The Money Expert: "Do Not Buy A House!" 10 Ways To Make REAL Money: Ramit Sethi

The Diary Of A CEO2023-07-20

The Diary Of A CEO#steven bartlett steve bartlett#podcast#the diary of a CEO podcast#life lessons#CEO

5M views|1 years ago

💫 Short Summary

Financial expert Ramit Sethi shares insights on achieving financial success by debunking myths, emphasizing mindset, and setting financial goals. He discusses tracking key numbers, societal pressures on homeownership, and the importance of investing early. Sethi highlights the significance of diversifying investments, managing risk, and having open conversations about money in relationships. He advises on wealth accumulation through consistent investing, strategic planning, and aligning spending with personal values. The video promotes financial literacy, intentional decision-making, and long-term perspective for living a rich and fulfilling life.

✨ Highlights

📊 Transcript

✦

Key insights on achieving financial success from financial expert Ramit Sethi.

01:18

Sethi debunks common myths and limiting beliefs about money.

Practical advice offered to overcome financial challenges.

Sethi's 10 Money Rules challenge conventional thinking to create real wealth.

Encouragement to adopt the right philosophy towards money for a rich life and sound investment decisions.

✦

Importance of Managing Money Wisely for a Fulfilling Life.

03:25

Emphasizes the combination of money and psychology for a fulfilling life.

Key points include saving, investing, and setting financial goals.

Encourages a balanced lifestyle of spending on passions and cutting costs on unnecessary items.

Advocates for living richly regardless of background or income level.

✦

Importance of tracking four key numbers for financial success.

06:09

Fixed costs, savings, investments, and guilt-free spending are crucial for financial stability.

Recommended percentages for each category can help individuals budget effectively.

Tracking these numbers reveals spending habits, priorities, and alignment with financial goals.

Understanding one's financial situation is essential for achieving true wealth and fulfillment.

✦

Importance of defining a personal "rich life" for happiness and fulfillment.

09:10

Financial obligations like mortgages and car payments often hinder people from achieving true freedom.

Less than 1% of individuals have a detailed plan for their rich life, providing them with a unique advantage.

Crafting a rich life based on personal preferences may confuse others but ultimately leads to personal satisfaction.

Specific goals, such as travel destinations and experiences, are key in defining a rich life.

✦

Emphasizing intentional financial decisions.

12:45

Reflecting on past expenditures, health, and travel-related expenses are highlighted as worthwhile investments.

Societal pressures around ownership are discussed, challenging the notion that owning a house equates to success.

Renting is presented as a conscious financial choice, especially in high-cost areas like New York.

Advocating for thoughtful financial decisions over societal expectations.

✦

Society's pressure on homeownership vs personal values and happiness.

15:05

Homeownership is often seen as a sign of success based on societal standards.

The speaker questions the traditional narrative of homeownership being essential to the American dream.

Emphasis on making decisions that align with individual goals and values, rather than succumbing to external pressures.

Highlighting the importance of running the numbers and making informed decisions.

✦

Financial Considerations in Homeownership

17:13

Factors such as maintenance, inflation, opportunity costs, and phantom costs should be taken into account when buying a house.

Renting may be financially advantageous when considering these additional costs.

Real estate ownership can be part of a diversified investment portfolio, but all expenses and potential rental income should be carefully evaluated.

Many individuals purchase homes for personal reasons rather than solely as an investment, emphasizing the need to understand the financial aspects of homeownership.

✦

Considerations When Buying vs Renting a House

21:55

Running the numbers is crucial to making informed decisions when purchasing a house.

Renting is preferred for financial and lifestyle reasons, providing flexibility and avoiding high transaction costs.

The speaker advises young individuals to carefully consider long-term plans before committing to homeownership.

Stability and long-term commitment are emphasized as important factors in the decision to buy a house.

✦

Financial decisions in big cities.

22:00

Buying a house may not yield high returns.

Paying a financial advisor one percent can result in significant fees.

Small percentages in money management can lead to substantial losses.

Higher costs can sometimes lead to better results, like in sushi quality correlating with price.

✦

Importance of early investing for a prosperous future.

26:16

Investing is not just for the wealthy or older individuals, but for anyone seeking personal enrichment.

Proper investing can lead to more travel, quality time with loved ones, and overall fulfillment.

Viewers are encouraged to start their investing journey and learn key basics for financial security.

✦

Benefits of investing in a target date fund for retirement planning.

27:27

Target date funds automatically adjust based on age, providing a low-maintenance option for investors.

Investing in a single fund provides diversification across stocks and bonds without managing multiple investments.

Look for low-cost brokerage firms like Vanguard, Schwab, or Fidelity for suitable target date funds.

Avoid trading apps that gamify investing and focus on long-term, profitable strategies.

✦

Benefits of investing in funds through platforms like Vanguard or Fidelity include easy, low-cost investment with no associated fees.

31:16

Funds manage investments in various stocks such as Facebook, Google, and Spotify, making decisions on behalf of the investor.

Automatic transfers can be set up for consistent monthly contributions, simplifying the investment process.

Following a conscious spending plan guideline of allocating five to ten percent of income towards investments can help individuals build wealth over time.

✦

Importance of consistent investing for building wealth over time through compounding.

32:50

Setting up automated transfers from checking to savings and investment accounts is crucial for consistent saving and investing.

Personal anecdote shared about a friend mistreating their investment account like a checking account, emphasizing the need for a mindset shift.

Advises structuring accounts with automation for efficiency and ease of saving and investing towards specific goals.

Allows money to grow without the need for constant monitoring.

✦

Investing in funds over a long period for financial wealth.

35:35

Stock market returns in America average around 11%, or 7-8% after inflation.

Using an investment calculator and investing consistently can lead to significant growth in money over time.

Importance of intentional investing and making use of unaccounted money emphasized.

Example of investing $5000 annually from a young age for substantial returns in the future.

✦

The potential growth of investments over time is highlighted, using an example of starting with $5,000 per year at age 16.

38:56

By age 30, the investment could grow to $133,000 assuming a 7% interest rate.

Increasing the investment to $30,000 per year and extending the timeline to age 65 could result in $736,000 in the account.

Consistent investing is emphasized as important for significant growth over time, especially with increasing income and adjusting investment amounts accordingly.

✦

Importance of Early and Consistent Investing for Wealth Accumulation.

42:30

Warren Buffett's success is due to starting young and letting investments compound over decades, with most wealth growth after age 60.

Focus on safe, stable returns and amount invested, rather than high returns or risky investments.

✦

Strategies for making money do not need to be fancy or complex, but rather involve starting early, investing consistently, and keeping costs low.

43:50

People who are likely to be poor in the future tend to avoid investing, feel overwhelmed by financial decisions, and fail to educate themselves on money management.

Everyday individuals can build wealth by acquiring knowledge and seeking encouragement from others.

Surprisingly, 25% of those making $100k/year still live paycheck to paycheck, highlighting the importance of financial literacy and discipline.

Wealthy individuals attribute their financial success to making small wins over time, rather than taking big risks, emphasizing the importance of patience and consistency in building wealth.

✦

Importance of Consistency and Strategic Planning in Achieving Financial Success.

46:41

Emphasis on unlearning societal messages about money and adopting a consistent approach towards financial goals.

Value of setting up automatic investing and increasing income for long-term financial growth.

Example scenario of coaching a personal trainer on enhancing income through adjusting rates and client retention strategies.

Overall, consistent effort and strategic financial planning are crucial for long-term wealth accumulation.

✦

Strategies for Personal Trainers to Double Their Income.

50:45

Increase client numbers, offer additional services like meal planning, and organize group sessions.

Retain clients by offering special incentives and increasing the duration of their commitment.

Maximize the value of each client, optimize time spent working, and boost revenue and profit.

Focus on increasing earnings per hour worked and efficiently utilize all hours.

✦

Importance of aligning skills with the right market for maximum value.

51:40

Transitioning from consumer goods marketing to biotech highlighted as valuable.

Encouragement for individuals to assess skill sets for maximum returns.

Potential career paths in various industries based on unique expertise suggested.

✦

Positioning skill sets in lucrative markets for higher earnings.

54:01

Focusing on high-paying clientele, such as celebrities or mid-career executives, can lead to increased income.

Scaling services through video courses and other means can help boost earnings.

Moving up or shifting to markets in demand is more beneficial than competing in oversaturated industries.

An example of a graphic designer who specialized in luxury design saw a significant increase in income.

✦

Transitioning from nightclub flyers in Manchester to achieving financial success in Dubai without revealing financial status.

57:04

Emphasizes the importance of making discontinuous jumps in business and investing, rather than incremental changes.

Stresses the need to think long-term and consider the compounding effects of investments.

Highlights the significance of understanding one's relationship with money to make informed financial decisions.

Encourages pursuing a fulfilling life aligned with personal values.

✦

Ramit Sethi's advice on investing in cryptocurrencies focuses on diversification and risk management.

01:00:03

He warns against chasing high returns and emphasizes the risks associated with crypto investments.

Sethi recommends maintaining a well-diversified portfolio and allocating a small percentage to crypto or other high-risk investments for enjoyment.

Many crypto investors are portrayed as risk-seekers who may neglect long-term financial planning, according to Sethi.

To achieve long-term financial stability, Sethi underlines the importance of risk mitigation and a balanced investment approach.

✦

Importance of Learning from Financial Mistakes.

01:02:22

Emphasizes the need to consider both successful and poor decisions in financial planning.

Belief in blockchain technology and long-term investment strategy in Ethereum.

Holds Ethereum for decades without concern for short-term fluctuations.

Importance of emergency funds, conservative financial approach, and following Ramit's 10 Money Rules.

✦

Financial rules for saving, investing, and spending are outlined in the segment.

01:06:25

Saving in a liquid account for emergencies and investing a percentage of income are key components.

Paying cash for large expenses is recommended.

Spending on books, health, and charity should never be questioned.

Childhood experiences can influence current spending habits, such as enjoying appetizers and business class flights.

✦

Importance of quality over quantity in spending money.

01:08:25

Personal rule of buying the best and keeping it for a long time, illustrated by a 17-year-old car.

Rule of no limit on spending for health and education, emphasizing passion for learning and knowledge.

Reflection on the value of scholarships in shaping mindset towards spending and education.

✦

Importance of Investing in Education and Health for a Rich Life.

01:10:04

Aligning spending with personal values, such as relationships, health, and career enrichment, is crucial.

Earning enough to only work with respected and liked individuals is emphasized.

Surrounding oneself with positive influences has a profound impact on values and consciousness.

Intentional decision-making regarding work environments and relationships can significantly impact overall well-being and fulfillment.

✦

Importance of prioritizing time outside of spreadsheets and living a rich life beyond financial details.

01:12:59

Choosing the right partner in marriage impacts living situation, spending habits, and values passed down to children.

Open conversations about money early in relationships help understand each other's financial upbringing and perspectives.

Understanding your partner's financial perspective leads to a deeper understanding of your partner and their values.

✦

Importance of Discussing Money in Relationships

01:16:27

Proactive conversations about finances are encouraged to prevent issues from arising in relationships.

Personal anecdote shared about partner feeling uncomfortable with unequal financial transparency.

Starting financial discussions early and positively is emphasized, reframing with compliments.

Open communication about finances is stressed to avoid misunderstandings and resentment in relationships.

✦

Importance of financial transparency in relationships before marriage.

01:18:33

Speaker shares experience of discussing a prenup with partner, stressing open communication and honesty.

Money conversation led to disagreements, prompting therapy to address the issue.

Therapist helped explore the meaning of money in their lives.

Speaker views money as a tool for growth and financial planning.

✦

Influence of childhood experiences on financial behaviors in adulthood.

01:22:30

Acknowledging and addressing these influences can lead to positive changes in spending habits.

Open communication about money matters in relationships is crucial for financial stability.

Prenups should be approached seriously and with understanding to reach mutual understanding and resolution.

✦

Importance of Communication in Relationships and Prenuptial Agreements.

01:24:45

Open communication about values and perspectives is crucial to prevent misunderstandings in relationships.

Prenuptial agreements serve to protect individual assets in the event of separation.

