YouTube Channel: @RyanDanielMoran

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. And when you see the numbers of how it breaks down, 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. 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. Do we know that it's going to go up that way in the future? No, but that's what's 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 en 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 $100 million, 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 money 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 Hauser 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, 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. The biggest factor here is your time horizon. The longer term that you can think, 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 will 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 we'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. 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 or until your business had a million dollar 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. Now what about inflation? This comes up a lot, especially when I talk about this on YouTube where people say, well, 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 million 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 more. 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 costs 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 invest. 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 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're in control of how much you work, you're in control of what you charge, you're 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 $1 million business or everybody can be a millionaire. I think everybody can. In fact, I know everybody can because I've been proven wrong. And people that I was like, 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 have a strong time horizon, meaning you're looking a year, two years out, it is very predictable to build $1 million 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 and 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 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, 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. Drive 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 buy, 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. I'm 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 450 years, that's worth $100 million. If I had no big wins, if all my other investments went to zero. But I continue to prioritize the compounding of $10,000 a month or $100,000 a year into the S&P 500 and it performs at its historical rate of growth, I'm going to be worth $100 million. 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 Ethereum 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, which is where we start companies when 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. You can have both a giant investment portfolio and a giant business because your time horizon gives you the COVID to compound the 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 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 key. 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 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.