isn't going to go to fund your social security income. It's going to fund somebody else to retire because the social security program has much bigger expenses than income. And so it is on the path of being completely dried up, of just running out of money. Is this because the younger demographics are just a smaller cohort than the older or? There's a lot of reasons for it. It's how the social security money is spent. It's how many people are requiring social security money, how long people are living for, how long these social security checks have to go out for. A lot of bad calculations, bad investing. And so the social security fund is now drying up. And so now everyone says, well, I'm not worried about it because government can just print more money and do bigger social security checks. That's what we're seeing this year. We saw between 2021 and now the biggest social security raise ever between five and six percent, something in that range, which one is already not keeping up with inflation. So yeah, you got a bigger social security check, but oh no, it's not buying you as much as you could have last year. But then the second issue is just think about that for a second. If the government is going to print more money, which means the Fed is going to print money, give that to the government to give you bigger social security checks, what does that mean?
Automated Active-Investing (Or Passive Investing) (17:48)
You got a bigger check. Great. But now the cost of things have grown even faster than the growth of a check. You cannot out print inflation. It just creates more inflation. And so you had the pension that's essentially gone for the vast majority people. Social security is not going to be able to fund your retirement, which leaves people with a third stool, which is your own investments. Now traditionally uses, oh, I'll save some money, save 10% every income. That's not going to do it. Your savings are going to make you poorer each and every day. And the second thing is your 401k. And it's a great start for the average investor because now it is like automatic putting a little bit of money into some investments. However, your 401k was never, ever, ever intended to be your sole investment plan. The founder of the 401k even came out and said that the 401k has gone awry.
Educational Resources (18:45)
It is a monster because now so many people are hoping that they're going to be able to rely on the 401k to retire. And that's not what it's intended for. And it will never be able to be enough for you. And so a lot of people have this false hope that, okay, yeah, whatever social security will give me a little bit extra, but my 401k will take care of me, but that was never the plan. And so what does that mean? Your 401k, just think of that like as if you invest in your 401k, your IRA, that is the absolute base. Your savings are not going to do it. This is where you have to go and invest yourself. And that's where, oh my God, how do I do that? We're never taught how to do this. We're never told how to do this. We're never given direction on how to do this. So you have to be the one now to go out of your way to start learning this. And thank God for YouTube because now we've decentralized education. But the question is now you have to be willing to do it. And you have to understand who your teachers are because there's crap on YouTube.
Losses In Investments (19:36)
There's also good stuff on YouTube. And we're never taught how to learn. We're usually just taught what to learn. So now we have to be willing and go out of our way to become smarter to one start learning and understand how do we learn the right things and then apply it. Because the downfall with investing is it's risky. You got to be willing to get punched in the face. You have to be willing to lose money because it's a part of the process. And it sucks. It sucks losing money. I made a video on my YouTube channel Minority Mindset where I went over my worst real estate deal ever. And the reason why I made it is so you can see, look, every real estate investor has got at least one bad deal. And to date, that's the only deal that I've ever lost money on. And I walk you through every single bad thing that, I mean, because everything that could have gone wrong went wrong plus a whole lot more. And it is one of the biggest headaches of my life. But my goal is, you know, yeah, you can laugh at me, make fun of me. But you're going to see like, holy cow, things can and will go wrong. So just anticipate it because that's, it's a real life tuition. You got to be willing to learn. And you know, it's a price to pay. And it's one of those things where, you know, just like with entrepreneurship, everybody wants to be successful as an entrepreneur. Everybody wants to be rich. How many people are going to be willing to get punched in the throat and keep going, keep getting back up and keep doing it? It's very difficult, which is why, you know what? Not everybody should be an entrepreneur. Try it. But it's not for everybody, but everybody can work to own this equity, right? This ownership, these assets and everybody needs to. People's actions speak louder than the words because if that's true, you should not have a Gucci belt if you don't have the same amount of money in the market. You should not own a BMW if you do not own any investment portfolio, right?
THIS Outro (21:16)
I mean, it's just, it's just a matter of looking at what you do. Does that match with what you actually want? If you want to become wealthy, question answers, yes. Okay. What are you willing to sacrifice? You have a BMW in the driveway. You got the Gucci belt, you have the Louis Vuitton. If you have the nice stuff, but you don't have the nice assets, your priorities are in the wrong place. And this is just a matter of you looking at yourself in the mirror and being honest with yourself and understanding what do you want. And for a lot of people, you know, maybe this is a matter of financial education. Maybe this is a matter of preference, but many people would rather look rich than be rich. If you just look at, you know, what it is. Now if you die with a little bit deeper, other people that want to actually be rich, who want to be rich today? You want to be rich tomorrow, not be rich in five, ten years. And so what does that do? It then drives your actions. If you're ready to level up, all you need to do is take the steps with the curriculum and community that's going to get you there. Enroll right now in Impact Theory University. 50 courses, 100 hours of content, and live sessions with me every week where you can get any question answered. Act now and get my exclusive live workshop, Make Any Goal Stick. Click the link and change your life. So it's very difficult now to understand that, hey, I'm willing to sacrifice not only the nice stuff today, but then also not do the attractive, the sexy, the things that are hot that are making people so much money today because I believe in this long-term investment that has been time tested because it's so boring. But the reality is that boring is where the real wealth is built. Thanks. I always tell people, boredom kills more entrepreneurs, kills more dreams than fear or failure. It's the daily grind, like when, to your point about watching candles, when crypto is really popping off, I had to stop myself from watching it because it was so fun and so exciting. I was like, you can't spend time there because I'm not going to want to watch it when it's down. Yeah. So it's like, you want a system, you want to set it, you want to forget it. And if I could get people to understand the psychology of how money impacts you, like, oh my god, to your point about people would rather look rich than actually be rich, when you think about what money really does for you, you have to understand peak emotion. There's only so much emotional amplitude that you can have.
The happiest moment of my life (23:50)
In fact, do you have an image in your mind of the highest emotional amplitude moment of your life as it were I felt the most emotion? Yeah. The highest positive emotion you've ever felt. Positive emotion. Yeah. Positive, for sure. You know, it's funny. My wife used to get really upset at me because I never showed emotion. And she was like, what's wrong with you? Like, you never, like, you never get excited. You never said, I'm like, look, the only real emotion that I feel is hunger. I get hungry. I've changed the sense. That's what a woman wants to hear. If you've had hungry for you, baby, that's the only thing I ever feel, you might have a shot. Yeah. So I'm a volve since then where I'm working on that, you know, but I think, you know, the happiest is really for me being around my family and the people closest to me and just laughing. Yes. That is my favorite thing in the world. Like, what do I want? I literally want my friends and my family in one room and us just joking around because I, you know, we, we make fun of each other and it's not enough. The mean way, it's just the, you know, our personalities can be laughing, have fun. That is, if I could think of my favorite thing to do would be that maybe if I want to take a one step further, maybe do it on a beach. You know, it's, it's honestly, it doesn't matter where we are. If we're in my basement eating some, whatever pizza, some Indian food and just laughing. Yes. So now I believe that to be true of what you're saying. It's certainly true of what I know in my life. So I have had the fascinating experience of, uh, I spend Christmas with my family and my wife's family together and it's amazing. And I've done Christmases in, uh, middle class home and had an absolute ball and I've done Christmases in a big fancy mansion and had an absolute ball. And while doing it in the big fancy mansion is fun, especially because other people, they don't get to do very often like, Oh my God, this is so cool. Uh, the, the peak emotion is not higher. Yeah. The highest amplitude emotion I've ever had is when I was in high school, I got cast in a professional play. Oh, wow. And that meant that I got to skip calculus. And dude, I was over the, I got paid to be in a play. It was like the craziest thing ever. I was like, I can't believe this is really happening. Now I have had millions of dollars show up in my account like that. And I'm telling it was cool. It was neat. And the reason I was in this neat is getting cast in a professional play where I made $75 a week in high school. There's only so much amplitude of emotion you're ever going to experience. And I know no matter what I say to people, they're not going to believe me. They're going to have to go through the same fucking rig or my role. I'm not saying money isn't powerful. Money's incredible. I want to make more money because you can do incredible, incredible things with it. I'm just saying that it doesn't touch fulfillment. It doesn't do the things for people that they want it to do. And so the reason I say that is, okay, you're going to be bored doing it the right way. It isn't going to be sexy. You're not necessarily going to be able to flex. It's going to take decades, but it will work. And it actually addresses the thing that money is good for, which is money problems. And so there are really two paths before you. If you want to be an entrepreneur, that is high risk, high potential reward, high potential failure. If you optimize your entrepreneurial journey for failure mode, and you're like, even in failure, I'm having a good time, you're going to hate failing, don't get me wrong. But like that, I'm pursuing something that really matters to me. I'm getting better every day. I'm serving other people and myself. I'm increasing my skill set. Even if you're losing, that's going to be amazing if you're thoughtful about your mindset. 100%. But if you're making all the money in the world and you're not able to laugh and play and have a good time and feel like you're doing something that matters, it won't matter. This is where I want to grab the camera and start biting it to get people to understand. Dude, set in, forget it. Let the make an income work at something that matters.
The ultimate satisfaction in life (28:10)
If you want to be an entrepreneur, I love that. I can even help you do that well. But the money isn't going to change how you feel about yourself. 100%. It is not going to make laughter more joyful. It isn't going to make human connection better. It will get you on the occasional beach. But if people could internalize that, I think that they would make very different choices. They wouldn't be so worried about making all the money right now.
Psychology And American Dream Context
What Do You Spend the Most Money on? (28:40)
In fact, let me ask you another question. What do you spend the most money on? My business. 100%. What do I spend the most money on? My business. So it's not like I'm out bawling on the beach. I could. But that doesn't give you fulfillment. I did a show. I was in New York last week. I did a show there. They were asking about the first time I made a million dollars. I went through that. I was like, "You're not going to like my answer because the first time I made a million dollars in a year, I think I took home 20,000." Which is what I'm about for right back in the business. Because I was like, "I'm fine. Driving a $500 car. I'm getting from point A to point B. I'm getting by just fine. This is my fun passion. And on your point of the fulfillment, this is what I call my quadrific theory where there's four-ass quadrific. So what I say, my theory is if you want to live a happy, fulfilled life, you have to be fit in four aspects of life. And just think about a triangle. Or on the bottom of the triangle, you have to be physically fit, mentally fit, spiritually fit. And on the top financially fit, if you want to live a fully fit life. Physically fit because if you're on your deathbed, it doesn't matter if you have $10 million in the bank. The only thing you care about is being healthy again. To be able to breathe again. You want to be physically healthy because if you are morbidly obese, you can't move. You're just the only thing under mind is to be healthy again. We all know the feeling where you're sick. You don't feel good where you can't do anything. The only thing you want to do is feel better than this mental fitness. Being around people that you love, not being miserable. If you're struggling with anxiety, depression, if you're not happy, more money is going to make you more miserable. And we all, I mean, I'm so passionate about this because I've seen this firsthand. I used to not believe in this, but I've seen this so many times where I try to bang this into people's heads. If you think that making a million dollars is going to suddenly make you happy is going to make people like you. It's going to make people want to be your friends. It's going to make you find the love of your life. You are so wrong and you are so far from the truth that it's going to be extremely painful for you to learn it because you have to work on this mental health as its own aspect of life. Learn how to build self-esteem, how to be happy, how to manage anxiety, how to manage and fight depression. Learn about these things. It's its own part of this. You have to be mentally fit. Then spiritually fit. Now, this doesn't have to mean religion. Spiritually fit, I mean finding your self-purpose. What are you waking up for every single day? Like you said, you've had millions of dollars in your bank account. You don't got to go to work every single day. You don't got to go and hustle. Yet you do. Why? Because you see a bigger purpose for yourself. You have a reason for you to get out of bed because if you don't have a reason to get out of bed, more money is not going to do anything. You need to have a reason to get up, want to thrive whether you have $10 or $10 million to want to hustle. Then at the top, this financial fitness has the most impact, the most power and the most ability to allow you to live a bit more fulfilling life because more money is just putting fuel on the fire. It gives you the ability to do more of the things that you love, to do more things that make you feel more fulfilled, to do more things that you want to do, to give back more, to do more of that. But having more money is not going to solve your physical fitness. Maybe it'll buy you better food or better gym, but it's not going to give you the mindset to go to the gym. It's not going to make you feel okay when you're drinking something healthy. You're going to say, "Man, screw the smoothie. Give me something nasty. Give me some unhealthy food." It's mental fitness. More money is not going to fix that. More money is not going to give you a purpose in life. It is its own aspect of life. This is where you have to understand that, "Yeah, work on all four of these." Each one of these requires its own attention, its own nurturing, its own thing.
The Quadrific Theory (32:25)
I focus on the financial side because I feel like I understood that. That's not the only aspect of life. This is what I really try to hammer into on my channel to the people that watch my videos and say, "Yeah, look, money is great. Understand it, conquer it. Understand how to master your money, but also understand that it's not the only aspect of your life." You've got three other huge aspects where if you don't have money, yeah, it's going to ruin everything else because if you don't have money, you're struggling about your bills, you're struggling how you're going to pay for anything. You don't know how you're going to take your spouse on the vacation that he or she wants. You're not going to be able to pay for your kids' education. You're not going to be able to do the things that you want, but if you have money and you don't have these other three things, you're going to feel miserable. Then what's the point of having money if you're not happy? Just go back to the middle class home and laugh.
