How To Retire With $100 Million

Something I've been thinking a lot about lately is how quickly the world has changed in the last few years. And unfortunately, I think it has given us a distorted view for how quickly things can happen. And one of the lost arts of the last few years is thinking very, very long term. But as the world has settled down at least a little bit, and I have started to think more about long term projections rather than the short term survival of my family during a pandemic, or the the short term survival of my business while the world shuts down, or the short term wins in the stock market when you buy at the bottom and things 3x over 18 months, these are all incredible changes that happen in a short time. But as the world sort of quiets a little bit, and I think much more long term, I start to realize that if you're 45 years old or younger, you can retire with $100 million just by extending your time horizon. If you do the right things for a very long time, and you think about things in decades, rather than thinking year to year or month to month, it is very, very difficult to not become insanely rich and insanely successful. I once heard Warren Buffett say that if you do a few things well and you have a very long term game, that it is difficult to not become absurdly successful and very rich within your lifetime. The first time I heard him say that, I didn't quite know what he meant. And so I started researching more about the people who follow his thought process when it comes to investing. And I came out with the same conclusion that it is very hard not to become super wealthy if you do a few things for a long period of time. In fact, I think you can and should retire with $100 million, especially if you're under 45 years old. I did a reaction video to Brad Lee, who was calling out Nancy Pelosi, the former speaker of the House, for being totally corrupt. He was saying that no one in government should have $100 million net worth because they only make $150,000 a year or so. And I totally get his point, but there's a much simpler explanation to his story, and that is that Nancy Pelosi has a wealthy husband and so she doesn't have to live off any of her salary, and therefore she could invest pretty much as much as she wants. And she's 80 years old. And so if you started investing when you were in your 30s or even in her 40s, and she did it for a long period of time, of course she would have $100 million net worth. Like if all she did was invest into low cost index funds for a very long time, she would have a net worth in the tens of millions at least. And a lot of times I think we throw shade at the people who are successful and criticize them rather than just say how could we follow the exact same footprint, the exact same footsteps in order to have that type of success? How can I build $100 million net worth? And when you see the numbers of how it breaks down, I think that this is going to set you free to be able to build a ginormous amount of wealth by the time that you retire and leave a legacy that changes your entire family tree. So let me start by just breaking down the numbers for you about how to retire or die with $100 million. And if you look at what the stock market has done over the last 50 years, it has gone up on average of about nine and a half percent per year. Now that's recessions, that is boom times, that is terrorism, that's everything factored in. It's about nine and a half percent per Year. Do we know that it's going to go up that way in the future? No, but that's what has been on average for the last 50 years. If we invested $100,000 a year into the S&P 500, the most boring way that you could ever invest $100,000 a year at nine and a half percent interest for 50 years becomes $100 million. But it's 50 years. Who wants to wait 50 years? I can already hear you. Simmer down. We're going to get there. You don't have to wait 50 years to enjoy your wealth. But if you let it compound adding small amounts, $100,000 a year into long term, low risk, broad based index funds, you can retire with a hundred million dollars, which means that you need to save $100,000 a year. It means you need to have a business that is producing a certain amount of money so that you can save $100,000 a year. In today's YouTube, Instagram, fast cash world, it is all about how much money we can make now so that we can spend it so that we can look good on social media. I am much more interested in how can I build the biggest pie possible and change my family's generations. That is much more interesting to me and it reminds me of something that Morgan Houser said in his book the Psychology of Money. It's wealth is what you do not see. Wealth is the difference between Your access to buy new stuff and what you actually buy, what you actually purchase. The difference between that and is actually your wealth. Which means that you need to have a high savings rate, which means you need to have a business that is spitting off enough cash flow for you to be able to save at least a few thousand dollars a month. Now if you can't save $100,000 a year, check this out. If all you did was invest $500 a month, it's actually $541 a month into the same long term strategy for 30 years, that becomes a million dollars. You have $541 a month that you need to save in order to invest for the long term. For you to know that you're going to be a millionaire. If you 