53% of people are planning to make a New Year's resolution about money, finance, and investing in 2025 to achieve Financial Freedom and Financial Security (00:00:00).
The most replayed and shared moments from conversations about money, personal finance, and investing have been compiled, covering topics such as saving, spending, investing, tax, crypto, buying a house, and having a money mindset (00:00:16).
The most expensive thing people pay for is the information they don't know, and making the most money humanly possible involves two key things (00:00:29).
By listening to the conversation, it is believed that people's money goals will come true in 2025, and the discussion will lead to an amount of success that will put people in the top 5% of investors (00:00:44).
The conversation aims to provide life-changing advice on various financial topics, which will help people never have to worry about money again (00:00:42).
A huge thank you is expressed to listeners for tuning into the show week after week, and it is mentioned that the channel is only just getting started (00:00:59).
Viewers are encouraged to hit the Subscribe button, which means a lot to the channel, and a promise is made to continue delivering high-quality content and guests in the future (00:01:20).
Investing in the S&P 500 can provide returns, but it's essential to simplify the process for those new to investing, as many people lack knowledge about investing due to never having had a conversation about it (00:01:45).
Investing is often perceived as something only rich people do after the age of 40, but it's possible to live a rich life without having a million dollars by learning a few key things about investing and money (00:02:11).
A simple way to start investing is by getting a Target date fund, which is one fund that automatically diversifies based on the year you plan to retire (00:03:08).
A Target Date Fund is a single fund that you can choose based on your retirement year, such as a The Vanguard Group 2065 fund or Fidelity Investments 2065, and it automatically adjusts its diversification as you get older (00:03:24).
All you need to do with a Target Date Fund is set up automatic monthly payments, and the fund will handle the diversification for you (00:03:54).
A fund is a set or basket of stocks and bonds that owns lots of companies, such as Microsoft and Google, providing diversification and making it easier for individual investors to manage their investments (00:04:00).
When looking for a low-cost brokerage firm, the country of residence is a factor to consider, and there are also apps available for investing, although many of these apps gamify investing and encourage frequent trading (00:05:01).
Frequent trading is not recommended, as traders tend to lose money, whereas investors view investing as a long-term, low-maintenance activity, often comparing it to watching paint dry (00:05:15).
A suitable approach to investing is to make it boring and automatic, avoiding the temptation to constantly check and tweak investments (00:05:32).
One investing app mentioned is HRI Lands, a UK-based company that has improved its app over time, although it is still recommended to use the desktop version to minimize the temptation to constantly check investments (00:05:36).
It is advised to limit accessibility to investing accounts by not having investing apps on mobile devices and only checking accounts every three to six months (00:05:57).
When checking investments, it is recommended to log in on a desktop, briefly review the performance, and avoid making any changes, much like cooking a meal and letting it sit without interference (00:06:17).
The Vanguard Group is mentioned as a website where investments can be made, with an example of investing £100 (00:06:38).
Hargreaves Lansdown has no minimum investment requirement, and investing in a fund is free, although investing in a stock may incur a charge of £12.20 per investment (00:07:02).
By investing in a fund, the fund manager makes the investment decisions, allocating the money into various stocks, such as Facebook, Google, Shopify, Spotify, and Nvidia(00:07:13).
The performance of individual stocks within the fund is inconsequential to the investor, as they own the fund as a whole (00:07:52).
To start investing, one needs to open an account, send the initial investment, and set up an automatic transfer to invest a fixed amount regularly (00:08:00).
A good guideline for the automatic transfer amount is 5-10% of one's take-home pay, which can be achieved by following a conscious spending plan (00:08:17).
Investing can become a habit by setting up automatic transfers, allowing the investment fund to draw from the checking account regularly (00:08:49).
Over time, the combination of regular investments and compounding can create real wealth, and investing is a key way to build wealth, regardless of one's initial financial situation (00:09:12).
Common Mistakes With Investment Accounts (00:09:28)
A common mistake people make with investment accounts is treating them like checking accounts, where they withdraw money whenever they need it, rather than letting the money accumulate wealth over time (00:09:28).
This mindset can be changed by setting up a proper account structure that automates the transfer of money from a checking account to a savings account and then to an investment account (00:10:14).
A suggested setup includes having sub-savings accounts for specific goals, such as vacation or car down payment, to keep money separate and organized (00:10:38).
Money should be automatically transferred to the investment account, where it should be left untouched to grow over time (00:10:51).
A separate account for guilt-free spending, such as going out with friends, can be set up to maintain a healthy balance between saving and spending (00:10:57).
Credit card bills should be automatically paid off every month to avoid debt and financial stress (00:11:04).
Setting up this automated system may take a few weeks, but once it's in place, it can be left to run without much maintenance or thought (00:11:08).
What's the Proof This Is Actually a Good Way to Build Wealth? (00:11:15)
The question of whether investing in funds over a long period is the path to financial wealth is raised, with a request for case studies to prove its effectiveness (00:11:15).
The common narrative about getting rich often involves selling a company, winning the lottery, or buying cryptocurrency that increases in value, which people try to emulate (00:11:31).
