"Use These 5 SIMPLE SECRETS To Become WEALTHY!" | Lewis Howes
Robert Kiyosaki, Tony Robbins, Dave Ramsey and others discuss building wealth in uncertain times. One guest borrowed $300 million during the 2008 crash and used debt as a tax shield. They argue against diversification and traditional education, favoring real estate, cash flow, and a crisis-as-opportunity mindset.
Chapters
When the market crashed in 2008, guess how much money I borrowed?
A lot.
300 million.
No way.
Why would I diversify? Rich people do not diversify.
When you do that, you're getting ready to screw up.
You'll never earn your way to freedom. You just don't.
I've always found that the people, especially entrepreneurs who talk about tax breaks all the time, are typically the most unsuccessful ones.
Money, money, money. Listen, if you want to make more.
Of it, and of course I know.
You want to, Then make sure to watch this video. It's got advice from some of the smartest financial minds in the world. Check it out. What's the lesson you've learned in the last two to three years that you thought you'd already learned? That you keep learning? That comes the hard way. Is there anything that you still learn or have you seen it all?
No, it's as you know, Rich Dad, Poor Dad is the story of my rich dad who had no education. But he grew up in business for real. He took over the family business at 13. So he kind of grew up in the real world of money, where my rich dad was a PhD, poor, helpless, desperate. Went to Stanford, Northwestern, very smart guy, good guy in all this. But as you know, teachers don't know shit. They teach stuff they don't know nothing about.
Right.
Well, some of them are forced, I mean, they're forced to teach that, right? Some of them try to, Educate in other ways and inspire.
Don't defend them. Don't defend them. I don't like them. Anyway, you know what happens? When do I get in the most trouble is when I criticize going to school. Because to many people, it's their only hope and salvation. Yeah. So if I say, well, I don't think school teaches you much, I may as well piss on the pope. You know, they said, I know. If you don't go to school, And then it tells us, well, you know, Steve Jobs dropped out.
He did pretty good.
Yep. It's dropped out. Dell dropped out. Zuckerberg. Zuckerberg dropped out. Henry Ford, Walt Disney, they didn't hurt. So anyway, religion is, I mean, education is religion to most people.
Yeah.
So that's why I step on toes and I get dumb.
What did Mark Twain's quote say? Like, don't let schooling get in the.
Way of your education or something like that.
And one of the reasons why I started the School of Greatness, I was telling you before we started recording, is that I was in the special needs classes literally every day for as long as I can remember. Since kindergarten until seventh year in college, I had a tutor. I was in the special needs classes with a few kids who had learning disabilities. And it was the most challenging thing for me because I wish they would have taught me things that I'm learning now. And the reason I created the School of Greatness, because I was like, what are the things I wish they would have taught me in school to help me get ahead in my finances, to help me get ahead in my health, my mindset, my how to deal with a breakup in a relationship, a tragic time, like the emotional side of things, the education that I wish they would have taught us. I was like, I'm gonna go create it. I'm gonna find people like Robert and teach us the ways. So, you're doing that through your work and I'm trying to do that, but I think there's people trying to do good by educating outside of the traditional school system where I think they're more limited.
Correct. And that's why I created the cash flow board game is because I learned about money playing Monopoly. I learned more about life playing Monopoly than I did in four years of college. I went to a really good school, the best schools in the world, US Merchant Marine Academy. I came out a rich man, but it didn't teach me much about money. I was only a high paid employee. So then I joined the Marine Corps. Then I have two professions. I can fly for United Airlines or I could sell for Standard Oil. I didn't want to do either because it wasn't challenging anymore. I think if there's a lesson is that I'm looking for the challenge and some people are looking for security. They're two different people. They're extremely different people.
Yeah, you talk about rich favors the bold, those that are willing to take risks and willing to put themselves out there. Do you think you can get rich without taking risks and being bold? and taking these big chances, or can you keep this security mindset and really gain true wealth?
Well, many people have, you look at Cuomo and all those guys, they were born rich kids and their father. Trump could have taken that path too. He was born a rich kid. So it's not, I think you're either an entrepreneur or not.
Right.
I think that's the difference.
You know what's interesting? I never thought, I was an entrepreneur until I had a big wake-up call, a tragic experience. And it was kind of like a perfect storm. I didn't know how to make a dollar. I was not like selling baseball cards. I didn't do the lemonade stand. I didn't try to hustle all this stuff as a kid. I literally maybe made a little bit of money in the summers just because my dad put me to work. And I had this dream of playing professional football. And then I made 250 bucks a week My dad got in a tragic car accident. He was in a coma for three months. I didn't have a college degree. It was 2008. The economy went down. I was living on my sister's couch. She was feeding me. I was making no money. I was living off three credit cards with student loans. And I didn't have my dad as that kind of financial safety net anymore because he wasn't able to help me and bail me out. So it was more like, what do I do? No one was hiring people with degrees at that time, even Master's degrees, I didn't even get a bachelor's degree yet. And I was just like, how do I survive? So, I don't think if the worst thing in my life would have happened, I want to be here learning how to be hungry, how to like say, I need to go survive right now and take chances. So, I think that perfect storm mentality made me into this survivor creative mindset willing to risk it all. Whereas if I had my father to kind of protect me financially or say, because he was like, you,'re going to take over the business, you're going to come work with me. And that was my mindset when he kind of left emotionally and mentally, he's still alive today, but not the same from the brain trauma. It made me step up as a human being as a 24 year old and say, I got to learn some stuff.
And that's why I said to young people today, look at this. this coronavirus pandemic, you know, it's really tragic because it attacks the old guys. But even worse is that baby boomers had it the easiest of all generations. But now their pensions are gone, their 401 s are gone. Social Security is broke, Medicare is broke. So I say to younger people, this pandemic, this crisis is the best thing that ever happened to you. You think about that iPhone. You have more power in that iPhone than I had with my Sparrow Univac mainframe computer. And then so when I meet people and say, oh, the economy is bad, I said, the only economy is between this year and that year. There's the economy out here. But this is the best time for your generation. Because you're tech savvy. I'm not tech savvy. This was made for you guys. The old guys like me are being cleaned out by the pandemic.