How the human mind works (33:13)
It's really interesting because of course, when you're in that, so all of this, everything we've been talking about today, you're up against the nature of the human mind. From clickbait titles are necessary because that's how the human mind works. Euphoria in the market, human mind, fear in the market, the human mind, the fact that you're not trolling somebody to say, "Buy low, sell high because it's one of the hardest things you're going to do." It's the human mind at work, really getting to understand what the psychological aspect of all this is. I know somebody, and even myself, when I was in a lower middle class existence, I was obsessed with getting rich. That was just all that I wanted to do. Getting rich, the thing that surprised me is that it didn't dull my ambition. It can't quench your need for fulfillment and feeling like you're doing something that matters. I just found myself right back in the game wanting to build something and create and have a great time. Thankfully, I had learned that you really have to optimize for the failure scenario because despite being successful, I fail a lot. It's really understanding the nature of that, what I call the physics of progress that fail me just as part of the thing. I get it. I get that people that are on the come up are not going to believe the following statement, but I promise that it's true. The most fun you're ever going to have, the pinnacle of existence, is that moment where you're working really hard at something that could pay off tremendously and you believe it's going to work. There's nothing better than that moment. Oh my God, I'm working really hard at this. I think it's going to work. If it works, oh my God, the world is going to be mine. That's way more fun than actually winning and getting the thing. Enjoying that ride. Yeah, that's the juice.
Optimizing for failure scenarios (35:15)
I found myself wanting to re-get back into that position of like, "Oh my God, I'm building something." Pull this up, so I know that it's not about the money. It's really about fulfillment. I don't want to harp on that too much, but just getting people to understand. You're in a battle against your mind. If you can get to the point where you realize that being around the people that I love is going to be huge emotional amplitude, doesn't matter if we're on the beach or if we're in a hut, as long as we have our basic needs met, because for sure that matters, but we have that. Emotional amplitude isn't going to go any higher by having a ton of money, but that moment of like, "I'm building something that matters, I think this really might work." If it works, like, "Oh, we've got some big victory," that's the juice and you're going to constantly want to be in that. Now, given that all of that is true, make sure that you're taking some percentage of what you're doing and just put it in the set and forget. Otherwise, you should get older and it gets harder to be sort of peak energy, all that stuff that you've got money, it's going to be doing its thing. Then, and maybe it's just taking that, like you said, you can spend 75%. Okay, cool. If we know that we have to save some and we know that we're going to buy assets with some, then why don't we take some of what we're going to spend and spend it on building something, starting a side hustle, whatever, seeing if that works for you. We're going through a period now where it's like everybody wants to start their own thing. Try it. See if it's your bag. I think people will, I heard you quote, "You have to be willing to get punched in the throat." I always say kicked in the face, but like, this is the same thing. Maybe both very, very, yes. If you like it and that's something that you enjoy, then that's a tremendous outlet and that can be the thing where you're really gambling on big upside. But man, if I could just get people to internalize this idea of emotional amplitude, like life's peak joys are available to everybody regardless of money. I think Warren Buffett under plays wealth a little bit. He said, "Look, I'm eating at the same restaurants that you're eating at. I'm staying at the same hotels you're staying at. I'm living in the same place. Look, money can do some pretty interesting things, but it can't change the amount of emotion that you feel 100 percent." If I can tie this back into what we talked about in the beginning of this video, where we talked about the real estate market, we talked about everything going on with that. I think the best way to explain that now is because you're putting some money aside. What are we looking to buy? Because I've talked about this recently a lot on my channel where the American dream, because you mentioned this, the traditional American dream was being able to buy a home, pay it off, and now you own a home. The reason why this was the American dream for anywhere in the world is because when you pay down your home, what are you building in your home? Equity is this concept of equity. We assume, or for lack of better, we don't have the financial education to know that equity, which we think is going to make generational wealth because equity is where real wealth is built, can only be found in the home that we live in, but that's not true. This is where so many people get things wrong because they now stretch themselves too thin.
The American Dream (38:38)
They do risky things, take out adjustable rate mortgages, use too much debt to buy a home because they think that is an investment that's going to make them wealthy because now you can pay it down, build equity, and have something to pass down. However, there are many other ways to build equity, to build real wealth that you can then pass down. This goes back into the assets that we talked about, right? When you invest your money into stocks, you are building equity in these companies. When you go and invest in real estate as an investment, now where you live in yourself as a rental property, you're building equity in your real estate portfolio. This is different than your home because when you buy a rental property, you're buying it for one purpose. You're buying it for the purpose of making money. You buy your home for the purpose of making memories. If you're buying something for the purpose of making money, you're probably going to make more money because you're going to do a different type of analysis than in the home that you live in. In one way, you can go and actually buy it. The second way that you've been talking about entrepreneurship is you can build the equity. When you build a company, you're building equity in the company. If you go and start a company, you are the 100% owner of the company. If your company can make $100,000 of profit a year, your equity might be worth $200,000, half a million, a million dollars depending on whatever type of company it is, but you're building equity in a company. You can build this equity, you can buy this equity and the whole idea of a recession is now this type of equity, these investments, these assets can go on sale and this is right now you can come in and buy more equity at a discounted price. This is one of those things. I'm going to go back to, we keep mentioning what we talked about before in a previous interview. We never taught this because school teaches us to become an employee. What do you do when you're an employee? You get a salary. Do you get any equity with a salary? No. Maybe a company gives you separate equity as a compensation package or something, but your salary is payment for hours that you work. That is nice today, but once you spend your salary, you have nothing left. Real wealth in this country, in this system is built through owning equity. We're never taught this. This is what gets me really heated up because we're never taught about this. If our whole system is taught around building and earning a salary, how come we're never taught about building equity? Because now what we should be teaching is, hey, go to school, get educated, but understand the wealth is built through equity. So earn a salary doing whatever you want, whether you're a doctor or you're working at a factory, it doesn't matter. Take some of your salary, go out and build some equity. We're always taught and think and told that the way you do that is to follow the American dream of just buying a home because now you can pay down your home, build some equity, but that is honestly one of the worst ways to build equity. You never talk about wealthy people becoming the richest people or wealthy people because I paid off my home. No, you become wealthy because you own a company, you build a company, you invest it in stocks, you invest it in real estate, you invest it in equity somewhere else and your home is honestly one of the last things that wealthy people think about. And for the majority people think about becoming wealthy and building this type of generational wealth, what are they thinking about buying and paying off my home?
Debt Covenants (41:43)
And there's so much more to that, but it requires that financial education. Yeah. I want to go back to somebody we were talking about earlier, debt, covenants. So you were talking about at the time that there's two kinds of selling. There's selling because you choose to, but oftentimes people are doing an out of panic and then they're selling because you're forced to. In business, when you're taking out a loan, they put covenants on it, meaning the following things must be true for you to have a loan in good standing. So even if you're making your payments, if the ratio of like your accounts receivable, so the amount of money that you know that you have coming in, if it drops below a certain level, if that's one of the covenants or you have to have a certain amount of savings in the bank or your profit margin has to be 13% or whatever, they put these covenants on that. Is that's what happening when somebody is getting overextended with either sort of? So if we talk about real estate first, wouldn't you go? Now, there's a couple of different levels of real estate investing and loans. That's something you're buying to a debt now. In the beginner level, they're going to look at your income very heavily, your income to debt rate. You're just like when you go on buy a home, they're going to look at all the things, same things to go and buy a rental property. Then as you get a little bit bigger, they're not even going to really care about your personal financial situation. What they're going to be looking at is primarily just like you were saying the actual investment itself, because now you're buying essentially a business. If you're buying in a property complex, well now you're buying essentially a business and what they want to see is, okay, what's the price of this? How much rent are you generating every month, every year? What are your expenses? What is that margin? Because they know that this property is going to continue to generate rental income and the rental income is going to then pay for the mortgage, the loan on the building. That's what they're looking at. Of course, they're going to want to see your personal financial situation because they want to see, okay, if things go bad, what can you do?
Value And Illusion Of Money
The Value of a Property (44:05)
Do you have any access to access cash? Do you have any other access to capital? Do you have any other wealth? Do you have any other experience? But the primary thing as you get bigger and bigger is just going to be the property itself. In the stock market, oh man. Well, let's say I'm property for a second. So, are they going to call the loan? There will be a predefined set of things, I imagine, that if they stop being true, they'll call the loan. So, for instance, as long as you have 20% equity in the building, we're fine. But the second, the value of the property drops. If you put out, let's say, $5 million to buy it, if the property ceases to be worth $5 million, then we're going to basically call it. Because I know that's what ends up happening to somebody in the crypto market. If your crypto is worth $1 million and you've got $1 million on barcode, you've got $1 million borrowed. The second that that's worth a million, they're going to do a margin call. Because now it's like, if it goes down any more, then they're out money. So they literally, the second it drops to the amount of the you, oh, boom, it's gone. It works similar to that in the stock market, but in the real estate market, no. They're not paying attention to the valuation of the property day to day because that's also kind of ambiguous. A property is worth really what someone's willing to pay for it. You can run an appraisal, you can do comps, but at the end of the day, it's what someone else is willing to pay for it. So instead of them looking at the valuation of the property or what the think is worth, what they're looking at is, are you making the payments? Because if you're making the payments, they're not going to ask you questions. If you stop making payments, that's when they start asking questions and that's when they start trying to figure out what to do. Then they might force you to sell. Now forcing you to sell in crypto is very different than forcing you to sell in real estate because forcing you to sell in real estate is not going to depend state to state what the foreclosure process looks like, how intense that process is and how long that process is. You're sitting in crypto from my understanding because it can be pretty instant. You get that margin call, they can take your crypto back pretty quickly. Real estate, we can be a year and then there's a lot of different tools that can be done. Like in the 2008 real estate crash, one thing that was very popular was a short sale. This is separate from a foreclosure. A short sale is now where there's three parties working together. The seller, the bank and the buyer are working to now come to an agreement on a price where the bank agrees, "Hey, we're going to lose money on this deal. We're willing to lose X amount of money on this deal." The seller says, "Yeah, I'm going to walk away from this deal and not make any money, but at least I don't get foreclosed on." The buyer says, "Fine, I'll pay this money. I was involved in multiple short sales and one of the short sales that I was involved in." They also had an additional provision where, "Okay, the bank's going to agree to lose however much money. I don't remember the exact numbers." The seller agreed to walk away and not get a penny from the home. Then they also wanted me to write a separate check at closing to the seller's contractor because he had done some work on the property, never got paid and had put a lean on the property. He essentially made a claim against the seller backed by the value of the home that, "Hey, I need to get paid." I then had to also work out a deal with the contractor where all these parties where the contractor had to agree to a certain amount of money. This was a long time ago, so I don't remember the exact numbers. It was two separate checks that had to go. One was to the contractor to make him happy and whole. One was to the bank where the bank now was okay with losing a certain amount of money. They're willing to do this, the bank in that situation because if they had gone through foreclosure, they would have to spend way more money on legal fees. They'd have to spend way more money on administrative fees and then they'd probably even sell the home for less money when it came to the actual foreclosure process. The seller would prefer a short sale in this situation because if you don't do a short sale and you go into foreclosure, then your credit score gets hit. You have to go through the entire foreclosure proceeds. You don't take a hit if you do a short sale. If you do a write, you typically don't have to get the same sort of credit score hit because you're just selling the home versus a foreclosure. But again, the reason why I said you have to do a write because there's provisions, there's certain contracts that you want to make with the lender saying that they're not going to come after you for the previous money and they're not going to file some other things. There's specific contracts. It gets very complex where you want to make sure you have a good attorney because it could affect your credit score and it could also not affect your credit score as much depending on how good your representation is and how well you draft these agreements. It becomes very complex versus we talk about crypto or with the stock market. If the value of your investments fall to a certain amount and you don't put in a certain amount of money, it just sells. There's nothing else. They're either going to say, give us $10,000 right now or we're going to sell the investments for you. There's really no one that if, ands, or buts is like almost automated in that sense. It's a very different situation. How do people get into the stock market with debt?