Research over more than a hundred years shows that the stock market returns tend to be around 10-11% in United States, and around 7-8% per year when adjusted for inflation (00:11:49).
To put the 7% return into perspective, using an investment calculator can help illustrate how money can grow over time, with inputs such as age, monthly investment amount, and return rate (00:12:12).
An example is given of plugging in $200-300 per month and a 7% return into an investment calculator to demonstrate the potential growth of money (00:12:19).
Compound Interest: Watch Your Money Grow (00:12:35)
Using a compound interest calculator, a scenario is presented where a person starts with a principal amount of $5,000 at age 16 and invests $5,000 annually for 14 years, with an interest rate of 7%, resulting in a total of $133,537 at age 30 (00:14:24).
Extending the investment period to 24 years, from age 16 to 40, with the same annual investment and interest rate, yields a total of $336,000 (00:15:19).
Further extending the investment period to 34 years, from age 16 to 50, results in a total of $736,000 (00:15:52).
A more realistic scenario is presented, where the annual investment increases to $30,000, and the investment period is extended to 49 years, from age 16 to 65, resulting in a total of $12,330,000 (00:17:20).
The importance of starting early and investing a considerable amount is emphasized, as well as the need to be conservative with expected returns, with 7% being considered a safe and stable interest rate (00:18:00).
The scenario is also calculated with an 8% interest rate, resulting in a total of $17,400,000, but it is advised not to count on such high returns to avoid potential losses (00:17:48).
The biggest debt people pay is ignorance, as it costs them the information they don't know, which can be both frightening and exciting (00:18:29).
A concept was presented where a person making $50,000 a year was told they pay "life" $950,000 every year for not knowing how to make a million dollars a year (00:18:40).
The idea is that the most expensive thing people pay for is the information they lack, and this can be changed by finding people who value what they have the most (00:19:02).
A story was shared about a father who gifted his son an old car, and the son was able to get different offers for the car from various people, including a dealership, an impound yard, and an antique dealership (00:19:26).
The son received offers ranging from $1,000 to $100,000 for the car, depending on who he spoke to, illustrating the lesson that it's not necessarily who you are, but the people who value you the most (00:20:10).
The story highlights the importance of finding the right people who appreciate one's worth, much like a good fisherman knows where to fish (00:19:11).
The key to success lies in finding where your skills are most valued, and going to the people who value you, as it takes the same amount of work but with a different mindset and target audience (00:20:33).
It's essential to level up and sell high-ticket items, as the process is often the same, but the price point changes, and it's possible to sell multi-million dollar packages with the same effort (00:20:51).
Understanding where to "fish" for clients is a valuable skill, and it's crucial to know that there are different markets and clients willing to pay higher prices for the same services (00:21:22).
Listening to conversations and gaining information can be incredibly valuable, as it lifts the curtain and reveals new opportunities and ways of doing business (00:21:35).
There are different levels of business, and as you progress, you'll discover new "rooms" with new sets of money games, and it's essential to learn from those who are already playing at that level (00:21:48).
Kevin Hart described the concept of different "rooms" in business, where you'll find new opportunities and challenges, and it's essential to be open to learning and growing (00:21:48).
As you progress in business, you'll find that the games and challenges change, but the key is to keep learning and adapting to new situations and opportunities (00:22:12).
The difference between charging low and high prices often lies in the information and skills you possess, and it's essential to focus on providing high-value services to high-paying clients (00:22:42).
Joe Rogan's conversation with Kevin Hart is mentioned as an example of how there are different levels of business and different sets of money games being played (00:21:44).
The Most Valuable Bit of Information You Wish You'd Known Sooner (00:22:51)
The concept of leverage is crucial in increasing income, as it refers to the difference between what you put in and what you get out, with high leverage meaning you put in a little and get a lot out, and low leverage meaning you put in a lot and get a little out (00:23:44).
There are different levels of leverage, including labor, media, capital, and technology, and understanding how to get more for what you put in is key to increasing income (00:24:02).
The first level of leverage is labor, which involves working for someone else, then working for yourself, and eventually getting others to work for you, with each level providing more leverage (00:24:08).
Media is another level of leverage, which involves creating something once and being able to license it out multiple times, providing a high input-output ratio (00:24:16).
Capital is also a level of leverage, which involves using other people's money to increase income, with different degrees of capital available, including friends and family, institutional money, and public money (00:25:25).
Technology is the highest level of leverage, which involves building something once and being able to use it multiple times, providing a high input-output ratio (00:24:32).
To increase income, it's essential to stack as many types of leverage as possible and maximize them, as seen in the examples of successful companies like Facebook and Amazon (company)(00:24:40).
Understanding the elements of leverage, as discussed by Nal, can provide a blueprint for wealth and help individuals move faster in life by getting more for every step (00:25:17).