Gender differences in financial behaviors are explored, with men leaning towards aggressive investing and women prioritizing safety and security.

✦

Importance of socioeconomic class in financial behavior and upbringing.

01:26:36

Discussion on different axes in understanding individuals.

Promotion of Fuel's Daily Greens for maintaining health and convenience.

Endorsement of Whoop, a wearable health and fitness coach, for its impact on sleep, performance, recovery, and stress management.

Emphasis on obsession with details and how small improvements lead to significant gains in health and fitness.

✦

Characteristics of successful individuals.

01:29:29

Successful individuals possess a diverse skill set, are punctual, socially adept, and possess transferable skills.

Surrounding oneself with supportive individuals is crucial for success, while negative influences can hinder growth.

Impulsive decision-making and a lack of long-term perspective may prevent success.

Building a strong support system and taking a strategic approach to decision-making are essential for a fulfilling life.

✦

Importance of long-term perspective in life.

01:32:30

Emphasize personal vision and intentionality in building a rich life, rather than material possessions.

Regret expressed for not being more financially savvy earlier in life.

Encouragement for listeners to make positive changes at any stage of life.

Value of grappling with questions about personal growth and progress.

✦

Importance of building a rich life through creativity and intentional work.

01:35:39

Designing a rich life involves self-awareness and dreaming big.

'I Will Teach You to be Rich' emphasizes understanding one's relationship with money.

The updated version of the book provides practical advice on investing, managing debt, and making financial decisions.

Well-received by millions for its no-nonsense approach to personal finance.

✦

Importance of Financial Literacy

01:37:31

Early education on money management is crucial to prevent major financial errors.

Achieving financial freedom leads to a richer life with more choices.

Gratitude is expressed for practical advice on improving financial relationships and planning for the future.

Ongoing financial education is essential for personal happiness and well-being.

00:00ah this is driving me insane to make a

00:03lot of money you don't need to be a

00:04genius you just need to remember a few

00:06key things

00:07ramit Sethi Financial expert the money

00:09man New York Times bestseller has more

00:11than 20 000 documented success stories

00:13this is your chance to never worry about

00:15money again you can live a rich life

00:17regardless of where you came from

00:19regardless of your income how many

00:21people are clear on what their rich life

00:24looks like less than one percent when I

00:26talk to people who have a spending

00:27problem 100 of the time they always say

00:30the same thing I just need to earn more

00:31if you double your income today do you

00:33think your problems would disappear no

00:35some of the stats I pulled out from your

00:37book about 25 of people who made hundred

00:39thousand dollars a year plus are still

00:41living paycheck to paycheck makes us

00:44realize that maybe the things we think

00:45we need are things that we have been

00:47socially taught are important for

00:49example owning a house is the best

00:51investment it means you are successful

00:53but it can be a very bad financial

00:55decision there are far better far

00:57simpler Investments so I've got 100

00:59pounds that I want to invest where do I

01:01start I love that we're getting into the

01:03nuts and bolts let's do this exercise

01:05together and everyone can do it with us

01:06first off and then got it now there's

01:09just one more thing you have to do

01:12do you know the math I would have 736

01:15000 in my account yeah

01:18ramits 10 Money Rules this is where the

01:22real wealth is created number one

01:32this episode changed my perspective on

01:36money I'm an investor I've been

01:38investing for the last six seven years

01:40at different levels big companies small

01:42companies the S P 500 funds you name it

01:45but ramit changed my mind he changed my

01:50mind on money

01:51spending investing and he changed my

01:54mind on something that I think

01:5695 of you that are listening to this

01:59podcast and they're about to listen to

02:00this need to have your mind changed on

02:03too that if you have the right

02:05philosophy towards money the right

02:07perspective and mindset towards money

02:10then there is a path to living our rich

02:14life

02:15to becoming rich that enough people are

02:19not talking about he debunks the myths

02:21of money the limiting beliefs about

02:24money

02:25and he confronts all of the unhelpful

02:27advice about money

02:28that stands in the way of you becoming

02:32rich

02:33there's an app on my phone that I now

02:35have installed because of this

02:36conversation

02:38and there are three big Investments that

02:40I've now made in my life because of this

02:43conversation

02:44and there is one key idea

02:47that I now believe will make me ten

02:50times more wealthy over the next three

02:52decades

02:54because of this conversation

02:57you're gonna love it

02:58enjoy

03:00[Music]

03:03remains

03:05[Music]