How do mainstream brokerages Robinhood make money? (49:15)
It's actually very simple. Most brokerages make their money through margin, meaning debt because if we, what backtrack? So you're saying if I go somewhere like Vanguard, I can buy on debt? So let's talk more about the mainstream level. Robinhoods and the more of the mainstream brokerages in that sense. And Robinhood now is mainstream, huh? They're pretty mainstream. How long have they been around for? I don't know the exact number of years. It's not that long, right? They're, I mean, they're, you know, one of those startup brokerages. I don't know what year they started. Wow. Well, let's start about a hundred years ago and then we'll kind of take this little time lapse. A hundred years ago, if you wanted to buy a stock a long time ago, you would have to have access to an actual stock broker. You would probably have a financial advisor. It'd be a very difficult process and a very long process. If you wanted to buy a stock, you would call somebody who would buy a stock. You would call somebody who would then make a transaction, maybe multiple people to make the transaction. So it was a very long process. Then in the 2000, early 2000s started coming in these digital brokerages. This is where Charles Schwab, E-Trade, TD Ameritrade, they really became bigger. But the way that they would make money was they would charge you a fee, a commission to make a trade. So it was somewhere between $5, $7 to $15 even $20 to make one transaction to buy a stock or sell a stock. Then after the 2010s came things like Robinhood and Robinhood then shook things up even more where they said, "We're a commission free brokerage. You can come trade stocks on our platform and we're not going to charge you a single trading fee." Now, if you're not charging a fee, how are you going to make money? The first way that they made money was this whole concept of you would buy a stock on Robinhood and then Robinhood would then make that transaction a little bit later and they would sell these trades. It was a very complex process where they would sell it to another entity. So you were doing an indirect trade for you as the trader. It made no difference or negative, it was a different. You wouldn't even know the difference versus Robinhood is then selling these trades on the back end. But then the second way that they would make money is through margin, meaning that Robinhood and these platforms would lend you money based off of how much money you have in the platform and then you can trade not just with the $100 that you have in your Robinhood account but now with the extra $20, $50, maybe $100 that Robinhood is giving you that you can now trade on margin. The amount of money they're going to give you is going to depend on a number of different factors but then they literally would just extend you this line of credit and now you can trade. I know this from first hand experience. That was Robinhood but with a different brokerage because when I first got started and we talked about trading, this was when I was, if it was my first year in college, I spent a summer doing trading and I was using a platform and they told me that, "Hey, I can, I started trading and then they said, 'Let's upgrade your account to a trader's account.' And I said, 'Okay, cool.' And then they said, 'Hey, we will also give you more money to trade with, margin.' I didn't, this shows you how naive it was with the lack of financial education that I had. I thought it was free money. I didn't know that this money had strings attached to it. I didn't know that I had paid the money back. I didn't know that I was being charged interest. So what happened was I traded money. I don't know if you've heard there's a guy named Jasper Eatsing and he says the most expensive money is free money. I learned that lesson in a very painful way. So I was trading money with the brokerages account where I just thought that because now I'm making more trades that they're going to make more commissions, that's how they made their money. Well long story short, I had lost money on some of these trades that were on margin and they said, 'Hey, you need to put more money in the current.' I was like, 'What do you mean? Okay, I got to make up this whatever margin.' So then I had fortunately some money, I covered it and then I decided I'm no longer going to be a trader. I'm done with this. So we loaned you money to make the trade. You lost pay us back right now. I paid that money back. So now I'm done. How long do they give you to pay back? I don't remember. I paid it. I had the money so I just paid it because I understood that I had lost their money so that part made sense to me. And then I was done trading. I realized this is not for me. I don't want to spend this time. You can't pay it back. Well I don't know exactly what they do but they're going to come after you. I'm sure they will file a loss because I'm thinking about this. I'm going to turn you right from legal perspective. It depends on how much money you owe and what you're going to be doing. Because now they can very easily claim against you. They can run a lawsuit against you if you're not paying. There's a lot of different things they can do. And the more dollars that you owe, there's the more things that they can do. Just like with anything else. But then I'm done trading. And then a number of months go by and I start seeing this deductions for my account. I'm like, what am I being charged for? So I call them up and they're like, it's your margin. Like what are you talking about? I'm not doing anything. Well, we gave you money, it's in your account. You have to pay interest on the money that we gave you. And that's when I realized there's a cost to money. And so that's when I said, turn this off, take your money back. I don't want this. I paid interest on it and that was the last time that I did that. I was 18 years old, 17, 18. I had no idea what I was doing. And this is where a lot of people get in trouble because you think, oh, I can double my money pretty quickly. But if I use their money in addition to my money, now I can quadruple my money. Because I only got to pay you a little bit of percentage if you know that you got to pay them back. So I don't know a lot about Robinhood. I am super stoked that the average person can now get into the equities market. But that's how people get into trouble. It's the financial education, along with everything else. Accessibility is great. But the accessibility without financial education can be dangerous now if we start using these tools. Because if you don't know the cost of some of these tools, it can be very bad. For example, think of a credit card. It's a credit card bad thing, but a good thing. It depends who you ask. There are so many people who have thousands of dollars with the credit card debt that is skinning them alive. I only transact with the credit card. Why? Because I get my points, I get my cash back, I get my fraud protection, I get free insurance on my car rentals, I get all these things that I wouldn't get if I paid with cash.
My Favorite Financial Tool for Spending (55:57)
Even if I debit card, I don't get all these things. So now when I'm spending, I spend a lot of money, especially my business. If I spend $100,000 a year, a half million dollars a year, I'm going to get a big cash back check that I could put right back into the business, I can spend it, I can use it on the vacation, I can get free perks. I mean, I get so many different things, but that's only because I know I'm not going to change my spending because of my medium. I'm not changing my spending because I have a credit card. I'm just using a credit card to facilitate my transactions as opposed to using it as a free money printer. And again, what is it? It's that financial education along with the tool. It's not the tool that's inherently evil. It's when you use a tool without that financial education that now you can get screwed over, that you get in trouble, that you start hating the system all day out to get you. They're not giving you the financial education because it's not in their best interest to give you that financial education. But this is where if you have the financial education, you can use the system to advantage, but the problem is we are never taught this. And for me, it pulls on these strings in my brain because it's like, "Oh my God, it's just screw so many people over because it's profitable to keep people poor. If you don't understand this, you're going to spend more money in your credit card, you're going to spend all your money making everybody else look like you. That's a terrifying statement that you just rush past. It's profitable to keep people poor. It is profitable to keep people poor. Is it profitable to keep them poor or to keep them ignorant? It's a mix of both. When you're ignorant, you stay poor. You go hand in hand because if you don't have the financial education, what are you going to do? You're going to go spend your money in Gucci, Louis Vuitton. You're going to be buying the extra guac because, "Hey, you got that money. Then, how are you going to buy it? You're going to buy that extra guac lifestyle. You're going to buy it with your credit card. And you're not going to wait until you can afford it. You're going to buy it now because you can. And nowadays, it's not just a credit card. It's buying out pay later." And everybody talks about how buying out pay later is 0% APR. There's no cost to this money. You can buy it now. Pay later. But again, like you said, what I said, the most expensive kind of money is free money. They got to make money somehow. There's a reason why there's billions of dollars pouring into the buy now pay later industry. One of the fastest growing FinTech industries ever because when you spend on buy now pay later, what happens? One, you're spending way more money than you would have if you didn't buy now pay later because if you wanted to buy a thousand dollars so far, you have to have a thousand dollars in your pocket. So now you can buy it now and pay it later. So now you can spend a thousand dollars on something else. Second, what happens to so many people is you don't pay it off in time. Now when you don't pay it off in time, it's no longer 0% APR. Now you get slapped with a very hefty, very expensive Fin.
Is Inflation a Good Thing? (58:52)
So now it's okay. The tool plus the education, the tool plus the education, going back to inflation. Inflation. Is it a good thing or bad thing? I think you asked me that last time or are you talking about the way the system works? Again, it just depends. Depends on if you understand it or not. If for wealthy people they love the inflation, hey, keep paying more for my assets. Keep driving up the value of my assets. Keep making me wealthier versus for the average person you keep getting screwed over because now your groceries are more expensive, your gas is more expensive, your rent is more expensive, everything is more expensive. And it's understanding the tool and the education. I'm going to give one more example because this is the stuff you can see. It gets me so, keeps me up at night. It gets me really upset because I understand both sides because I never had that financial education and now I see the benefit of it and I'm like, please learn this. Even if there's a click-baity title because I need you to watch it, please learn this. We talk about how the government many times, they might have good intentions. But the people in government aren't economists. They're not always the best decisions with their money because sometimes their goal might just be to create jobs and creating jobs is different than being efficient. And so, if you look at, for example, the college education system where back in the day, it was not easy to get a suit alone. And back then, college was also a lot cheaper. And back then, a lot of people were not getting a college degree. So if you had a college degree, what happened? You stuck out. You were different. You had something. Well, what happened later, you know, in the 70s now, the United States government, maybe the 70s, 80s around that time, the United States government passed a law that said that if you want a student loan, we'll guarantee it. Anybody can get access to college education. The government will guarantee a student loan. Now, this sounds like great news. Hey, everybody can get educated. How can that be bad? But colleges heard this and it was music to the ears. You're telling me that I can charge any amount that I want and the government is going to guarantee to give that to our students. Sign me up. Now, we can hike up our tuition rates and people keep paying. Now, everybody can go to college because we think that we need to go to college in order to become successful and now where we are today. Everybody has a college degree. If you go in a plant for a job with a college degree, you don't stick out. You're just like everybody else. All right. So I have a sincere belief that there are habits that keep people poor and that anybody, regardless of where they're born, what their circumstance is, if they do the right things over a long enough time period, they can get out of it. We are living in horrendously uncertain times. What are the things, the habits that keep people poor? Wow. Well, the first one really has to do with understanding money because unless you understand what money is, none of the other habits really matter because at its core, what is money? And when you ask people that, you might say it was a $100 bill, $50 bill, that's what money is. But what is that money? Because that money that we have today is different than what money was 60 years ago. The money that we call money today is currency. It's really just pieces of paper. And when you understand that, it's going to change what you do with the money. And the reason why I'm saying that is because I'm from my family's, my state in India called Punjab. And over there, it's a very traditional thing that when you earn this paper dollars, many people will convert this cash into gold because they understand that these paper dollars lose value and it's just paper. So they want to convert it to something real, something tangible.
What really happens when you give away $10K (01:02:40)
So they will go out and buy gold with it. All right, really fast explaining to people why paper money loses value over time. So our paper dollars can be manipulated and controlled by other entities such as the Federal Reserve Bank and the government. Now the interesting thing about the Federal Reserve Bank is it's called the Federal Reserve Bank. However, it's not federal, it's Cecil on their website. They're not a reserve. They don't keep cash reserves anywhere. They're not a bank. You and I can't go there to deposit money. So what happens is, should I hear wolves howling in the background?
The governments Illusion of Money (01:03:13)
Like is there something sinister going on? Do you think for real or is it just the system and it's just how it works? Well, it depends. If you understand the system, you can use it to your advantage. If you don't understand the system, it is going to screw you over many, many, many times. Yeah, this is my obsession. So as you and I were talking about before we started rolling camera, two years ago, I considered myself very good at making money, very bad at investing money. And then the pandemic hit and I really started to panic for other people that, look, I'm going to make it out of the pandemic fine, but I don't know that that will be true for people that don't understand money. And so getting educated, like for me to try to help other people, I've had to educate myself about what money is, getting freaked out by inflation. And I've heard you talk about this, so I know you know this well, but that the government, when you say manipulate the money, they literally just make more of it magically. Literally. And this is where the rich will become richer. The poor will become poorer and the middle class will get wiped out. And the reason why is because some people, rich people will understand money and they will continue teaching the kids and everybody else, the majority of people who have no idea what's happening will continue to become poorer because they don't even see it happening. And so what happens is, so you have the government and the Fed. The government spends money. Now, where did they get their money? Well, they get their money from taxpayers, people like you, me, people watching this video through tax dollars. Now, can we hammer that for a second? Sure. The government does not make money. The government takes money from people who are making money. Right. They're fairly bad because they provide a lot of amazing things. They provide services. They're not necessarily efficient with their dollars. So, yeah, so we can dive into that for a second. So, you know, you have to understand what someone's role is. If you are a company, right, you have a company, your job is to make a profit because if you don't have a profit, you're not going to be in business unless you have some other stream of venture capital debt or something. But if you don't have a profit, you can't continue operating. And so your job is to be as efficient as possible as a company. The government can actually be benefited by being inefficient because what is the government's job? You have to understand what is their role? If their goal is to create jobs, well, then you can be as inefficient as you want and you can achieve that goal because if my goal, if I'm the government, I just want to create as many jobs as possible, I can pay people to pick up this mug and put it from the left hand to right hand. I just created the job. You're employed. You have an income, but you're not producing anything of value. And this is where you have to understand, okay, what is that purpose? And so now, you know, if we get away from the politics for a second, the government now spends money. They get money from taxpayers because the government is not a for-profit entity. They don't create a product and sell it for or create something and sell it for a profit. Instead, people make money and then the government taxes your income. Now, just like anybody else, there's checks and balances. If the government has a million dollars, they can only spend a million dollars, you would think, but that's now how it works. So the government has a million dollars and what's happening now is they're going to spend significantly more than a million dollars. Now, if you have a certain amount of income and you spend more than that, what do you do? Well, you're going to have to subsidize or find that extra cash somewhere. And in the government's case, what they can do is they can go out and look for a loan. It's called a treasury bond for as long as anyone can remember, have been considered the safest investment anybody can make. Well, what it is is you're literally loaning money to the government. But what happens now if there's not enough people out there to loan money to the government? If the government wants trillions and trillions of dollars, if there's not enough people out there to loan that money to the government and they keep wanting to spend more money, you still got to make up this cost. So what do they do? They call up their friends at the Fed to Reserve Bank and they say, "Hey, we need a $2 trillion loan." And then the Fed's going to say, "Okay, we got you." Now, remember what I said, they're not a reserve. They don't have a cash pile anywhere. So what do they do? They go to their money printer, "Boop,oop,oop." And now they can print out $2 trillion. They loan this cash to the government. And now the government got the $2 trillion. The Fed was they're printed out of nothing. The government can now take this $2 trillion and spend it in whatever way that they want. It can be inefficient. They can try to create efficient products. But their goal is to hopefully help people. Now, whether they're inefficient or not is a political debate, however, that is what they do. Now, really fast before we move on, so this is the part that people need to understand about why the rich get richer. Because I'm super, as a rich guy, I'm like, "Oh, I'm going to get richer." Great. So what happens then? I never understood how. So now what happens? You just printed this money, right? And then- Which you don't actually print, by the way, you just increase the database somewhere. It's a bunch of digits. Yep. And now this money enters our economic circulation. But what happens now when more dollars enter without actual wealth being created? Because we saw this happen in textbook form of 2020-2021, where nothing was being produced except money. Well, when more money gets produced, it effectively reduces the value of each individual dollar. This is what inflation is. The word inflation comes from the word "inflate." What are you inflating? The monetary supply. So increasing the monetary supply, causing the value of each individual dollar to go down, which effectively causes the price of things to go up. And so in 2020-2021, no one's producing. However, the government is spending money like crazy. Where are they getting this money? The Fed. So the Fed's printing money, giving it to the government, the government spending it like crazy. Now people are getting money. It's people. It's businesses. It's corporations. And this money is being spent. And now everybody is like, "Wow, I'm sitting at home and I'm rich. You have some people who are getting big unemployment checks. You have some businesses getting millions of dollars. And everything is running smooth. And people are spending money like crazy buying things, but nothing is being produced." So then what happens? Well now you have a supply chain mess because everyone's buying all the stuff in stores. However, no business is able to produce anything because the economy shut down. So the supply chain issue that you start to see is a byproduct of the inflation because everyone's trying to blame, "Oh, the inflation is happening because of supply chain issues." But you have to look at what is the real root cause?
