134. Secret Lessons From High-Net Wealth Individuals

Don't work too hard and not enjoy life. Spend time with your kids if you have them. Don't neglect family or friends for work. Eventually your business will be sold. Friends pass away and the people where they're a family so love and treat them correctly.

Bro. Doesn't that just smack you in the face?

Welcome back to another episode of the bennetbergs Podcast. I'm Ben, your favorite high school dropout and founder of collective shift alongside Ms. Bergs, your favorite MBA and COO of Collective Shift. Join us as we bring you world class crypto research and strategies to help you dominate this crypto bull market as well as a behind the scenes view of us scanning a fully remote subscription research business. Thank you to everyone that listens into the podcast each week or if it's your first episode, thank you so much. We'd love for you to give us a little follow on the podcasting app that you use or subscribe on YouTube. It really does help us grow the podcast coming to you twice a week to help you with your business and in your personal life. And today I'm sharing a little bit of a story of a an event I went to recently where we had some of the top high net worth investor advisors come in and speak to myself and a couple of my business friends on what are the top key lessons that they have taken out of working with so many high net wealth individuals. So these guys are an advisory company, one of the biggest in Australia, and they work with family offices and individuals that have a high net worth to advise them on what to do with their money. And they have learned over a number of years of working with these clients about some really cool and interesting like ways that we can take into account to know what it's like to be at that level. And also what are the lessons that those high net wealth individuals have learned along their journey about what might be, you know, some of the things are working for them and not working for them. And I thought Bergs, the number one dot point here that I think is just like a great way to kickstart it is that how life changes at the $3 million mark. So $3 million of investable assets makes life easier. $10 million of investable assets changes nothing for 98% of people. There is a lesson in there about risk at this point. It hurts more to lose 1 million than the upside of making the next. So that 3 to 5 million dollars of investor assets is the key number that makes life super easy. But then the risk of going above 10 million that's like the next point. $10 million of investable assets is amazing and life gets even easier. But for the, the cost or risk of trying to go higher than 10 million doesn't actually make too much of an impact. And that's one thing that, that was sort of drawn into us is like once you go sort of beyond the $10 million mark, life doesn't necessarily get much easier. You sort of already got enough money to do pretty much most things that you'd ever want to do. But the cost is in the risk of trying to go higher than that. You start to bet the farm on trying to go higher and that's when things can go south, mate.

What an absolute treat to have like a wealth manager come in and tell you these life lessons that's he's seen over time managing the finances for these people and perhaps mentoring them and just seeing it play out in real time, what's actually happening to them. And I love this how if you got $10 million of investable assets, it hurts more to lose a million dollars than the upside of making the next three to five. So you're saying life changes significantly at 3 million of liquid assets and then it changes slightly again at 10, but above 10, nothing happens which is just.

End on a risk of, of losing the. The pain of losing a million versus trying to get an extra little bit is more painful on the downside than, than the, than the, like the growth of the upside.

That's amazing. And I didn't go to this, but Ben, afterwards they sent through a list of dot points which we're going through today. And these are absolutely phenomenal, mate. Let's get on to the next point. Let's get through this. This is wicked.

Okay, cool. So for clients who are really good at saving and have scarcity mindset, it's okay to spend money. Your kids will get enough. You can't take it to the grave. And Bergs, I'm actually talking to you on this one because you constantly tell me, you know, that you've got this sort of like, and you've been in this mindset for a long time. You've been a great saver. Your own property, you know, you've got a good portfolio but sometimes you really struggle to spend it. And these guys really drew this home that you can't take money to the grave. And you know, people like you that have a really good scarcity mindset are great at saving, are not good at spending and they're saying that it's okay to spend your Money, your kids will get enough. Everything will be okay. You can't take it to the grave.

Absolutely, mate. It's something I'm definitely working on. And it's funny because I'm like, really good at spending in some areas, but not others. So it's working on that and undoing, like, multiple decades of a scarcity mindset and whatever upbringing you had and that formed, you know, those formative years of how you think about money, you have to undo. And it is the most challenging thing. Like people think, especially in the financially independent retire early community, which I'm not a part of, but they struggle with this, where they save up millions of dollars and it doesn't just bang overnight. You can suddenly spend your money. So this is really, really important to move towards that abundance mindset. Definitely something I'm working on.