Finding Your Unfair Bet That Will Make You Lots of Money (00:26:01)
To find an "unfair bet" that can generate significant income, it's essential to identify a unique skill set that nobody else can replicate, and this can be achieved by listing down all the things one is brilliant at, with the help of a whiteboard, pen, and a smart friend. (00:26:11)
The process involves writing down "skills" on one side of the whiteboard and "money" on the other, and then listing down all the core skills one possesses, such as social media expertise, networking, charisma, and data-driven strategy. (00:26:27)
In the example given, Stephen's skills include being incredible at social media, having a network, being charismatic, and being good at short-form video, data-driven social media strategy, and in-person interactions. (00:26:50)
Once the skills are identified, the next step is to think about how these skills can be applied to generate the most money possible, considering factors such as deal flow, networking, and charisma. (00:27:56)
The goal is to find a unique combination of skills that can be leveraged to create a high-income opportunity, and this requires thinking creatively about how to apply one's skills in a way that sets them apart from others. (00:28:00)
Applying Your Skills to Get the Most Money (00:28:05)
To maximize earnings, consider two key factors: the size of the problem and the value of the solution, as these determine the potential revenue and profit margin of a business or industry (00:28:06).
When applying skills to make the most money, research the average revenue and profit margin of the target business or industry to gauge potential earnings, such as comparing the profit margins of a trade or service business to a biotech company (00:28:36).
The combination of skills and money is influenced by three factors: sector, size of the business, and profitability of the business, which can be used to identify high-potential opportunities (00:29:06).
To find high-paying opportunities, focus on industries with high profit margins and large revenues, such as Silicon Valley or Wall Street, rather than low-margin businesses like Walmart(00:29:30).
A useful exercise is to create a chart with skills on one side and potential high-paying applications on the other, considering the size of the problem and value of the solution, and sharing examples with others for feedback and inspiration (00:30:07).
This exercise involves listing skills, such as writing, and then brainstorming ways to apply those skills to high-paying industries or problems, such as a writer considering opportunities in high-margin industries (00:30:29).
A writer with skills in writing and understanding the internet, particularly LinkedIn and blogs, can explore various options to make money, starting with the worst-case scenario of working for a local newspaper at around $14 per hour (00:31:10).
The highest-paying jobs for writers include copywriting, with entry-level positions paying around $35,000, and medical writing, which can pay $150,000 or more, as medical writers need to have specialized knowledge and skills to write about complex medical topics (00:31:35).
Medical writing is a lucrative field, and one can learn to become a medical writer in a month with dedication, as it doesn't require a medical degree, just the ability to write using medical terminology (00:32:04).
Another high-paying industry for writers is finance, where financial writers can earn a significant income by writing investor updates and other financial content (00:32:15).
To increase earnings, writers can consider structuring their jobs to include a percentage of the upside they drive above and beyond their goals, such as taking a lower base salary and earning a percentage of the revenue generated by their writing (00:32:46).
This approach can lead to significantly higher earnings, as seen in the example of a writer who earned around $10 million in six months by structuring their deal to include options in the company's IPO (00:33:55).
The key to making more money as a writer is to get smarter about deal structuring and to be open to negotiating and exploring different compensation models (00:33:18).
Learning how to do deals is a valuable skill set that can change one's life, regardless of whether or not one buys a business, and it's considered the most valuable skill set in the world (00:34:17).
This skill set is not gatekept, and information about it is widely available, unlike in the past when it was restricted to certain individuals or groups (00:34:40).
The importance of doing deals is highlighted by successful businesspeople such as Donald Trump, who is known for his ability to make deals, and Elon Musk, who has used his deal-making skills to help Tesla, Inc. survive and thrive (00:35:05).
Elon Musk's deal-making skills have allowed him to negotiate favorable terms, such as solar tax credits, which have helped Tesla make money and stay afloat during its early years (00:35:12).
The ability to do deals can provide a competitive advantage and help individuals and businesses achieve their goals, making it an essential skill to learn (00:34:27).
Not knowing about the importance of doing deals is no longer an excuse, as there are many people sharing information and resources about it, and individuals have a responsibility to educate themselves (00:34:39).
The concept of doing deals is not limited to buying businesses, but can be applied to various aspects of life and business, making it a versatile and valuable skill to possess (00:34:20).
Where Do We Go to Learn How to Make Deals? (00:35:29)
To learn how to make deals, one can start by reading the book "Main Street Millionaire", which provides essential information on doing deals and is available for pre-order at a cost of around $30 (00:35:44).
The book "Main Street Millionaire" is designed to be concise and not overly intense, covering exactly what one needs to know to start making deals (00:35:57).
For further learning and resources on deal-making, one can visit contrarian thinking.com, which offers courses, free newsletters, and a community focused on buying businesses (00:36:08).
The website contrarian thinking.com is recommended as the next step for those who enjoy learning about deal-making and have read "Main Street Millionaire" (00:36:08).
Wealthy individuals play the tax game by utilizing tax avoidance strategies, which the average person is often unaware of, and this is a key skill in building wealth (00:36:19).
The goal is to pay as little tax as possible while doing so legally, as it is seen as an obligation to minimize tax payments when trying to build wealth (00:36:49).
