Passive Income, Investing Assets, and Lifestyle Design : How To Make A Million And Keep It

When I was a kid, I used to think that a million dollars was like all the money in the world. And that was the goal growing up. I wanted to be a millionaire. And so in this video, we're going to talk about what to do with a million dollars or if you don't have it, how to generate a million dollars. Let's dive in. Okay? So first things first. When I was a kid, or first starting as an entrepreneur, I thought I had to discover some sort of a magic way to make money so that I could be a millionaire. And if you really boil down making money, even millions of dollars, it comes down to having an offer or having a product that other people want to buy. There is no magic place in the world where you can plug into the river of money. Money comes from other people. And so that comes in the form of products, services, advertising places and opportunities for other people to voluntarily give you money because they want your thing. That's where money comes from. And that's how you generate a million dollars. If that's not how you make, you're not really in control of the long term generation of that income. And that's the foundational principle of building a business and investing the profits. Now, I wanted the lifestyle as a kid, right? I wanted to travel the world, I wanted to buy cars. I used to have this dream of I want to have a house that I can get lost in. That was my dream in like second grade, I remember telling my teacher I wanted to get lost in my own house. And let's be real, we do that because we want some sort of admiration of other people or because we want to prove something to ourselves, which is all fine, all cool. We're human beings, we do that. But ultimately that doesn't keep you rich. It's not enough to make the million dollars and then go buy the things because you still have to go make another million dollars for you to keep up. That lifestyle is why many, many entrepreneurs are on this rat race. They're on this hamster wheel all the time of they make this money and they spend it to impress all their friends. And then they have to go make more money. And they're never really at peace, they're never really happy. They never really get to enjoy the lifestyle that they're trying to project because they're so insistent on just creating this idea of what they wanted to be that would be valuable enough as a kid. But I'll save my philosophical rants for another day. The point is there are much wiser ways that I'VE learned now to be able to have a million dollars, invest it for passive Inc. And live the lifestyle all at the same time. So let's go into part number one, your passive income sources. Alright, so the first thing that I would do if I had just made my first million dollars is I would take that money and I would put it into some sort of a passive income machine. Now of course we'd all love a passive income machine. Where the heck does that come from? Well I thought when I made my first million I thought that meant that I should buy other businesses and kind of take my money and have other people put it into their businesses and send me checks. So I bought a restaurant.

That's fun and a mistake. Yeah, maybe it's just a bad business decision to buy restaurants but ultimately I don't have access to that capital anymore. That was the mistake that I made. I can't go just flip the restaurant and get my money. It's now locked up and the business has to perform really well. And it was a new business and so I basically just wasted that money. I got a nice tax write off for that investment. Rather than a long term stream of income and upside wealth, a much better place to put your money in your first million. Your first million should set you up so that if the world goes to the pooper you can still eat. And so this would come in the form of putting it into a long term passive income fund like a real estate fund. It might come from buying websites. There are places to buy websites and you can management companies then manage it. Those are very tax efficient by the way, which we talk about on my podcast which is called the 1%. You can get it on Spotify or on itunes or you could put it into dividend paying stock in long term companies that have been around for a long time so that you're getting the passive income from the dividend. You could buy real estate or buy an apartment building and put in a property manager. The foundational principle for your first million is how do we turn this into passive income so that you can live a little bit of a lifestyle so that you can relax a little bit and not have to worry about where's my next paycheck going to come from. But rather than buying cars or buying big houses or buying restaurants into some place that is a boring but long term passive income stream for your friends first million I would take at least 25 to 50% of that allocation and put it into a passive income stream. I'll tell you what I did When I started to practice with this was I bought into something called a real estate investment trust. This is a perfectly fine investment. It's basically a real estate fund that exists on the stock market. So you can just Google real estate Investment Trust, or REIT. REITs some people call them. And a REIT is a publicly traded real estate company that sends out their profits in the form of dividends. And because it's real estate, because they are forced to distribute their profits via dividends, they can be really attractive rates of return, like 8, 9, 10, 11, sometimes 12% rates of return. And since they're tied to the real estate market, they're going to go up and down with the real estate market, but you're going to be getting that long term income from the underlying real estate. So that's the first place where I started to shore up my passive income when I started to get a little bit smarter about this. And the reason for this is now you have a source of income that's not tied to your business that allows you to relax just a little bit and you don't have to touch it. So you have that income coming in and it frees up your creativity to go put the rest of your energy into your next idea and your next business. Part number two, we're going to put the rest of that million dollars into long term wealth generating assets that we can borrow against. All right, so in the first piece, we had passive income coming from websites or from.