Number three, if you're into philanthropy, a philanthropy. Sorry, if you're into philanthropy, do it within your lifetime to see the impact and use it as an educational tool with the next generation. You can start a philanthropic fund or sub fund for maximum impact tax benefit and the education benefit as well. So rather than just waiting to, you know, later on in life and then start to donate the money, do it early. So then you can start to see the impact of that money and it starts to educate the next generation. And. And there's actually tax benefit funds that they explained at a micro level that you can create. That's actually a tax benefit for you when you're donating, you know, lots of money, which is super cool.

This is something that in the book Die With Zero that he talks about where he's like, on a personal level, it's like, you can go on a holiday today, or you can wait 10 years and you can go on two holidays. That's a personal level. When you look at when you're donating, it's like, it's to a charity. They're helping people generally. So do you want those people to suffer for another 10 years to give them double the money, or do you want to give it to them today? They can do the research faster and they can help more people. And he's like, donate it today. Don't be that person that donates $10 million on their deathbed that lived a really frugal life. Give them what you can and see that benefit today.

Yeah, I love that. Diversification is a free kick. Don't have more than 40% of your investor assets in one asset class now. This was a really cool one. It's kind of interesting because we think about concentration builds wealth and diversification.

Sustains that or keeps that, keeps our wealth around, protects that wealth. And obviously these people are talking to people that already have wealth. So diversification is a free kick because with diversification you can lower the volatility between asset classes by having money across different assets. And the way they describe this is, it's a free kick, it's just an easy way to not be so correlated to one market.

Yeah, I'm pretty sure it was Ray Dalio that said this. It took him like ages to understand that all he needs to DO is find 10 to 12 non correlated assets to invest in because if they're not correlated, a few go down, a few will go up and you'll make money over time. Whereas if they're all linked together, like you're in cash, you're in housing, you're in bonds, you're in shares, they can be linked together, usually think they aren't, but you know, it's proven otherwise in recent times. Your, your net wealth can go down significantly.

Yeah, yeah, 100%. And this is another way you can lose your wealth very significantly is liquidity is often forgotten and underrated. It doesn't matter until it does. Never want to be in the position of selling assets in poor economic times. And doesn't this ring Truebergs of crypto, that bear market, you've, you've gone too deep, you've, you've, you've busted a, busted a cash valve, you got all the money in crypto, Bitcoin's plummeted 25, 30% and you're going, fuck, I need to sell to get some money in the pocket. You never want to be selling in four times. Liquidity is underrated.

It really is. And think about this like if you're in assets, let's say you've got term deposit, you've got gold, you've got real estate, you've got relatively like illiquid things that are hard to sell. Or you might have some shares, right? But economic times are bad and even though shares are relatively liquid, you're going to have to sell those off because you don't have enough to sustain yourself and service your debt or your living expenses. That is not a situation you want to be in. And this brings us to the next point. Have 1 to 2 years cost of living in cash or equivalent equivalent liquid assets is generally the right amount for families to sleep at night. And de risk portfolios, this is such a key point. So I have this and it has changed my life so this is the equivalent of FU money. Right. Where you've got one to two years of the cost of living. So whatever it costs you or your family to live for an entire year, let's say you lost your job or, or you had to look after someone or whatever it may be, if for some reason, you know, you're, you weren't able to work or get cash or your business was failing and it needed money, whatever it is that helps you sleep well at night, because you have one to two years to figure it out. You don't have to sell your assets at the wrong time. So could you imagine if, like I bought all this bitcoin, I didn't have this, I lost my job and I had to sell my Bitcoin at like 16,000, like, what position would I be in? It would be so bad. And because you have that buffer of cash and it's actually easier to do in these times because especially if you have a mortgage, you can offset that. So you're earning a decent rate equivalent. This is one of the key things that I try to tell people. A lot of financial people will say, have an emergency fund of like three months. This is what they're talking about. But when you're playing like a level 10 game, going to be one to two years of your family's living expenses to cover all of your debt and things you need day to day.

Yeah. And they're just sleeping well at night, you know, and that's, you know, that's a lot of money too. Like, if you think about it, for most people, like to save up that amount is like, it's a lot to have that just in the bank. So, you know, but if you can get there, it's going to kind of do things. And.