10x that you want to retire over 30 years, it becomes $10 million. If you invest $5,000 a month and if we were to let that compound over 50 years, $5,000 a month invested over 50 years becomes $65 million. Doesn't that make you want to go out and, and start the side hustle that makes 10k a month and not spend it? Continue to like live super reasonably well and invest as much as you can into something that is gonna compound for 50 years? Now I know you don't wanna wait 50 years. So there's a couple of things that we can do in order to enjoy our wealth faster. The biggest factor here is your time horizon. The longer term that you can think the, the more successful you can be. As Charlie Munger says, the first rule of compounding is to not interrupt it unnecessarily. Which means that we want to let things ride as long as possible. If we invest $5,000 a month for 30 years it becomes 10 million, but over 50 years it becomes $65 million. This is also the case with business and this is the case with other areas of life too. I wrote a book called 12 Months to $1,000,000. And although Gary Vaynerchuk gave me a nice quote for the book, he also said, you know that this title flies in the face of everything that I stand for, right? And I said, if you read books, you'll understand that mine's a little bit different. And I say that because Gary is very public about the fact that he doesn't read books. But my, my book 12 months to 1 million is less about how do we make as much money as possible in the short term. And it's about rolling the chips as long as we can, at least for a full year. And at the other end of that, the other end of that year of pushing all the chips into the table for a full year, we'll have a million dollar business. In fact, I've said this before on the podcast, that one of the biggest mistakes we see entrepreneurs make inside of the capitalism fund is that people want to pay themselves too early. They're taking chips off the table rather than rolling everything in for at least a year until they hit pay dirt. A year is usually enough time to develop a skill or to see if you've got product market fit or if you've got repeat customers, or for you to have some stroke of luck that allows you to cross a million dollars and have a six figure profitable business where you can now pay for your life and you can now invest for the long term. So this idea of 12 months to 1 million is really about compounding for at least a year. Well, what if we took that mentality into five years? What if we took that mentality into 10 years? What if we took that mentality into other areas of business? If you were willing to push the chips into the table for a full year and not take any money from the business and continue to work a full time job until your business had $1 million run rate and then you paid yourself a meager salary while investing the rest for the very long term, while continuing to outwork other people in your business for the next three to five years, you can see how you can start to create generational wealth within just a few years time. Five years is enough time to build and sell a company for millions of dollars. Five years is enough time for you to be spitting off enough cash flow for you to build up a really solid nest egg that is going to compound over 10, 20, 30, 50, 50 years. Five years is enough time to completely change your family tree. So if you're willing to go all in and push the chips to the middle of the table for a year and then continue to do that until you have a business that you can sell and investments that are going to compound. You can retire with $100 million. Remember, $100 million is just $100,000 a year compounded over 50 years. And we'll talk about some ways that you can actually get there faster and enjoy your wealth along the way. I'll also share with you how I am investing my money after having this realization. Now, what about inflation? This comes up a lot, especially when I talk about this on YouTube where people say, why doesn't anybody ever talk about how the money's only going to be worth 50 million by the time it's worth 100 million. Which by the way, wouldn't that be just the worst thing in the world if you only ended up with 50, 50 million dollars in today's dollars? That would just be devastating, wouldn't it? Well, here's the thing that people don't tell you about inflation. Yes, inflation eats away at your savings and it eats away at your total net worth in terms of real dollars. But as inflation goes up, the cost of goods that you sell goes up. As inflation goes up, your salary or your wages also goes up. So theoretically, you will continue to make more money to match or beat the pace of inflation. The other thing to factor in here is if you have a 30 year mortgage, that's a fixed rate, which means that your biggest expenses are not going to go up. The cost of other goods are going to go up, like gas or buying food at the grocery store. But your biggest fixed expenses, like your car and your house, assuming that you're not upgrading them every year, those are fixed costs that are not going to go up over time. So as inflation does go up, you will make more money. And as you make more money, your expenses should not be going up at the same rate because the biggest expenses are fixed. That means that if you don't expand your lifestyle, you'll have more money to, to invest. So even if inflation makes your $100 