Unless you have a lot of that are bringing you in cash.
The way is clear for you now. The old guys are gone. They're dead.
Right.
What are you gonna do about it? You know, so it's really a great time. But exactly, as you were talking about, the bad times are leading to the best times. That's it. Yeah.
If you can see it.
But some, unfortunately, as you know, there's a lot of your generation are younger. They'll never recover.
Yeah.
They're gonna see it as the worst of times. I know.
And they're gonna, they're gonna reflect back to this in five years and 10 years and say, that's the thing that screwed me up or hurt me and, and be a victim to it. as opposed to saying, okay, this is happening and how can I make the most of it? And what's it gonna take for me to learn a new skill or get more creative or be hungrier in this time?
Or more important, who's your teachers?
Who are you listening to?
Well, you know, that's why I keep saying to the young, the millennials, you know, if they're a pack of wimps, you know, I meet millennials who are just horrifyingly weak. Snowflakes, I call them, you know?
Yeah.
They go to college and they get... Dorms. They're taught trigger events or whatever, you know, I don't know what they say today, but they've got to have special rooms where there's no whatever. I'm going, holy mackerel, welcome to the real world, you know? And there's other millennials who are as tough as nails. I mean, this is the biggest opportunity they've ever had.
Huge.
So it just depends upon what's between this year and this year, what's in your heart. That's it.
Yeah.
What do you think is the next step, the first step or the number one step for the average person with the kind of the normal job that they might be losing, they have some debt, they got some credit card, what's the next step for them to not only survive but thrive in this market, in this time?
Well, I always say quit your job. But that's not, you know, I don't have a job. I've only had one job and I never wanted a job after that because I had to be hungry. That's not going to say, you know, but we're all different. We're humans, we're different beings. If I show you this diagram here, you know, it's why I created my cash flow board game. Because we have four different intelligences. We have mental intelligence. We have, I don't know what that one is, physical intelligence. You probably have very good physical to make, you know, all and all that.
Yeah.
Emotional intelligence. But spiritual intelligence. So I went to military school in New York. The first thing is spiritual. You know, I become a marine, that's spiritual.
Yeah.
You know what I mean? Because you're putting your life on the fricking line.
Yeah.
You know, so Nazim Taleb, you know, he wrote the book, the Black Swan. He also wrote, Anti Fragile. He says there's three kinds of people in the world. There's fragile, and that's what our school systems are putting out, fragile, wimpy, snowflakes. And that's your choice. You want to be that way? have a good life. The second type is that so a fragile is like a champagne flute. Yeah. You hit it, it shatters. Then the second one is called robust. And a robust person is like the rock. You know, you can pound on them, dump on them. Yeah, they take it, but that's all they do. They take it. And that anti-fragile is somebody like you, where they pound the crap out of you. and you get smarter and better because of it. So I love Nassim Taleb, and a lot of people call him Dr. Doom, but the way I look at this whole thing, this economy is we're probably going into a depression. We're not gonna get out of this.
Really?
Oh yeah. And so the thing is, is this good for you or bad for you? I'm looking forward to it. The last crash was 2008, and I made more money in 2008 than in my whole life. So this one here, 2020, I'm gonna get even richer. But other people are gonna get poor. And if they're baby boomers, they're gonna blame it on this coronavirus, oh my health, you know, that, hey, hit the road, put on some running shoes, change your diet, get some sunlight, you know, get healthy. Don't get, don't be a wimp. But oh no, I'm so afraid of dying. I'm going, you,'re already dead. You don't even know it yet. You know, in the Marine Corps, you know, in the Marine Corps, we used.
To call them corpse people.
Right.
Corpse, not core, yeah.
A corpse man, no, a corpse man. A corpse man is a person who's.
Dead but doesn't know it.
Wow. They're so afraid of dying, they're already dead.
Yeah, it's about taking action, taking control of your life, taking control of your health, your finances, everything.
This is the best time to be alive right now.
I did an interview with Dave Ramsey last week and he said, you know, the last three or four recessions or down economies, whatever you want to call it, crashes, He said, I made more money during those times than I do in good times. So, I'm hearing him say that. I'm hearing you say that. How did you make more money then and how are you planning to turn this into an opportunity to make more money now for you? What are the things, the actual like action steps? Is it investing more in the stock market? Is it real estate? Is it buying other assets? What does that look like for you?
Well, the lesson is here, you got to choose your teachers wisely. When the market crash in 2008, guess how much money I borrowed.
A lot.
300 million.
No way.
From investors, the bank, or how does that work?
Because interest rates were dropping and real estate prices were going to the toilet. And when I walk into my banker, this is what Rich Dad Poor Dad about. Rich Dad Poor Dad is about a financial statement. Income statement, balance sheet, statement of cash flow. It's a book on accounting. People don't even know it's a book on accounting. So I walked into my bank with my partner and had all this property that was floating to the surface. And I say, I'll take them off your hands. I just give me the money to buy the property.
Wow.
That's cojones.
300 million.
Give me the money and I'll buy your properties for you.
That's crazy.
So it depends, and this is my whole thing. I'm now 700 million, almost a billion in debt.
Really? You know why?
Because I don't pay any taxes. The more debt I have, the less tax I pay. And the average guy goes, how do you do that? Because you have bad teachers. And so it's this whole thing that you got to choose your teachers wisely. That's why I wrote the book, Fake, Fake Money, Fake Teachers, Fake Assets. I don't touch that garbage that Wall Street puts out. I don't have a 401k, I don't.
Have stocks, bonds, mutual funds, ETFs.
Doesn't mean you shouldn't, but I don't need them. Okay.
Right.
And the other part is, look for young guys, the best teachers are not in colleges, the best teacher are on YouTube. The best teachers are on YouTube. Wake up. You know those guys, George Gammon, he's fantastic. Patrick Bet-David, fantastic.
He's great.
Records. The fake teachers are in colleges. They're telling them to get a job, the corporate ladder. You know, Patrick Beck David said it the best, and I love that guy. He says there's two kinds of leaders, wartime and peacetime. And a peacetime leader is a guy like my poor dad. He goes through all the right schools, he has all the pedigrees and credentials, he does all the right things, he climbs the corporate or the government ladder and all that. A wartime leader goes to war. So, Jobs, Steve Jobs, a wartime leader. I'm a war time. Difference is I went to war. I went to war twice on the front lines. Yeah.