Yeah, and this takes a lot of time to do and you have to prioritize it. So it's not something that's going to happen overnight. You need to sacrifice in order to create that. So. So don't think it's a very easy thing to do. It's a very, it's something that you really have to sacrifice for and it has to be something that's important to you.

Yeah. Right, Coberg. Now, the next one we talk about a lot in crypto, and I think a lot of people underestimate this, is that small tweaks now can help you save a lot of money in the future. Example tax or you make example investments.

Hundreds of thousands or millions of dollar difference when the impact is compounded over 20 and 30 years. If you don't have the right tax structure. You know, if you're, if, if you're, you know, you're not putting away enough money, maybe making, you know, trades too, too much, too often. And because we're talking about this pre show, like even the airdrop mania at the moment, like, you know, tax is a big thing that you've got to consider. Like it's a, it's a big, big around you, you know, you're doing all those airdrops and then you gotta, you've got to look at the tax side of things as well. And if you don't have that structure, right, if you're not thinking about it, thinking about it a lot, that compounded over 10, 15, 20 years, like it's going to be a huge difference.

That's it. And you've got to think about, mate, this is just life. Like if you wake up and you have a Coke every day and you do that over 20 or 30 years, you know how that adds up? What's it going to do to your teeth? Or if you have. And really this comes down to good habits and poor habits and how they compound. But because it's only a small amount, you don't really think about it. But when you look back 30 years, you're like, oh, shit. And let's go through a couple of easy ones. Let's look at your tax. Just get an account. They're relatively cheap and that will save you so much money. I'll give you a classic one with my tax structure. So when I was working full time and running my business, I was going to get hit with this big tax. It was like Div 230 or some, I don't know what it is. It's like, would you earn a lot that year? You get this super special tax. Thank you. So I would have had to pay an extra 40 grand tax on that. But because I was structured as a company and I had a trust, I was able to send that income elsewhere. And the tax I paid was like 8,000 instead of 40. That cost me maybe 300 bucks to set up and maintain and it saved me 32,000 in one year. They're the simple things. You want to look at your legal structures as well. So you know, what name do you have on your house? What is your liability? Get your wheels in, check the certain pillars that you need to do. And classic one, people have wealth managers where they pay them 2 and 20. So they pay them, let's say you put in $1 million, they immediately get 2% of that every year, no matter how they perform. And on the profits, they get 20%. And if you combat compound that over 20 to 30 years, they end up with more money than you do. That is how crazy it is, you know, oh, but it's 2% and they're making me money. You need to just model this out. If you're investing from now till the end of your life, how much that actually is going to, is actually going to be. And then let's look on the investing side. This is the thing we preach. Dollar cost averaging. Take whatever you can, $10 a week, 20, 50. And constantly put it into whatever you're investing in. Like whether it's saving for a house or you're putting it into a mutual fund or stocks, or you're putting it into crypto. Keep doing that. And that habit compounds over time. Like, how good would you feel if you went to the gym every day for the rest of your life? You'd be amazing. This is what these guys are talking about. It makes a big difference. Just look at those little habits and model it out over your lifetime.

Speaking of health, this is an extra point and I love this. Don't neglect your health. Good thing. Sorry. Don't neglect your health. Good health is the only thing a wealthy and sick client wants. Wow, does that hit home, mate?

It's like, you know, the, the healthy person wants a million things, the sick person wants only one, and they would trade all of their money for an extra 10 minutes of life, but it's.

Too fucking light and money can't buy that.

No.

Wow. Now, next, if you're worried about your investments, you're in the wrong. Investments.

How good, mate.

Mate, doesn't this just hit you in the field?

Oh, I actually don't worry about my investments anymore. Like, I'm structured in a way where I'm fine with the decisions I've made. I know how I came to those decisions and the things that I thought at the time, like, I do review it. I'm like, okay, what I thought three months ago, is that still true in the market? And it is. So I leave it the way it is. And I sleep well at night. I do not worry. I've got that longer term view. This, this is a huge change for me because I used to be like, oh, what's happening with this stock? Or gee, what are they saying on the forums? Or what's the latest Reddit thing or thread? And what's happened now? What are they saying on Twitter? Don't do any of that crap anymore. I just live my life. I bake sourdough bread and make Napoli pizzas in my spare time now.