Funds or from.

Real estate investment trusts. Some source of passive income that's going to pay for our lifestyle with the rest of our money. What most people would do then is say, great, my lifestyle is paid for, I'm generating $10,000 a month or whatever it is, and now I'm going to go buy cars. Here's what I would recommend. You take the rest of that million dollars and you're going to put that into something that's going to increase in value over time because they are serving customers. This is going to come in the form of stocks you like, companies that you follow for a long time because they're doing really cool things in the world. And if you want to take a piece of that 10% of that million dollars and put it into more speculative investments like your buddy who's launching a new app or your old business partner who's going into a new direction, that's the place for that. But 40%, 50% needs to go into passive income. 40% needs to go into places that will go up over time that you can Borrow against. There's a couple places for this one. If you put your money just into stocks, you just put them into your E Trade account. In the event of a rainy day or the event of you wanting to make a different investment, you can borrow against your E Trade account. You can do that. There are banks that will do this. You can borrow against your E Trade account so that your stock portfolio continues to go up in value. And now you have the money that you can put elsewhere and you're going to pay an interest rate on that money. But now you've got access to both sources of capital. Another source of this would be a capital warehouse. A capital warehouse is actually an insurance policy that is fixed to the market so it goes up over time, but it doesn't go down in value. Tony Robbins talks a lot about this inside of one of his books about money management. It goes up in value, but it doesn't go down in value. So if there's stock market crash, it won't ever go down in value. And at any point you can borrow against that policy and go put it into some other fixed rate of return asset like municipal bonds. If you want to generate more monthly passive income. Or the third place would be real estate, you could take that remaining a few hundred thousand dollars and use it as a down payment on a real estate portfolio that is going to pay you money every month. And you can borrow against the real estate. And the reason why this is important is because it gives you a source of income, source of upside growth. But also you still have access to the money that you made in the form of borrowing against the asset. Or you can sell the asset and put it back into your pocket. So in the first section we talked about generating passive income. Number two, it's about protected income that you still have access to. So our entire portfolio, that entire million dollars is still generating money for us. And we have access to it. So we're never going to be broke again. We never have to worry about being one of those entrepreneurs that lost everything because they bought a bunch of cars and now they're embarrassed and their life is a sham. On Facebook, you don't want to be that guy or that girl. So if you do this even half right, you set yourself up for long term passive income, upside wealth, and you still have access to your money, which frees up a lot of your mental bandwidth to go crush it in business or to peace out for a while, if that's what you want to do. And with that remaining little percent 5 to 10% that would be $50,000 to $100,000. If you want to put it into a penny stock or bitcoin, God bless you. Or if you want to give it to your friends who are doing a raise for a business, that's the place for it. But no more than 10% of your income ever. That is what to do with a million dollars so so that you never go broke again. Hey, if you like this stuff, I talk about each one of these areas in depth here on the channel so make sure you are subscribed. Also, I bring on other subject matter experts who specialize in buying websites or specialize in capital warehouses or specialize in dividend paying stock and we create plans and also look at certain opportunities that exist in the marketplace. Inside of my monthly program which is called the 1% monthly. Or if you just want my free stuff, I also do a podcast, a long form podcast which is available on Spotify and on itunes. It's called the 1%. Thanks for watching and I'll chat with you soon.