Large corporations, such as Apple Inc., use tax avoidance strategies by issuing intellectual property to subsidiaries in low-tax countries like Ireland, then licensing it back to their US operations, thereby reducing their overall tax rate (00:36:52).
This strategy allows companies like Apple to increase income in low-tax countries and decrease income in the US, resulting in a lower overall tax rate (00:37:05).
Many organizations and corporations use tax avoidance strategies to minimize their tax payments, and individuals should also consider doing so (00:37:18).
The current tax system allows the 25 wealthiest Americans to pay a tax rate of between 6 and 8%, highlighting the need for alternative tax strategies or reforms (00:37:30).
Implementing an alternative minimum tax is seen as a potential solution to address the issue of low tax rates for corporations and wealthy individuals (00:37:24).
What Are the Tax Games the Rich Are Playing? (00:37:36)
Rich people play tax games by buying stocks, never selling them, and borrowing against them to avoid realizing capital gains and paying long-term capital gains taxes, instead paying a little interest from their current income (00:37:40).
They can then put the stocks into a trust and pass them on to their kids, allowing the stocks to continue growing (00:38:11).
Some wealthy individuals, like Jeff Bezos, move to states with lower or no income tax, such as Florida or Texas, to avoid paying state taxes, which can be around 8-10% in states like Washington (state)(00:38:17).
The US tax code allows individuals to move to states with lower or no income tax, which can result in significant tax savings for the wealthy (00:38:41).
There is a tax loophole in the US called 122 or qualified small business (QSB), which allows business owners to sell their company tax-free if they hold onto the stock for more than 5 years and the company is worth less than $50 million (00:39:05).
The QSB loophole allows the first $10 million or 10 times the basis of the stock to be tax-free when sold, which can result in significant tax savings for business owners (00:39:28).
The US tax code has grown from 400 pages to 4,000 pages, with the additional pages largely benefiting rich people and turning them into super-rich people (00:39:56).
How to Bring Your Tax Down From 40% to 8 (00:40:08)
Rich people pay a disproportionate amount of taxes, especially those who make their money from current income such as salary, and may pay more taxes than anyone else, with tax rates sometimes reaching 45-52% in urban centers in blue states (00:40:08).
To lower tax rates, it is beneficial to earn enough money to invest and become a "super owner" rather than just a "super earner", as the top 25 wealthiest Americans pay around 8% in tax (00:41:01).
The bottom half of the population pays almost no tax, but instead pays a lot of consumption taxes, while "super earners" or "workhorses" tend to get taxed at a higher rate (00:41:07).
Once an individual makes the jump to owning things and making money from buying and selling assets, their tax rate can plummet, as seen in the example of a chiropractor who raises capital, buys clinics, and sells them for a large profit, resulting in a lower tax rate (00:41:17).
The goal is to transition from making money solely from current income to making money from investments and owning assets, as this can significantly lower one's tax rate (00:40:59).
A strategy used by wealthy individuals is to buy a stock, then take out a tax-free loan against that stock from a bank, allowing them to hold the stock while using the loan for other purposes (00:41:27).
This approach can be repeated if the stock's value increases, enabling the individual to take out another loan, and if the stock's value collapses, the bank will sell the stock to recover their money (00:41:49).
The loan is secured against the stock, so the individual is not personally liable for the loan, and this strategy can be used to leverage investments and minimize tax liabilities (00:41:59).
Stocks can grow in value over time without incurring immediate tax liabilities, as taxes are only paid when the stock is sold (00:42:14).
This means that if an individual owns a stock that increases in value, they will not be taxed on the gain until they sell the stock, allowing them to defer tax payments (00:42:34).
A strategy used by some wealthy individuals, including Elon Musk, is to borrow tax-free against their companies or stocks, rather than selling them and incurring tax liabilities (00:42:44).
When the time comes to sell the stock or company to pay off loans, some individuals may relocate to a state or country with lower tax rates, such as Elon Musk moving to Texas despite building his wealth in California(00:42:49).
Getting good tax advice is crucial for wealth creation, as it can significantly impact one's financial outcomes, with some people going bankrupt and others becoming multi-billionaires due to their tax strategy (00:42:56).
Tax advice can be a game-changer, and understanding tax can be likened to someone pulling back a curtain to reveal new possibilities, with rich people often discussing their taxes and using this knowledge to their advantage (00:43:27).
Not all individuals pay the same tax, and discussing tax strategies can be beneficial, contrary to the notion that rich people try to keep poor people down by not talking about it (00:43:35).
Seeking professional tax advice from experts, such as Lucy Lee, can be invaluable, even if it comes at a high cost, such as $1,800 per hour (00:43:45).
When setting up a company or receiving a large payment, it's essential to consult with a tax professional to make informed decisions (00:43:54).
Becoming an owner rather than an earner is key, as it allows individuals to develop an "army of capital" that can generate wealth independently (00:44:05).
As one's assets grow, so do the opportunities for tax optimization, and becoming a "super tax avoider" can be a strategic move, but it's essential to start by building wealth and then optimizing taxes (00:44:32).