Asset Acquisition And Investment Basics
Rich Get Richer, Poor Get Poorer (01:09:25)
The inflation is what causes the supply chain issues and now we're trying to go backwards. But this is where rich get rich and the poor get poorer because as the value of the dollars drop what happens for regular people, your salary doesn't stretch as far. Your savings don't buy you as much. And so you're effectively becoming poorer each and every day because for most of us, we're taught to save our money. That's what I was told to do growing up. That traditional Indian house is save, save, save. And so I was told to save my money and your savings are becoming less valuable each and every day. Well, what wealthy people do is they're not storing cash, they're buying assets.
Buying assets explanation (01:10:04)
And so when we have this sort of economic system. Can you explain what an asset is? An asset. Because this, we're now getting to the root of how the rich actually get rich. This was the part it took me a very long time to understand. But now that I get it, one, it doesn't need to be the rich that are getting richer. Anybody can own assets. Yeah. And then you can understand what assets are and then actually buy said assets. Right. Because this is how the government pumps the money into the system. And this was a part like I'm grateful sometimes that I'm kind of dumb for real. And this really, I had a breakthrough moment back at Quest. We were dealing with nutritional science and I didn't always understand it. And so I would have to keep asking, keep asking, keep asking, keep asking. But what I found was if I just totally got rid of my embarrassment over not knowing. Yeah. And then I was asking until I understood it so well that I could explain it to other people. That ended up propelling me forward because I was no longer just nodding and smiling and going along. I was like, no, no, I don't get that. I don't understand. I don't understand. Yeah. And so by pushing into that, then I actually began to understand the biology. I began to understand what ingredients made sense and all that. Right. So, but I had to be willing to look stupid. Yeah. And so now because I've been willing to look stupid for so long in the world of finance, I finally asked the magic question, which is when people, because I actually thought they were printing money, I thought that $100 bills were coming off of a printing machine. That's not how it's done, at least not to the vast majority of it. It's zeros and ones in a database. And when they create that money, I was like, whose database entry is it? Like are they actually going into rich people's accounts and giving them money? No. What they do is they buy oftentimes government assets. I don't want to introduce the word bonds and stuff. Sure. They buy the assets from the government. Right. But the question is, where did those assets get purchased in the first place? And they got purchased by people who are effectively trying to park their money, as they call it. Yeah. So I, for years, was parking my money in government bonds because the government guarantees it. Yeah. And so the way that the government raises money without having to raise your tax is they put bonds out into the world that then people buy. So when they're pumping money into the system, they just go buy those bonds. So now they're buying them from rich people because rich people were the ones that were educated enough and had the capital to buy said bonds. Impact theory university one full year for only $997. And if you act now, you get to join my exclusive live 90 minute workshop called make any goal stick. The great news is I don't care if you were the highest achiever in the world in 2022 or of 2022 beat you down hard. 2022 has been a brutal year for a lot of people. And that's why I'm going to be going live later this month to host a workshop on exactly what you need to do. If you want to make any goal stick, do not miss it.
Tax deductions with investing (01:12:59)
That's correct. And it goes actually a little bit deeper because in the pandemic, we saw something that we've never seen happen before. So the Fed has the ability to work with interest rates. We'll talk about that in just a second and then they can print money and give it to the government. And then when you have an emergency time, we saw this happen in 2008, we saw it happen in 2020, they can do weird things. So what they did in 2020, this is the first time it's ever happened in history, is they directly gave money to corporations in the form of purchasing corporate bond ETFs. So think of it this way. The biggest corporations in America can go out and raise money from a bank. They can go out and raise investment dollars or they can put out this loan, say if you want a regular person, you want to loan money to us, you can do that. And so there's ETFs, which is a group of corporations that are looking to raise money. It's a way to kind of track those debt investments. Well in 2020, because a lot of corporations had no cash and now all of a sudden they're like, oh, we can't sell products, we're going to go under, the Fed did something that has never been done. And they started buying corporate bond ETFs in the first time in history. And this is where things got really dicey because now how do you decide who gets that money or not? I mean, they're printing money, somebody's got to pay for that, who's paying for it? Regular people, average people because now it's a hidden tax because the government can't just spend money without somebody paying for it, they have to generate the tax dollars. If they don't pay it through tax dollars, somebody's still going to have to pay a tax. And inflation now is a hidden tax. It's a silent tax. It affects the people who don't understand money and it disproportionately affects the poor and the financially uneducated. And this is why financial education is so important is because if you don't understand this, you are going to get screwed over by the system because now guess what? Your gas is going to be more expensive. Your groceries are going to be more expensive. Your home cost is going to be more expensive. The cost to do anything is going to cost you so much more today next year, the year after that, well, your salary, hey, you got a raise, but you're actually a broker now, then you were before the raise because your raise isn't keeping up with inflation. And so what's happening now, this money gets printed and it enters our economic circulation and out you can own the assets or what happens unless you own stocks, you own real estate. Well, the Fed can also manipulate interest rates. So when interest rates go down, it makes borrowing money cheaper. Well, when you make borrowing money, cheaper, more people and institutions are going to go out and borrow money. This also creates more inflation because now when you go to the bank and you borrow a million dollars or $100,000, the bank is going to work with the Fed to print this money and that's how it gets injected into the economy. The lower interest rates create more inflation and if you are somebody who's financially educated, you own assets and we don't explicitly answer what is an asset.
What is an asset (01:15:50)
It is something that gives you equity and at the broadest form, an asset is something that puts money in your pocket. Liability is something that takes money away from a pocket. Wasn't an example of an asset. This could be owning a business, investing in stocks, investing in real estate, anything that you buy for the purpose of making money. And so when interest rates go down because now the Fed working with the government want to create more inflation, more dollars are going to enter economic circulation, more people are going to want to buy a home. Well, if you have more demand to buy a home where the home prices go up, who owns homes? Well, yeah, if you're a homeowner, but if you are a real estate investor, now the value of your assets have just because now you own multiple real estate investments. Your rents have gone up. Your stock investments have gone up because now businesses can borrow money for effectively nothing. You borrow money for three, four, five percent and now you can borrow hundreds and millions of dollars to grow the company. And if you can grow your company by six percent, well, you just made a profit off of the free debt. And so now corporations become wealthier because of asset prices go up. And what does this do? The reason why it makes rich people richer and poor people poorer is because not only is your cost of living higher, but now if you want to go and invest your money, well, asset prices are more difficult to attain. It's harder to buy the same level of stocks. It's harder to buy the same level of real estate because now the people who own these have already seen that appreciation. And now if you're wealthy and you understand this and you're buying these assets and you've been buying them, now you're seeing the real gains and you start to see this divide between the rich and the poor. And this is where inflation disproportionately hurts the financially uneducated and the poor and disproportionately benefits the wealthy and that's why the middle class gets wiped out. And the crazy thing is none of us are taught this.
Follow the textbook path (01:17:47)
I didn't grow up learning about money. I didn't grow up learning about financial education. I didn't grow up learning about investing. I didn't grow up learning about any sort of wealth. My parents are immigrants from a state in India called Punjab, like I was saying before. And in my household, success meant go to school, get good grades, get a good job. And for me, that good job was I had to become a doctor. I was actually given two options, become a doctor, become a failure. I could choose. And they're like, you're true. And let me choose, right? And so I saw how hard they worked for my dad. If he had a Saturday and a Sunday off, that was considered a long weekend. And so, you know, I wanted to give back to my parents and you wanted to become successful. They wanted me to become successful. And so I kind of followed that path, like doing what everybody says, following the system, trusting the system, right? And it just didn't make sense to me because on one hand in my house, money was a taboo topic. You don't talk about money. You don't worry about money. You don't. It's a bad thing. But at the same time, I see how hard my parents are working to get paid, you know, to pay for our lives. Now, we were fortunate. I never had to worry about my next meal. And we were never poor or anything like that. But I saw how hard they worked. And it wasn't until I got to college until I realized something isn't adding up because I was actually studying to become a doctor. I was taking the medical college admission test, the MCAT. And as I'm studying for this test, I started doing a couple things. First, I started reading business books because I was just interested by this. That was the first... English is my second language. So I never grew up reading books in, you know, my grade school years. I have even English class. I almost failed my English class and I think it was middle school because I just didn't understand how to write papers or do all that. But as soon as I started reading business books, I started reading them for fun because I was interested by it. And then I started going on to Google and I started researching just random things from things like the richest people in America. And, you know, you see like Warren Buffett, Steve Jobs, Mark Zuckerberg. I don't even know. He was on it back then. But you had a bunch of people who none of them were doctors. None of them went down that traditional path. And I was like, wait, I thought that grades correlated linearly with income. Like if I got better grades, my income would directly correlate with that.
Let's get into the 101 of investing (01:20:13)
So that was like my first like, wait, is something wrong here? Was something like... It just wasn't adding up. Stock market is volatile. Cryptos volatile. Housing markets can even be volatile. I'm not going to panic in a down moment. I'm going to set myself up where I'm not investing more than I can afford to lose. I'm not doing this on debt. You have to keep your income going. So whatever it is, whether it's a job or whatever, you have to be very thoughtful about that. But setting yourself up well, knowing that there's going to be a downturn, that it's about time in the market instead of time in the market. And then you can just ride this out. Exactly. And I think for the majority people, the vast, vast, vast majority people, that is the best advice that you can give them. Invest with debt. Don't invest more that you can lose. And I'm going to take it one step further because I think for 90% of people out there, regular retail traders, investors, you don't need to be buying individual companies. Just put your money into a low-cost ETF, into a low-cost index fund, and that's it. Facts. What are those though?
Financial Literacy And Active Investing
What is an Exchange Traded Fund (ETF)? (01:21:21)
And so Joss Breet, most people don't know what that means. So let's break that down. So an ETF is an exchange traded fund. And it is literally a group of companies, a basket of stocks. So instead of you going out and investing in, let's just say McDonald's, the corporation, and now all your eggs are in McDonald's, meaning all of your money is in the investment in McDonald's. So if McDonald goes up, you can make a lot of money. If McDonald's goes down, now you're going to be panicking because you're in whole portfolios down. Well, the issue is you have the most upside, but also the most risk. Because if the executives at McDonald's run their company into the ground and they go bankrupt, your whole investment's gone. Now invest into something like an ETF or an index fund, which are very similar to each other. Now you have a group of companies, where now it might be McDonald's and 499 other companies. So now what happens? You lower your risk, you lower some of your upside, but you also lower some of your downside. Because now if you run through that same scenario, where the McDonald's executives run the corporation into the ground and they go bankrupt, well, you have 499 other companies in the portfolio. So you're okay. And so then what can happen in a low-cost ETF or an index fund is they have computers, and this is automated, where they will kick out McDonald's because now they're no longer fits within these 500 companies, and then they'll put in another company to take the place in McDonald's. So now it's passive on your end because if you're not willing to put in the work to do that active investing, to do that sort of fundamental analysis, meaning listen to the earnings levels, study the revenue, study the profits, study what the corporation is doing. If you don't care about doing that, if you don't want to do that, and if you're not willing to do that, don't invest in individual companies because now you're taking on all the risk, hoping for some upside. Versus you can mitigate a lot of that risk by just investing in ETFs or index funds, and you can do this right off of really any stock brokerage app out there, and now you can buy them. Now how do you buy them? Well, two strategies, passively or actively. Passively which is a great strategy is now ideally every week or anytime you get paid, you put a little bit of money automatically into this ETF or index fund. So I use a platform called M1 Finance, just M1 Finance, M1 Finance, there's tons of brokerages out there, you can find whatever one you want.
What is dollar cost averaging? (01:23:32)
Where now it is completely passive, money is automatically pulled out of my checking account on Wednesdays, you pick the day, it doesn't matter. And it's automatically invested into dollar cost averaging. Dollar cost averaging into my portfolio ETFs, so I have a number of different ETFs in there. Happens every week, whether the market's up, whether the market's down, and I don't touch it. It just does its thing. The active side would be now you're looking for a good price point. And this is where it gets a little bit more advanced where if you're willing to do the research, you can pick ETFs or index funds where if you see a big crash, you see prices go down, you can put more money in. Or now you can start looking for good companies that you believe are undervalued.
Who's financially literate? (01:24:19)
But again, this now gets a little bit more advanced where you have to be willing to put that work. Can I ask you a really blunt and interesting question? Yeah. The average person, they're not financially literate. Would you rather, if they had a thousand dollars, would you rather they play Blackjack or try to actively trade that money? Play Blackjack or actively trade that money, don't trade. I think trading, unless you want to do it to learn, I trade it. I'll give you my personal experience. I know you would trade because you know what you're doing. Well, I wouldn't trade. Even you wouldn't trade. How do you trade? Your only options. Blackjack active trading. So explain that to me. Because I'm not a casino person. So Blackjack is the one where you go to 21. Oh, you're going to lose either way. Oh, you're going to lose either way. The reason I bring this up is I really think that the average person would be better off taking their thousand dollars to Vegas and playing Blackjack because it will be fun. If you try to actively trade, you're going to lose your money.
What is the difference between active trading and active investing? (01:25:14)
Now is that a hundred percent of the time? No, of course not. But Ray Dalio, for people that don't know, runs the largest hedge fund in the world. When he explains this, I'm like, oh my God, I'm never going to try to active trade. He said, you're going up against people like me. I spend whatever. $200 million a year on research and I have AI, which is making trades in milliseconds. We know how fast the fiber optic cable is to make sure that our trades go through slightly faster than the other person, which can be the difference between a percentage point, which could be millions of dollars. He was like, you're going to lose.