It's a good place to be. And I think a lot of people probably not even worry about their investments. They probably worry about how much they've got invested, you know, versus, versus. Not like they've overextended themselves or they don't know when to get out or that, you know, it's just a lot of if, buts and maybes.

So that's another thing. What are you invested in? Are you worried about that? And how much have you put in? And are you worried about that? So if you're investing, you have to be prepared to write out those difficult times. Your portfolio goes down by 50%, 60%. If you're in crypto, 90%. You have to be able to stomach that and make sure you're not using too much debt and that you're not using too much money. Where you need to dip into that, like we said before, to cover your living expenses or service that debt.

Yeah, yeah, great call. Now, we spoke about this in the other episode. Pay people to do the things you're not good at, not passionate about, don't understand or don't want to do.

Mate. This, this is epitomized where I'm like, my wife and I both hate cleaning. So we've got a cleaner, changed our lives, doesn't cost that much. It's like 120 bucks a fortnight. And that's what we do.

The house is clean. You don't have to worry about it. Like, everything's in the right spot, mate.

Like 90% of our arguments have gone away. It's so good just from spending that money. And, like, what is that? That's literally like one less trip to the pub. Like a fortnight. And it's the best money I spend.

Well, four less skewers for 498.

Oh, especially the price of beer now. Yeah. Jeez, mate, almost got hit 20 bucks for a pint the other day.

Jesus.

So if you go out for a feed and like three or four pints, that's about 120 bucks.

It's actually nuts, isn't it?

It's crazy. So I just don't do that. Instead we'll go out for a coffee with mates or something.

Yeah.

And then bang, I've got a cleaner.

This, this. This is key. Like, don't. In your life, yes, there will be pain, uncertainty, and constant hard work, but you get to choose where those pain points are, where that uncertainty lies and where that hard work lies. And it doesn't have to be things like this. If you're not passionate about cooking, outsource it. Like, get my Muscle Chef or something, you know, if you don't like doing personal admin, outsource it. If there's things at work you don't like doing, outsource it. Trade with another team or talk to your boss and restructure it. There are things you can do, mate.

Getting a cleaner here, just like, hey, cleaning. Hate doing the washing. Up skinny. A cleaner in every week, change the game. It's amazing.

Yeah, simple things like do automation. Get a dishwasher, like, get that. All you got to do is you've got to put the dishes in. That's it. And you've got to take them out.

There's one thing, like even having this house that I'm now, you know, living in, in Melbourne and not living out of a suitcase, is that my Muscle Chef, Like, I'll just stock up with all the. All the meals so I have that. I can just eat it while I'm working my Muscle Chef protein shake. There's a coffee shop just down the road. Like, everything is just built to be just so fast and to do what I don't want to do, which is clean.

Yeah, amazing. And to further iterate that point, if you're paying someone to do something professionally, hold them accountable, but don't micromanage. If you're micromanaging, you probably don't trust them or aren't seeing the value. Find someone else or another way. And this is so true. So if you are paying, let's say, an accountant to do some work for you and your micromanaging going, do it this way, do it that way, do it that way, you either don't trust that they can do it or there's no value there. We've actually got an advisor for our company and he goes through and he sees, like, when people. If he's on retainer, when people call him what they're doing, and if they're not calling him, he's like, hey, like, am I not adding any value for you? Because if I'm not, that's cool. Like, let's end this relationship and I'll spend my time elsewhere. Like, you need to see the value with them. And like, if you're constantly questioning an advisor, you have. That should tell you you're not comfortable. You need to find someone else or find another way to do things.

Yeah, totally agree.

And if you've been through Five, five tax advisors. You haven't found the right one. It's probably you find another way to do something right.

Yeah, it's not, it's, it's not them, it's you.

Yeah. And this goes for employees as well. Like if you engage an employee in your company and they've got a skill set, trust them to do the thing. If you keep micromanaging them, they're probably like, you don't trust them or they're not doing a good job, you're not finding value. Get them out, find someone else or find another way with that person.