03:08someone's just clicked on this podcast

03:10on YouTube on Spotify on Apple and they

03:13saw the title they saw the thumbnail

03:14they thought that sounds interesting

03:17tell me why you think

03:20they should stay and listen to what

03:22we're going to talk about today what

03:23they stand to gain if they give us their

03:25time

03:26whenever someone hears someone talking

03:29about money

03:30they get rigid they instantly think that

03:33someone's going to come in and tell them

03:34you can't spend money on lattes you

03:37can't go on vacation you can't buy any

03:38new clothes save all your money until

03:41you're 90 years old and maybe just maybe

03:45then you can spend it and I don't

03:47believe in any of that I think you

03:49should spend extravagantly on the things

03:51you love as long as you cut costs

03:54mercilessly on the things you don't

03:56I think you should live a rich life

03:58today

03:59and an even richer life tomorrow and so

04:02when you combine money and psychology

04:04you start to understand that there is

04:06more to a rich life than just some

04:09number in a spreadsheet people already

04:11know they should be saving more

04:12they know about compound interest they

04:15may not know the intricacies but they

04:17understand if they invest some now

04:18they're going to have more later

04:21so what's stopping them that's been the

04:22central question that I'm fascinated

04:24with for the last 20 years that's why

04:26when I studied human behavior and

04:28persuasion and psychology I was obsessed

04:31with this question of what are the

04:33things we know we should do but we still

04:36don't you can live a rich life

04:38regardless of where you came from

04:41you can live a rich life regardless of

04:43your income

04:44now of course having a higher income

04:46dramatically helps

04:48but just like Fitness we can all improve

04:50where we are and that's what we get to

04:52talk about today

04:53when you talk about the language

04:55language of money what do you mean I

04:57mean understanding the nuts and bolts of

04:59money so just the same way that we all

05:02learn how to drive we learn the rules of

05:04the road when to use our turn signals

05:06most of us do not have even the

05:08equivalent knowledge of money for

05:10example the basic language of money

05:12would be what percentage of your income

05:15are you saving and why

05:17what percentage are you investing and

05:20why when will you have a hundred

05:23thousand dollars or five hundred

05:24thousand or a million dollars and what

05:27will that money get you because just

05:30having a million dollars in the bank is

05:31pointless what does it get you

05:33specifically

05:35this is the basic language of money

05:37you've got to know your key four six

05:41numbers in your life not many just a few

05:43but once you understand those numbers

05:45it's like understanding the speed limit

05:48understanding the speed limit means you

05:50understand a lot there's a rule of the

05:52road if you go too fast what's going to

05:54happen why do these rules exist and

05:57these rules are similar in money you can

05:59break them

06:00that's okay but you got to understand

06:02the rules first what are those numbers

06:04that I need to know there's four numbers

06:06that I really like to track I track

06:07these myself and these are the numbers I

06:09encourage the first is your fixed costs

06:12those would be your rent or your

06:15mortgage your in uh your any debt

06:18payments groceries the money that you

06:21are spending every single month that is

06:22essentially fixed

06:24and the number I recommend for that is

06:2650 to 60 of your take-home pay

06:30so that would be if you're spending 50

06:32to 60 percent of what you make what you

06:34take home on your rent your groceries

06:36any debt payments your car

06:38you're in good shape okay the next one

06:41is your savings that would be roughly

06:43five to ten percent savings would be

06:45things like an emergency fund savings

06:48for a down payment for a car things like

06:50that

06:50third is Investments uh this is where

06:53the real wealth is created and for this

06:56five to ten percent of take home is fine

06:59of course the more you put in the more

07:02you're gonna have and then the fourth

07:04category the one I love the most is

07:07called guilt-free spending

07:09this is going out for cocktails in New

07:11York it's buying a beautiful shirt it's

07:14treating your friends whatever you love

07:17yoga

07:1920 to 35 percent of your take-home pay

07:22so if you're watching or you're

07:24listening to this just take 15 minutes

07:27back of the napkin jot down your

07:30approximate numbers you don't even have

07:31to get them perfect and you will be able

07:33to Benchmark how you are spending

07:36compared to those numbers

07:38I'll tell you that those numbers tell me

07:41a lot it's almost if you just show me

07:43those four numbers of your spending I

07:45can tell so much I can tell what you

07:47love spending on I can tell what you

07:48don't I can tell what your priorities

07:50are

07:52and I can also tell where you are out of

07:54alignment

07:55so I'll give you an example

07:57when I ask people what is your rich life

07:59one of the common answers they say is I

08:01want to do what I want when I want I go

08:04oh God not this answer again I hear it

08:06every day I go wow that's so interesting

08:09so what do you want

08:11they go

08:13uh uh most people have never thought

08:15Beyond a trite answer

08:17so then the next answer I often get is

08:19freedom I want freedom I go great that

08:21sounds good

08:22what is freedom I want to do what I want

08:24when I want I look at their numbers and

08:26I see

08:28a huge payment that they're making to a

08:3030-year mortgage

08:32I see debt payments I see car payments

08:35and I go now this is interesting you

08:38want freedom but you have essentially

08:40anchored yourself down to not be able to

08:44travel or to Pivot or to move

08:47how can those two be how can you

08:49reconcile those two and that dissonance

08:51is actually a fascinating moment I love

08:54when we experience dissonance we all do

08:56I say that I want to work out more but I

08:58don't work out more why

09:01and what you'll discover is people often

09:03they simply have never thought about it

09:05what what our rich life is these Genera

09:08these generic phrases Freedom

09:10flexibility it's just words

09:13what I really want somebody to say I

09:15want them to go a lot deeper is to say I

09:17want to be able to travel for six weeks

09:19a year I want to go to London I want to

09:23go to New Delhi I want to go to Thailand

09:26because I want to visit my family

09:28that's a good start if we get even more

09:30specific they tell me what seat on the

09:32airline they're sitting on they tell me

09:34where they're eating they tell me who

09:35they're bringing with them

09:37but to Simply say I want freedom

09:40is so vague that when I look at your

09:43numbers there's often a huge incongruity

09:45with how you're spending versus what you

09:47claim your rich life is how many people

09:49from your experience of interviewing

09:51people and doing this research

09:53are clear on what their rich life looks

09:56like

09:57down to you know what you described

09:59there I want to travel for a couple of

10:00months a year and then even further down

10:03to which seat I'm going to be in which

10:05class I'm going to be on as I travel

10:06less than one percent less than one

10:08percent of people know that no most

10:10people literally say I want to do what I

10:12want when I want that is their the

10:14extent to which they've thought about a

10:17rich life why does it matter to be what

10:20did that one that less than one percent

10:22of people that have that planned out

10:24have as an advantage or a benefit from

10:26that meticulous thought that the other

10:2999 don't have because they can craft

10:32their rich life that is uniquely theirs

10:35almost like getting a handmade glove and

10:38in fact the more you craft your rich

10:39life the more bewildering it looks to

10:42the outside world so I'll give you an

10:44example from my own life I love to

10:46travel

10:48I spend a lot of money when my wife and

10:50I we go we'll travel for months at a

10:52time

10:53I love hotels I love the hospitality I

10:57love the details I I love it all

11:01I don't really care about cars not at

11:03this phase of my life it's just not that

11:05important to me

11:06so when I talk about my money dials or

11:09the things that I love to spend money on

11:11I might spend

11:13a crazy amount on a hotel per night just

11:17because I love it

11:18but I drive a car that's almost 20 years

11:20old it's just not important to me

11:23and I want that I want to hear in your

11:25life what you spend extravagantly on but

11:28then you cut costs mercilessly on

11:30because I want that Duality which

11:33indicates you are intentional about your

11:35rich life what if we're buying things to

11:38impress other people and we don't

11:39because it's hard to un looking in from

11:41the outside especially it's hard to know

11:43if someone actually likes Lamborghinis

11:44yeah or if they're buying Lamborghinis

11:46because they were beat up when they were

11:48nine years old on the playground and

11:50they're trying to overcompensate and

11:52make the world and does it matter where

11:54they're buying it does it matter I don't

11:55know first of all how would we even know

11:58how would they know is there is there a

12:00difference do you think just on your in

12:01your opinion on the impact that that

12:03purchase has on us whether we're doing

12:04it intrinsically or we're doing it

12:06extrinsically because I reflect on

12:08some of the things that I spent money on

12:10and I go that was for someone else

12:12whereas there's other things I spend

12:13money on which are maybe health related

12:15or travel related like convenience

12:17flying in a nice class on a plane which

12:19I know that's actually adding a lot of

12:20benefits to my life whereas that Mansion

12:22I bought out in the countryside when I

12:24was 23 or whatever

12:25was a terrible decision it took me away

12:28from my friends because it was an hour

12:29and a half outside of the city yeah and

12:31none of my friends ever came to it so I

12:33was just arriving at midnight after work

12:34in this mansion with this Tennis

12:36Court by myself sleeping for three hours

12:38and then driving another hour and a half

12:40back to the city where all my friends

12:41and work were I go that was a stupid

12:43 decision based on extrinsic

12:45external you know motivations it's a

12:48great question and you know

12:51particularly in America we love this

12:53idea of ownership we are taught you've

12:56got to own owning a house is the best

12:58investment it means you are successful

13:01and if you're renting

13:03no one really says this but what they

13:05deep down say is you're a loser yeah

13:07okay

13:08this individualistic strain really runs

13:11deep and it has led a lot of people to

13:14make poor financial decisions uh first

13:17of all you might be surprised to hear my

13:20view is that owning can be a good

13:22financial decision but it also can be a

13:25very bad financial decision in fact I

13:27rent by choice and living in New York

13:30for example I lived here for a long time

13:33I knew

13:35that if I were to buy I would be losing

13:39thousands of dollars every single month

13:41because it actually cost more than twice

13:45as much to own than to rent

13:49but can you imagine the type of

13:51pressures even I got from people who

13:54would come over and say oh

13:56so do you own this place the place that

13:58I was renting I said no I rent

14:01and there was this visible moment of

14:04confusion they're shaking my hand they

14:06know that I'm the I will teach to be a

14:08rich guy

14:09but I rent how can you be teaching money

14:12but you rent isn't renting for losers

14:16and I have to say because I was Rock

14:18Solid confident in my decision

14:21that pressure did not affect me

14:24but I want to also say that

14:26a lot of us buy things based on status

14:29like the idea that we don't buy things

14:31based on what people around us think is

14:33is nonsense we buy things based on

14:36status to deny it is absurd

14:40but I do think that for the big

14:42purchases in your life like a house a

14:44car the big things

14:47you've got to run the numbers

14:49and if you decide hey you know what I

14:51want to buy a house even though it's

14:52going to cost me an extra six hundred

14:54thousand dollars in opportunity costs

14:55and Phantom costs but I'm gonna do it

14:58because I like it or it makes me feel

14:59good I say God bless

15:03if you simply make decisions based on

15:05what other people around you do then you

15:07will discover like you did

15:09I thought I was going to feel a certain

15:11way and I don't really feel that way and

15:15that for me is an opportunity for you to

15:17interrogate your own beliefs and money

15:19is a

15:20like a personal zerosome game right like

15:22so I can't just spend indefinitely so

15:24buying that ridiculous house out in the

15:28countryside takes away from something

15:30which might have

15:31genuinely brought me closer to happiness

15:33like I don't know going with my family

15:35or whatever it might exactly you talk

15:37there about buying property I find that

15:38really curious because the the popular

15:40narrative is for most people the minute

15:42they get any decent amount of money is

15:44to buy your first house and that's what

15:45people do they get they take a 10

15:47deposit or 20 deposit whatever it might

15:48be and they buy a house

15:50um why is that

15:53a poor investment

15:54why is that a bad thing to do because

15:56that does kind of sit counter to the

15:58popular narrative well we have to

15:59remember first of all where the popular

16:01narrative came from

16:02in America if you ask people what is the

16:06American dream

16:08yeah the answer is inextricably tied up

16:10with a single family home with a white

16:12picket fence that's not an accident that

16:15is the result of Decades of messaging

16:18some might call it propaganda

16:21first of all most people in the world do

16:23not live in single-family homes like we

16:25do in America that has caused a lot of

16:27issues but to leave that part aside

16:30this is how most people think about

16:32buying a house they think Grandma bought

16:35a house in Austin Texas in 1970 for a

16:39hundred thousand dollars grandma just

16:42sold it 50 years later for one million

16:45dollars grandma made 900

16:48000 they go it's the most profitable

16:50thing you could do buy a house

16:52I go okay that sounds really nice did

16:55granny factor in

16:57how much she spent on maintenance for

16:59the past 50 years uh no uh did granny

17:03factor in inflation and how that

17:05affected her return uh no what's

17:06inflation uh did granny factor in the

17:09opportunity costs of what that down

17:11payment could have been used if invested

17:13in the S P 500 uh no and did granny look

17:16at all these Phantom costs such as

17:18interest on the loan uh no

17:22it's not simply the bigger number minus

17:25the smaller number that's wrong that is

17:27simplistic

17:29for the biggest purchase of your life

17:31you've got to go deeper again when I was

17:33living here I kept a very close eye on

17:36real estate and the place right right

17:39next to me same square footage same

17:42number of bedrooms same everything it

17:44would have cost 2.2 times what I was

17:47paying in rent so just to give you an

17:49example if I was paying three thousand

17:50dollars a month it would have cost about

17:52sixty four hundred dollars a month to

17:55own

17:55okay I said you know what I like renting

17:58if I have a problem I just text my

17:59landlord I took the thirty four hundred

18:02dollars I would have spent owning when

18:04factoring in Phantom costs maintenance

18:06interest taxes all that and I simply

18:09invested it and I made more money doing

18:11that than I would have owning what about

18:14if you're buying somewhere to for the

18:17rental income that can work that can

18:19work so owning real estate as an

18:22investment can be part of a

18:24well-diversified portfolio if you run

18:26the numbers right now there's a lot of

18:29hype people go I'm gonna buy a house and

18:32if I don't like it or whatever I'm just

18:34going to rent it out okay fine but

18:37you've got to remember that if your

18:39mortgage is a thousand dollars

18:42that's not just the amount you're paying

18:45there's a lot more in fact in my

18:47estimations I add 50 to that price so

18:50fifteen hundred dollars a month which

18:52would include a roof repair happening 19

18:54years from now we've got to amortize

18:56that out uh labor costs interest all

18:59that

19:00if you can rent it out and make a profit

19:03fantastic

19:04it cash flows that's awesome

19:07what you discover is that most people

19:09who buy a primary residence the place

19:11they want to live in they buy it because

19:13they want it and then they tell

19:16themselves it's an investment

19:18buying a house can be an investment but

19:22oftentimes it's not and they're far

19:24better far simpler Investments here's my

19:27key message I want to make sure nobody

19:29misunderstands me I've been accused of

19:30saying buying a house is bad no I never

19:33said that in fact I will buy a house

19:34myself one day and when I do it's going

19:37to be a terrible financial decision and

19:39I'm going to do it anyway

19:41my key message is for the biggest

19:42purchase of your life you've got to run

19:45the numbers sometimes buying can be a

19:47good financial decision often renting

19:50can be a good financial decision run the

19:52numbers and never feel guilty for

19:55renting

19:56as it relates to buying a house I've

19:57always been hesitant because I'm

20:01scared really of the point you mentioned

20:03about being anchored to a location so I

20:05the way that I've kind of Justified that

20:07away is by saying well I'll just Airbnb

20:09it when I'm not there or I'll rent it

20:10out when I if I decide to move to New

20:11York or whatever is there a a cost in

20:15the opportunity of being less flexible

20:18about where you can be

20:20um that people don't think about

20:22especially when they're younger yes and

20:24they're probably a little bit

20:25unencumbered by you know life yes at

20:28that point yes buying a house is one of

20:31the most profound financial decisions

20:33that will affect your lifestyle ever

20:37you can sell a car even at a minor loss

20:40but selling a house involves massive

20:42transaction costs and labor that most

20:44people don't anticipate

20:47one of the reasons that I rent is for

20:49lifestyle reasons Financial yes I make

20:52more money renting and investing the

20:54difference than I would owning but also

20:56lifestyle I don't know that I'm going to

20:58be in the same place for 10 years which

21:00is one of the key things that I would

21:02encourage people to decide before they

21:05buy you want to know that you're going

21:07to be there for at least 10 years

21:08because then you can spread all those

21:10transaction costs

21:12spread them out over 10 years they

21:13become much more affordable it's kind of

21:15like buying an expensive jacket if you

21:18buy it and you wear it once that's

21:20really expensive if you buy it and wear

21:22it over 10 years it becomes a lot more

21:24affordable now take that multiply it by