Thriving as the default financial outcome framework. (01:25:54)
He was like, it's hard for us. We've got, whatever, 1500 employees, like I said, AI that they've been building for the last 25 years, fiber optic cable, measuring things in milliseconds. He's like, the odds of you finding something that we haven't already traded on is basically zero. Every person that I know, this is a very small sample size, I'm well aware of that. Every person that I know has lost money on a long enough timeline actively trading. The only people that make money are people that are, that, and I will use my language. This is how I think about myself. I am too stupid to beat the market. I'm too stupid to be Ray Dalio. That's for sure. Ray Dalio's entire team in AI and all that. So, actively trading is off the table just because I know it would be like me trying to play a professional soccer. I'm going to get my ass handed to me by Messi. The difference between me as a footballer and Messi is the same as me as an active trader and Ray Dalio. The gap is so catastrophically large that at least playing Blackjack, I would have a good time. I think the difference is now differentiating active trading versus active investing. Yes, I'm just trading. I tried trading once somewhere in college and I spent every day staring at charts, candles, which are these little ways that you can make a stock chart. You get glued to the screen, you get glued to the emotion and it is very difficult. Watching candles is emotionally significant. So I stopped it because I realized I was never going to make any real money doing this. Active investing, what I mean by that now is you're looking at companies and when you see this company fall because the whole world is getting scared, the whole market is tanking, well, this is an opportunity for you to come in by a great company and it is kind of priced and then you just hold on to it. And would you do that at the company level or at the ETF index? Now again, who is the person? For me, I would do it at the company level. For the average person, do it at the ETF level because again, you have to be willing to put in the work to research companies, keep up with the earnings statements if you want to buy and hold for the long term. I am doing active trading right now. Not right now. Sorry, active investing. Active investing. I am not actively investing my money into the market. I am passively investing. The reason why for one, active investing means I'm putting my money into the market when I see a great buying point. Second thing is it's now going into just my personal life. What is the best use for money? Right? Invest in money in five places. My own business, I put my money into real estate, into stocks, into crypto, into physical gold, in this order. Right now I see the most opportunity in my own business, market briefs. And so instead of actively putting my money into the market, the most favorite thing you read every morning, it's a great newsletter. So it's where we break down what's happening in the financial markets into a fun, easy to read email. But for me, I see the opportunity there. It is the biggest purpose for me. Better than yourself. And the most excitement for me. So instead of me putting my money into the market, instead of me putting my money into real estate, which I love doing, I've been stopping these active investments and putting my money back into market briefs that we can build the company, build the infrastructure, build it into something bigger. And so that's what I'm asking. I knew the punchline, which is why I asked the question. But I want people to understand that you make a living researching this stuff, knowing about it. And even you aren't doing the active investing. You're doing passive for sure, very wise, set that up. But for the average person, the average person, the odds that they will do better by trying to go in and saying, oh, I know where this is going well enough to know that now is a good time to buy McDonald's, whatever. They're going to have heard headlines about Tesla and things like that. And I'm not saying that there aren't moments that present themselves. But if you watch Wall Street Bets, do you watch Wall Street Bets? I know. I've read it all. It's scary. You get these kids committing suicide because they don't understand. They'll do something where I forget if it's calls or puts or whatever. I am so not good at this. I'm not able to be. I know my limits. But whatever it is, where there's an unlimited downside. And so they end up owing $75,000 all of a sudden. And they're like, what do I do? And so now they're just absolutely devastated. So anyway, let's put trading out on a note. People are so careful. Don't be trading. Don't trade your money. And now when you're investing in money, don't invest with debt. Don't invest more than you would lose. I want to go back to recession.
Take advantage of this opportunity (01:30:35)
Yeah. This is a huge moment of opportunity. Even though I'm warning people as vociferously as I can about trying to beat Ray Dalio, I do think that understanding that if you're playing your cards right and you're not overextended and you've done what you're talking about, you've got your five buckets of investment, we're going to get into remember to hang till the end because I'm going to give you the eight things that just free teaches a lot. But if they're doing it well, this is Black Friday for assets. If people think of it that way, like don't get yourself in trouble. Don't be overextended. Don't have debt. But if you think of this as Black Friday, there's huge opportunities. And this really is a moment where I want people to pay attention and take advantage of this moment. I am so hungry for the average person to get educated on this stuff because I have lived the American dream. And I mean, not that like it's your house and all that, but that you can change classes. I grew up lower middle class and now I'm wealthy. And so I'm like, no, no, no, this is a set of ideas. If you get your head around the right ideas, like you can really win, but you have to simplify, simplify, simplify. And because of the internet, because of meme culture, people get so caught up in the emotion, it's the one thing you can't do. And you have to be like stone cold logical. You have to get that emotion out and it's hard because everybody look on the internet. You've included. There's a lot of emotion. I'm going to be completely blunt, completely honest here because I'm going to talk about how the YouTube algorithm works because I think we've talked about this before. I see this on my own platform where sometimes YouTube is going to promote certain video titles over the other. So let's talk about the market going down. If I say one YouTube pedal is the market goes down 3% here's what you need to know. Be prepared for market crash. What's going to get more clicks? Be prepared for market crash. Now I hate that because I hate these titles. Now you're going to say just breathe. But you and every major YouTuber has titles that sound like this. Oh, someone got to this video through a clickbait title. Someone got through this. And so now let's dissect this because I have a team and for a very long time they kept saying just breathe, make these types of titles and I refused. Now what happened? Views went down like this. Now I had a heart to heart with a couple of people on my team where they were like just breathe, listen. Your videos are, I'm saying what they said, I don't want to sound like a super narcissist. But they're like your videos have real financial education that people need to hear and it's better than what a lot of people are putting out. And I was like, okay, like if this title is what it takes to get people to learn what you're saying within the video, why not make it? And so it was one of those things where I was like, oh my God, I hate this. And it's the only way to provide that financial education to give people to click it because if I need to click that video and now I can provide you real education without saying, oh my God, I need to panic and sell. No, understand the opportunities, become, look for the options. That's my goal. So it's one of those things where I see it because I'm in it and I'm going to talk about market briefs for another second because that's another driving reason for me wanting to create market briefs because the internet is full of sensationalism, especially in the titles because they need to get you to click. That's how just the internet works. It's the reality. Okay, I mean, it is what it is. I have fought it for a long time and I hate it, but it's the reality. Now the reason why I like market briefs and the reason why I'm so passionate about it is because we can completely separate ourselves from that because now we are one email. We are, you know, when it's coming into inbox every day, it doesn't matter what the title is because it's in the email. Once you open the email, have the thing that's right there. So now we can give you the actual news without any of that, you know, the hyperness. And so that's the way, you know, you and I operate, but there's a lot of people now that take it one step further that even the news then the actual content of the news becomes just super crazy sensations that doesn't make any sense that sometimes an outright lie, which then takes it one step further. Now you have to be able to dissect the crap dissect the good because the reality is if it doesn't have a quote unquote clickbaity title, you're never going to see it. It's never even going to cross your phone, your screen. It will be hidden into the depths of the internet. So now if you see it and it has a clickbaity title, the question is what's inside that content and that's where you have to be able to dissect and dig a little bit deeper. You understand if this is good and if this is not and the general rule of thumb is that generally when times are good, they're typically not as good as the media makes a scene and when times are bad, it's typically not as bad as the media makes it seem. It's usually somewhere in the middle and this is where now you have to really be able to understand and do that financial education for yourself now as an investor. But the best thing is, you know, just just keep investing your money looking for those opportunities, but then also be able to understand what's happening, which is taking some of your emotions out of the equation. So this is now kind of building that financial education where it's difficult to do, but it's so important, especially in this day, this age where the internet is our means of education, where accessibility is so much more where anybody can invest and put their money into the markets.
Roadblocks And Strategies For Wealth Building
What's stopping people from building wealth? (01:35:57)
Anybody has access to these tools. One thing that I want to mention is when we talk about building wealth, whether we're in a recession or not a recession. The majority of people, I think, assume that it's a lack of tool set that's stopping them from getting to where they want to go. When in reality for the majority people, it's a lack of mindset. Most of us have access to the tool set. It's just a mindset that's lacking. You don't need a ton of money. What's the mindset problem? The mindset is one, believe it, I don't have enough money. I don't have access to enough tools. I don't have access to enough things to go into it. That if I want to go and build a business, I need this, this, this, and this. I need $10,000. I need $100,000 to go out and do that. I need to have this type of degree. I need to have this type of parent. I need to have access to these types of people in order to go out and build a successful business. If I want to go out and invest my money, I need $10,000 before I can invest for it to be worthwhile. Why would I want to start investing with $10? What is that going to do? When in reality, these small investments do build up. If you are 21 years old today and you start by investing just $100 a month, which is just over $3 a day, and you do this consistently until you retire, until you're 65 years old, 66 years old, and you can get an average 10% return on your money. That doesn't mean it's a 10% return every single year. It's an average 10% return over the course of investment, which is the average stock market return. You will retire a millionaire on the $100 investment, assuming you never increase the amount of money you're investing in. We're talking about less than $4 a day.
It boils down to buy low and sell high (01:37:42)
That's $100 a month, not at one time, $100 a month. Less than $4 a day. You put $100 a month for the rest of your life. And so even if you get a raise and you never put another penny into your investments, you will be able to retire a millionaire on the $4 a day that you're putting aside. Yeah, see, that's why I want people to get stoked on that. Look, there is an entrepreneurial side and we can talk about that later. That's exciting and high risk and pour yourself into it. You will get kicked in the face over and over and over. But if you care about the thing that you're doing and you have a strong enough why, even losing can be incredibly fulfilling. But that's a separate bucket. When it comes to investing and thinking about retirement, it is a totally different ball game that comes, it really does boil down to buy low and sell high. Now how do you get to that point? You can do what you just talked about, which is you put a little bit of money in, doing dollar cost averaging. And you may be dollar cost averaging simply because you don't have the capital saved up to do it any other way. By the way, capital is just a fancy word for money. So you don't have the money saved up to do it any other way. So you're just every paycheck, it's pulling out, you say you do it on Wednesdays, whatever. Just it adds some increment. It's pulling some amount of money, which can be very small to your point, $100 a month. But doing it consistently and not selling in moments where everybody else is freaking out. And then as advanced as you need to get is, if we're in a downturn and you're doing your ETF or your index, and you know that we're in the middle of a difficult time, maybe instead of $100 that month, it's $150 or $200. You're not going crazy, you're still just dollar cost averaging. But now you know that when it's Black Friday for assets that you're going to spend a little bit more just because you know it's going to go farther. But it isn't sexy, man. And this is why having now witnessed euphoria, I'm like people act a fool. And I had the impulse to act a fool. I was like, no, no, no, go more. You're so smart. Like you get this. This is something I was like, ah, I know better than that. I am a fool. The only thing I can hope for is that by staying rational and calm and not overextending that I can stay in this long enough to sort of wash out my ignorance. Exactly. Just through time. Exactly.
Wealth is built in silence (01:40:17)
I think it was Wall Street Journal that used to do this thing back in the day where they used to bet against a monkey. Where a monkey would throw darts at a stock. I love this argument. And they would compare what the monkey picked against traders. Has really happened? Has really happened. Look it up on Google. And so the monkey obviously had no financial education. It just literally threw darts at these companies. It would hold on to it. I think it was a 10 year span or it was a long term thing compared against these massive traders. Guess who won? Not the traders. The monkey. Oh my God. And it just shows that. Could we turn that into a t-shirt? That feels like a t-shirt. This is so hilarious. This reality is really important for people to understand. A monkey outperformed professional traders. Professional traders. I'm going to have to look this up. Look it up. This is way too important. This is the reality where it's just the value of owning an investment for the long term. And like you said, that short richness is loud. It's flashy. Everyone talks about, oh my God, I double my money in this memes doc. Oh my God, I made so much money here. It's loud and flashy, but that's also fleeting. It's the first to come fast to go. It's also how you lose money. Where it's like, yeah, you gained all that money, but then you lost it. Exactly. But that other, the real wealth, real true sustainable wealth is built in silence. It's quite because it just keeps happening in slow increments over time. And now you start to build this, you know, that there's that snowball analogy where from Michigan, right? We have snow there. You start by building a small snowball like this. You put it on the ground and you start rolling it. In the beginning, you got to roll it a lot because you have this much surface area to pick up as much snow as you can. As it gets bigger, it grows faster because now you have all this surface area that could pick up more snow. So you roll it and it picks up more snow, it gets faster and bigger and faster and bigger and faster and bigger. And before you know it, now you can have a massive pile of snow, but the initial one is the hardest because you're starting with $100. And you're like, what's $100 going to do? Which if you stay consistent with the $100 and if you make more money, you keep putting more money in and you just stay consistent letting the $100 grow and you put in another $100. Now the first $100 is growing and then you add in another $100. And then you add in another $100. Now the first $100 has grown, hopefully the second $1 has grown, hopefully, now you add another $100 to grow and you just keep doing that month after month after month after month. Now you really started to build this snowball that's growing and growing. And if you look at this not month after month but year over year, that's when you really start to see the returns. But the problem is who wants to wait that long? Nobody wants to wait 10 years, 20 years, 30 years because we're thinking about when can Obama Lamborghini tomorrow? How can Obama Lamborghini next year? How can I have the nice stuff now? And this then becomes a different question. We're turning to these long-term investment vehicles to make us rich next month. As opposed to actually doing what it's supposed to do which is make us rich over the long-term, we're trying to do it the wrong way. So now we've got to flip the question. If these types of investments are there to make us rich for the long-term, how can we make more money today? And so this is where people turn to things like trading. Oh, I can flip these dogs, I can flip these houses, I can do whatever to try to make a lot of money right now. And for some it might work in the short-term but it is very difficult to be long-term. And this goes back to what you were saying regarding something like entrepreneurship. This is more of an income issue because now we're trying to create an income through trading. Now, if you are a full-time trader, you have the systems, you have the tools, this is all you do, maybe it works for you. But for the vast majority of regular people, it is not going to work. And this is where now something like, you know, just like entrepreneurship, it's not going to work for the majority of people.