million worth only $50 million along the way, you can actually invest more aggressively than your projections today. So if you're going to invest $5,000 a month today, in 10 years, are you still going to be investing only $5,000 a month? Maybe, but hopefully not, because inflation allows you to actually put more away to, to match the rate that it's eating away at your savings. Now, what if you don't want to wait 50 years? Good question. I don't want to wait 50 years either. In 50 years, I will be 85 years old. I don't want to one day just have $100 million and then say, what am I going to do with all my cash? I want to expand my lifestyle. I want to enjoy my wealth as I am building it. And so there's a couple of things that we can do here in, in order to enjoy it along the way and not just kick the can down the road until we are 85 years old. The obvious one is we can make more money. If you own a business, you are in control of how fast that grows. You are in control of how much you work you are in control of what you charge, you are in control of how good you are in that business. So the first thing is you can always make more money. And one of the things that people throw shade at me for is just assuming that everybody can have a million dollar business or everybody can be a millionaire. I think everybody can. In fact, I know everybody can because I've been proven wrong on people that I was like, oh, they're not going to make it. I've seen plenty of people get four products to 25 sales a day at a $30 price point. That's a million dollar business that produces six figures in cash flow that they can live a modest lifestyle and invest aggressively. So I think everybody can do it. If you're an entrepreneur, you're in control of your income. If you are focusing on developing skills, you can make more money. If you have a strong time horizon, meaning you're looking a year, two years out, it is very predictable to build a million dollar business. Where people go wrong is they're thinking about two months out, 90 days out, even six months out for six months, you are still earning your keep figuring out if you got product, market fit and how you're going to take sales. But if you can extend that time horizon a year to two years, we can absolutely get four products at 25 sales a day and then some. So step one, just expand the time horizon for which you're going to have enough cash flow to be able to invest and compound over the very long term. The second thing to note here is once you compound this over a few years and you have a business that is worth $10 million, or if we look 10 years out into the future and you've been investing aggressively and you've built up a business that's worth $5 million and you also have an investment portfolio that's worth $5 million, you can borrow against both of those things. So I am well known for helping people have an eight figure exit in their business after a few years of operating it. But you don't have to exit your business in order to get a lump sum of money. You can also borrow against your business. You can also borrow against your portfolio. So I have a friend who has a ridiculous amount of Apple stock. It's worth millions of dollars. He had an exit a few years ago, put it into Apple at the perfect time and it has gone way up. Well, he doesn't want to interrupt that compounding. He wants Apple to continue building up his net worth. So what he does is he borrows against his Apple stock and he invests in real estate with it or he buys the car, he actually drives a, like a Honda Accord or something. He's worth like $15 million, drives a Honda Accord. You would never know he's rich. That's how you do it, folks. He borrows against his portfolio, puts it into real estate, and then when that has a liquidation event, he pays off the loan against Apple and then he repeats. So you can absolutely increase your livelihood and enjoy your wealth without interrupting the beautiful effects of compounding interest by borrowing against the assets and then deciding, are you going to invest even more aggressively or are you going to expand your lifestyle? Now obviously when you introduce debt into the system, it changes the risk profile and the risk tolerance that you need to have. But you can enjoy your life and enjoy the wealth along the way without interrupting the compounding unnecessarily. And the important thing to note here is that when you do that, that money is tax free. You do not pay taxes on money that you borrow against. A house, a business, your stock portfolio. And when you know that, you start to see how the wealthy really play this game. They compound in their businesses, they compound in their portfolio, and then they borrow against them and have tax free money that they're going to put to expand their lifestyle or to compound even further and they're going to use those profits to service the debt on which they borrow it against. So let's tie this together by sharing with you how I am changing my investment strategy moving forward. Because I'm 35 years old, I have been an entrepreneur for 17 years and quite frankly, I have gotten used to fast results. I built and sold a company in five years. I had an eight figure exit in five years. I am used to projects either working out or failing very quickly. And it's been a little bit of an adjustment for me to recalibrate to a very long time horizon. But I'm thinking about