21:26a thousand and that's a house

21:29particularly for young people

21:32I don't give a lot of unsolicited advice

21:34I used to do it when I was young when I

21:37just learned about money and I realized

21:39nobody really wants to hear it they

21:41really don't

21:42if somebody comes to me they come to my

21:43blog my social media great otherwise I'm

21:46not going around telling people you

21:47should do this

21:49once in a while though I get a young

21:51person asking me I'm just about to

21:53graduate from college what advice do you

21:55have for me

21:57and at that moment the the best piece of

22:00advice that I have is move where the

22:03action is

22:04and typically that's a big city so that

22:06would be where there's more jobs where

22:10there's simply more people if you're

22:13looking for relationships and there's a

22:15lot of tacit knowledge that happens in

22:17big cities

22:18like oh have you tried this oh what have

22:21you seen that musical uh have you tried

22:24this thing this idea that's going around

22:26so often surrounding yourself

22:28geographically can be hugely rewarding

22:31to you as you grow you can't do that if

22:33you bought a house because everybody

22:35told you that it was going to be the

22:36best investment and if I were to say

22:39show me where you calculated the numbers

22:40that it was going to be in a great

22:42investment

22:4375 plus percent of people have never

22:46created a simple spreadsheet how does

22:48buying a house compare in terms of

22:51returns to something like investing in

22:53the S P 500 it's quite poor actually

22:56really yeah over about a hundred years

22:58there's great research showing that it

23:00has essentially matched inflation it's

23:03been slightly above inflation people

23:05find this mind-boggling again because

23:07they think somebody bought a house for

23:09100k and they sold it for a million so

23:11it's 900k but they don't properly factor

23:14in inflation opportunity costs Phantom

23:16costs all that it's really hard to

23:18factor these numbers in but it's

23:20critical because it's the biggest

23:22purchase of your life I'll give you

23:24another example of where people don't

23:26properly Factor it in

23:28uh some people pay a financial advisor

23:31one percent they go one percent it's not

23:33a big deal I'll pay one percent

23:36what they don't realize is that that one

23:37percent over the course of their

23:39lifetime will take 28 of their returns

23:43and hand them over in fees

23:46think about it if you make a million

23:48dollars in investing over the course of

23:49your life 280

23:51000 are going right out of your pocket

23:53into that advisor's pocket now that's

23:56super counterintuitive one percent turns

23:59into Twenty Eight percent how does it

24:00work you can simply go online and search

24:03for uh investment cost calculator and

24:06plug in the numbers at a one percent fee

24:08and you will see

24:09point of this is that sometimes money is

24:12highly counterintuitive really

24:15counterintuitive it's unlike anything

24:16else if you and I go to sushi right now

24:20and we get sushi for 20 bucks it'll be

24:23fine if we get it for a hundred bucks

24:27what do you think probably be a little

24:28better right and if we get it for a

24:30thousand dollars the fish will have been

24:32flown in from Tokyo this morning and it

24:34will be served in an absolutely stunning

24:36setting

24:38so in other words you pay more you get

24:40better results we're used to that if I

24:43spend more on a sweater it's probably

24:44gonna have a different type of fabric

24:45more on a car it's going to look cooler

24:47have cooler features

24:49money's not like that if you spend more

24:53you don't get better returns you don't

24:56get better anything in fact if anything

24:58you get worse returns

25:01people find this mind-boggling because

25:03it is it's counterintuitive but in

25:05investing costs matter in buying a house

25:09you've got to run the numbers because

25:10they are totally counterintuitive

25:13quick one before we get back to this

25:14episode just give me 30 seconds of your

25:15time

25:16two things I wanted to say the first

25:18thing is a huge thank you for listening

25:20and tuning into the show week after week

25:22means the world to all of us and this

25:23really is a dream that we absolutely

25:25never had and couldn't have imagined

25:27getting to this place but secondly it's

25:29a dream where we feel like we're only

25:31just getting started and if you enjoy

25:33what we do here please join the 24 of

25:36people who watch this channel regularly

25:37and have hit that subscribe button means

25:40more than I can say and if you hit that

25:42subscribe button here's a promise I'm

25:44gonna make to you I'm gonna do

25:45everything in my power to make this show

25:48as good as I can now and into the future

25:50we're going to deliver the guests that

25:51you want me to speak to and we're going

25:53to continue to keep doing all of the

25:55things you love about the show

25:57thank you thank you so much back to

25:59episode so what is the S P 500 for

26:03anybody that doesn't know yeah and what

26:05are the returns that I'm likely to get

26:07from investing in the S P 500 I really

26:09want to simplify this for people that

26:10are at the very start of their investing

26:12Journey you know because I mean this is

26:15what you spend so much of your time

26:16doing that I just think about my my team

26:18here instead of the Diary of a CEO

26:20there's about 30 people and we started

26:22talking about money one day and it was

26:24mind-blowing how nobody in my team's

26:27lives had ever had the conversation with

26:29them about investing we all think of

26:31investing as something that rich people

26:32after the age of 40 do once you have a

26:35million dollars

26:37um or if you don't have a million

26:39dollars then the only other way to

26:40invest we're taught is to buy a house

26:44driving me insane it's true though isn't

26:46it yes and

26:48and central part of my work is that you

26:51can live a rich life and that rich life

26:53can be richer and more vibrant and more

26:56personal than you ever imagined if you

26:59want to travel you can travel for longer

27:01than you ever thought you can travel for

27:03me at nicer hotels you can spend more

27:07time with your children with your loved

27:09ones whatever your rich life is you can

27:11do that but you've got to learn a few

27:14key basic things about investing and

27:17money so let me tell you what I would

27:19tell my family when they come to me and

27:21they go how should I start investing

27:23the simplest simplest way that I advise

27:25my family

27:27is I say get a Target date fund so let

27:29me explain what that is a Target date

27:32fund is One Fund just one

27:35and you pick it based on the year that

27:37you're going to retire

27:39so if you're going to retire in 2050

27:42if you're going to be 65 in 2050 you go

27:45and you find that one fund it's called a

27:48Vanguard 2065 fund or Fidelity 2065 or

27:52Schwab 2006. there's lots of brokers

27:55These funds it's One Fund all you do is

27:58put money into it that's it the fun like

28:01a pie chart is automatically Diversified

28:03so as you get older it gets more

28:06conservative because somebody who's 75

28:09years old should be investing

28:11differently than someone who's 25.

28:13One Fund all you have to do is set your

28:16money up to go into it every single

28:18month what is a fund a fund is a a set

28:23or a basket of stocks and maybe bonds so

28:27we've all heard of you know companies

28:29like Microsoft Google whatever

28:32a fund owns lots of these right and

28:35that's important because we've heard

28:37diversification like you should have

28:39Diversified your Investments okay well

28:41how do I do that you don't need to go

28:43and buy 20 stocks and then figure out

28:46how much of each to do that's too much

28:47work and honestly most people are not

28:50good at that even professionals

28:52you buy a fund which automatically owns

28:55lots of stocks like hundreds of them

28:58and over time all you the individual

29:01investor like me have to focus on is

29:04putting money into it automatically so a

29:07fund essentially I've got 100 pounds

29:08that I want to invest

29:10um I find a fund where do I find these

29:12funds you can go to Vanguard Schwab or

29:15Fidelity all those are great companies

29:16uh what you're looking for regardless of

29:19what country you're in is you're looking

29:20for a low-cost brokerage firm so but

29:24there's also apps and stuff that I can

29:25you can use apps I don't like a lot of

29:27the apps because they gamify you to try

29:30to invest right they want you clicking

29:33and trading I hate Traders trade you do

29:36not want to be a Trader Traders lose

29:38money investors treat investing like

29:42watching paint dry that's how sexy it is

29:45trust me I'm not getting my

29:46entertainment from investing I'm going

29:48out go watch a movie go watch Netflix

29:51but investing is boring and automatic

29:54that's how it should be I used a a

29:57company called hargreave lands down in

29:59the UK who have an app when I first

30:01started investing

30:02um when I first started investing in

30:04funds they they had a very ugly app so I

30:06wasn't very compelled to use I think

30:07it's better now but I would use just do

30:09it on desktop which I do get your point

30:11because you don't want to you don't want

30:13to be gay you don't want to scream yeah

30:14all of that note I like uglies it should

30:17be ugly and you don't want it to be too

30:18accessible correct I don't want to be

30:20able to check it every day no look on my

30:22phone you will see no investing apps yes

30:24there should not be why do you need to

30:26log in and check it every day what's the

30:28point yeah in fact I log you know what

30:31most people should check it every three

30:33to six months and here's how you check

30:36it you log in on your desktop

30:38wow it's up wow it's down okay bye

30:42you're not tweaking anything it's like

30:44making Thanksgiving dinner once you've

30:46put the turkey in the oven

30:48just let it sit do not fiddle with it

30:52because you're only going to mess it up

30:53and in this case you're letting the

30:54turkey cook for decades and that fun so

30:57I've got 100 pounds I go on a website

31:00Vanguard Fidelity Schwab whatever they

31:02are I have no Alliance to any of them

31:04neither do I um there's various ones in

31:06the UK I actually do recommend Hargrave

31:07Lansdowne just because it's quite simple

31:08and I think investing in funds there's

31:10no fees there's no fee associated with

31:12the investment itself obviously they

31:13take you know they might take a

31:14percentage depending on which fund

31:16you're investing in I take my 100 pounds

31:18and investing in Hargreaves lands down

31:20you don't need there's no

31:22um minimum great from what I understand

31:24and there's no if you invest in a stock

31:27they charge 12 pounds per investment but

31:28if you invest in a fund it's free

31:30um I put my hundred pounds into a fund

31:32the fund is essentially taking one

31:33pounds one of those pounds and investing

31:36one pound into Facebook it's investing

31:37one pound into Google one pound into

31:39Shopify one pound into Spotify one pound

31:41into Nvidia or whatever it's doing that

31:44for me it's managing it for me it's

31:45making the decisions for me I just put

31:47the money in

31:48every month whatever I can and I leave

31:51it yeah and let's go even deeper I love

31:54that we're getting into the nuts and

31:56bolts here because you know honestly

31:57most people they do not know how to

32:00invest literally what website do I go to

32:02and then what do I do

32:05the fund owns these different stocks and

32:09some will go up and some will go down

32:10and it's inconsequential to you all you

32:13need to know is you own this fund

32:16now that you've opened up an account and

32:18you've sent a hundred bucks or a

32:20thousand bucks great you've made one of

32:22the most important decisions of your

32:24life now there's just one more thing you

32:25have to do set up an automatic transfer

32:28so that every single month you have a

32:31certain amount of money going in

32:33now if you don't know how much money use

32:35my conscious spending plan guideline

32:37what did I say five to ten percent of

32:39take-home is a good guideline all right

32:42you should be able to do five percent

32:44trust me anyone who comes to me they go

32:47Remy there's no way must be nice I can't

32:49afford I go show me where you're

32:50spending your money I guarantee you I

32:52can find five percent to send in every

32:54month now you're not trying to send it

32:57in I don't try to brush my teeth in the

32:59morning it's a habit investing is even

33:02easier than brushing your teeth because

33:04you set it up automatically the

33:06investment fund will automatically draw

33:09from your checking account

33:11and it will pull in a hundred bucks 500

33:14bucks a thousand bucks whatever your

33:15number is

33:16and so you're not going to log in for

33:19three four five months you're going to

33:20log in a few months later you're gonna

33:21be like oh my God

33:23I didn't even realize

33:25that all this money is in here

33:28when you add that plus compounding over

33:31many years that is how real wealth is

33:33created so I don't want anyone to think

33:36that you have to be rich in order to

33:39start investing one of the ways you get

33:42rich is by investing I've got a friend

33:45that's currently actually in this

33:46building at the moment and I had this

33:48conversation with them about a year ago

33:51gave the advice that you've just given

33:52there and about two months later this

33:56individual who I shot name came to me

33:58and I said How's your you know your your

34:00Investments going in in that fund and

34:03they said oh yeah I had bills I had a

34:04credit card bill so I took it out oh

34:07yeah she treated like a checking account

34:09Investments for me are

34:12places to accumulate wealth I don't draw

34:15from it that's what a checking account

34:17is for so if what that is is there's two

34:20parts to what your friend is saying one

34:22is

34:23um mentally she's thinking that this

34:26investment account is just money I can

34:28draw from if I need it so I would sort

34:30of gently change the way she thinks

34:32about it the second is I guarantee her

34:34account structure is a little

34:38um subpar so here's how I would set it

34:40up this is in chapter five uh it's all

34:43automation because trust me I don't want

34:45to spend time transferring money back

34:47and forth that's I don't spend any time

34:49on that

34:50you get paid your money goes into your

34:52checking account from your checking

34:54account it is automatically transferred

34:57to a savings account in fact I have sub

35:00savings accounts for vacation car down

35:05payment all that stuff so you have money

35:07set up for specific goals

35:09money is transferred to your investment

35:10account

35:11it's transferred there I'm not going to

35:14touch that money I'm going to let it

35:15cook and then I have my guilt-free

35:17spending which is going out with friends

35:19whatever I love and my credit card bill

35:22is automatically paid off every single

35:24month

35:25that's how you want to set it up it

35:27takes a couple of weeks to set

35:29everything up and then you never have to

35:31think about it again

35:33how can you prove to me that this is the

35:35way to make wealth what case studies

35:36have you got that investing in funds

35:38over a long period of time is the path

35:42to financial wealth because you know

35:44it's you said earlier about the paint

35:46drying thing the narrative that we see

35:48about how why people and how people get

35:50rich is you know they sell a company or

35:52they have a lottery win or maybe they

35:54buy some cryptocurrency and it goes up

35:56yeah that's what we hear that's what

35:58we're trying to emulate totally we prove

36:01to me that that's that this fun strategy

36:03is better well there's there's a couple

36:05things first off the research over more

36:07than 100 about a hundred years shows the

36:10returns of the stock market and the

36:13returns tend to be at least in America

36:15they tend to be around 11 percent

36:1910 to 11 and if you take out inflation

36:23you get about seven to eight percent per

36:26year now for anyone listening they go

36:28okay well what does that mean that

36:30number means nothing to me seven percent

36:31whatever

36:33if you go right now and you Google

36:36investment calculator and you just plug

36:39in your age you plug in let's say 200

36:43300 bucks a month and you plug in seven

36:46percent return and you just watch how

36:49that money grows

36:50you will be shocked Jack give me my

36:53phone I'm gonna do it now

36:55okay so let's search for compound

36:57interest calculator and there's a really

36:59simple one this it's called money chimp

37:02okay

37:03okay I've got it all right

37:06all right so there's four numbers we

37:07need to fill out here let's take a look

37:09the first is current principle that

37:10means how much you've got in the bank

37:12I'm gonna say

37:14five thousand dollars and I'm gonna

37:16start when I was 16 because if I'd saved

37:19my money when I was 16 and not spent

37:23recklessly I think I could have had that

37:25five thousand dollars when I was 16. um

37:27annual Edition what does that mean how

37:29much can you invest per year so for most

37:32people they think about on a monthly

37:33basis they might say 200 bucks a month

37:36which would be twenty four hundred

37:38dollars annual Edition

37:40okay so what do you want to say I'm

37:41gonna say can I say five thousand

37:43dollars yeah that's you know about 400

37:45bucks a month I think that's reasonable

37:47I often find that with people making uh

37:51median or slightly above median salary

37:53that they're hundreds of dollars a month

37:55of money that is unaccounted for that if

37:58properly made intentional could be

38:00invested so great five thousand a year

38:03all right obviously I could have once I

38:05got past a certain age I could have

38:06increased that though so we're going to

38:07talk about that okay hold on to that

38:08idea okay how many years this was you at

38:1120 this was me at 16. oh okay and how

38:14old are you today 30. okay so 14 years

38:17let's just do it until today and we'll

38:18see what happens okay all right 14 years

38:21and then it says interest rate so what

38:24should we assume for that is that eight

38:26percent yeah seven to eight I you I do

38:28seven just to be super conservative

38:30because I never want to be surprised on

38:32the downside right if anything I'm going

38:35to make more so seven percent all right

38:37let's calculate it

38:38okay what do you see

38:41Tom what do you see

38:44133 000 537. yeah that's what you would

38:48have had right now now let's add some

38:50context so this is really important you

38:53see a number that says 133 000 at age

38:5630. yeah okay

38:59is that a lot is that not hmm I don't

39:02know

39:03let's break it down at that point you

39:05started with five thousand dollars and

39:07you invested five thousand dollars per

39:09year

39:10we assumed no raises even though you

39:13obviously made more than you made at age

39:1516. we assumed you stopped investing at

39:18age 30 which is obviously ridiculous

39:22and you end up with six figures let's

39:25play it out

39:26let's take it until 40.