And I changed. What happened?
So I joined the Marine Corps. I got a flight pool in Pensacola. I learned to fly. I go to Camp Pendleton. I strap on my weapons. I go to Advanced weapons in Camp Pendleton. I go to Okinawa, and then they send me into Vietnam. And I. I came out of Vietnam about four months later, back to. Back to race stage in Okinawa. and I thought everybody had changed. I looked at the fellow Marines and I thought, and it wasn't that they were, I had been to war.
You got tougher. You got stronger.
It's different when somebody's trying to kill you. Every single mission, I went down three times.
No way.
Yeah.
And I came back stronger and tougher. So I come back to Okinawa. I got like a week off. and they're gonna ship me back into Vietnam again. I said, what happened to these guys? And it wasn't that they changed, I changed. So what happens to entrepreneurs who go out and they get their ass handed to them and they survive? If you survive, you see the world differently. So that's what happened to you when you got injured and all this. You see a different world, whereas some peacetime, who's climbing the corporate ladder right now, they just lost their job. They're sucking their thumb. You know, this is the worst time for them. Yet for a wartime leader, they're excited.
They're excited about it.
Yeah. It's the best of times. Yeah. If you're an entrepreneur right now, the world's open to you. You're an employee, your world's dead to you.
What advice? Yeah.
An entrepreneur can create their own success.
Yeah.
What advice? Oh, sorry, go ahead.
It's a job. They're a peacetime war. Remember, watch Patrick Beck David, you know?
He's great.
Later, peacetime later. Which one are you? You know, I mean, no, that's, that's what it comes down to.
Yeah, that's true.
So this is the best of times for the wartime guys. Horrible time, peacetime.
Right.
And for the people that are the wartime people, what is the, the best advice you would give them now for the next year or two years to capitalized on how do they make more money, how do they make their millions during this time? What would you say?
You can't make money now. You should hang it up. I tell all you frickin' millennials, man. You know, I don't know where it is. I got this iPhone. If you can't make money with that, hang it up. You know, like we used to say, hang up the jockstrap.
You're not gonna make the team.
You can't make money with an iPhone through social media, through marketing. you have the world at your fingertips and you can't make money. The problem is between this year and this year. It's not out here. It's in here. That's why you've got to choose your teachers wisely.
Yeah.
You know, so let me just say it again. The best teachers are on youtube. So it's the best porno. Take up your mind. Make up your mind what you want to listen to. You know what I mean? So, yeah, i'm just being real to you.
I hear you, man. No, I hear. I hear you. What's the best investment people can make then to capitalize on this opportunity? Is the investment in education?
Left ear, look, if you're poor right now, it was called look in the mirror. That's what Richard always said to me. If you're looking in the mirror right now and you see a loser, that's what you are. Can't make money in this economy. you've got to change your thinking. You know, hindsight is 2020, as I said.
Yes.
That was, if you're looking, you know, you don't have any money, you don't have a job, your boyfriend or girlfriend has left you. And Cindy goes, well, how did I get here? How did I get here? There was a, there was a great book called, you know, gulag archipelago by Solzhenitsyn. So he gets thrown in this, in a concentration camp or a gulag in Siberia. And he says, how did I get here? You know how he got there? Because he was a peacetime leader. Didn't fight back. So people are being sold a bill. Go to school, get a job, pay taxes, save money, get out of debt, buy a house. The house is an asset. and invest for the long term in a well-defined portfolio of stocks, bonds, mutual funds, and ETFs. And I do none of that.
And why do you recommend the opposite?
Because I don't have to do that crap. That's Kool-Aid. Go to school. Go to school. What do they teach you about money? Nothing. Get a job, you pay the highest taxes. Pay your taxes. I don't pay taxes. Get out of debt. Well, debt, money is debt after 1971 if you know your history of money. Your house is not an asset, your house is a liability. And why would it invest for long term in the stock market when I can make my own assets? I don't need the stock market. I'm not saying you shouldn't. But I create my own assets. I create my own cash flow.
Every day I can- you- mean through your business, through your creativity.
I'm an entrepreneur. Most people are employees. They're looking for jobs. I'm just looking for... So like right now... Should entrepreneurs invest.
In the stock market? Do you think if you're an entrepreneur.
You shouldn't invest in it? Look, find a stupid teacher who's gonna.
Tell you what to do.
I'm asking your opinion. I'm curious as a teacher.
I don't give advice. You know, I wouldn't follow Warren Buffett either.
Mm-.
You know why? Because he invests the money. Why would I let him invest my money?
I want the fun.
So what's the investment you make the most in?
Look, please hear what I'm saying.
Yes.
I made a fortune in 2008, 2020, I'm making more money, I'm paying less taxes. It doesn't mean I don't have problems, but I'm prepared for this. My biggest problem right now is because everybody's taking a vacation. I can't get enough product. I'm selling out, you know, my cash flow game is sold out. It's selling out constantly all over the world. All over the world, I get royalties from my book sales. My book sales are going through the roof right now. So I'm making more money. That's information, yeah.
There's two kinds of discipline.
There's internal or self-discipline and then there's external discipline. So right now, if the world's kicking your butt, that's external discipline. And if you're self-disciplined, the world's kissing your butt right now. It's up to you. So that's why I love the Marine Corps. That's why I love going to military school and not a university, because I got my ass kicked every single freaking day. First word I had to learn at the academy, mission. Mission is spiritual. What's your mission? And my mission has always been to serve people. Most people all they give a fuck is making money. That's ruining people. That's called the Federal Reserve Bank, Wall Street and all that. I want nothing to do with them. I just don't play their game. But you have to get smarter enough to play their game. So that's why YouTube has the best teachers. This guy, George Gammon, Matthews, great, great teacher. Patrick, David, Fantastic teacher. You know, Cardone, fantastic teachers. So choose your teachers wisely.
We talked about why people should get rich. What's the best way people can get rich? And what does rich mean? How much is rich?
I'm talking about money now. I'm just talking about money. We're not talking about spiritual freedom.