Understanding capital allocation is crucial in making informed decisions about one's wealth and tax strategy (00:45:09).
Morgan Housel's Capital Allocation Strategy (00:45:11)
Morgan Housel's capital allocation strategy is simple, consisting of cash, a house, index funds, and some shares of Berkshire Hathaway, with no other investments or multiple bank accounts (00:45:19).
The strategy emphasizes the use of index funds, which is also adopted by the individual discussing Housel's approach, who stopped trying to pick stocks after reading Housel's book and invested available capital into index funds (00:45:45).
The individual discussing Housel's approach also invests in starting companies, being a shareholder in 50-70 companies, and has a large position in Ethereum, which has been held for six years and has performed well (00:46:08).
The ethereum investment was based on the individual's insight into the software business, specifically seeing that developers were building on top of ethereum more than any other Blockchain.com(00:46:21).
Despite the recent decline in the market, the individual's ethereum investment is still profitable, and they attribute their understanding of successful investing to Housel's book (00:46:34).
Housel's approach to investing is characterized by simplicity, with a focus on a limited number of investments and a straightforward allocation of capital (00:45:30).
The individual discussing Housel's approach also values simplicity in their own investing strategy, with only one bank account and one brokerage account (00:45:35).
How to Get Into the Top 5% of Investors Easily (00:46:39)
Investing can be successful even when one loses track of their investment account, as it indicates a lack of frequent checking, with the speaker mentioning they lost the password to their investment account and feeling proud about it because it means they haven't checked it in a long time (00:46:40).
The speaker does not believe that nobody can beat the market, but rather thinks it's extremely hard to do so, and very few people will succeed, although there are smart people who can achieve this (00:47:07).
The speaker's investment strategy prioritizes endurance, aiming to earn average returns for an above-average period, which can lead to significant success and put someone in the top 5% of investors (00:47:24).
The speaker's parents, who have no financial background and minimal financial interest, have successfully invested by dollar-cost averaging into index funds for nearly 40 years, earning returns that would put them in the top 3% of professional investors (00:47:44).
Dollar-cost averaging and index funds are key components of the speaker's parents' investment strategy, with dollar-cost averaging involving regular investments into a fund to reduce the impact of market volatility, and index funds being a type of investment fund that tracks a specific market index (00:47:55).
Dollar cost averaging is an investment strategy where a fixed amount of money is invested at regular intervals, regardless of the market's performance, such as investing $100 on the first of every month (00:48:07).
This approach helps investors avoid making emotional decisions based on market fluctuations, as they invest a set amount of money at the same time every month, without considering the market's state (00:48:04).
Many people with a 401k at work are already using dollar cost averaging, as a fixed amount is automatically deducted from their paycheck and invested in their chosen funds, often without them realizing it (00:48:13).
In contrast to dollar cost averaging, some investors try to time the market by buying and selling based on their feelings about the market's performance, which can be a riskier approach (00:48:26).
An index fund is mentioned as a related concept, but its definition is not fully explained in this section (00:48:36).
An index fund is a single fund that owns hundreds or thousands of stocks within it, allowing investors to own a slice of the global economy, which is essentially owning a slice of capitalism (00:48:39).
This type of fund contains thousands of individual stocks, such as Tesla, Inc. and Apple Inc., providing diversification and reducing reliance on individual company performance (00:48:50).
A long-term wealth creation strategy using index funds is more effective than buying crypto or individual companies because it focuses on sustaining returns over a long period, rather than seeking high short-term returns (00:49:08).
The key to success with index funds is endurance, as the ability to stick with the investment for an extended period, such as 50 years, is more important than short-term gains (00:49:31).
The formula for compounding, which is essential for long-term wealth creation, is based on returns multiplied by time, with the exponent (time) doing the heavy lifting in the equation (00:49:40).
How to Build Wealth Like Warren Buffett (00:49:48)
Warren Buffett's net worth is a prime example of the power of long-term wealth accumulation, with 99% of his net worth being accumulated after his 60th birthday (00:49:55).
At the age of 60, Warren Buffett's net worth was around $3 billion, but by the time he turned 90, it had grown to over $100 billion, with him donating around $100 billion to charity (00:50:14).
If Warren Buffett's net worth were to increase by 10% in a single year, he would make $1 billion, which is roughly three times his net worth at the age of 60 (00:50:27).
The key to Warren Buffett's success lies not only in his investment skills but also in his endurance and patience, having been a good investor for 80 years (00:50:41).
If Warren Buffett had retired at the age of 60 or 50, he would likely be unknown today, and his household name status is a result of his continuous efforts since he was 11 years old (00:50:57).
The power of long-term wealth accumulation is evident in the fact that the longer Warren Buffett held onto his investments, the more extreme the numbers became (00:50:06).
Warren Buffett's story highlights the importance of patience in wealth accumulation, as it is the endurance that has made him so wealthy, rather than just his annual returns (00:51:06).