39:31so instead of 14 years

39:33you invested for 24 years what do you

39:36see

39:37I would have

39:39336 000 it's getting better

39:42from just five thousand dollars a year

39:44it's not much it's fantastic again 400

39:46bucks or so a month is very modest

39:50remember people's income goes up

39:52typically in their 30s and 40s and if

39:55you already are investing a little bit

39:56automatically all you have to do is just

39:58tweak a number and it will take an extra

39:59couple hundred three four five hundred

40:01bucks let's do one more let's go to 34

40:03years just because I want to see what

40:05happens and then we're going to play

40:06with the other numbers

40:07okay so

40:09investing from the age of 16 until I'm

40:1250 mm-hmm

40:13I would have

40:15736 000 in my account yeah now I want to

40:19do the full the full thing I want to do

40:22a more realistic number here so instead

40:25of 50 we're gonna go

40:2749 years

40:30that takes you to age 65. yeah okay and

40:33instead of five thousand dollars per

40:35year your income obviously went up from

40:38being 16 years old so I'm gonna pick a

40:41number out of thin air and and I'm gonna

40:44tell you how I picked it I'm going to

40:46say instead of five thousand dollars a

40:47year it's actually going to be

40:50thirty thousand dollars per year let me

40:52tell you why I picked that

40:55in your early years you don't have as

40:56much money but you were still investing

40:58a little bit which shows that you're

40:59dedicated as your income goes up

41:02you're going to start proportionally

41:04continuing to invest so at a certain

41:07point your income will be really high

41:08and that will bring that average up

41:11that's why I switched it to 30 000 per

41:13year I actually think this is quite

41:14modest but I'm gonna go ahead and do it

41:18so here we have someone starting

41:20investing at five thousand dollars they

41:22invest thirty thousand dollars per year

41:26okay they grow it for 49 years at seven

41:30percent

41:30do you know the math

41:33no tell me

41:3412 million three hundred and three

41:37thousand dollars

41:39so that's me starting with 5K gradually

41:42ratcheting it up until I'm investing

41:44well investing 30k on year a year per

41:47average across those 49 years yes which

41:49is a flaw in this because it's so simple

41:52that money invested you are not actually

41:54going to invest that much early on

41:55you'll invest more later yeah so you

41:57won't actually you'll maybe have a

41:59marginal amount less but we're talking

42:0110 versus 12 million that's a lot of

42:04money

42:05and then if I got eight percent instead

42:08of the seven percent I'd have 17.4

42:10million yeah but don't mess with that

42:12because this is what people do they go

42:14well if I got 13 I'm gonna invest in

42:16this PE fund I go don't do that you're

42:18gonna lose all your money just stop yeah

42:19seven percent is safe it's conservative

42:22that's why I am here that's why I want

42:24to encourage people you don't need to

42:26juice your returns I hope you do get

42:29eight percent but I don't want you to

42:30count on that I want you to count on

42:33safe stable returns and what matters for

42:36you is the time you started early and

42:39the amount you have a considerable

42:41amount to invest

42:43what about the richest people in the

42:45world you know we think of the Warren

42:47buffetts of the world or the Charlie

42:48mongers of the world who ended up

42:50becoming the richest investors on planet

42:52Earth yeah what was their strategy I'll

42:54tell you let's talk about Warren Buffett

42:56uh there's a friend of mine Morgan

42:57housel he wrote this amazing artist I

42:59love that book yeah the psychology money

43:01he wrote this amazing article about

43:03Warren Buffett if you look at Warren

43:06Buffett's returns

43:08he started investing at a very young age

43:11and the money compounded again it's like

43:13putting the turkey in the oven and

43:15letting it sit there not just for an

43:17hour but many hours in his case 60 plus

43:20years

43:22he has made over 90 I think over 99

43:25percent of his wealth happened over the

43:28age of 60.