No, just financial.
Because look, if you get a bunch of money and you're still like, you.
Still don't- Miserable inside, then it doesn't matter as much.
But I'd still rather be rich. It helps. By the way, let me just say this. Absolutely. Let's make it clear.
No. If I'm gonna be miserable, I want some money to go with. Exactly.
You know, at least get rid of some problems.
Yeah.
You're not gonna get rid of the inner problem.
No.
And it's gonna probably be worse. It's probably gonna be magnified. Like if you're on a global 6,000 and you gotta fly 15 hours and you freaking hate yourself.
I mean, it's gonna be freaking, it's.
Gonna be real bad. But dude, that's better than being in a middle seat on mile 37.
That's true. That's true.
You know, so at least give yourself the choice, right?
Yeah.
Yeah.
So.
So what is.
What is.
You need to be rich. How much are we talking about?
Because just money. If we're talking about money.
Yeah.
You know, I think you probably need 20. 20 million.
Then you're rich. You need 20 million. You probably need 20. Now, the problem with this, okay, this is where everybody hates the podcast now. See, see, the problem is nobody wants to, like, confront the real. magnitude of the mathematics. And that's why people are like, that's ridiculous. No, what you're saying is you can't imagine how to get to 20 million. See, I wish somebody had told me this in accounting. I went to accounting for, I spent five years getting an accounting degree. I only went there for one reason. I thought they were going to teach.
Me how to account.
I thought, I thought it was a freaking money course. Okay, I'm thinking in the fifth year, dude, it took me five years to get out of this course. I'm thinking, this year, they're going to teach me about the money. There's nothing about money. And the only reason I went to that course was figure out, dude, how do you, how do you make money? How do you keep money? How do you multiply money? The basic money class.
So, like, if you just do the.
Math, a guy's like, oh, man, 80 Grand, I'm good. 80 Grand. Another guy's like, 100 Grand, and I'm good. They haven't done the math. Another person says, if I just make a, if I just have a million dollars, I'm good. but you haven't done the math. The actual math. You know, like how much money is that really? You know, 100 grand in Los Angeles, 13,000 goes to the state. You have $87,000. Okay? Half that goes to the federal government. You're at $42,500. I've done the math. Yeah. Okay. You're at 42-5. You go to Whole Foods once a week just to take care of your little baby girl and your wife, you're broke. Okay? So you're broke. You're broke, okay? And we hadn't handled the health care issue. Trumpcare, Obamacare, you don't care if you don't get your money right. I mean, that's the facts. So most people have never done the math. There is no school on it. There's no class on it.
Why is that?
Why, man?
So frustrating.
But do you know how many people the middle class support? How many bad, awful groups? You know, I mean, just think about it, man. Like if the middle class, if 215 million people in America knew the truth, And they weren't sitting there saying, but look at my two cars, look at my two little girls and I got dresses for them. And look at people in Ethiopia, they're starving. You went over to Africa, compare their situation to our middle class. Everybody here is rich, including the guy on the street corner that's a panhandler. Absolutely.
Right?
So why is the freaking killer question? Why have so many people been put under the spell of the middle class? that is who determines who's the president of a country.
Right.
Look what happened in this last election. Okay. That middle class is starting to get a little edgy right now. They're starting to be like, I ain't had a good job. I hadn't had a freaking pay raise. You keep talking about unemployment going down. Where's my money? Okay. I don't get anything at the bank. I earn a half a percent at the bank. So your mom, my mom, my mom, I watched my mom earn 12% at the bank. She earned 1% a month on her money. So the battle cry back then was save your money because you could earn something right save your money today. What do you get nothing?
Nothing you lose money.
You lose money. Okay, so inflation is yeah, don't take a risk. Don't take a chance diversify why why would I diversify? Why rich people do not diversify? Okay, they got the wealthiest people on this planet when they went into trains They went all in on the trains when Henry Ford went into cars he didn't diversify. He went all in on cars Elon Musk he's going all in on solar Right? That's how you make hits. But the middle class is taught what? Put a little here, put a little here, put a little here, put a little here. Put 27 different things out there. Why? Who benefits from 27 investments? Those people.
Wall Street.
Yeah.
Okay.
Start early.
Start early.
Start early. Okay? Get a Keo account. Get an IRA. Who benefits? Freaking Wall Street. Dude, all that money gets pushed over.
There for 30 years.
Mm-.
So.
So where do you put your main, your money then? Well, let me just say this.
Yeah.
If they offer it to you, okay? It's like, it's like, it's like insurance in Vegas at a blackjack table. You know, when you got you, they got an Ace up, and they're like, you want insurance? Dude, if they offer it to you in Vegas, this is what my mama told me. She's like, if they offer it to you, don't take it.
So.
So if Wall Street offers something to you, it's probably not good for you. So where do I put my money? I put my money number one, where I have total control. number two, where it is indestructible, like the investment has to be indestructible. So I'm, I'm indestructible, right? I can invest in me and I'm in control of that investment. That's the first that I would tell everybody, like, don't even invest. You don't even think about a financial investment until you have a hundred grand set aside. And until then, you got five, you got 10, you got 22, you got 50. Just keep reinvesting that money in yourself. Courses, classes, whatever. And until, until you're taking the action necessary, the money will show up at the bank. If you keep investing in you, the vehicle. And then the second thing is where the money goes. Okay, the money's got to go into something indestructible. No technology can wipe it out. And it needs to be very simple for me. Like so simple that I can explain in one sentence.
So what's that?
Well, it's not bitcoin because I can't get my head wrapped around the cryptocurrency and most people can't explain it to me.
But you're receiving payments from bitcoin.
I will take, I will take your crypto. Yeah, I'll take it, but I'm not going to invest in it. Yeah, I'll take anything, dude.
I'll take your donkey.
Yeah, sure. So my office feels differently about that. But because we got, we had this phone call like, hey, will you take 50, 000 in bitcoin? And Sherri was like, no, Jared's like, no. I'm like, hey, dude, take that money, son. Okay, take that freaking...
If it's that or nothing.
Take it, man.
Don't tell people no. Figure out how to make it all right to say yes to it. So, what was your question? You said, so... So what are you putting it in then?
