YouTube Channel: @RyanDanielMoran

Hi everyone. Welcome back to the show. I'm Ryan Daniel Moran and if you're new here, I'm the founder of capitalism.com where we help entrepreneurs become millionaires by building million dollar businesses and investing the profits. We have hundreds of success stories of people becoming millionaires by following our very basic strategy. And today we're going to talk about the second part of becoming a millionaire. It's the investing the profits first step to being a millionaire, build a business. The second part, invest the profits. We're going to talk about that second piece today because we're entering into a new era. We're entering into a new period in the economy that a lot of entrepreneurs haven't seen before. And in my opinion, it looks like we're going to be in one or at least a period of slow growth for several years. Now, that doesn't necessarily mean that it's a bad thing or that it's bad news. In fact, I think if you play this time well, if you are thoughtful in your strategy going into this recession, you're going to come out the other side richer than maybe any other period in history. And the reason for that is because as we're going into what I think is going to be a multi year asset price recession, it's going to be a great time to acquire assets. That's real estate, that's stocks, Bitcoin, if you want to play that game. It's even making strategic investments into your business when things are going to be cheaper than what they've been over the last few years and building the foundation of your wealth over the next few years. Before we talk about the actual investing strategy, it is worth noting that if you don't have a business that spits off at least $10,000 a month, that's where you got to start. 10 to $25,000 a month is really your starting point if you are an entrepreneur, because the investing plan is going to be different. If you're an employee, the investing plan is going to be different if you're never going to become an entrepreneur. But if you always wanted to be an entrepreneur, if you're entrepreneurial minded, then it's really not worth doing all of this investment planning until you've got at least 10,000 to $25,000 a month in cash flow coming in. And as you are building your business or even if you're working somewhere else, one of the mindsets that will help you make more money going into this period is if you were thinking about what is best for your boss, your Customer, your clients, whoever is writing the check. When we go through boom periods like we've been through over the last 10 to 15 years, we get soft, we chase after the next thing. We look for the best opportunity, we chase rabbits. And when everything is working, when everything is making money, it is very easy to forget about the fundamental source of money, which is creating value for other people. It's tough to think about doing the long fundamental hard work when bitcoin is going from 10,000 to 65,000, or when you're seeing everybody else flip their businesses and make millions of dollars. That's the trap that we get into when things are booming. But when things are slower, it gives us the opportunity to pause and build the foundation of our business. And that comes down to paying attention to who you serve and aligning yourself with their goals, being on their team, and serving them for the long term. I have been playing with this thought lately of thinking about how I work for our customers, how my job is to serve our customers, my job is to serve our people. And you know what happens. I calm down when I think like that. So recessions are really good opportunities to pause and focus on those fundamentals. Service of customers, creating great content, thinking about who is writing the check and how you can serve them. The second thing I want you to keep in mind when it comes to making more money during this recession is looking at what skills need to be developed so that you succeed through this time. Again, when everything is booming, we tend to go for that low hanging fruit. We launch the next product, product we ask, we launch the next course or we make the next offer. And it works for a while. But when we're going through recessionary periods, we have to think more long term and that requires some skill set development. All right, let's move into the investing the profits side of things again. We're going through a recession in which investments are cheaper than they've been in years. Bitcoin is back to 2020 prices. We thought we'd never see this again. Ethereum's down to a thousand. We thought we would never see these prices again. The S P500 is down 30%. Even dividend paying stocks are cool again because they're paying 5, 6, sometimes 7% yields. These are all really interesting opportunities that some of us thought we would never see again. And one of the things that can be stressful during boom periods is you want to throw money at everywhere. You want to buy bitcoin, you want to buy Ethereum, you want to buy dividend paying stock. Stock because everything seems to be working during recessions we have to be more thoughtful. So I'm going to walk you through the plan that I am following in order to invest my capital, to invest for the long term and retire with millions and millions of dollars. These are long term processes. These aren't sexy. These won't make you a million dollars next year. Because you make your money in your business. You invest to protect your wealth, to grow your passive income and to protect your mindset so that you can continue to kill it in business. The first thing that's important to establish is your emergency fund. Do you have six months to two years of expenses in the bank so that if everything falls apart, you're good? As an entrepreneur you should