Yeah, very cool. Keep your investment simple. Unless you intend on paying a stack to professionals or you want to have a full time job being an administrator in retirement, your kids don't want or need the complexity either. And I think like tying this back to crypto, I mean, geez, you could just think about, you know, the different wallets, the different chains, you've got stuff on different computers, you've got different exchanges going. Like it's an absolute nightmare to stay on top of everything and you end up spending hours and hours and hours trying to figure out what the hell is going on or you just generally miss it. And in crypto there's no real professionals you can pay to do this sorts of stuff. Like we're talking more share market, you know, private equity in this sort of feedback. But you know, this is directly correlated in quick crypto as well. The more you have, the more complexities, the more harder it is to actually stay across.

Complexity adds overhead. And this comes back to how well do you want to sleep at night? Do you want to be a full time money manager for the things that you do? How much money do you really need? How far out on the risk curve do you need to go? What's the overhead of managing that day to day, getting in and out? Are you catching a falling knife? What are the tax implications? How do you explain it to your accountant? Or do you pay some guy a squillion dollars to look after that for you? And when you factor that in, is it worth being in that investment? So unless you want to do that full time, don't do it. And this is where people say at a certain level you can become a slave to wealth.

So because you know, you spend your whole life making it, then you spend your whole life managing it and you've made all this wealth, why are you spending all your time managing it? You're supposed to spend your time enjoying your life, not managing the thing you created.

Mate, love that and that directly correlates to the next point here of don't work too hard and not enjoy life. Spend time with your kids if you have them. Don't neglect family or friends for work. Eventually your business will be sold. Friends pass away, and the people who are there are family. So love and treat them correctly, bro.

Doesn't that just smack you in the face? Like, could you imagine some guy that's worked his whole life into his 60s, made an amazing business, made all this money, and then, like, his friends are either, like, dead or don't even know who he is anymore because he spent no time with them. It's horrendous. And it really hits home what the important things are. Like, when you're on your grave, you're gonna be like, yeah, I made this amazing business. I made all this money. Or are you gonna be like, oh, I had amazing times. My friends, we went to the beach, we had coffee, we had time for each other, we laughed together, we cried together.

Right? Totally. And the same for crypto, right? Like, why are you in crypto? Like, yes, you're here to make money, but you've got to enjoy it. You've got to be able to, like, you know, build that wealth for your family and do the things that make you happy, not be, like, just glued in front of the computer trying to trade and day trade and be nervous and anxious all the time and, like, scared and, like, worried.

Yeah. Don't identify with your investments. And that's who I am and what I do. The investments are there to get you the money to live the life you want. Don't be afraid to sell them. That's their function of that.

Don't bind kids together. In your estate planning example, use individual testament, testamentary trust for each child. They all need and will live their own lives. There is an extremely high chance of damaging the family relationships by centralizing and binding intergenerational wealth. I've actually never seen this work.

Well, absolutely. I really like this. And the. The legal side, the legal part aside, I remember one of the guys at EO came in and talked to us, and once a year, he's got three kids. He'll take each of his kids on an individual trip to whatever they want to do and spend time with them for a week or two. And you got to think about this. Like, humans are individuals. Don't put them together. They're going to live their own lives. So just silo them so there's no shit fighting. There's no, you got this, I got that. You know, structure it so that they can use that money for the purpose that they want to live their own life. That's what it's all about. It's not about you controlling them or intertwining them with their siblings. Like, I leave you all of this house and this stuff. You three figure it out. You know, it's just all. But dad wanted this house. We should keep it. No, but we should sell it, because I want to do this. Oh, my God.

You know, it's funny, a really cool story was this. The family generational owner of the property business that spoke to us.

He.

What he does with his grandchildren is that he gives them all, at their 18th birthday, $50,000. And with that $50,000, they have 12 months to make a return on it, and then they have to return the initial $50,000 and they get to keep the rest.

So good.

So it's up to them to go and do whatever the hell they want with it. They can invest in somebody. Some bought property, some invested in the stock market, Some, like, started the business, but they have to return the original capital and they get to keep the rest. I thought that was a really cool idea.

That's a really good lesson, mate. Like, to get people to actually play with a significant amount of money. That's really, really good.

Yeah.

And think about this. Like, this is from.

A wealthy person's perspective. Usually they got businesses as well. Could you imagine having a business that does, like, you know, 20 mil rev. You got a bunch of employees, and all of a sudden, like, the mother or the father, whoever it is, passes away. And it's like, what happens with that business now? If you're not structured and you don't have things in place, you don't treat your kids as individuals, it'll basically, like, turn into the TV show succession where they're all in the company trying to fight for power. It's like, that's crazy shock.