Yeah, I mean, I load up.
Everybody knows I'm loading up in real estate. You know, I buy apartment buildings. And so the simple thing is, I buy a place where somebody has to live. They rent it from me, and they're gonna rent it from me for years. and that's going to pay down the debt on that place. I don't own homes. I don't buy houses. I buy rental property that people have to live in, that they want to live in because they're great properties. They're really nice properties. And it's affordable living. It's not this $5,000 a month stuff that you live in. It's affordable, $1,100 a month, great neighborhoods, great properties, safe environments. We go in and improve them. fix them up, happy living, take care of people. We don't abuse anybody. I don't do any government programs, even though there's a lot of money in them. And then, and I know that money will be there for my kids 30 years from now. I mean, that money will be there 100 years from now.
So you put 100% of your investments in that or either in yourself, your team or real estate.
In my business, in myself, my business, every surplus penny twice a year I go broke. twice a year.
I'm like, put it all in.
Really?
Into real estate?
Yeah.
Wow.
And then it's gone.
And then you have to reach. I gotta go back in. I gotta go. But literally, I'm like, like real estate guys. There's the same. We're real estate guys. Don't ever go to dinner with them because they never have any cash on them.
I'm broke right now.
Really? Like, yeah, we're going all in right now.
So I go.
You're buying a big unit or big units, right? I exhaust my reserves, and. And then we got to go back out and say, okay, let's go again.
Really?
Let's go, let's go sell a book. Let's go sell a, let's go get a millionaire booklet out there in a marketplace. Because there's nobody, there's nobody that I know in our space that, that will push as hard for a $9 product as I will. I don't know anyone.
Right?
Nobody.
I don't know anyone.
Nobody.
I'll go from one, I'll, maybe, you.
Know, Timmy, Tim Sykes.
Yeah.
He pushes pretty hard.
But, you know, he won't, he won't drop down to like a, a $3 product, dude.
I don't know.
Yeah, maybe not. But, I mean, you can come to one of my seminars, you'll see me at the back table freaking selling $2 stickers. So why is that? Because it's a flow, dude. It keeps the flow going. Okay? It's about money's about, it's about, it's about a, what is this? It's a cycle, circulation, circulation. It's, it's, it's, this has to happen for you to have money. And the bigger the circulation, you know, I was in Australia, I was on this dive. It was a nine day dive, live aboard. We didn't see land for eight days.
Wow.
Dude, I saw so much activity underneath, right, at 80 feet and 100 feet. Like there was economies without any money, tremendous economies where they're trading food, right? I mean, there's all this activity, giant tunas. I mean, a group or bigger than this wall right here, where there's this big, this food, right? There's this just a cycle of food and ecosystem. And that's what the economy is. The economy is basically an ecosystem of people that either have confidence or don't have confidence.
What is the worst investment people should be making during this time and what's the best investment they can make?
In my life, when I have become desperate, right after that's when I become stupid.
Yeah.
And explain.
The other one is when I get, well, when, you know, when you get scared and you go rushing towards something out of fear, that sense of desperation, this, oh, thing, when you do that, you're getting ready to screw up. I mean, just count on it. And the other time you do that is if you're greedy, if you think you. Okay, I got this one. I can take advantage of this, and, I mean, greedy as a lack of virtue greedy. I don't mean greedy in a positive way where I'm being ambitious. Okay. I mean the negative sides of greed. And so if you're functioning in desperation or in this no holds barred, I'm going to just clean up on other people's pain thing, that's when you're getting ready to screw up and you're getting ready to make a major mistake. And so you're set up also for con artists when you do that. And so if you're functioning in high emotion, your brain just doesn't work good. My friend Art Laffer says, when you're panicked and when you're drunk, you don't make good decisions. And so, you know, when you're on high emotion, your brain is, your critical thinking skills shut down. And so that's when I've made the biggest mistakes in my life is when I was desperate and the few times that I was greedy where I thought, oh, I'm gonna slip in there and that's gonna be easy money.
What was that?
Easy money.
Could you share a story of one of those greedy times where you tried.
To jump in and. Yeah, a buddy of mine. A buddy of mine, I was in my 20s, and a buddy of mine was buying gold. And now this is in the 80s. Okay, it's a million years ago, and he's buying gold. And he had this friend that was a gold. He was a gold bug. He was picking gold. And this guy had picked the gold prices where they were going within a dollar, like. 14 times in a row. And so we both dropped five grand into this thing. And if we had hit, it was a, it was a margin deal. And so I would have made 50 grand. And I thought, I'm putting 1,000 bucks in here, I'm gonna make 50 grand. But it's a margin play, which means you're either going to make 50 grand or you're gonna make zero. And so he picked it right 14 times the time I got in the 15th time, missed it. I got zero. Turned 5,000 bucks into zero instantly. Last time I bought gold, last time I played stuff on margin, last time I got greedy.
Is there ever a time where... So what's the difference between greed and a great opportunity of being ambitious? Can you make money fast in certain things? Or is typically most things take a certain amount of time and energy and.
Effort The vast majority of people who are successful financially and successful have done it incrementally. There's very few people who you see a meteoric rise in their wealth or their success that's keep it. And I think because you build your character along the way to be able to hold on and be able to do it, I think that's my theory on it. I mean, I got rich quick. I started with nothing and by the time I was 26, I had $4 million worth of real estate. I built a house of cards. you know, and I had a million dollar net worth. I made $250,000 in 1984. I was making 20,000 bucks a month and in my 20s, so I mean, but you thought I had it all figured out, meteoric rise to the top. But the very thing that caused me to be the incredible overdrive of ambition caused me to go so fast that I missed the blind spots. I missed the detour signs. I missed the bridge out signs. And so I built this house of cards I thought was a stone house. But I was naive and didn't know and along comes some regulations changes, a few shifts in the economy, a little SNL crisis and couple of...
It comes down.
All of a sudden Dave looks like an idiot instead of a genius. And so it turns out I was a little of both because you don't build something like that at 25 if you're not somewhat of a genius. But I was obviously an idiot in the way I built it and so I get to do it again. Get the wonderful opportunity to start over.
And it went the right way. Yeah.
Yeah.