probably have more than most people. If you're working a nine to five job, they will tell you have three to six months of an emergency fund. I say if you're an entrepreneur, you should have six to 12, even 24 months of dry powder. Because we don't have the security of having a 9 to 5 job. So having at least a year's expenses in the bank is the first place to shore up. So if you have a business that is starting to spit off cash flow, I wouldn't recommend investing into anything until you've got six to 12 months of dry powder so that you can now be all in on your business. You're not also worried about the stock market or the worried about bitcoin prices or your real estate holdings. We have to protect the focus of what is making the money. So having some savings so that you can go kill it in business consistently is your best investment. Because your business is going to 5x. Your business with your focus might 10x over three years. It would be very hard to pick an investment that is going to do that. It would be very hard to pick the stock or the cryptocurrency that is going to 10x in three years. There might not be any. The whole market might go down. But your business with your focus has a reasonable shot of 10xing over the next three to five years, maybe even two years. So your focus on that has to be protected first. The ROI just makes sense. So the first step is to create whatever security bucket you need in order to go all in on growing that asset. That asset being the business that is paying for everything else and has a chance of making you rich even if everything else falls apart. The second bucket to put capital into is long term investments. Now I've actually changed my opinion on this. I used to save long term investments for after you have passive income all shored up. But I've changed my thinking on this because having almost like a second emergency fund invested into something that is going to grow for a very long time that you're not going to think about. I've actually prioritized over cash flow. If you've got an equivalent emergency fund in dividend paying stock that you know is reasonably going to grow 6 to 9, sometimes 12% per year and you have a year or more of living expenses in that, that is a second bucket of security so that you can continue to kill it in business. So let me make this a little bit more practical and give you some more details about how I'm doing this. I'm taking 10% of my take home income and putting them into dividend paying stocks that I will likely not touch for years. This is not the thing again that is going to make you rich in two years. It's a good place to consider putting a piece of your take home income. So that's what I plan to do. The second thing that I plan to do is take 10% of my take home income and put it into long term S&P 500 index funds. And the reason for that is because over the long term, pretty hard to lose money in the market. Now there are times that you can go through years of no growth, but over the long term it's pretty hard to lose money if you're just invested in the market. Okay, if you're still here, you've gotten through the boring part. The boring part of setting up emergency funds and basic long term growth. Now we're going to get into the more exciting part. This is what we as entrepreneurs love. But we prioritize this in the wrong order and it's passive income. If you're an entrepreneur, once again, you're going to make all of your money in your business. Your passive income is going to come from your investments that other people are managing. And for me, my best investments for passive income have always been real estate. Now I would love to be a full time real estate investor. I still have fantasies of buying up apartment buildings and investing into areas that I know well. Like I come from Cleveland, Ohio. I would love to buy apartments in Cleveland, Ohio and I actually plan on developing that skillset over the next few years. But for now I just look for private syndications, which means I'm looking for other people who buy apartments and I give them money. Now I have invested in a lot of different places for passive income and I have gotten in trouble in a lot of different ways. Investing for passive income. One place that I've not lost money is real estate, specifically residential real estate that other people manage that is going to produce 8 to 12% cash flow over the long term. And I'll tell you right now would be a really good time to start building your network of people who are doing this kind of stuff. Now, cash flow is the bucket that we're going to build over three to five years that ultimately can set us free for life, especially if our business is doing well. The target amount of money to be free forever is between 2 and 4 million dollars. Now if you're going to live a grant cardone lifestyle, you're going to need more. But for the average entrepreneur, in order to have financial freedom for life, you need, let's say it's 4 million bucks. Why 4 million bucks? Because 4 million bucks invested into real estate, which has a very low chance of going to zero, is going to produce 10% passive income, which gives you $400,000 a year, which is a 1% income. And how do you get $4 million? You build a business that you can sell for $4 million and that will take you four to five years. Is it reasonable to think that you can build a sellable business for 4 to 5 million bucks over three, five years? Absolutely. What's the best way to do that? There's a hundred ways to do that. You can build a blog that gets lots of traffic. You can build an agency. Or my favorite way, you build a brand that has four products that does 25 sales a day at a $30 price point, which is a million dollars a year. You grow that over three to five years and you