Building systems (01:44:03)
Majority people are not meant to be entrepreneurs but you have to start asking the question of how can you increase your income if you want to have that better lifestyle. But now I want to caution that a little bit more too because, you know, we talked in our previous interview about building systems, how to become financially smart. This is where now one of the simplest, not easiest but simplest ways to become wealthier faster is when you increase your income to not increase your expenses. And so the best way for me to give an example of this is if you ask the majority of people what's caused to get financial issues. The majority of people are going to say is an income problem. If I just made an extra $10,000, I'd be able to put money aside from my investments. I'll be able to do this. I'll be able to do that. I'll be able to do so many other things. But what data has showed us is for the vast majority of these people is when you make that extra money, what happens? Your expenses go up right with your income. Now you got to buy a new car that matches your new income. You got to go on a vacation. You got to celebrate. You got to go out. You got to live this lifestyle that matches your income. So instead of doing that, create a system that flows no matter how much money you're making. And one of the simplest things that you can do is follow something like a 75/15/10 plan, which means that for every dollar that you earn from now on, 75 cents is the maximum you can spend. 15 cents is the minimum that you're investing, putting aside for investments. 10 cents is the minimum that you're putting aside for your savings. So now whether you're making $40 grand a year or $4 million a year, it doesn't matter. You're still following the same system where it's just a percentage based on how much money you're earning. And the only thing that you're going to change is your savings because you don't want to save your money forever. You want to save your money for three reasons.
The only 3 reasons to save money (01:45:55)
Save your money for an emergency. Save your money for a big purchase like you want about a home or a car or save your money for an investment. If you're not saving your money for these three reasons, don't be saving your money. Now when we talk about saving your money for an emergency... That's a bold statement. Yeah. That's a bold statement. There's no other reason to save your money because now you're just saving your money. We're going to have to get into inflation otherwise people are going to derail. But I also, let's start there. So why, why not save? That's all I was taught as a kid. Save, save, save. Me too. So I grew up in a traditional Indian house where the whole idea of planning and becoming a self, this is for me, was become a doctor. Why? Because doctors have a big status and doctors have a big salary. Now when you make this big salary, what is the plan to become wealthy? Not by investing. Not by doing some fancy stuff. It's by saving your money. Have a big bank account. So live small, live off of ideally 20 to 30% of your income, save the other 70%. And that might sound extreme, but this is the reality of what a healthy financial household looks like for a Indian doctor. Was it for emergencies? Like what is the purpose of saving? In that particular mind. So it's not for emergencies. It's literally just to build up a big savings account. It's to pass on your kids. To pass on, to build wealth. So I think-- I should be wealthy and live in a shoebox. What is the-- are they ever articulating why you're doing it? For my mom, if I'd pressed her, what would she have said? You never know when you're going to need it. That's the only way to get rich. She would have said something like that. But if I had then pushed farther and said, okay, what's the point of being rich? Well then you can do this, that, and the other. Well, not if I'm saving forever, I can't. So I think it has to do with the times that somebody grew up in. So this saved heavy culture is a big byproduct of my parents' culture. People who grew up were born in the '60s, especially in India. So now if you look at that time frame where you look at before 1970 in India, it was a very tough time where poverty was very common. Most people were poor. See, that I get. That's a protection again. And it was-- I don't ever want to be hungry. I don't want my kids to be hungry. And that culture ends up-- it hasn't gone away. And so it just kind of trickles down, right? You see what you know. Because I personally-- many of my friends are doctors. Many of my friends make a lot of money. Many of these people also have zero investments and have huge bank accounts. Because then you're beaten away from this idea of doing something risky like investing your money. Investing your money is dangerous. It's bad. Like when I-- I mean, I've-- we're not wanting to invest in real estate. I mean, my family had ever heard of this concept of real estate investing. Either had I. Nobody I knew was an investor. So I told my dad, dad, I want to invest in real estate. I found this condo for $8,000. I want to rent it out. Blah, blah, blah, blah. My dad's response was, you are stupid. Go become a doctor. Go do something worthwhile. And he said it on a love. I love my dad. But-- Did he really say worthwhile? Yeah. Yeah. Now, the reason why my dad said was that extreme about it is Indian parents have this thing where they like to create stories to scare someone away from doing something. And so his whole thing was, oh, what happens if your tenant doesn't pay you? What happens if you go to your tenant's store and then they shoot you because they don't want to pay you? I've got to escalate it correctly. I mean, this was the example that he gave me. And so it's just it-- you start creating all these fears where it's like, if you invest in those that you might die. And that's supposed to scare you from not doing it. It's one of those things where it's this lack of financial education, lack of ever experiencing it because you don't know that it's possible. You don't know anybody doing it. You don't know anybody that looks like you doing it. You're still new in this country. How are you supposed to go undo it? It's just very scary where this is the safe thing is just saving money. If you save 100 grand today, and you look at your bank account a year from now, it's still going to be 100 grand. Maybe a couple extra pennies if your bank is giving you some interest, but that's it. If you invest in your bank-- So why isn't that the best idea ever? Well, going back to what you said, inflation. Inflation, by definition, is deluding the buying power of your dollar. So what is-- I thought this was a fundamental law of nature. It's really human intervention. Yeah. It really is. Inflation comes from the word inflate. What are you inflating when you have inflation? And it's funny if you've been watching some of your content or my content, you know that it's you're inflating the monetary supply. When you increase the amount of dollars out there, without increasing the amount of wealth, the value of each individual dollar goes down.
If you increase the amount of money.. (01:50:46)
You just broke brains. How do you increase money without increasing wealth? So if I just print money, the Federal Reserve Bank, which is the central banking system of the United States, they have the ability to print money. They can increase the amount of physical dollars out there or increase the amount of currency through digital things. So the amount of money in circulation, they can increase this. And so if we go to a very basic example, if we live on a hypothetical world where there's me, you, and three other people, and each one of us, us five, have $20 each, and that's it. We're each equally owners of 20% of this world's wealth. For what happens now, if this new alien government comes in and then they magically gave us $20 more each, are you going to be 20, you know, double as wealthy as you were before? You might feel like you are for a minute because you see, oh my God, I have $40. There's only $100 in this world. I have 40 now. And then you go and talk to your friends and you go shopping and you realize, oh, everybody has $40. So now all of a sudden, the price of anything you want to buy is going to be double because you've increased the amount of currency in this case without increasing the actual wealth. And so this is where you kind of have to differentiate currency from money because you have to kind of define what money is because money can have a couple of different definitions. It can be a store of value or it can be a means of exchange. And what I mean by that is money as a store of value, if you look at physical gold, for example, gold is your traditional store of value because it takes time, effort and labor to mine physical gold. So that time and labor is represented through a physical gold bar and that is the value, the physical gold. Now, if we compare that to something like our paper dollars, it's very easy to transact with. It's a very good means of exchange. Gold is difficult to transact with. If I wanted to go to McDonald's and buy something with some gold, it's going to be very hard to do that versus with dollars.
Investment In Context Of Entrepreneurship
Money as a good means of exchange (01:52:53)
It's very easy to exchange. However, it can be easily manipulated because the Fedorizur bank can print money essentially on command. So they can increase the amount of dollars out there, which decreases the value of each individual dollar. So while our dollars serve as a very good means of exchange, it's not a very good store of value. This is where now what wealthy people do is they want real money. They want something that's not only going to store their value, but also hopefully increase in value. This is what assets do. If you look at hope, we hope, right? You invest in assets for the purpose of making money. How does it make money by increasing the amount of value that it provides? We need invest in a company or ETF or anything. You want to invest in something that you believe will be more valuable in the future. If you didn't believe that, you wouldn't put your money in there. How is it going to become more valuable? How is McDonald's or Amazon going to become more valuable? Their goal is to produce more value, to create something new that will provide more value to more customers. And then their value is represented through revenue, through profits, through money. So you're investing in something that you believe will produce more value. Same with real estate. You want to invest in an area that you believe will be a more desirable area because if you invest in an area where businesses are moving to, where people are moving to, where jobs are moving to, you own that land, you own that property, you own that building that is now more valuable because more people want to be here. And now that is represented through money, through this currency, where now more people want to be there, so now rents are higher, property values are higher. This is why this stuff gets complicated and why people turn their brains off. Because for instance, if you pick the wrong neighborhood, you can lose your ass. This is where ETFs, index funds become very interesting to use real estate as an example. I personally, because I recognize how ignorant I am, I would much rather be investing in a whole bunch of neighborhoods across not only this country, other countries because I don't know which one's going to pop off. So because there is so much uncertainty, it's like as you spread that out now, but to your point, you're limiting your upside, but you're limiting your downside. That to me is far wiser. You don't become the next Ray Dalio by doing that, so you're not going to turn into a billionaire. But when Ray Dalio was pressed, what would you do? If you could only leave a set of instructions to your kids about what to do with their money, you couldn't actively manage it for them, you couldn't have your company do it, you just had to give them instructions. And he came up with what he called the all-weather fund.
What does the average person invest in? (01:55:32)
And so it's just like, "I don't know what's going to happen." So here is the diversification that you should put it across and you're not going to make as much money, but you're not going to lose a bunch of money either. And so all of this stuff is so freakishly complicated that even better, it is so easy to be wrong and so hard to be right that your odds of getting it right consistently enough, because to your point about the monkey, if you looked at it in six months, the monkey probably loses. If you look at it in 12 months, the monkey probably loses, 18 months probably loses, two years maybe loses, three years though, it starts to be like, "Oh, all bets are off." And by the time you get to 10 years, it's like the monkey's winning. Just because you just left it alone instead of thinking that you could outsmart the scenario. And Warren Buffett did a very similar bet against some major hedge funds on Wall Street, what he bet. There was a $1 million bet that the winner would give a million dollars and then they would go to charity. And his bet was that the average person would be better off by investing their money into a low-cost index fund as opposed to actively managing their money, actively trading their money like the hedge funds were doing over the long term, over a 10-year period. And what happened was exactly what you said. In the beginning, the hedge funds were crushing the index fund. The index fund was down, hedge funds were going up because they were able to find these trades and make all this money in the short term. And the media was asking Warren Buffett, "How do you feel about it?" He said, "The 10 years are not up yet." And then come year 10, well then we had some swings on the market, some hedge funds had some losses. You took out their fees, which is also a big chunk of it. After factoring in the fees and all that other stuff, the index for the loan. And what did he do? He just put his money into it, he set back and didn't do anything versus the hedge funds they were spending all their time managing the money, trying to beat the markets. And they did for a little bit, but then over the long term they didn't. And then when you factor in their fees for spending all that time trying to beat the market, now your returns are less than if you just put your money into the market and didn't have to do a thing. And so this is that basic financial education where it's not as attractive. How much did you pay for your first share of Ford Motor Company? Two dollars. So this is what I want people to hear. And I'm glad it's coming from you. I was very honored to have Wall Street Trapiron as well. Because I want people that are, I know minority in the name of your program isn't about being a literal ethnic minority, but it's about thinking in a new way. But having people that are minorities, at least in this country, say like, hey, if you do the right things, you're going to be able to change your circumstance. What do you say to people that either think, well, it's okay for other people, but for me either because I'm poor or I'm a minority, it's never going to work for me.
The Land of Opportunity (01:58:28)
So I'll kind of give you the story of my family in that sense because the reason why people come to America is because of opportunity. You have the opportunity to own something, own a home, potentially own equity in companies, build your own company. You have the opportunity to build something which is something that you can't do in a lot of other places in the world. My grandparents were refugees. They had some land and in 1947, the state of Punjab was severed. And when that happened, if you were sick, which is the religion that I am, and you're on the west side, either you migrate east or you're going to be killed. So now my grandparents, literally, all they had were the clothes on the back and the sword in the hand of the ran. During the process, my grandfather was attacked and he had to literally fight for his life. He saw his uncle get his head chopped open in front of him, put him on a horse. That was the last time he saw him. He got to the new east side of Punjab in India and didn't even have shoes on his feet. They didn't have a place to sleep. Had literally nothing. Now from there, you got to start. You got to start now all over from scratch. And there's a lot of political issues, unfortunately over there. And so that's when my parents, my dad, my mom, were like, we want to get out of this country. We want to go somewhere where we have better opportunity. Come to America, don't spit the language. Don't know the culture. Don't know the people. Don't know how life is. I mean, India has a very different world. It's a beautiful place, but it's very different than here. And you start over. Why? As a minority. As a minority, just for the opportunity because that's all, you know, there's risk, but you see the opportunity there. And do you think looking back now, do you think that, because I often think that what we refer to as being an ethnic problem is actually just, there is an element of what I call school of fish. Like you're just, you're going to group up with people that look like you. It's just so embedded in the subconscious. But I think a bigger thing is just it's either majority or minority, right? Because globally, the Indian ethnicity is massive. Villains. But when you come to the US, now you're a minority. Do you think that the trade off of going from being the majority ethnicity, I mean, everybody in India basically is, shares the ethnicity. I know there's religious differences. But then coming here and being a minority, does the opportunity that America provide outweigh whatever detriment there is to being a minority? You know, again, if you're willing to work, you have to be willing to work and kind of just break out of whatever. Anytime you see a majority kind of just groupthink, you have to be willing to question that. But the opportunity you have here in America isn't more difficult now than before. Absolutely. It's more difficult for some people than others. Absolutely. However, it's the best opportunity you have in the world. And that's why literally even till today, you have people that are willing to risk their lives to come to this country. And I mean, actually risk their lives. And so you have that aspect. And I can speak for me where six, the religion that I am, they are a minority in India. And there's a lot of issues that come with being a minority anywhere. But again, here you have more opportunity than anywhere else. And so the way I look at it, for me personally, it's my parents came to this country with next to nothing. So I got nothing to lose and everything to gain. And so this is the place where that opportunity exists. But now you have to be willing to work hard. But you also have to be willing to work smart. I can't stand what people say, "Work smart, don't work hard." But to me, that's all complete crap. Because you have to do both? You have to do both. Because if you're not willing to work hard, your smart working is effectively worthless.