But I mean, in the midst of that, as I was falling, it took two and a half years to lose everything we owned. I had stuff presented to me. I almost got conned, serious conned, like people just a real con artist type guy. There's not many of them out there. Most of the time you get screwed by well-meaning ignoramuses. But these were real con artists coming into my path and I was about to give them money because I so desperately needed to turn quick money into big money to save myself. I was desperate. And right about the time you get desperate is when you get stupid. So don't make those decisions.
So there's not really, so what I'm hearing you say is the wealthy, wealthy people, it takes time and it's incremental. It's not an overnight thing. It's not a quick rise. There might be some spikes here and there, but it's typically over time.
It's okay to take a spike, but anytime I get a spike, I'm always a little suspicious of it.
Really?
It makes me even more careful. I draw back and I go, well, that's really cool. Is it okay? You know, because it's not normative. Normative is incremental. And so I always tell entrepreneurs, it's okay to be on the COVID of Slow Company magazine.
And what I want to know is why we weren't taught these things growing up.
Me too. Tell me.
Right?
So if you were, if they were like, okay, Tony, giving you the key.
To the education system.
And how would you apply, what teachings would you apply into about finances, learning about this, how to generate wealth as opposed to trading time for money, but really leveraging it and investing it the right way. What would you start implementing? Well, the first thing you want to.
Teach anybody, a child, a kid, anybody, is that you'll never earn your way to freedom. You just don't. You look around and you see, you know, Kurt Schilling, if you remember from Boston Red Sox, in $100 million a year, Broke, bankrupt. I asked Warren Buffett, I said, what made you the wealthiest man in the world? And he smiled and he said, Three things. He said, Living in America, great opportunities, having good genes, so I lived a long time. And he said, the last thing is compounded interest. And we all know about compound interest, but I give the example of the book of this guy, Theodore Johnson, worked for UPS, never made more than 14,000 in income in his entire life in a year. And in old age, he's worth $70 million. And how did he do it? All he did was he took a percentage of his income. His percentage was 20%. Now his family said, you can't, we can't save any money. But he met a friend who said, if you pretend there's a tax and the tax just took the money away from you and you never see it, the money just comes out of your account and goes in investment account, you'll be financially free. So he was disciplined. He didn't look at it. It happened $70 million by compounding. So people's mistake is, and kids don't know this, adults don't know this, that you won't earn your way there, but you can compound your way there. What I want to do is say, where do you put that money? That's a trick, right? It's a secret. Well, the first trick is actually doing almost nobody does. Right. The second trick is you really have to understand where you're going to get hurt because the fees.
The fees are just destroy people.
You have a whole chapter about the fees.
I was like, this is incredible.
Isn't it wild? It's nuts. I mean, there's so much money just on the fees. Well, just so people have an understanding. 96% of all mutual funds never match the market. I mean, they never beat the market. So I was just on a morning show this morning, and, and Michael Bloomberg's one of his guys that house some of his money. So I'm, you know, this is the only industry I know of where people think they could be a doctor. They think they could be a financial planner. And I said to myself, look, the statistics. Warren Buffett taught me this. He said, Ray Dalio told me this. David Swenson, who took Yale from 1 billion to 24 billion in two decades, these are people telling me this, right? Nobody beats the market except a couple unicorns that nobody has access to. And I said, I didn't say you're not one of them. But I said, here's the truth. 96% of mutual funds don't match the market. That means 4% succeed. Now, what are your chances of picking the right mutual fund? People don't know what they're doing. They put their money in a 401k. They pick a mutual fund, not knowing what it is. If you play blackjack and you and I play and you get two face cards and your inner idiot says, hit me, I want to give up one chance. a million when you get ace, you have an 8% chance of winning. If you try to get a mutual fund, you got the 4% chance of winning. So what I show people is not only do you not get the result, thinking logically, if I hire someone else to do it, they'll do better than me. But in addition, you pay around 2,000% more than it's worth. Meaning you get the same exact product, the same stocks, if you own the index, right? You want a piece of all of America's best companies, say the Vanguard 500 Index, 500 top companies. that costs 0.17% like less than two-tenths of a percent versus the average mutual fund is 3.17.
Incredible.
But first just hear that so you understand it's like if the average car sold in America is a Honda Civic, it's $20,000. You can get the Honda Civic for $20,000 or you can pay $350,000. That's the difference between 0.17 and 317. But if you look at it over a period of like, how old are you?
31.
31. Okay. So let's assume you and a group of buddies at 35 managed to put aside 100 grand and you manage not to add any more money but to grow it at 7% in spite of ups and downs in the market. And you're 65. How much money do you have? Well, if you paid 1% in fees over those 30 years, 100 grand became 574,000 bucks. Not bad for never adding another dime. If you had 3% in fees, have the same growth, But 3% in fees, you now have $324,000.
Almost half as much.
$250,000, 77% less money. And you have the same return. It was just the fees. So the world, most people you ask them, what are your fees? They have no clue. So I've created a site where people can go, they can type it in, you find exactly what your fees are and what you should be paying. And it's just, it's highway robbery. Where in the world would you pay 2,000% more for the same exact product? You can only we do it because the financial industry makes things so opaque, so convoluted, and people feel overwhelmed. And hard to understand.
That's why I try to come in.
Here and go, look, time to become the chess player, not the chess piece. Let me teach you so you understand what's going on. It's not that complex. They use all these big words, but when you know what's going on, you don't get screwed. And more importantly, you take advantage of.
The system instead of letting the system take advantage of you. Yeah, I like that. Now, you've coached some of the world's the greatest athletes, former presidents, biggest CEOs. Who coaches you? I've had a lot of people asking me to ask you this question. Who mentors you?