have a business that you can sell for a few million dollars and you can invest into your emergency fund, your cash flow, into the long term growth strategies we talked about. And then you put your long term cash into places where you can get 10% and live off the passive income. Now here's practically how to do this and how I am doing this right now, we run a profit first model in our business. Now profit first means that we take a piece of our top line revenue and we put it into a special bank account that is not touched, it's just for profit. And for us that number is 10%. So I take 10% of top line revenue and we put it into a bank account that we will not touch and it just sits there accumulating over the course of a year. So if you have a $4 million a year business. It means that $400,000 is going to be scraped off the top and put into a bucket that is reserved for profit. You don't touch it until the end of the year. And what do you do at the end of the year? You distribute it to yourself. You can do this every quarter or every year, but I recommend having a separate bank account that is reserved for profit. The reason that I would recommend this is because you don't spend sits there. It's a good habit to just save that money. And then you think about it like the place that you're going to distribute out to yourself and invest into long term places like real estate. If you've got a few hundred thousand dollars a year that is coming to you and you're looking for one investment per year in real estate, you've done really well. So if your business has two and a half million dollars in top line revenue and you save $250,000 at the end of the year, means you can make one good real estate investment through a syndication that's going to pay 10% over the long term. You do that for a few years and we're really building up some momentum. That means that over four years you're going to have $100,000 in passive income with tax incentives. And again, right now is a pretty good term to be considering this. Seeing that a lot of things are coming down in price, coming down in value. The last place to put any of your money is into speculation. And for me that is Bitcoin and Ethereum or businesses that I'm investing in. Personally, I have made the mistake and I'd be willing to bet that a lot of you have made the mistake of putting this first. If you believe that Bitcoin is going to 10x over the next 10 years, it would be reasonable to justify putting all of your savings into Bitcoin or all your savings into Ethereum. Or if you've got a friend that has a business that you think is going to boom over the next few years, you could justify putting all of your money into that. And a lot of entrepreneurs that I work with do exactly that. I've made that mistake too. And what happens is you can't sleep at night, Bitcoin goes down in value, that business goes under and you lose years of momentum because you overexerted into one investment. What we do instead is we treat that 5 to 10% of our net worth as a place where we can speculate. The first way that I get exposure to speculative places is, is by taking payments for things in Bitcoin and Ethereum. I made the decision to close a Mastermind that was $50,000 a year. It made me a decent amount of money, but I was not feeling like I was creating the value that I wanted to create. And I felt like I had to hard close people into getting people into it. And we prided a lot of value people became multimillionaires in this mastermind, but I felt like it had run its course. And so I decided to only do a mastermind for people that I own equity in their businesses. So that is how I get exposure to businesses that I'm advising or speculating on or investing in. And I have a group, a community where I take payments in ethereum. Instead of $50,000 a year, it's five. It's five Ethereum right now, which right now is about $5,500 for a three year pass to this mastermind, which is crazy cheap compared to what I used to charge for communities. But what it does is it gives me exposure to an asset class that I want to be in for a very long time. I no longer feel like I have to hard pitch it. I no longer feel like I have to provide $500,000 in value because I like to provide $10 in value for every $1 that I charge. I, I now am thinking about just creating a great long term 3 year experience for the members. And I feel like I'm building a proper business instead of just launching something and getting money from it. This plan will allow me to focus completely on my business that provides the protection for my family, that provides the service to customers over the long term, allows me to show up in full capacity and service to the people who follow my content and who are in our programs. And that's the model that will make you rich. The model that will make you rich is when you can focus fully on your business and then you have a plan to save, invest and grow your passive income while still allowing you to speculate in areas where you want exposure. And I hope that me going through my plan over the next couple of years gives you permission to do something similar. Because once you are freed up to focus specifically on your business, you will create more change and more money than most people in history. Because that's what entrepreneurs do. I'm Ryan Daniel Moran with capitalism.com we help entrepreneurs become millionaires by building businesses and investing the profits. If you'd like some help or you need a place to start, there are some free resources in the description of this video that will help you get off the ground and get started on your journey and your road to become a millionaire. Thanks for watching. Hope to see you on the next one. Take care.

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