The story of Ronald James Reed, a janitor who died in 2014 at the age of 92 with a net worth of over $8 million, serves as an example of the importance of patience in investing. (00:51:09)
Reed achieved his wealth by saving a small amount of money from his job and investing it in stocks, leaving it untouched for 70 years. (00:51:31)
Having endurance in investing is more important than being a genius stock picker, and it can help individuals beat 97% or 99% of professional investors. (00:51:45)
Picking the right stocks is a challenging task, but having endurance is largely within an individual's control, making it easier to be patient than to consistently make correct investment decisions. (00:52:04)
Some people, like Ronald Reed and the speaker's parents, may naturally understand the importance of patience, but it is a skill that can be developed over time. (00:52:12)
Professional investors who work long hours for many years may still struggle to beat the market, and even those who do may only outperform by a small margin, such as 0.5% or 1% per year. (00:52:26)
In contrast, individuals who earn average returns and remain patient for an extended period, such as 20 or 30 years, can accumulate significant wealth, even if they are not skilled stock pickers. (00:52:50)
A brother, who works in the company and introduced the concept of a particular book, advised against buying houses solely for financial gain, suggesting instead to focus on unique opportunities that offer bigger returns due to exclusivity (00:53:04).
The idea is that anyone can buy a house, resulting in limited financial returns, whereas finding a niche or game that only a few people can play can lead to more substantial returns (00:53:25).
Buying a house should be viewed as a lifestyle decision rather than a purely financial investment, as many people get misled into purchasing a house for potential financial gains when they should be renting for mobility and flexibility (00:53:40).
Historically, housing prices adjusted for inflation have been relatively flat in the US and the UK, with the last 20-30 years being an anomaly where owning a house was a great investment (00:54:10).
Robert Schiller, a Nobel Prize winner, demonstrated through his work that over the last 150 years in the United States, most home prices have been flat when adjusted for inflation, with the last 20 years inflating people's expectations of what a house can do (00:54:23).
Some individuals may consider buying a house as an investment to accumulate wealth, but this approach is not recommended, especially if the sole reason is financial gain (00:54:41).
Historically, rental properties were often of poor quality, but this has changed in many cities, particularly in America, where luxury apartments with desirable amenities are now available (00:55:12).
The idea that one cannot live well while renting is a misconception, and it's essential to recognize that renting can be a viable option for those who want to live in a desirable location without the financial burden of homeownership (00:55:24).
Buying a house as an investment often involves borrowing a significant amount of money, which can be a risky move, considering that real estate investments have historically been a bad investment (00:55:34).
It's crucial to reevaluate one's decision to invest in a house, considering the potential financial risks and losses involved, and to question whether borrowing hundreds of thousands of dollars for this purpose is a wise decision (00:55:51).
Blockchain.com is a public database that can be thought of as a "database in the sky," where transactions and contracts are checked by everybody who has their computer on and interacting with the database, eliminating the need for a government or bank to verify them (00:56:12).
This decentralized system allows for a "source of Truth" in a world where online identities and transactions can be unclear, providing a transparent and trustworthy record that everyone can agree on and see (00:56:56).
The blockchain technology is not primarily about money, but rather about establishing truth, exchanging value, and creating value in a digital age (00:57:31).
The blockchain's decentralized nature solves many problems that are inherent to traditional systems, including issues related to trust and verification (00:57:15).
The technology enables a transparent and secure way to conduct transactions and exchange value, without the need for intermediaries like governments or banks (00:56:26).
The blockchain's "database in the sky" is constantly being checked and updated by computers interacting with it, ensuring that all transactions are in accordance with the database's history and rules (00:56:33).
Blockchain.com provides a solution to problems that may not be immediately apparent, as they are deeply ingrained in the way traditional systems operate (00:57:20).
The development of blockchain technology is similar to previous global infrastructure advancements like the internet and broadband, but with a key difference: everyone involved in maintaining the blockchain is rewarded for their role (00:57:46).
The blockchain's reward system is based on scarcity, with a limited supply of assets like Bitcoin, which has a maximum supply of 21 million units (00:58:38).
The people who mine and verify the blockchain are rewarded with these scarce assets, and others can invest in the asset by buying it, essentially investing in the future use cases of the technology (00:58:57).
Blockchain.com provides a global infrastructure layer that allows people to invest in it, unlike other technologies like AI, which is largely inaccessible to non-accredited investors (00:59:19).
The blockchain is fractional, meaning that investors can buy a portion of an asset like Bitcoin, rather than having to purchase a whole unit, making it more accessible to a wider range of people (00:59:40).
This fractional ownership model is similar to investing in property, but unlike traditional property investing, where only a select few can afford to buy and flip high-end properties, blockchain investing is more accessible to the general public (00:59:50).
The blockchain allows people to invest a portion of their income in the technology, making it a more inclusive and accessible investment opportunity (01:00:08).
Everyone Is Equal When It Comes to the Blockchain (01:00:14)
This equality allows individuals to invest the same percentage of their worth in the blockchain, bypassing the banking and brokerage systems that can hinder international investments (01:00:38).
The blockchain has created a leveled playing field in the fastest-growing technology and asset in terms of price, making it globally available to anyone in a short period (01:01:00).