Who coaches you today? I have always looked for people that were playing the game at a different level than I am and/or knew the road ahead. I always tell people, anticipation is power. If you ever play a video game against a child, it's pretty disastrous, right? Maybe not for you. You're maybe a different generation. For me, it's like, you know, it's not the kid faster and smarter if they played this game eight million times. So they know the first shot's here, the second shot's here, the third shot there, and you're like reacting. So when you're reacting to things, you fail. So my mentors have been people over the year, different people. My earliest mentor was a man named Jim Rohn, who was a personal development speaker, just touched my life. Then I was involved in neuro-linguistic programming, NLP, when I was 21, 22, 23 years old. I became partners with a man named John Grinder, brilliant man, co-founder of that. But in my last couple decades, it's been people like Peter Guber, who owns the LA Dodgers and owns, you know, the Golden State Warriors NBA team. And he's just got 52 Academy Award nominations. So he's a mentor for me. Paul Tudor Jones, I coach, but also I'm coached by him because we get to pitch and catch. And then, you know, I've got some people in my life that, you know, like Steve Wynn is a dear friend of mine.
Yeah.
Most of Las Vegas. He's brilliant. And these guys are all, 18 years my senior. So they know the road ahead. And I'm able to learn from them in advance and kind of anticipate things. And that to me is incredibly valuable.
-Yeah. Very cool. Now, I want to ask you how you personally handle a breakdown. Because you... I've been to your workshop and incredible experience. -Thank you. -And you teach people how to overcome.
Their fears and how to handle breakdowns. But how do you personally deal with it? And do you even have any breakdowns? -Yeah. They sent me a list of questions you have just to kind of give me a that was one of the questions. And I was like, you know, it's interesting. It's breakdowns. It's certainly not something I experienced, but it's not because I'm so talented or so brilliant or so fearless. It's just you're like an athlete. You're an athlete. You're in shape. You're not going to have a reaction in your body like somebody who doesn't take care of themselves. So, you know, I believe, I don't believe in emotional intelligence. I think it's useful, but I'm more interested in emotional fitness because intelligence is a capability. Fitness is a state of readiness. Interesting. If you are fit, you can take that demand right now and you can deal with it. You can deal with that physical stress, that emotional stress. Same thing is true with psychological fitness, emotional fitness, right? So, I'm pretty fit. And part of that is not because I'm so smart. Part of it is I've taught this for decades. I remember I had a woman who came to one of my seminars in, I don't know, early 80s probably, and she would run in this room, 5,000, 10,000 people, I think it was, you know, she went a couple of 10,000 person events, and she would get in this front row. Fight her way through there. And she'd jump and go for it. And one break, she came up to me, I was signing a book for her, and she says, Mr. Robbins, I've seen you at like eight of these. And she goes, I've seen you like when you're really, I know I can hear your voice, you're hurting, or you haven't slept.
And she goes, you always seem to.
Be so up all the time. How come you're so up? And I said, well, part of it is I attend all these seminars. So I'm teaching it. So there's a fitness of that. But there's also, you know, I've buried three fathers and in one mother and that affects your life. I've had a physician look me in the eye and say, you have a tumor in your brain. And so I've had those moments that when you've had extreme stress and you push your way through it, you build psychological muscle. It takes a lot to knock me off. In the early days, we didn't have $50,000 to keep the doors open. How do we do it? Then I graduated to $5 million. I graduated to a partner of mine who kind I didn't do things well and I ended up owning $100 million because I had to take on his debt.
$100 million.
And but when you do all that stuff, you know, now my companies do five billion, you know, a year. So you keep expanding what I would call really the circle of your, the threshold of your influence. Sure. You know, everybody has a threshold of control. And if you get beyond it, you kind of freak out. So it takes a little bit more. I don't have breakdowns. I don't have breakdowns. Adam, do I get pissed off or get frustrated or tired?
Yeah, but breakdown, honestly, no. So how do you handle if you get tired of something?
I sleep when I can. I mean, it's honest, it's pretty simple. But you know, when I've had challenging times, I mean, I have so many tools. Yeah. You know, I pull them out. And mostly, it's so it's like you as an athlete, you know, you don't just physically break down. Right. You take care of yourself. So, I think most people don't train their mind and emotions. It's like I think the most powerful muscles to me are not physical, they're as strong as important as they are. It's like faith is a muscle, courage is a muscle, determination is a muscle, playfulness is a muscle. Passion unexpressed weakens. Faith untested gets smaller. So I'm always, I call it deep practice, always pushing myself to the edge.
And pushing yourself to the edge makes you stronger. In the book, I was really excited to hear you talk about you say the secret to wealth is gratitude. Somewhere in the book it says that.
And I think maybe it was someone.
Else you were referencing. -Yes, it came from Sir John Templeton. -And every day I practice gratitude. When I wake up and every night, I always try to say to my girlfriend or someone I'm talking to before I go to sleep, three things I'm most grateful for. -Great.
-Now, why... So, I was pleased to see that. I was like, I'm on the right track if I'm living in gratitude. But why is that the secret to wealth? -Well, Sir John Templeton is probably one of the greatest investors history. People don't know his name. He started out with nothing. He wasn't Sir, he wasn't from the country, he came from the US. And he decided that he wanted to understand wealth and so he saved $10,000, huge amount of money in those days. And when Hitler invaded Poland, he developed a belief. His belief was you make your money in times of maximum pessimism. Like if you were around in 2008-9, you remember what it was like, right? You could have bought the sands and Las Vegas, you could have bought their stock for $2.28. Today it's $67. It's a 3,000% return. It's not bad. You could have bought Citibank for less than a buck, right? So people in those times, he understood that. And so what he did was, and everybody thought the world was gonna end, he took $10,000. He bought every stock on New York Stock Exchange. It was a dollar or less, including companies everybody thought were going bankrupt. But when things are bad, people think it's gonna be bad forever. When things are good, they think it's going to be good forever. And they're always wrong. Life's cyclical. So there's a season for everything. So once we got through World War II and a few years later, guess what? Those same stocks made him a billionaire. So when I asked him, I said, what's the secret to wealth? His response was, you, know it. You teach it. I said, what's that? He said, gratitude. And I said, why do you say that? He said, because if you got a billion dollars and every day you live pissed off and frustrated, the quality of your life is called pissed off and frustrated. But if you have nothing, but you're euphorically grateful for whatever you have, you're the richest person that you're going to know. He said, so it doesn't matter how much money you got if you don't have gratitude. So I do the same thing, by the way. I have a process I call priming where I get up every morning, I do mine in the morning, I do this radical change to my body, kind of alter my state, and then I do 10 minutes, I never miss, and my first three and a half minutes is what I'm really grateful for. And I make myself think of at least one of those three that's something really simplistic, instead of something giant. the wind on my face, the look in one of my kids' eyes, something of that nature. And then I do three minutes of strengthening and healing, and I do three minutes of what I'm going to create my world. And I do that for a minimum of 10 minutes every day because I believe you have to condition it.