leaving my kids something now and thinking about leaving a legacy now. And so what I am calculating is what is the minimum that I could reasonably reserve into the lowest risk, most conservative investments possible and still have a nine figure net worth. And that's how I ran the numbers of if I invest 100k a year or $10,000 a month ish, into the S&P 500 over 50 years, that's worth $100 million. Now. Am I reasonably confident that I'm going to continually be able to save at least $100,000 a year and invest it for a very long time? Yes. I am. And so if everything else completely failed, if all I did was compound $100,000 a year for a very long time, I'd retire or die at 85 years old with a hundred million dollars. That to me is like, all right, we got the bases covered. I can relax into knowing that if everything went to hell, all I need to do is continue to compound. Like if nothing went right, if I had no big wins, if all my other investments went to zero. But, but I continue to prioritize the compounding of $10,000 a month or a hundred thousand dollars a year into the S&P 500, and it performs at its historical rate of growth, I'm going to be worth a hundred million dollars. And so now I have that base covered. And then I, on top of that say, okay, what am I going to do on top of that? I know now that all I need to do is some basic things to become worth a nine figure amount of money. So what do I want to do on top of that? I want to invest in companies, I want to start companies, I want to advise companies and have equity pieces in them. I want to grow my business. I want to do these things that are a little bit more aggressive. And so if one of these businesses that I invest in or that I start, if that has a $10 million exit or if it has a $1 million payday for myself, then I can decide do I want to invest this more aggressively into Bitcoin or Etherium, or into real estate that's going to provide cash flow, or do I want to just dump it into the overall compounding pile that is going to become worth $100 million? But for me, it's about deciding what is the most conservative thing that I could do and still hit my financial goals. And then I can layer on top of that, okay, if I save more, I invest more aggressively, where can I have a little bit more play? Because I don't really care about having more than $100 million net worth. Sounds cool to have a $500 million net worth, but if all I ever did was the basics, the minimum, I could still have a nine figure net worth. Now let's cover that and play with everything else, which is where we start companies and we incubate brands and we start new projects, or I invest in Bitcoin, or I invest in the things that I think are exciting, that I'm genuinely compelled toward. And so for you, can you cover what the minimum is to have a million dollar net worth or $10 million net worth and then know that all you need is to have a business that matches that amount of money and do that for a very, very long time. You can have both a giant investment portfolio and a giant business because your time horizon gives you the COVID to compound those results and you can absolutely retire with at least $100 million. In order for you to do this, you need to have three things. You need to have a profitable business, you need to have a predictable investment strategy, and you need to have a very long time horizon. The time horizon thing is, is something that entrepreneurs struggle with. It's we want the results fast, we want the ripped body fast, we want the relationship fast. But the longer you can extend your time horizon, the more that you can compound the activities that you do and get everything that you want. You just might have to wait two years to get that result. That's where you earn your keep. Two years is enough to start a business. It's enough to build up a nest egg. It's enough for you to do the work on yourself to to have the body you want or the relationship that you want. You need a predictable, boring investment strategy. We like to take our entrepreneurial minds and beat the system with our investments. But the point of investments is to compound for a very long time, not win year to year. You do that in your business. And if you need help building your business that you know is going to put you on the path to compound into generational types of wealth, we can help. And if you go over to capitalism.com1, you can find out more about what we do and how we can help you build a business that allows you to start compounding for a very long time because this stuff works. I'm Ryan Daniel Moran with capitalism.com thank you so much for listening and I'll see you on the next episode. If you found value in this podcast and you're ready to go Deeper, here are three resources where we can help help you. One, you can grab my book 12 months to 1 million on Audible or Amazon. It has over a thousand reviews and it's the playbook to building a seven figure business. Second, you can join our community of entrepreneurs who are following a plan to build a 1% net worth by building businesses and investing the profits you can get plugged in@capitalism.com 1. And third, if you're looking to grow, go deeper and build a seven figure business that you can sell. You can work closely with us inside the Capitalism incubator and you can get on the waiting list and find out what we do over at capitalism. Com Inc. That's capitalism. Com Inc.