The more investors that participate in the blockchain, the more valuable it becomes, increasing the likelihood of securing it and encouraging people to join the network to earn tokens (01:01:22).
As more use cases are built upon the blockchain, it creates an incentive-based system that bootstraps its growth, driven by behavioral economics and the potential for individuals to make money (01:01:34).
The blockchain's growth is fueled by its ability to disrupt traditional systems, such as money and the internet, and create new opportunities, despite initially seeming like a ridiculous startup idea (01:01:45).
A company called Thirdweb, a web three infrastructure business, has raised around $30 million and has a large team, allowing for observation of various use cases on Blockchain.com(01:01:54).
One of the notable use cases that has gained significant traction over the last 12 months is gaming, specifically web 3 blockchain-based games (01:02:12).
Traditional games like FIFA and RuneScape have in-game assets, such as cards or swords, which can now be traded outside the game using blockchain technology (01:02:31).
The blockchain enables assets to be taken from the game and traded on platforms like the Ethereum blockchain, even when the player is not inside the game (01:02:41).
This development has created a new economy for game developers and increased the value of in-game assets for players, as more people can access and trade them (01:03:01).
Web 3 games have become an exceptional use case at Thirdweb, with the company seeing significant interest in this area (01:02:53).
The ability to trade in-game assets on Blockchain.com has created a valuable new revenue stream for game developers and increased the value of assets for players (01:03:08).
If I Own Crypto, How Do the Other Use Cases Benefit Me? (01:03:13)
Owning Ethereum tokens can benefit individuals as the value of their tokens may increase if Ethereum becomes bigger and more widely used in various applications, such as games being built on the Ethereum platform (01:03:13).
This concept is similar to owning shares in a company like Facebook, where early investors would have greatly benefited from the company's growth, but with Ethereum, anyone can participate in its growth without needing approval or a brokerage account (01:03:25).
Participating in the growth of Ethereum is relatively simple and can be done from a mobile phone, allowing individuals to be a part of a technological revolution without significant regulatory hurdles (01:03:44).
Investing in Ethereum's growth is a way to invest in the future of technology and be a part of its disruption, making it an accessible opportunity for almost everyone in the world (01:04:11).
Alternatively, some digital banks and services like PayPal offer the option to buy crypto, which can be a good starting point for those new to investing in crypto (01:04:46).
It's essential to get a feel for what it's like to own a crypto asset that can fluctuate in value, and to learn how to deal with the emotions that come with it (01:05:05).
A Ledger device is a type of hardware wallet that allows users to store their crypto assets securely, and it's like a mailbox on Blockchain.com where assets can be sent but not taken out without the private key (01:05:45).
The Ledger device uses a seed phrase to secure the assets, and it's recommended to store this phrase in a safe and secure location, such as on pieces of paper in different countries (01:06:31).
The technology behind crypto storage is expected to change in the future, with potential advancements in fingerprint and face recognition, but for now, a Ledger device or similar hardware wallet is a secure way to store crypto assets (01:06:34).
Having a Ledger device or similar hardware wallet allows users to have full control over their crypto assets, and ensures that they are the only ones who can access and retrieve their assets (01:06:50).
The Bank or Government Doesn't Control Any of Your Crypto (01:07:18)
Unlike traditional banks, cryptocurrency stored on a device such as a Ledger cannot be frozen or emptied by the government, ensuring the owner retains control over their value (01:07:21).
There have been instances in the past where governments have frozen or confiscated assets, such as the conversation of gold in the United States, but this is more difficult to do with cryptocurrency (01:07:33).
Historically, people have had to physically transport valuable assets, such as money, diamonds, and gold, across borders to protect them, as seen in the example of Jewish people fleeing Nazi Germany and Europe(01:07:48).
In contrast, cryptocurrency can be easily transferred and protected by simply remembering a seed phrase, a string of words that serves as a key to access the funds (01:08:00).
How to Get Out of the Living Paycheck-to-Paycheck Cycle (01:08:07)
People stuck in the paycheck-to-paycheck cycle often feel imprisoned and struggle to break free, as they spend their entire paycheck within a few days of receiving it and wait for the next one (01:08:07).
This cycle benefits banks, corporations, and the government, as individuals in this situation are more likely to take on debt, make impulse purchases, and pay high taxes, ultimately making others rich at their own expense (01:08:31).
To break out of this cycle, it's essential to understand that one needs to prioritize making themselves rich before making others rich, by stopping excessive spending and keeping their money (01:09:17).
A crucial step in achieving this is to "seal the holes" by stopping unnecessary spending, which is often driven by impulse purchases and a desire for instant gratification (01:09:40).
The paycheck-to-paycheck cycle can be likened to a sinking boat, where water is flowing in, and the individual must start by plugging the holes to prevent further financial struggles (01:09:33).
If You See This, You're in the Financial Danger Zone (01:09:46)
Individuals who do not have $2,000 saved for emergencies and have credit card debt are considered to be in the financial danger zone, requiring immediate and drastic changes to their financial habits (01:09:47).