Work smart and hard (02:02:20)
You have to be willing to apply both together. And I had none of this financial education. For me, it was, "Dad, I want to go invest in real estate. Your stupid go become a doctor." I had to do all my entrepreneurial stuff in secret. The first, my parents didn't even know that I was doing this business stuff until I was on the news. I was running a different SOC company. And this is now a couple of years after. And we were doing well, and we got featured on the local news. My parents got a call from a family friend. And they said, "Oh, we saw your son on the news." My parents were like, "Oh God, what did he do now?" And they're like, "No, no. He has this company. He's doing really well. They're growing him." And Dad was like, "What?" And so now he sits me down and he's like, "What the heck is going on?" And that was the first time they were like, "Okay, you can actually do something with this." And it was like, you have to, for me, it was like, "I understood what I wanted." And I knew that I saw this like really, I wanted to achieve success. And I knew I was doing it for good intentions. I knew I didn't have bad intentions with what I wanted to do. But the question was, how do I get there? Because it was like, if I know if I try to convince my parents, it is like, it's going to be extremely stressful for me. I'm going to stress them out. It's just not going to work. So I'm just going to try to figure it out myself and I'll fail. I'm going to school. So I kind of had that backup. But for me, I went to law school as well. The problem was I wasn't the best student in law school particularly. I did well on the bar exam. I loved learning. And so for me, I knew I needed to pass the bar. And so I studied hard and I actually did really well. But in the classes, I was not very good except for a couple of the business ones because I really enjoyed that. But for me, it was just like, I just need to get the degree that way I can be done with this because I went to law school because my parents found out that I wasn't going to be a doctor. I had at least become an attorney to keep pride in the family. And so I was like, all right, well, if I go to law school, I can go to law school part time. And if I go to law school part time, I can work on me, my business full time. So that was my mindset with it. But I knew that, yeah, if I graduate law school and things don't work out, I don't even know how I'm going to work as an attorney because I have no idea. I don't know how to file a lawsuit. I have no idea what to do. So if I graduate, I'm going to have to start all over and figure it out after I'm done. It used to give me a lot of anxiety, but I was like, you know, this is why I have to figure it out. It was a mission because one, I wanted to do to give back to my family and myself. And second, I wanted to do it because I wanted to prove a lot of people wrong. And I remember when I used to talk about this, everyone was like, oh, you shouldn't do it out of spite. Don't do things because you want to prove someone wrong. I was like, you don't understand. You don't get some of the, you know, the things that you hear, the things that you see. And sure, you know, maybe it can drive you forever. But it can take, I mean, that pain of seeing the things that people say to because, you know, in between, I started a SOC company. And when I was doing the SOC business, this is when, you know, people started to be aware that I was an entrepreneur and I wasn't like super successful.
Why We Become Entrepreneurs (02:05:18)
I was doing okay. And that's when I got on the news. But you know, just think about this. I was supposed to be a doctor. Now here I am selling socks on the internet. And everybody is like, oh, so you left, you know, this idea of becoming a doctor. Now you're just selling socks. And you know, hearing that for years, it's like one day I'm going to have your kid want to work for me. And that was like, in the back of my mind, I never said that. But I was like, in the back of my mind, your kid's going to want to work for me one day. And it's like that driving force, right? I knew I'm going to prove this person wrong. I'm going to make this person like really like see that, hey, I am worthy. I can do something. But it takes a lot of work, you know, going back to that. It's it's it's be with anything being willing to try, being willing to take risks, being willing to make mistakes and being willing to learn from it. Because you know, like I said, you know, for me, I was willing to be dumb or stupid. I never saw that risk until more recently because for me, it was just like, I know this is what I want. And so the risk really was never even on my horizon. If I had a business idea, I would start at like the same night because for me, it was like, I just got to I want to do this. I want to figure it out. Books weren't kind of giving me an idea. My teachers weren't teaching me this. I don't know who the turn to my experience was my teacher. That's how I learned how to be an entrepreneur, how I learned to start investing. That's when I started learning about money because, you know, the whole issue with the money stuff, I mean, this is something that we're never ever even remotely talked about. And it's now becoming a real pressing issue. You have to be willing to try, learn risk failure. You are going to fail. I always try to get people to understand that failure is the most information rich data stream that exists. It sucks. It hurts. It can be costly, but one in triggering the parts of the brain that have to do with pain, you trigger the parts of the brain that have to do with memory and focus. So you're more likely to really look at that thing that you don't want to happen again to figure out why that happened, memorize it, and then you're going to get better the next time. And to your point about having a chip on your shoulder and people telling you that you can't do something and thinking one day, you know, your kids are going to ask for me, it probably is a primary driver over an extended period of time. Like you said, it'd be a little caustic to the soul, but it's so powerful in terms of, so you've got light energy and dark energy, right? Just to be like all stories about it. And if what I have found in my own life is that the hardest times, the light energy will only get me so far. And then I'll hit a brick wall and I want to stop. And it's only when I tap into the dark energy of like, I will not let this person be right about me. I'm not going to back down because I know they're just waiting for me to fail, but it actually does give me another boost. Now I try to split it call it 80/20, where I'm spending 80% of my time in the light, the beautiful things I want to do, the people I want to help. But dude, let me tell you 20% of the time, I'm thinking that the person that really wants to tap down some of my grades.
Money Does Not Motivate (02:08:22)
It gets you going, right? Yeah. I'm not going to lose that. And I found the same way because for me in the beginning, it was just figuring it out. I went from business idea to business idea to business idea because for me, I was just trying to figure it out, hop it from one idea to the next. But then you talk about the light energy. For me, it was my really driving, my passion and my mission and my purpose. And that became more of the light energy because now, after a certain point, you're like, the money doesn't drive you. It just is what it is, right? It's just like, I'm fine. I'm not a very materialistic person. I don't really care about brand names, designer names. First time I made a million dollars, I was driving a $500 car. It just doesn't matter. Sure, it provides some sort of benefit, more comfort, more value. But after a certain point, that money is not a driver. It's now what is my purpose? And for me, that minority mindset, where we started making videos, I wasn't doing it to make money. I did this as a hobby because I got scammed in that sock company. I'm just talking about things that I wish somebody would have told me when I was younger, having to do with business, having to do with money. So I did it as a hobby. And people will say, you can't just do that as a hobby. I'm like, dude, you don't understand. I didn't invest any money into it. I was making videos off my phone about a $30 or maybe $35 tripod off of Amazon. And I was just making videos for fun. And my friend asked me-- I think I was around 10,000 subscribers. And he asked me, he was like, how much money are you making off of YouTube? What do you mean? He's like, how much money are you making from your ad revenue off of YouTube? I don't know. What do you mean? He goes into my YouTube backend with me. And this is before YouTube had requirements of, like, you've got to have X number of videos, X number of subscribers, you can monetize any video. He's like, dude, you haven't even turned monetization on. Click one click and now you can start making money off of your videos. I was like, oh, I didn't know that. I really enjoyed it. For me, this was like really fun and something that I loved doing, which is why I did it. And then minority minds started to grow, started to make some money. And I was like, oh, actually, actually, like, do this. Like, I can work on just spreading this purpose.
Understanding Market Fluctuations
What is it about what you guys publish? (02:10:31)
What is it about what you guys publish that people respond to? It's one email, right? It's a newsletter. And you know what time is coming. You know where it's going to be every day. And so people want to open it. We don't need to have a-- the world is ending. You know where it is. And then we just break down what's happening in the stock market, the real estate market, the crypto market was happening with inflation, was happening in the global economy. And then if there's anything else, we'll add that in there as well. And it's super fun. And so you can avoid that headache, avoid all that, you know, spending hours and now here it is in a fun way to read email. What should somebody that in this environment, they want to pay attention. They want to make the right moves. They've listened. They know that you bought your first stock for $2. They know that no matter what they look like, they need to be changing their behaviors, that they need to find assets. Like in this uncertain time, where should people be putting their money? I know there's no one size fits all. So I'll tell you where I invest my money. I invest my money in five places. My business, market briefs and other startups. I invest my money in real estate. I invest my money in stocks. I invest my money in cryptocurrency. I invest my money in physical gold. Now I don't recommend you go on and just start putting your money everywhere. Start with one place. How did you pick those five and how do you allocate what percentage? So giving a percentage will be hard because valuations change all the time.
Valuations change all the time (02:11:50)
But I have been less and less actively before my active investment, main one was real estate. That was the thing that I loved and the thing that I really understood. So anytime I had extra cash, I would go out and buy rental properties. But now I'm doing less and less of that so I can have more money to invest in my own company, market briefs. And now what I do is out of my company's minority mindset, I pay myself a salary. Out of that salary, pretty much all of that gets passively invested. It gets invested into stocks, crypto and physical gold. So what does that mean? Well in stocks, I have a system where every Wednesday, you can pick whatever day, it doesn't really matter. But for me it's Wednesday. My money is automatically pulled out of my bank account and it's invested into a few different ETFs. So an ETF is an exchange traded fund and you could think of it like a group of stocks. So instead of going out and investing in Amazon, one company and then hoping Amazon grows, you invest in a group of companies. Like some will give you exposure to 30, some will give you exposure to 500, some will give you exposure to 1000s. There's a bunch of different ETFs out there and there's ETFs for a bunch of different things. Like one example that I invest in is the S&P 500 ETF. The S&P 500 is a group of the biggest 500 companies on the stock market. And so when you invest in this ETF, you're literally or indirectly/directly investing in the biggest 500 companies on the stock market without individually investing in all of them. You invest in one ticker symbol and it gives you exposure to all of them. So you're in essence investing in the companies that make America, America, investing in America. You can invest in specific sectors, technology, healthcare, you can invest in companies around the world, emerging markets. And so you can find these ETFs, again Google Search, YouTube, you'll find the things that you'll see what you're interested in, buy what you're spending your money on. And so that's one thing that I do. I have a few ETFs, everywhere and it's damn bad. And then I have my cryptocurrencies. So for me, I think cryptocurrencies are going to have a lot of value in the future. But I also believe it's going to be very volatile. I think we're going to see a lot of, just like anything else, there's a lot of dumb money in crypto. And anytime you have all this money that was printed, money's going to want to go to dumb places. And so I think that we're going to see some cryptocurrencies go under. And again, what is that going to do? It's going to keep panic. The volatility is going to create fear. So especially when the newer asset class, you have to be willing to understand that and withstand that. And so I understand that I'm not the most educated person in crypto, but I understand the basics. I believe in the value of the blockchain. So I invest in Bitcoin, Ethereum and a couple of smaller coins, the things that I believe in.
10 to 15 Percent Buy Method (02:14:40)
And that's happening every day. And then I invest in physical gold. Every month I have some cash going to buy some physical gold every month. And so this has happening on autopilot. It's automatic, it's passive and it's consistent. And it's just a simple way for me to invest. Because what a lot of people try to do when they invest, they say, I'm going to invest in the stock market. Okay, either, you know, when times are good, I'm going to try to find the next hot stock. The thing that's been rallying like crazy, everybody's been making a ton of money on it. So I come in and buy and that's when it starts to go down and then they get scared, they lose money on the sell. Or when times are bad, they say, I'm going to buy at the bottom. I'm going to wait for that perfect time to come in and buy. And this happened again in 2020 in just textbook form because the market started collapsing. And it was the fastest collapse that we've ever seen in the markets, even faster than the Great Depression. And so what I was saying was on YouTube, I said, look, here's what I'm doing. I'm buying. I have the companies that I like because my ETF strategy is happening passively. But actively, I'm also picking and choosing what I want to buy. I already knew which companies and stuff that I wanted to own. I'm just waiting for a good entry point, a good price to buy. So what I said was, look, when things fall by 10 to 15% I buy. And it falls by another 10 to 15% I buy more. And it falls by 10 to 15% I buy more aggressively. I just buy the way down in phases because I can't perfectly time the market. And anytime I said that, it was just a flood of comments people saying, why would you want to buy now? The whole market is going to implode. It's going to go way lower. Just wait that we can get a better buying opportunity. And I said, I can't predict the bottom. That's not my game. I'm not trying to time the market. I don't got a crystal ball. And then what happened? The Fed opened up the money printer and they did something called unlimited quantitative easing, which is something we've never really seen before. And so they just flooded the economy and markets with money. And now you had the market, the fastest claps ever. And then you had the fastest stock market rally in the history of time. And it was like, no, I mean, I couldn't predict that. I don't know who could have. But if you were waiting to time the market, you missed the opportunity. And the people that weren't trying to, and you just, you know, you wait for the good entry point you're buying, even when everybody's scared, they were the ones that were able to make a lot of money very quickly, way faster than pretty much I could have anticipated or anybody could have anticipated just because you understood, you know, you buy in phases. Recessions create more millionaires than any other time, like you said, because when you have a recession, a market crash, people get scared.
Recessions Create Millionaires (02:17:12)
And then they sell their assets. It was an asset stocks, realistic crypto, gold. It can be any type of investment, depending on what the crash is, what the recession is about. And that then creates a buying opportunity for somebody who has access to cash or capital and somebody who is financially educated. So if you have the cash it prepared and you have the education of knowing what to buy, well now a crash creates a discount for you to come in and buy an investment on sale. You could think of it like Black Friday for investors. You get to go shopping at a discounted price because now people are selling because they're scared and what you want to look for now is good investments that are being hurt, not because their investment is on the verge of bankruptcy, but because the economy is pushing the price of good investments down. So that's kind of on a, in a nutshell, to answer your question what that means.
What Does a Recession Mean? (02:18:03)
But now if we dive a little bit deeper, we go a little bit higher level, how do you do this? What does it mean? Well, if you ask the majority of people or if you just ask anybody, is a recession a good thing or a bad thing? Most people are going to say it's a bad thing, but it's really relative depending on which side of the equation that you're on. See, it's bad for so many people because recession means, well I might lose my job. I might lose my home. I might lose my savings. So it's bad in that sense where if you're not prepared, you might not be able to weather the storm and you might get financially hurt. We've seen this happen forever now that anytime you see a bubble burst, the people who are not financially educated, the people who are not prepared, the people who don't understand what's going on in the economy, get burned. I remember the first time it occurred to me, I was like, wait a second, if I don't lose my job, then a recession doesn't impact me. Now that was before I had any money invested, so now I have a better understanding of if you're counting on income or whatever from your investments, then it can still be a dicey period.