And that's. That's. That's the next point here. There is a gray line that needs to be walked between giving enough to children to get them out of daily struggle and to still ensure that they still value a dollar.

Oh, I think every parent struggles with this, especially those that grew up with not much money. Now they've got a little bit of money, they're kind of middle class. You want to give your kids a bit more, and you're like, am I spoiling them too much? Or you might buy a rental property, which later will become a house for them. You always wonder, like, am I Giving them too much, am I spoiling them? Are they not going to strive for things in life, even the way you treat them? You always, always wonder that. So it'll be good to get. I'm probably going to go out and seek advice from people older than me that have done this for their children to, to see what they've given them and what they haven't. So they still have that in life. Because I know quite a few like really, really rich people and they worked like their children worked a little bit but they're like, why even bother? Because I've got all this money like it doesn't fulfill them. They're kind of really lost in life and they grew up not really spending a lot of time with their parents because they're always working as well.

Yeah. So it's definitely challenging, man.

Which is again the, the next point here. Give your kids money and an obligation at the same time. Have the obligation back to the bank with regular payments, not the bank of mum and dad because it's too easy to be not taken seriously or reduces conflict. So they actually won't give that. They might be this security on the loan but they actually get, still do the bank. Because if your kids like should I owe money to my mum and dad, I don't worry about it, who cares? I won't get. Or I owe money. The bank, the bank's going to come and like knock on my door like that's a whole different mindset.

I love this one because there's a consequence because it'll ruin your credit, credit rating. You're beholden to someone else and you're learning a life skill. This one's perfect.

Yeah, I love it. And last but not least, I love this one Burges because you and I speak about this, you know a lot, you know, in business and crypto and we, a lot of our members, we walk through this because we think it's the most important, have clear goals and objectives. If you don't have an objective then you'll never stop. No amount of wealth will ever be enough and you won't measure risk correctly. And this berg just sings. So true for crypto. People don't know what they're trying to achieve. They don't know what their goals are. They don't know when to sell, so they never sell. And they round trip the whole thing because it's never enough. If you don't know when it's enough, you'll never get out of the right time, you'll never sell and you'll never actually make any money. This is so important, and it was so great to hear. This is not just in crypto. This is. This is the same advice they're giving to everyone.

So I saw on Twitter recently, people were talking about their goals, and one person's goal was to retire their bloodline. And I'm like, bro, how. How much money is that going to be? And you are never going to get there. Like, have. Well, you might get there. You never know. But have a smaller goal that's more immediate because there's no. There was no figure on it. There was nothing like that. Like, attach a number to it so you know how far out on the risk curve you need to go to achieve what you want. But really, once you. And we're talking about wealthy people here, have clear objectives that you want, otherwise you'll go too far out on the risk curve and you risk all the wealth that you've accumulated.

Yeah.

Only take on the amount of risk you need to get the thing that you want.

Yeah. And that was a big one. They. They really drove home, like, you don't need to take more risk when you get that to level. You need to be decreasing your risk, because the more risk you have, the more you're betting. Now you're betting millions of dollars to get another few million rather than, you know, decreasing that risk. And it might have been all right when you had nothing, but when you've got something to lose, it's a different story.

Exactly right. And if you want to achieve that thing, let's say it's another 10 million because you want to give it to a charity. Great. Don't try and do it in a year. Do it over a reasonable time frame.

So true. So there you go, ladies and gentlemen. That is the dot points of how the high net wolf are being advised, the lessons that they have and how they would do things differently. And I learned a lot from listening to these people. It was great to go through that. Like, I think there was some really good lessons there.

It was amazing. And this whole thing is how life changes at $3 million. And honestly, a lot of those lessons you can apply to your life today.

Yeah, spot on. So thank you, everyone. If you found this episode valuable, we'd love for you to share it with a friend. It's how we grow the podcast. Growing a podcast is super difficult for those that have tried. We've been doing this for coming up nearly two years now, and it's just been great to get all of you listening, and hopefully you're learning a little bit along the way. So if you have any friends or family or colleagues that you think would find valuable, would find value in this, would love for you to share it with them. Thank you so much, everyone, and we'll see you on the next episode.

Thanks. Championship.