43:30okay think about that it's all because

43:33he started investing so far ago and what

43:36is mind-boggling is that you don't need

43:39a fancy strategy you don't need to be

43:41picking individual stocks you don't even

43:43need to be a genius

43:44to make a lot of money you do not have

43:46to be the smartest person in the room

43:48you just need to remember a few key

43:50things start as early as possible

43:53okay and if you're not 16 years old if

43:57you're 30 40 even 45 okay start now

44:00second invest aggressively every single

44:03month that's critical third keep your

44:06costs low one percent in fees is going

44:09to take 28 of your returns two percent

44:11is going to take over 55 of your returns

44:14keep your costs low

44:16if you do those things you will have

44:19more money than you ever imagined what

44:22are the attributes of someone that's

44:23probably going to be poor in 30 years in

44:25terms of that relationship and their

44:27behavior with their money they're easy

44:28they don't invest they feel overwhelmed

44:31and anxious about money and they talk

44:33about it all the time but they've never

44:36read a single book about money

44:39and there's these deeper attributes they

44:42have only rich people invest they think

44:45that yeah and that's why I'm here I want

44:48Everyday People to know just like me I

44:52started off my parents immigrated from

44:54India I had no special uh

44:57investment knowledge but I had two

45:00parents who were educated and encouraged

45:02me and said learn this stuff here we'll

45:04do it together and that was a gift

45:07everyday people can build tremendous

45:10wealth which in and of itself is

45:13impressive but it's even more impressive

45:15when that wealth is used to live a rich

45:17life a rich life of adventure and

45:19spontaneity and generosity some of the

45:21stats I pulled out from your book about

45:2225 percent of people who make a hundred

45:25thousand dollars a year plus a still

45:27living paycheck to paycheck

45:30according to a recent survey of

45:32millionaires done by the U.S trust 83

45:35percent of the wealthy wealthy say their

45:37largest investment gains have come from

45:39small wins over time rather than taking

45:42big risks yes this is counter to

45:45everything we see on TV because on TV

45:47it's really boring what are you going to

45:49look at my Vanguard account oh wow

45:51compounding seven percent per year it

45:53went down eight percent last year and it

45:54went up nine percent this year so boring

45:57so we see these cool stories of business

46:00owners and we're both business owners it

46:03is cool but a tremendous amount of my

46:06own wealth will come from low cost

46:09long-term methodical investing that's

46:12like a rule of life isn't it that the

46:14the real returns you know in reality the

46:17great Returns come from patience and

46:20consistency and things that really

46:22aren't sexy like they're not

46:24instagramable if I post on my Instagram

46:25today hey I've got some advice for you

46:27guys to become wealthy and I go I need

46:29to invest in this fun then just leave it

46:31there but if I go listen I've got this

46:32new NF this new nft collection or

46:34cryptocurrency coin that's gonna make

46:36you a million percent this year

46:38people are going to go all in that's

46:39just like something within the human

46:41condition where we want we want

46:43big returns with little effort and today

46:47we want to get rich quick same with a

46:49six-pack we want the six-pack abs in 10

46:51minutes we don't want six pack abs with

46:53diet restrictions and nine months of

46:56work that's not and that is why I have a

46:58lot of compassion for helping people

47:01unlearn some of the messages about money

47:03because we all have them uh we all have

47:05the equivalent of I want six-pack abs

47:08but we also have something in life that

47:10we've spent time to get really good at

47:12and we know that the secret is basically

47:15consistency if I go ask someone who's an

47:18amazing cook

47:19hey I want to cook like you how do I do

47:21it what are they going to give me some

47:22use cinnamon no they're gonna say get in

47:25the kitchen and cook every single day

47:26for five years and you're gonna learn

47:28about when to use salt and when to cook

47:31it for longer Fitness you want to ask

47:32someone who looks really good or or

47:34feels really good about their body

47:36they're going to give you some secret

47:37workout no they're gonna say I show up

47:40when I feel good I show up when I don't

47:43I show up when you let's think about the

47:46people that might be listening now so

47:47there's going to be someone that is a

47:48they're a they're a bus driver or they

47:51are a social media manager they are a I

47:54know cleaner they're a teacher they are

47:57a personal trainer

47:59if you were if your job was to make that

48:02person a millionaire in 20 years from

48:05now whatever your age they are right now

48:08what is and you were there financial

48:11advisor in fact you were controlling all

48:13of their personal professional decisions

48:16talk me through what you would do with

48:18that individual at a very detailed level

48:20I would do a few things number one that

48:23the most important things I would do

48:24would be set up automatic investing and

48:27be aggressive about it two they have to

48:29increase their income okay I'm gonna be

48:31that person I'm gonna embody that person

48:32like I just described so increase my

48:34income I'm a personal trainer perfect

48:36okay so so what should I do all right

48:38you're a personal trainer so first off I

48:40would say how much are you charging how

48:42are you finding your clients we talk

48:43about that and let's say you're charging

48:46100 bucks an hour and you have clients

48:48who say how long do they stay on average

48:49uh that's exactly what I'm changing

48:51perfect great

48:53they stay longer than two months I'm

48:55very good

48:56how long do they stay three months three

48:58months wow okay you're very good all

49:00right so your average client is worth

49:02400 uh

49:04a few thousand bucks yeah great so

49:06you're making let's say 60 70 000 a year

49:10all right

49:12uh the first thing after I understand

49:14all this information I would say all

49:16right we're going to double your income

49:18how are we going to do that

49:20the first answer everyone gives is I've

49:22got to find more clients okay you should

49:24you should ask your clients hey I've got

49:25a few slots available who would you

49:27recommend so you should get more clients

49:30second you're going to listen to your

49:31clients and you're going to say what

49:33else are you looking for I know you've

49:35got your fitness journey you're going on

49:36they're going to tell you I've got a

49:3810-year reunion I want to plan for that

49:41uh another person is going to say gosh I

49:44I know I should be eating healthier but

49:46it's really hard for me so you're

49:48thinking about it here's what you do

49:50you create you package up meal planning

49:54Services you can either do their macros

49:58for them and charge them a little bit

49:59extra let's say an extra 200 bucks a

50:02week or 200 bucks a month you can also

50:05partner with a food delivery service and

50:08you coordinate with that company to feed

50:10over their macros and it gets delivered

50:12to them and you take a small cut right

50:13there you've added thousands and

50:15thousands of dollars per year

50:18per client as long as they stick with

50:19you in addition to that you can do group

50:23sessions so you go hey I'm going to do a

50:26weekend session I'd like for you to

50:28invite your friends invite them for free

50:31and of course of the people who come

50:32let's say you get 15 20 people to come

50:34you do a free little session on Saturday

50:35you go I'm a trainer I work in SoHo I

50:39have three open slots that's how you're

50:42finding new clients now so you're doing

50:43two things you're finding new clients

50:45you're increasing your average lifetime

50:48value per client okay that's the that's

50:51two things now let's do one last thing

50:52let's increase the duration that they

50:55stick with you they're sticking with you

50:57for three months give them a special

50:58offer to stay with you for six months

51:00so when they sign up they work out with

51:02you for a month you say look it's a

51:03hundred bucks right now if you stick

51:05with me for a six month plan I will give

51:07you my sessions at ninety five dollars

51:10per plan you'll save x five percent

51:13one two three you've increased and if we

51:15did the math

51:16you may have doubled your Revenue you

51:18certainly boosted your profit in a huge

51:20way all of a lot of that's about making

51:22sure you're getting a better return per

51:24hour you spend at work but also making

51:26sure all of those hours are full then

51:28doubling down and making sure each hour

51:30because that's your your currency when

51:31you're a personal trainer you're trading

51:33in your time I need to make the most

51:35from every hour I spend

51:37um I've thought about something recently

51:38as I've been writing my new book The

51:40Diary of a CEO um which I've written

51:42these 33 laws for building and becoming

51:45great essentially it goes across

51:46marketing and business whatever and one

51:47of the chapters that I investigate is

51:49this idea of making sure your skills are

51:52on the right market so my company went

51:55public and one of the things that I I

51:58came to learn from sitting with

51:59investment bankers for many many years

52:00was that if you put a company the exact

52:03same company let's just say it's you

52:05know

52:06the company that make these silver mugs

52:08in front of me if I take this company

52:10public on the London Stock Exchange I

52:12might get for example four times Revenue

52:14if I take the exact same company and I

52:17list it on the New York Stock Exchange

52:19it will be valued at eight times Revenue

52:22yeah it's the exact same company exact

52:24same people exact same business just

52:25moving it to a different market and what

52:27upon leaving the social media marketing

52:30world when I was 27 years old one of the

52:33first calls I got was from a biotech

52:36company ran by a billionaire friend of

52:37mine that was going public

52:39and they brought me in and on the first

52:41week when we were discussing what they

52:43might pay me I'm thinking they can't

52:45really pay me in cash because I've got

52:46enough cash I don't really need that

52:47they can maybe give me some stock

52:49they're offer to me for my skill set

52:52was eight million dollars roughly eight

52:54million dollars in options that I would

52:57earn in nine months from taking the

52:59company from where it was building out

53:00the marketing team handling their

53:02storytelling and taking the company

53:03public which we did at about 3.2 billion

53:05valuation

53:06their offer was eight million dollars in

53:09options I reflect on that and go I'd

53:11spent the previous 10 years using the

53:13same skill set to sell consumer goods

53:16like dresses and iPhones for apple and

53:18Logitech and big fashion brands yeah I

53:20took the same skill set and applied it

53:23to a marketing industry where it was

53:25rare biotech people know nothing about

53:27Reddit and Twitter and Facebook and

53:29social media so my skill set was rare

53:31scarce in that market so it was

53:33incredibly valuable and I think about

53:35this a lot with with especially as this

53:37AI thing rolls in

53:39I think people should be looking at

53:40their skill sets and going where is my

53:42skill set as a writer gonna yield the

53:44greatest returns I could be a social

53:46media manager I could be a uh a Blog

53:49writer or

53:51I could add a little boat string to my

53:53bow and become a a scientific writer or

53:57like work a writer in biotech and you'll

53:59get paid if you can add that little bit

54:01of knowledge to your to your writing

54:02skills you'll get paid I'm gonna say

54:05five times potentially five times more

54:07yeah and people don't think about the

54:10fact that they're they they need to use

54:12Place their skill sets in the most

54:13lucrative Market where it's scarce yeah

54:16and I it's so yeah just throwing that

54:19out there because it's really front of

54:20mind for me at the moment like retaining

54:22you know like personal should be at a

54:23gym and you'll lose 75 of your income to

54:26the gym or you can do it virtually you

54:29can specialize on

54:32um just preparing people in in the

54:35beginning of the year it's like your

54:36best year and every January that is your

54:39focus it can be celebrity clients it can

54:41be uh Uptown

54:44um mid-career Executives that's a very

54:47lucrative you choose but you choose

54:49carefully I agree that's a bit of an

54:51advanced concept I think most people

54:53they start off they go just how do I

54:55make more money I'm a trainer I have

54:57three hours but once you kind of Master

55:00that and you go like for example there's

55:01a trainer I know here who charges 175

55:03bucks an hour that's very good

55:06after you get that and you fill up your

55:08entire calendar you go okay I'm making

55:10305

55:11000 a year I want to make more how do I

55:14do it now you need to get creative you

55:16move to different markets you add in

55:18package things that scale when you sleep

55:20you have video courses Etc there's so

55:22many different ways but I think everyone

55:24would do well to listen to what you're

55:26saying which is think about how to move

55:27up Market or potentially to a totally

55:29different Market well your skill set is

55:31really scarce yeah and that's the

55:33problem a lot of people have there's you

55:35know their skill set might be too

55:37abundant in the industry like social

55:39media managers even social media

55:41managers is one thing but that's a

55:42slightly different skill set because

55:43there's there's a wealth of knowledge

55:45there that is unique to that knowing the

55:46algorithms knowing the platforms there's

55:48a real creative element to it but I

55:50think about my friend Anthony he was he

55:53was a graphic designer the greatest

55:55graphic designer I ever knew in

55:56Manchester but he was designing

55:58nightclub flyers and he's talked about

56:00this publicly before for not every

56:02nightclub fly he designed he got fifty

56:04dollars the equivalent 50 to 100 right I

56:07had a conversation with him a couple of

56:08years ago about this and I said you're

56:11you you're really specifically good at

56:13like luxury design he's got that really

56:16like beautiful Chic simple but you know

56:19elegant design style I always go to him

56:21whenever I only design work like that so

56:24I said to him

56:25move to Dubai

56:28and and go in there and help design

56:32um luxury Brands yeah and this guy did

56:35it so he went from Manchester where he

56:36was doing nightclub flies

56:38to moving to Dubai and without revealing

56:41his financial position what I can say is

56:43the same hour per

56:46piece of work is now yielding him tens

56:49and tens more in returns you know

56:52instead of getting 500 he's getting

56:53fifty thousand dollars for for a project

56:56and it's just moving his skill set the

56:58same thing designing on the same

57:00software to a different industry which

57:02will appreciate and pay more for the

57:03same skill

57:04the lesson I take away from that Beyond

57:07his willingness

57:09to actually make a change which is

57:12amazing is that most of us do not think

57:15in terms of discontinuous jumps we think

57:18okay I'm making I have a hundred bucks a

57:20month

57:22what if I had 120 bucks a month well 20

57:25is like quite good that's amazing but

57:28what if I had 500 bucks a month or five

57:31thousand that's a discontinuous jump and

57:34to get those kind of numbers something

57:35big has to change in business

57:38moving markets developing a new skill

57:41partnering all those things but it's

57:43different in investing

57:45it's primarily time

57:47and that's where we're not attuned to it

57:49we go well you know I only have like a

57:51couple hundred bucks a month to invest

57:52that's nothing it's only going to turn

57:53into a few thousand you know you're not

57:56thinking about time because the human

57:58mind is not made for compounding so plug

58:01it into a calculator and you will be

58:03blown away same thing buying a house

58:05you're only thinking of how expensive

58:08your rent is which granted rents are

58:10very expensive but you're not actually

58:13factoring in how much time and money it

58:16costs to pay taxes and maintenance and

58:18interest on your loan you've got to get

58:21smart about running the numbers and when

58:23you start to sit back when you learn the

58:26basic language of money and you

58:28understand how you feel about money

58:30whether it be I like status or I like

58:33luxury or I don't really care about XYZ

58:37when you understand your own feelings

58:40suddenly you can almost look at the

58:42chess board

58:42dispassionately you sit back you go okay

58:45I see what's going on here I even see

58:48how I am a player on The Game of Life

58:51when it comes to money

58:52and then you start to say the most