Why people get scared (02:19:09)
But that was one of those things like a recession was a boogeyman. It was like something to be afraid of, but I didn't really understand why I was supposed to be afraid. And so my question is, why do people get scared in a recession?
Property Sale And Mortgage Insights
Why is this relevant to me (02:19:27)
What is it that makes them sell? I'll give you a very specific thing. So in crypto, even though the price is plummeted, I haven't sold a single ETH, not a single satoshi. I've just been holding, not tense about it. So why do so many people get scared in a recession? So there's two reasons why someone sells. Either it's a forceful sale or it's a voluntary sale. The voluntary sale is a little easier to understand, so I'll explain that first. So when the 2020 pandemic hit, we saw the stock market crash. Now I think most of us understand- And crash is a definition, by the way. Well yeah, crash, a bear market is when you see the market fall by 20% or more. Now the stock market, when the economy shut down in March of 2020, we saw the fastest stock market crash in the history of time. Now naturally people got scared faster than- Faster than the Great Depression. People got scared. And I think most of us understand that your 401, for example, is a retirement plan that you don't want to touch until you are near retirement. What happened? All we saw a massive amount of people sell out of their 401s near the bottom of the 2020 stock market crash. Because they're convinced they're just going to keep going lower and it's like, "I gotta get out now." You just see your portfolio in the red, you lose 10, 20, 30, 40, 50%, you get scared and you're like, "I want to save whatever money that I can because you don't understand what's going to happen." I mean if you look at it from the last 100 years, chart, you'll see that crashes happen, but then each time they happen, our economy is stronger, rebounds and the market moves higher. But we get this like narrow vision where we're looking at today, tomorrow, the day after, next week. And now we want to pull out as fast as we can to save, quote unquote, save our money. And so you sell. So this is a voluntary sell where now you get scared. You panic people talk about how the world is ending. I mean the media isn't the business of selling hype. It's as unfortunate as it is, you have to understand this. Things are typically never as bad as they seem and things are typically never as good as they make it seem. So it's typically somewhere in the middle. And so now when you know that, you'll understand that, "Okay, the stock market is a liquid investment." Meaning you can buy and sell a stock with a click of a button. I can buy and sell a share of a company literally within two seconds. And so what does that mean? Well if I start reading headlines, I see the market going down and start getting this anxiety, I start getting this fear. I might just want to sell. And I can do it in two buttons. And if all my friends talk about how they're selling, how they're losing money and the media keeps talking about how the market's collapsing, the world is going to end because the media is either going to say the world is ending or nothing bad will ever happen. It's typically one of these two extremes because that's what drives the business. And I want to get to that. That's one of the things I'm going to push you on later is like, I heard you talk about this. People lie a lot. They do. And then they come out and admit, "Yeah, we were lying." But we had a reason. But I don't have to. But I don't have to. But that kind of stuff freaks me out. And that's the reality of life. And we'll talk about that. So now if you understand that, what does that do? It manipulates people's emotions, emotions and driver actions. And what are these actions we sell at the bottom. And then we buy at the top because at the top it's the same thing. People say, "Oh, everyone's making money on this dock. You can't believe how much money these 17 year old kids from high school are making. You can't believe how much this hedge fund made. You can't believe how much money, whatever your neighbor made and how you get jealous. You get this formal. You don't want to miss out. You come in and buy. Then at the bottom is the opposite emotion. So that's the voluntary sell because most of us don't have the psychology, which is a part of the financial education of how to manage our investments. The second is the forceful sale. Now the simplest example that I can give you of this will be if we backtrack, look back to the 2008 realistic crash. Now if you buy at home for $400,000 and you had a adjustable rate mortgage, which was very common back then.
Short term for adjustable-rate mortgage Is basically betting (02:23:26)
And it's getting common again now. It is getting very common again, which is very bad news. But they were very common. Another thing that was very common back then was a 0% down payment. But let's assume you put a little bit of money down because you wanted to put some skin in the game. You put a little bit of money down and you put 3 to 5%, maybe 10% down. What happened was a few years after you bought the home interest rates went up and now you realize... You really thought I want to walk people through what an ARM is. So an adjustable rate mortgage. I had one. If I had known how dicey it was. We talked about this. And so an adjustable rate mortgage, you're basically betting that the future is going to be better than the current moment. So you take something with a certain interest rate and you're like, "Okay, I'm going to be able to refinance. Either the value of my home is going to go up or interest rates are going to come down whatever. But I'm going to be able to refinance my home so the story goes or I'm going to be able to pay it off whatever before that huge increase." You are betting literally your house that you're going to be able to either make enough money to cover the increase or that you'll be able to sell your house at a price that you like or be able to refinance it before that happens. It's so dicey. So people end up getting in these insane situations. That tends to go along with when people are getting pretty loose and fast about not expecting as much money upfront. So now you don't have any equity in the property. You get upside down, meaning that the house is worth less than you owe. So even if you sold it, you're going to be selling it for a loss. And so now you're in this really dark spot where you can't sell it. The interest rate just jumped sometimes dramatically. And so now you owe significantly more. I mean, it could be 50% more, 100% more. And you're just in a really, but you can't get out from under it unless you just let them foreclose on you. Or you have to find a way to pay that money. And it is speaking from experience. I was so convinced that my life would be in a fundamentally different place than it was when I took it. So I put a five year bet on myself. And dude, it ended up working. But oh my God, in the intervening five years, I became so much more financially literate that I was like, what was I doing? Like that was the most dangerous thing I could have possibly done.
The banker doesn't want you to not buy this home because (02:25:47)
It's a very dangerous vehicle when it's given with no financial education. The problem is it's not given with any financial education because see a banker, so I'm going to just explain this for a second. A banker is in the business of making money. Harder to make money by selling you money. So they're trying to sell you as many loans as possible. And now if you're looking at this $400,000 home, well, let's just assume for rough numbers that the mortgage on this $400,000 home is $2,000 a month. And you might see, I'm kind of stretching myself a little thin, but I want to own this home. The banker doesn't want you to not buy the home because if you don't buy the home, they don't get paid. So now what they can do is say, well, how about you buy this $400,000 home. You don't pay two grand a month, but instead you just pay $900 a month off. Are you telling me I can buy this $400,000 home for $900 a month with nothing down? Yeah. How about you have this free TV as well? Because there was promotions back then where they would give you a free TV. You literally put no money down and now you can buy this home. And so what was happening is people were buying these types of homes with these types of deals speaking they have this amazing price, $900 a month. And it was given with zero to extreme little financial education because then what would happen is after a number of years, your interest rate would readjust because you were given this low teaser rate for the first few years. And the pitch was, well, don't worry about it. Home prices always go up. So if home prices continue to go up or not, if when home prices go up in a few years, if you can't make the payments, don't worry about it. Just refinance out or sell the home and then you have cash in your pocket. So what could go wrong? And this was the pitch. Now, again, many people are not financially educated. We're not hot about money in school. So that was the first aspect. The second aspect was these loan officers, banks are incentivized very heavily to sell as many mortgages as possible because the more mortgages you can sell in a month, the bigger your bonuses. And so you had these two aspects happening. So now you bought this $400,000 home, you pay $900 a month and things are great. Then a few years go by, you get this letter in the mail saying your payment's going to go from $900 a month to let's just say $2,000 a month. Now if you don't have the ability to pay this extra $1,100 a month, you're going to say, well, that's quite a bit. Oh, well, no big deal. Let me call up my banker and tell him the situation and he'll tell me what my best options are because my banker is a good financial advisor, right? Call up the banker. Hey banker, I can't afford this $2,000 a month. What are my options? He says, well, you can refinance or you can sell. This is what was happening now getting closer to 2008. And so you said, okay, well, let's get in a appraisal or let's look at the value of the home. You bought it at $400,000, now you may be, oh, 380,000 over the first few years because the first few years of your mortgage are interest heavy, meaning the majority of your monthly payment is going towards interest, not paying down your balance. And so now they look at it and they say, so the value of your home is now 350,000. You owe 370, 380, meaning you're underwater. So now if you owe 380,000 under 350,000 other home, no bank is going to want to refinance because now you're underwater. They're not going to want to realend you any more money. Otherwise, you're going to have to bring cash at the table. You can sell the home because if you sell your home for $350,000, you need to still pay the bank the other 380. So you need the $30,000 coming out of your pocket. And if you don't have $30,000, you can sell. So what's the next option for? If you can't make the monthly payment, either you're going to walk away or the bank is going to force you to walk away through a foreclosure. This is now a forced sale. So now the bank comes in, they take the home from you and now the bank wants some liquidate because they want to not own properties. They want to just lend money. That's their business. They don't want to own homes. And so that was what happened. And so many more homes hit the market. You see the same thing happened in the stock market when you buy stocks on margin. And now what does that mean? It means you're using debt to buy stocks. And when you use debt to buy stocks, your lender, your brokerage doesn't want to see your portfolio fall by a certain amount. If it falls by a certain amount, they're going to ask you now to cover, meaning put some money in.
What Causes People to Sell? (02:30:01)
And if you don't have this extra cash, the reserves to put more money in because you thought your investment was going to go up so you went all in, well now they're going to force you to sell. And that is now again a forced sale. So now markets are going down. What causes people to sell? Either voluntary because you get panicky, you get scared, you get worried or you think you have a bad investment so you want to exit as fast as possible or on the flip side, it's a forced sale where now you use debt and you are over leveraged and now you're under water and now you're being forced to sell. So what does this do? This increases the supply of this asset. Now again, what is an asset? Stocks, real estate, crypto, it can be any asset out there and investment. So now when you increase the supply of this asset, well that can now bring the price of things down because the price of anything really, whether it's an asset or something else depends on supply and demand. When you have a lot of supply of something with no demand or very little demand, the price of this thing is going to fall because now all the sellers are fighting against each other to get somebody to buy it. On the flip side when you have a lot of demand but no supply, the price of this is going to go up. This has been the real estate market for the last two years or so. We have had this massive demand of people wanting to buy homes. Why? Number one, the pandemic changed our workforce where now you can work from home. So people want a home with an office in the home. Second, people want to move out of the big cities because they realize like if I can work from home, I don't got to pay this $9,000 a month in Manhattan. I can go live in a suburb and pay a fourth of that and have a bigger home. And then third, mortgage rates were the lowest that we have ever seen ever. In the history of American modern history, we've never seen mortgage rates this low. So this created a massive demand, meaning people wanting to buy homes.
Builders Couldn't Build Homes (02:31:59)
So you had this flood up people wanting to buy homes while the supply of homes was extremely low. So some people that don't want to sell because they were worried about the pandemic, they don't want people to come in their homes who could have potentially been sick. Second, builders couldn't build homes because we had a labor shortage. We had and still are facing supply chain issues. So what does that mean? You want to build a home? Remember, there was a period where there was a huge spike in lumber costs. Builders could not get access to certain materials. Certain materials were backed up. It was harder to find labor, to find workers to help build a home. And then on top of that, the costs kept going up because now workers wanted more money. The cost of materials kept going up. So it was this big dilemma in the building side. So the inventory of homes was artificially low. We could not build them our homes. So for the last 18 months or so, two years, we saw the situation where demand was through the roof literally and supply was very low. Some of the lowest supply levels have you ever seen. That pushed home prices up at the fastest rates essentially ever. And now we're starting to see that slow down. Where now demand started to go down because more or good rates have gone up so significantly, people are looking at the higher prices of homes saying, "I don't want to pay this higher price." That's starting to flip but this is where understanding how supply and demand works. And you now as a financially educated person, as an investor, what you want to be looking for now, when you see market slowdowns, a recession, a crash, what you want to be looking for is not the emotion, but now cutting through the noise, cutting through the media, but now looking for the actual financial fundamental investments where you have a good asset, a good investment that's being hurt by the economy that would now you can come and buy that at discounted price. And that's what you want to be doing. And I don't want to keep going on this same topic, but after the 2008 crash happened, that's when I first started buying real estate. And I think we talked about this before. I didn't understand what was going on. I was 19. I had some cash saved up because I was running some entrepreneurial ventures. Detroit, which is kind of my home base, Metro Detroit. Four GM and Chrysler were the main drivers of our economy. GM and bankrupt, Chrysler and bankrupt, Ford was on the verge of bankruptcy. So the Michigan real estate market was hit exceptionally hard. And real estate prices had fallen by 90 to 92% in some instances. Oh my God. And so that was where I was able to come in. I didn't know all this. Like I look back and I understand this now, but I was 19. I had a little bit of cash saved up. And that was when I bought my first rental property because I didn't have any real estate mentors or guidance or people. I didn't know any real estate investors. My first real estate property was an $8,000 condo. I bought it out of foreclosure from the bank. And it previous to me buying it, it had sold for $150,000 just a few years prior. And that was just the market where there was nobody there to buy it. I was the crazy one, the dumb one for wanting to go and buy real estate when the world was ending, when real estate was collapsing, when nobody wanted to own real estate.
Real Estate Investment In A Crisis
How to Buy Real Estate During a Market Crash (02:35:08)
Everybody told me that I had lost my mind, but that was a situation. And you have to understand the psychology. I've said this before. I'm going to say it again. History, while it does not repeat itself, it does rhyme. Wealthy people that know how to use debt effectively, that's what they're doing. They don't sell the asset. They borrow against the asset. And as long as there's a delta between the cost of the loan and the amount that the asset goes up, you now never have to sell the asset. You can just keep borrowing against it. This is how real wealth has made real generational wealth.