To address this situation, it is necessary to stop spending money on non-essential activities such as eating at restaurants, taking vacations, and subscribing to services like Netflix(01:10:01).
The goal of cutting back on these expenses is not just to save money, but also to free up time that can be used more productively, such as learning new skills or working to earn extra income (01:10:13).
The average American spends over 2 hours per day watching television, which is considered a waste of time for those in the financial danger zone (01:10:18).
To make the most of their time, individuals in this situation should focus on learning, working, and finding ways to earn extra money (01:10:35).
One strategy for earning extra money is to sell items that are no longer needed or used, such as unused TVs, cars that are too expensive to maintain, or homes that are too costly to afford (01:10:42).
Downsizing to a smaller living space and reducing expenses can also help individuals in the financial danger zone to earn more money and improve their financial situation (01:10:54).
The concept of "pick your hard" refers to the idea that life will be difficult either now or later, and one must choose what is more important to them at the moment (01:12:20).
Many people, especially young men, face societal pressure to spend money and impress others, making it challenging to cut back and achieve financial goals (01:11:34).
The expectation that men pay for dates and other expenses can be a significant burden, making it difficult for them to balance financial responsibilities with social and romantic aspirations (01:11:49).
The idea that becoming wealthy or turning one's finances around requires focus and attention, and dividing attention among multiple goals can hinder progress (01:12:46).
Achieving financial success often requires making sacrifices, such as reducing social activities or delaying romantic pursuits (01:13:02).
Focusing inward and prioritizing personal growth can ultimately make one more attractive to others, as seen in the example of Steven Bartlett's own life story (01:13:36).
The pursuit of wealth and financial stability can lead to a more fulfilling life, including romantic relationships, but it often requires a period of intense focus and sacrifice (01:13:23).
Building wealth is not about being money-hungry or greedy, but rather living a holistic life where money is just one part, and making sacrifices for a period to enjoy the rest of life without financial worries (01:13:51).
Life can be divided into seasons, and it's hard to see these seasons naturally, especially when looking forward, but easier to identify when looking back (01:14:15).
The concept of life seasons can be broken down into five-year periods, which helps in understanding the current season, making sacrifices, and prioritizing things (01:14:45).
It's challenging for people to understand this idea, especially during times when others are showcasing their wealth on social media, making it difficult to make sacrifices and prioritize long-term goals (01:15:05).
The pressure to keep up with others can be intense, especially when partners or friends compare their lifestyles to others who seem to be enjoying more luxuries (01:15:25).
The key is to have confidence and work towards something bigger, and to have a partner who understands and supports this mindset (01:16:14).
The idea of not doing what the majority of people do is essential, as seen in the example of driving a $500 car despite making a million dollars in a year, and having employees drive better cars (01:15:51).
Wanting to Look Rich Will Make You Go Broke (01:16:27)
Confidence is an internal aspect that can greatly impact one's life, and a lack of it can lead to fear of being perceived as broke, causing individuals to avoid certain situations, such as romantic relationships (01:16:27).
Many people go into debt to buy things that make them appear rich, but this behavior is often driven by the fear of looking broke, and ironically, it's this fear that keeps them poor for the rest of their lives (01:16:44).
Living a relatively miserable life, lacking nice things, and experiencing loneliness can lead to seeking dopamine hits through activities like gambling, which is why many gambling shops are located in financially struggling areas (01:17:10).
People in difficult financial situations may make reckless spending decisions to experience a temporary dopamine rush, which can be a coping mechanism for the lack of fulfillment in their lives (01:17:41).
The desire to look rich can lead to poor financial decisions, and it's essential to address the underlying issues driving this behavior to achieve financial stability (01:17:05).
A life of loneliness, working long hours, and struggling financially can contribute to a miserable life, leading individuals to seek instant gratification through material possessions or other means (01:17:13).
The pressure to appear wealthy can be overwhelming, causing individuals to prioritize short-term gains over long-term financial security, ultimately perpetuating a cycle of poverty (01:16:58).
Stop Making Emotional Decisions and Start Making Logical Ones (01:18:01)
Making emotional decisions can hinder one's ability to become wealthy, as it leads to a focus on short-term gains and instant gratification, rather than long-term financial stability (01:18:05).
To overcome this mindset, it's essential to understand the difference between emotional and logical decision-making, and to develop discipline and self-control (01:18:16).
Emotional decision-making can lead to getting caught up in get-rich-quick schemes, which often promise unrealistic returns and can result in financial losses (01:19:15).
These schemes prey on people's emotions, selling them a lifestyle of luxury and ease, rather than providing a realistic and sustainable path to wealth (01:19:38).
Corporations also take advantage of people's desire to appear wealthy, selling them the latest and most expensive products, which can lead to debt and financial struggles (01:20:00).
To break this cycle, it's crucial to focus on developing a logical and disciplined approach to finances, rather than being driven by emotions and a desire for instant gratification (01:18:37).
A new tool, the Diary of a CEO conversation cards, is available to help facilitate discussions and reflections on personal finance and wealth-building strategies (01:20:15).
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