58:54powerful question of all what if

58:56what if I earned more what if I spent

59:00less what if I decided I actually love

59:04traveling two months a year or buying a

59:06house because I can decorate it the way

59:08I want what if what if what if and then

59:10you can start to make moves that line up

59:12with your rich life someone comes to you

59:14and they say what about crypto I get

59:16that question a lot oh God what about

59:18crypto should I be investing in that my

59:20friends told me about this new coin and

59:22I'm thinking of putting a couple of

59:24thousand Pounds into it I get this all

59:26the time should I invest in that coin

59:28that my friend told me about

59:30so I get this question a lot I I got it

59:32a lot a few years ago yeah let me tell

59:34you what happened you know people read

59:36the book they know that I'm a fan of

59:37low-cost long-term investing and then

59:39all these crypto nuts grow up and well

59:42they grow up to be you know 19 years old

59:45and they go oh ramit seiti such an old

59:48guy such a Luddite he doesn't understand

59:49investing this is the new future Fiat is

59:53dead I go

59:55um I have a couple of questions for you

59:57number one what is the rest of your

59:59portfolio look like

01:00:03crypto I go oh God okay

01:00:06second

01:00:07do you think that it's normal to get uh

01:00:10four thousand percent return per year

01:00:13when over about a hundred years the

01:00:16stock market has returned approximately

01:00:17seven percent per year they go yeah

01:00:19that's because Fiat is dead you idiot

01:00:21it's gonna be we're going to the Moon I

01:00:24go you're going bankrupt and many of

01:00:26them did lose a tremendous amount of

01:00:28money my view on crypto is if you have a

01:00:32well-diversified portfolio well

01:00:35Diversified and you want to have a

01:00:37little bit of fun with one two even five

01:00:41percent of your portfolio go ahead

01:00:44and that could be crypto it could be an

01:00:46individual stock it could be investing

01:00:47in your friend's bar in Brooklyn could

01:00:49be whatever you want

01:00:51but you got to limit your risk and what

01:00:53you find is that the type of people who

01:00:55tended to be attracted to crypto tended

01:00:58to be extremely risk seeking and in fact

01:01:02they saw diversification and risk

01:01:05management as boring for old people

01:01:10this game is a marathon you want to live

01:01:13a rich life you want to be living it for

01:01:1560 70 years I'm not trying to get

01:01:19ten thousand percent returns and then

01:01:21blow out

01:01:22and that's what happened to many of them

01:01:24I mean part of the problem here is that

01:01:26when we do get our 10 000 returns ten

01:01:28thousand percent return moment yeah we

01:01:30think it's going to be 10 million

01:01:31percent if we just but we also go tell

01:01:33everybody oh of course you never hear

01:01:35anyone saying let me tell you something

01:01:36thank you for saying that I went on

01:01:38Twitter because uh you know I mess

01:01:40around with these crypto guys a lot on

01:01:42Twitter I have a great time doing it I

01:01:44go hey where'd all the crypto Bros go

01:01:46everyone seems to have disappeared in

01:01:482023 where'd you guys go and there's

01:01:50just like crickets we're in 2020 they

01:01:53were really coming out you know guns

01:01:54blazing I said if you have lost a lot of

01:01:59money from crypto send me an email I

01:02:02want to share your story I'll keep you

01:02:03anonymous

01:02:04I have a lot of people who follow me on

01:02:06social media

01:02:07I got less than three responses

01:02:11we love to share our successes we love

01:02:15it we do it with crypto we do it with

01:02:17buying a house and selling it for a

01:02:19profit we do it with business we do with

01:02:21all that stuff

01:02:22but you almost never hear anyone saying

01:02:25oh my gosh I bought this uh I sold it

01:02:28for um one-fifth the price oh and by the

01:02:31way because of the transaction fees

01:02:32Associated I actually lost like 80 of my

01:02:35money you know or 85 of my money you

01:02:37never hear that

01:02:39it's deeply shameful for people to admit

01:02:41that they lost money it's the opposite

01:02:43of status isn't it yeah and we're not

01:02:44wired to seek the opposite of status

01:02:46exactly why to voluntarily bring

01:02:49ourselves down in the tribe exactly we

01:02:52are safety seeking we are status seeking

01:02:55and so this is what happens with money

01:02:57that's why I talk about prenups and why

01:02:59I talk about investing and mistakes and

01:03:02all of the above is that I want to shine

01:03:04a light and show people if you are only

01:03:06seeing the top of the iceberg all the

01:03:09successes of course you feel like you're

01:03:11behind of course you feel like everyone

01:03:12knows something you don't but it's

01:03:14complex some people make good decisions

01:03:18some make poor decisions we got to look

01:03:19at them all and then we will understand

01:03:21what's right for us

01:03:23so on my my position on crypto is um I

01:03:26believe in the underlying technology of

01:03:27the blockchain and I I'm I've been a big

01:03:29ethereum holder for a very very long

01:03:31time but it does represent less than

01:03:34five percent of my portfolio although I

01:03:35am a very big holder

01:03:38um in ethereum and I've held it for so

01:03:41long that although I'm at a I'm at a

01:03:44point of profit right now I'm well aware

01:03:46that I could go

01:03:49um into a huge you know into the red

01:03:51yeah irrespective of that it a has is

01:03:55inconsequential to any decisions almost

01:03:56like like my financial Financial

01:03:58portfolio at large and B because of that

01:04:01I have such a long-term time Horizon

01:04:03that I could hold it for 30 40 years and

01:04:06I've never flinched I don't check the

01:04:08price sometimes I just check my password

01:04:09works but I but but I'm not in I've

01:04:12never traded I have no interest in that

01:04:14ramits 10 Money Rules

01:04:18I just want to go through these 10 money

01:04:19rules because you mentioned prenups

01:04:21there and I was quite curious that

01:04:23number 10 in these rules is marrying the

01:04:25right person but let's start at number

01:04:27one

01:04:28always have one year of emergency funds

01:04:31yeah so for me one year of emergency

01:04:33fund is conservative it's more

01:04:36conservative than most lets me sleep at

01:04:38night and I just keep the cash in a

01:04:40savings account

01:04:41it's not under my pillow cash does not

01:04:44mean it's sitting under my bed please

01:04:45don't try to rob me it's cash in a

01:04:48savings account totally liquid and

01:04:50that's what it's for emergencies

01:04:52rule number two save ten percent invest

01:04:55twenty percent of gross annual income

01:04:57yeah this is all about the numbers that

01:04:59I shared and being more aggressive with

01:05:01them I know that paying myself first now

01:05:03turns into way more later so I invest

01:05:05aggressively rule three pay cash for

01:05:08large expenses like engagement rings or

01:05:10big holidays or weddings yeah this one

01:05:13is controversial because for the things

01:05:16that are important to me I don't want

01:05:19price to be the number one concern so

01:05:22I'd rather save up for it when I was in

01:05:24my 20s before I ever met my wife I knew

01:05:27one day I would get married and because

01:05:29I'm Indian I knew we would have a big

01:05:31wedding and I wanted it to be amazing so

01:05:33I started putting money aside every

01:05:35single month automatically I do the same

01:05:37thing for trips house

01:05:40Etc rule four never question spending

01:05:42money on books appetizers health or

01:05:44donating to a friend's charity

01:05:45fundraiser yeah so the books and the

01:05:47appetizers are a little weird I have

01:05:49something called ramit's book buying

01:05:51rule which means if you ever see a book

01:05:52book that you're even remotely

01:05:54interested in just buy it don't ask a

01:05:57question don't equivocate just get it

01:05:59because if you can learn one thing from

01:06:00that book it can transform your life

01:06:03appetizers when I was a kid we couldn't

01:06:05afford to eat appetizers so we would eat

01:06:07out every six to eight weeks if we had a

01:06:09coupon we'd usually go to a pizza place

01:06:12getting appetizers was inconceivable so

01:06:15now when I eat out to be able to see one

01:06:18or even two appetizers that look good I

01:06:20go yeah I'll take them both it feels

01:06:22incredibly rich and this is just an

01:06:25example of how our childhood sticks with

01:06:27us it feels awesome to be able to do

01:06:30that rule number five business class

01:06:32flights on flights over four hours long

01:06:34Yes again my money rules not for anyone

01:06:36else

01:06:38when I used to when I was in my early

01:06:4020s I would get on a flight and I would

01:06:42actually in my head scoff as I was

01:06:45walking from the front of the plane to

01:06:47the back I feel like why would anyone

01:06:48spend four times the money paying for a

01:06:51first class ticket makes no sense we're

01:06:52all getting to the same place ha ha ha

01:06:55I wish instead of disparaging that I

01:06:58would have gotten curious and I wish I

01:07:00would have said

01:07:01wow if somebody can afford to get those

01:07:04seats why would they I wonder what

01:07:06they're spending money on aren't we all

01:07:08getting to the same place and if I had

01:07:10gone from disparagement to curiosity

01:07:12from D to C

01:07:14I would have understood that some people

01:07:16have their office paying for it some

01:07:18people do it for health because they

01:07:21want to get there they want their back

01:07:23to feel good they maybe need to go to a

01:07:24meeting and some people just have enough

01:07:26money that they can do what they want

01:07:28and when I started to become more

01:07:30curious about money that opened up my

01:07:33eyes to be able to spend on certain

01:07:35things and spend extravagantly but also

01:07:37to realize wow maybe I try this certain

01:07:39type of food once cool I don't need to

01:07:42do it again so for me my money rule so

01:07:44that I don't have to decide every time I

01:07:46take a flight boom this is my guideline

01:07:49it's done it's written never have to

01:07:52think about it again

01:07:53rule six buy the best and keep it as

01:07:55long as possible yes I love this I think

01:07:57we all intuitively have this idea of

01:07:59quality over quantity but if you look in

01:08:01somebody's closet or you look at the

01:08:04things in their house there may be some

01:08:06incongruity so um for example my car is

01:08:1017 years old it's a good car so I mean

01:08:13for me it was a fine car I don't care it

01:08:16rides fine it's a four-door Honda Accord

01:08:18I told you very sensible long-term great

01:08:23uh

01:08:25buy the best keep it for a long time

01:08:27it's the same with clothes

01:08:29um those things matter to me I like that

01:08:31and so I'll buy something that might

01:08:33seem very expensive but I'll keep it for

01:08:35a long time good for the environment as

01:08:36well yeah

01:08:38rule seven no limit on spending on

01:08:40health or education yeah this this one

01:08:43is important

01:08:44um I learned when I was in my 20s and I

01:08:46started training and learning from

01:08:48personal trainers and nutritionists that

01:08:50I really loved it and I also realized

01:08:52that I needed help I needed great

01:08:54teachers and So eventually I just

01:08:57realized I'm gonna give myself unlimited

01:09:00spending on this same for education so

01:09:03I'm a teacher I teach different programs

01:09:05of course I'm a student as well I want

01:09:07to learn from great teachers from taking

01:09:10accounting classes here at Columbia to

01:09:12buying every conceivable book and

01:09:15digital program there is

01:09:16I've given myself the freedom to do that

01:09:19and all that came from I had a

01:09:22scholarship I had many scholarships that

01:09:23paid my way through college and one of

01:09:26the scholarships set up an account for

01:09:27me at the Stanford bookstore

01:09:30so when I walked in there I could get

01:09:31literally any book I wanted it was like

01:09:34uh Willy Wonka and the Chocolate Factory

01:09:36for a guy like me to have unlimited

01:09:38books

01:09:39it was like unbelievable and when I

01:09:43graduated from college I realized that

01:09:45would be going away

01:09:47and then I remember having this

01:09:49conversation with myself and saying

01:09:51how much would it really cost to

01:09:54recapture that feeling that feeling of

01:09:57being able to get anything I wanted see

01:09:59a book on the bookshelf I'll get it and

01:10:02the answer is really not that much so

01:10:04over time that then expanded to health

01:10:07and Education Health I find really

01:10:09compelling because

01:10:11it's clearly clearly the most important

01:10:14foundation of all of this it's clearly

01:10:16the most lucrative investment any of us

01:10:17could make

01:10:19um because everything we've described

01:10:20the rich life doesn't exist without that

01:10:22Foundation yeah so it's all good

01:10:24investing in your Vanguard but it

01:10:26doesn't matter at all if you're gonna

01:10:27die yeah if you ask people what's

01:10:29important to you they'll often give you

01:10:31the same answers they'll say

01:10:32relationships Health maybe travel career

01:10:35maybe yeah I go okay let's take a look

01:10:37at your spending show me where you spend

01:10:39on those things

01:10:41it gets really quiet really fast now

01:10:44it's one thing to spend time on

01:10:46relationships and we should but we can

01:10:48also spend money to enrich those things

01:10:50it might be surprising your niece at a

01:10:53showing of Michael Jackson or it might

01:10:57be surprising your family by going home

01:11:00and visiting them there are lots of ways

01:11:01you can use money to enrich those

01:11:03experiences same for health

01:11:05it could be what you buy at the grocery

01:11:07store it could be training or a gym

01:11:09membership it could be whatever it is

01:11:10that's meaningful for you but if we

01:11:12claim something's important to us

01:11:14it sure better show up in our time and

01:11:18our spending rule number eight earn

01:11:19enough to work only with people you

01:11:21respect and like I love this one

01:11:24I decided long ago that I only want to

01:11:26work with people that I like and respect

01:11:28and so I earn enough money so that I can

01:11:33do that and to me who you surround

01:11:35yourself with matters profoundly ideas

01:11:38seep into your Consciousness values seep

01:11:42in if I'm around people who when I look

01:11:44at the calendar when I have a meeting

01:11:45with them I dread it I already know it's

01:11:48the beginning of the end most of us have

01:11:50to work with they're right like

01:11:51we yeah I say have to I shouldn't use

01:11:52that word I don't like saying have to

01:11:54but most of us spend most of our lives

01:11:56especially the early part of our Lives

01:11:58working with

01:12:00um we work with people that we may not

01:12:02particularly choose ourselves I think

01:12:04that's probably

01:12:05[Laughter]

01:12:08so yes I built a life where I could make

01:12:12that decision for myself I'm the CEO of

01:12:14my business

01:12:15but

01:12:17I think what is important there is the

01:12:19intentionality behind it it's like even

01:12:21if I worked at a company I would be

01:12:24deciding on which Division I want to

01:12:26work in which boss I want to transfer

01:12:29under based on do I like and do I

01:12:31respect him

01:12:33that's it the intention is there you

01:12:35again these are my rules not anybody

01:12:37else's but if this one strikes you then

01:12:40the way that I would interpret this is

01:12:42wow who in my life do I not like who do

01:12:45I not respect do I need to be around

01:12:48them maybe it's not work maybe it's the

01:12:50friend that I hang out with socially on

01:12:52Saturdays again we have a choice not on

01:12:55everything but in the things we do have

01:12:57a choice what a shame if we don't use it

01:12:59rule number nine prioritize time outside

01:13:02the spreadsheets yeah too many Nerds

01:13:05love a spreadsheet and they they go I

01:13:08gotta optimize cell b43 b43 never talk

01:13:11back to me I go uh all right look yes

01:13:14you need to know your numbers yes you

01:13:15should be automatically saving and

01:13:17investing all that yes do the conscious

01:13:18spending plan but at a certain point you

01:13:21won

01:13:22the turkey is cooking you won you know

01:13:26your numbers Turn the Page get out of

01:13:29the spreadsheet a rich life is lived

01:13:31outside of the spreadsheet so on a

01:13:34personal level that means I spend less

01:13:35than one hour per month on my finances

01:13:37it all runs it's a machine it's a system

01:13:40I speak to my wife we talk once every

01:13:43couple of weeks about money

01:13:45besides that do not spend time tweaking

01:13:49because the rich life is lived having

01:13:52conversations like this seeing friends

01:13:54seeing my family

01:13:55that's where I want to live not tweaking

01:13:58things endlessly for no marginal gain

01:14:02number 10.

01:14:04you mentioned your wife there marry the

01:14:06right person yeah maybe the most

01:14:07important one of all marriage is the

01:14:12most consequential

01:14:13financial and relational decision we

01:14:16ever make and people they're a little

01:14:19weirded out by this rule they go what

01:14:20does this have to do with money I go

01:14:21what do you mean the partner you choose

01:14:25will affect where you live what you

01:14:28spend on a day-to-day basis what type of

01:14:31house you buy if you do how often you

01:14:34travel the values if you have children

01:14:36that you pass down to kids

01:14:38of course it's important

01:14:40and so these are conversations that if

01:14:43you are starting to date it's great time

01:14:46there's natural moments in the dating

01:14:48process or even the relationship process

01:14:50where you can bring up money so it's

01:14:52like the first time you take a vacation

01:14:53together take a trip you go hey

01:14:56um just wanna you know this is on my

01:14:58mind I'd love to just like put it out on

01:14:59the table love that you invited me on

01:15:01this trip I'm so excited to go I'm just

01:15:04curious how were you thinking about

01:15:06paying for the trip who who in your mind

01:15:09pays for it how would you see us

01:15:11splitting this

01:15:12that's a great way to bring it up and

01:15:14you learn a lot about your partner there

01:15:17are questions you can naturally ask you

01:15:18know how were you raised with money what

01:15:20do you remember your parents telling you

01:15:21here's what I remember about my parents

01:15:24genuine curiosity it also tells you a

01:15:27lot about your partner

01:15:28and then there's a few other natural

01:15:29moments in a relationship where it just

01:15:31makes perfect sense to talk about money

01:15:33uh when you get engaged when you get

01:15:35married you uh if and when you move in

01:15:38together pre or post-marriage uh if and

01:15:40when you have children there are these

01:15:42natural moments where you get the gift

01:15:44of being able to talk about money do

01:15:46people talk about money

01:15:48couples they talk about it uh when

01:15:50something goes wrong

01:15:52outside of that what sort of percentage

01:15:54of people couples do you think talk

01:15:55about money rarely it's very low I know

01:15:58I speak to them all the time I ask them

01:16:00when do you talk about money they go

01:16:01when we're fighting or when they talk

01:16:03about it it's like

01:16:04it's these grooves that have been

01:16:06created for 40 years oh every time she

01:16:09goes to Target she spends too much ha ha

01:16:12and I'm like that's not that funny like

01:16:14the running joke between you is that she

01:16:17spends too much at Target sounds like

01:16:19resentment yeah why not it be

01:16:23something different so that when you

01:16:25talk about money once a month

01:16:27proactively you always start off

01:16:30complimenting your partner you go you

01:16:31know what

01:16:33I really appreciate that when we travel

01:16:35you always pick the best flights

01:16:39I I have total trust because you always

01:16:41get us there on time and you pick the

01:16:43flies that are so comfortable and I just

01:16:44love you for that

01:16:46that's a great way to reframe how we

01:16:48talk about money but instead we often

01:16:51simply do not talk about it proactively

01:16:53we only talk about it when something is

01:16:55a problem do you think how Partners

01:16:57should know how much money we have

01:16:59when you're married

01:17:00probably a little before that as well

01:17:03like I'll tell you what happened with my

01:17:05wife and me

01:17:06so in my book in chapter nine I talk

01:17:08about how to talk about money and when

01:17:10to talk about money

01:17:11and first of all there's a lot of

01:17:13personal finance experts they're like

01:17:15you should talk about money on date one

01:17:16I'm like have you guys ever been on a

01:17:17first date can you imagine who's talking

01:17:19about their asset allocation on the

01:17:21first date I'm like get a life so she

01:17:24had um asked me like years into our

01:17:27relationship some 401K question and I

01:17:30was like read this book learn it it's in

01:17:32there so I knew all about her money we

01:17:35had talked about her finances and then

01:17:37as we started getting more serious one

01:17:38day she came to me and she said

01:17:41I don't feel comfortable because you

01:17:42know everything about my finances and I

01:17:44don't know anything about yours

01:17:46and that was it

01:17:48a sobering moment because I realized I

01:17:50had violated my own rules in chapter 9

01:17:53of talking about money early and

01:17:56proactively why didn't you feel

01:17:57comfortable

01:17:58she didn't feel comfortable because she

01:18:00felt like I knew everything and she

01:18:02didn't know anything about me being in

01:18:04the dark about your partner and their

01:18:06finances is very uncomfortable

01:18:09we were planning to get married so what

01:18:12does that mean does he have debt does he

01:18:14not does he have this much money or not

01:18:16does he expect me to pay the exact same

01:18:19amount for this apartment because I

01:18:21don't know if I can afford that there

01:18:23are what does it mean for children what

01:18:25does it mean for our elderly parents all

01:18:27that stuff

01:18:28this is what money means money is not

01:18:30just a amount in a spreadsheet it's

01:18:33where do we live security security who

01:18:36do we get to be

01:18:37and you know security is a really good

01:18:40that word haunts me because uh we we I

01:18:44realized to my horror that I had not

01:18:46shared about my finances so we had a

01:18:49series of conversations

01:18:51and as we got engaged

01:18:55um we had more we started talking about

01:18:57money a lot and I mentioned to my now

01:19:01wife I said it's really important for me

01:19:03that by virtue of me running a business

01:19:06for so long I've accumulated this

01:19:08business these assets and I love you but

01:19:10it's important for me that we talk about

01:19:11a prenup

01:19:13and I was very very scared I had talked

01:19:17to a lot of friends and I'm sharing this

01:19:19because prenups are another thing that

01:19:22always happen in the dark

01:19:24and I don't want that I want people to

01:19:26shine a light and to understand how

01:19:28these conversations happen because

01:19:29nobody talks about this I'm going to

01:19:31talk about it

01:19:33so I was nervous and all the advice

01:19:35online is awful it's like um have the

01:19:38conversation I'm like what conversation

01:19:40what do I say or some people they tell

01:19:42you to blame your lawyer my lawyer

01:19:44insisted I have a prenup I'm like if I

01:19:46can't be honest to my soon-to-be wife

01:19:48what kind of relationship do we have so

01:19:51that's what I said to her and she

01:19:53responded like awesome she was like wow

01:19:57I didn't expect that I don't know much

01:19:59about prenups but I'd be willing to

01:20:01learn more I said fantastic so we start

01:20:04talking more about it we both get

01:20:06lawyers as you're both required to

01:20:09it was going pretty well

01:20:11until

01:20:12it didn't and we started really

01:20:15disagreeing about money

01:20:17and we were we're just like fighting and

01:20:22she finally said we should go see

01:20:25somebody because this conversation is

01:20:28not going the right direction

01:20:30and and I totally agreed with her so we

01:20:32literally went on Yelp and we searched

01:20:35like therapists near us and we found one

01:20:38right there we went

01:20:39and we sit down and this therapist was

01:20:41great she asked us what does money mean

01:20:45to you and she asked me first

01:20:48it's so obvious money means growth like

01:20:50I could literally see the compound

01:20:52interest charts in front of my eyes I

01:20:54know about the rule of 72 and expense

01:20:56ratios

01:20:58growth of course

01:21:01she has the same question to my wife

01:21:04my wife says

01:21:05safety

01:21:08like

01:21:09what that's like somebody's saying

01:21:12metal money means metal to me I go huh

01:21:16and it was that that we realized

01:21:19we saw money completely differently

01:21:21completely it explained to me why my

01:21:25wife wanted more money in just sitting

01:21:27in a checking account

01:21:29when I go but that checking account is

01:21:31losing potential interest why would we

01:21:33lower our yield blah blah blah we were

01:21:35looking at it through two totally

01:21:36different lenses

01:21:39so that single question was very helpful

01:21:41in us reframing our conversations it

01:21:44didn't change everything overnight we

01:21:45still had a lot of conversations we had

01:21:47to have and even once we got married we

01:21:50still have conversations now they're

01:21:52different they're about spending and

01:21:54investing and prioritizing but it was a

01:21:59new way for us to look at the way we

01:22:00related to money where did her lens come

01:22:03from

01:22:04childhood like most of ours same for me

01:22:06in fact every time I talk to couples who

01:22:10are now in the seat that I was in

01:22:13I asked them what do you remember about

01:22:15growing up with money and they always

01:22:17tell me similar things uh my parents

01:22:19never talked about money that's very

01:22:21common or they said certain phrases like

01:22:24we can't afford it money doesn't grow on

01:22:26trees we don't talk about money in this

01:22:28family Etc

01:22:30imagine you hear we can't afford it a

01:22:33hundred times a thousand ten thousand

01:22:35times

01:22:36growing up

01:22:38and you turn 25 35 you start to make

01:22:40decent money

01:22:42but every time you go to buy something

01:22:45you feel guilty and you feel anxious and

01:22:47you feel like I should be saving this

01:22:49money and you can't figure out why

01:22:51because on paper you make more money

01:22:54if you came to me on my podcast we would

01:22:56trace it back and you might realize it

01:22:58is something as simple and Vivid as

01:23:00sitting around the dinner table and

01:23:01hearing mom or dad saying we can't

01:23:04afford it our childhood sticks with us

01:23:08and we could change but it's so

01:23:10important for us to acknowledge that it

01:23:12sticks with us

01:23:13if I approach my partner and I say I

01:23:15want to get a prenup and they say what

01:23:17you don't trust me yeah and they say no

01:23:22uh what do you do is that the question

01:23:24well I would say first of all I wouldn't

01:23:26start off like that I think there's

01:23:29that is one of the most important

01:23:31conversations you're ever going to have

01:23:32in your life and the subsequent

01:23:34conversations so take it seriously you

01:23:37show up and you explain it I explain it

01:23:40perfectly and they'll turn around and

01:23:41say that and they say no

01:23:43they say you don't trust me uh no okay

01:23:46that's a contingency you might have to

01:23:48plan for so you might say okay can you

01:23:50tell me why

01:23:51tell me what's going through your head I

01:23:52want to understand your perspective

01:23:56this is a conversation it's not a

01:23:58dictate trust you don't trust me yeah

01:24:02would you marry that person

01:24:04I would have a lot more conversations I

01:24:06can't say yes or no because you can't

01:24:09judge someone based on their reaction in

01:24:12a situation they've never been in how am

01:24:14I going to react if I got in a car

01:24:16accident and I start crying can you

01:24:18judge me my entire life based on that no

01:24:21but let's say that we extend it and and

01:24:23you and I are in a relationship and I

01:24:25ask you I it's important for me by

01:24:28virtue of this and that

01:24:29and you go I don't you don't trust me if

01:24:33you are unwilling

01:24:35to even discuss it

01:24:37if you're unwilling to talk to friends

01:24:40to talk to lawyers to talk to people you

01:24:43can find on your own or I can introduce

01:24:44you to

01:24:45then I think we have a bigger

01:24:47disagreement about values and you know

01:24:49the way that most of us think about a

01:24:51prenup is it's usually some rich

01:24:53telling someone who has way less money

01:24:55like sign this paper or it's over and

01:24:57again that's Hollywood

01:24:59prenup which I learned

01:25:01is all about if the marriage ends

01:25:06what you had before or any agreed upon

01:25:10assets stay with that person so if you

01:25:13have a business and your partner and you

01:25:17get married there's no prenup and

01:25:19for whatever reason God forbid you

01:25:21separate suddenly that business might be

01:25:25at risk the portfolio that you

01:25:27accumulated before you ever met your

01:25:29partner

01:25:30might go to them and that when you

01:25:32explain it that way most people go oh

01:25:34that doesn't really seem fair but the

01:25:36money that you accumulate together

01:25:39as Mary Partners yeah there definitely

01:25:41should be an agreed upon that money

01:25:43needs to be split Etc and no person

01:25:46especially the partner who earns less

01:25:48should be left out in the cold ever do

01:25:51you notice any differences when you

01:25:53speak to these couples or on your

01:25:54podcast

01:25:55um in

01:25:57gender differences as it relates to the

01:25:59people's relationship with money because

01:26:01I read a lot of stuff about men being

01:26:02more prone to gambling addiction and

01:26:04gambling generally yeah yeah I think

01:26:07there are a lot of differences I think

01:26:08gender is one of the axes that people

01:26:10differentiate on

01:26:12um I see typically more aggressive

01:26:14investing from men I typically if I see

01:26:18a gender difference in investing

01:26:19differences it would be much more

01:26:21conservative with women I might see

01:26:24words like Safety and Security used more