You don't just hope that stuff shows up. You set your intention each morning. Every day. Yeah, very cool.
So what are you most grateful for recently in your life?
So many things.
Well, it's Thanksgiving, so one piece, well, one is my daughter, My daughter is 40 years old and she's been married child forever and she's gonna bring me a grandson.
Wow.
Congratulations. Thank you very much.
That's cool. But also it's Thanksgiving, so for me it's a very emotional time because my family was fed when I was 11 and we had no food at Thanksgiving and it touched me so deeply and I decided I was gonna give back. So, when I was 17, I fed two families and then four and then eight and then I didn't tell anybody I was doing it and then I got my friends to do it and my companies grew. I've fed 42 million people now over 37 years. But you have a challenge for this, right?
100 million? Yeah, this one, what I did is.
I decided, you know, I'm writing this book and in the middle of writing it, last summer, most people didn't even notice Congress cut food stamps. They don't call them food stamps anymore, but I lived on them, so I know what they are food stamps. My family lived on them, but they cut it by 8.7 billion, which means you eliminate 2 million people from the rolls overnight and they still need to eat. So, I support all these nonprofit organizations. organizations and Feeding America is the largest in the country. And so I thought, I want to call attention to this. So if I donated all the profits of this book in advance, how many people could I feed? Because I normally feed 2 million through my foundation and I match it. So I feed 4 million a year. And they said, you can feed 10 million people. I was like, wow. I mean, and then as the years gone by, I've got more and more inspired. And so now I'm gonna feed 50 million people personally. I'm not just in the book, I'm writing a larger check on on top of it. But also, I'm working with Feeding America to get matching funds to feed 100 million people. Incredible. So, to go from my family not being able to eat to feeding 100 million people is a pretty amazing sense of gratitude and a sense of grace. And, I've done my part but there's.
Been grace in that as well. That's amazing.
It's incredible what you're doing and very inspiring. So, thank you for doing that.
So, anybody gets a book... -You're feeding 100 families. Yeah. But it also feed on average 50 families every book. 100% is being Not only 5%, more than that. That's amazing. Now, I think I also read in the book, I don't know if you said this or someone else said this, but the key to living is giving.
Yes.
Now, I think I might have heard you say this actually back when I first saw you when I was 16 at an event.
And.
I remember thinking, I don't have anything to give. I don't have any money. How am I supposed to invest my money? 10-20% every month. and then how can I give on top of that? But I really understood that it's so valuable and important to give and I work with a lot of nonprofits myself, building schools for kids around the world. That's wonderful. And I've seen a big impact in.
My life, the way I'm able to serve people. Sir John Templeton told me that he's never seen anyone tithe, which tithe is usually 10% of what you earn for at least a decade, who didn't become incredibly financially free.
Wow.
And I think the reason is, I had a moment like when my whole life changed. It was kind of twofold. I was really young like yourself back then, working my tail off, trying to build a business. I mean, big goals, you know, you don't always succeed to start with. You just come together, right?
It was hard.
And I remember I was so frustrated because I was working 18-hour days and nothing was working and I was broke and I felt embarrassed, you know, I should be doing better than this. And so I was driving home from Orange County on the 57 freeway in San Gabriel Valley, out near a place in Pomona, California. It probably doesn't know anybody else, but I remember it so vividly because it was almost midnight. And I was at this breaking point, and then I was like, why am I not doing better? And then I just pulled over the road, and I used to keep these journals. I still have them, written journals. And I wrote in big lines, the secret to living is giving. And I started to cry. And I realized I am so focused on what am I not getting, or focusing on what I'm giving. So for six months, man, it turned turn me around. But then, you know, something else to get in your body. It was in my head, it was in my heart, but I had to get in there to stay. And I started going through some really tough times, and I lost everything financially. And I was mad at everybody because, like, I'd loaned a friend a thousand bucks, and, you know, I'm doing well, and he didn't even return my phone call. And what changed me was I. I was down, I don't know, 22, 23 bucks, something like that.
I don't know.
It was 24 dollars. Enough that I knew that I didn't have money for food for the next week, clearly. And I didn't have any prospects. I was living in Venice in this 400 square foot bachelor apartment, feeling sorry for myself, and I thought, you know what? I gotta eat. So, I'm not gonna drive my car because I'm not gonna spend the gas. I'm not gonna pay for parking. I'm gonna go to an all-you-can-eat place and load up for the winter, right? So, I could get more like one meal a day. And so, there's a place called Marina Del Rey, not far from Venice, and it's a beautiful community and it's right on the water. And there's a place called El Torito. It's still there. It's a little restaurant and had taco bar and all that kind of stuff. So I walked there for the three miles and I go, I'm gonna go and load up. And I was all about myself and getting through this. And this little, well, this woman walked the door, actually, very attractive lady. That's probably why I caught my attention. And I'm waiting to see who her boyfriend is. And there's nobody up there. There's a little guy down here. It was obviously her son. And he's wearing this three-piece suit, you know, a little vest. He opens the door for her. He pulls out the chair for her. and it was just, he stared into his mother's eyes. I mean, it was just pierced into her eyes. I don't know what it was, but something about him was just so moving. It was such a sweet, caring, loving young man. It was mother that moved me. So I paid for my meal. I don't know what's left. 17, 18 bucks. Put it back in my pocket. Was left. Walked up this young man, introduced myself, and I said, hi. I don't remember his name. I think he said his name was Ronnie. And I said, Ronnie, I said, said, you're really, I said, you're a class act. I I saw how you opened the door for your lady. I saw how you held out the.
Chair for your lady.
He goes, She's my mom. I said, that's even more classy. And I said, so cool that you're taking her out to lunch like this. And he goes, well, I'm not really taking her out to lunch because I'm just 11 and I don't have a job. I said, Yes, you are. And I had no plan. I literally just reached in my pocket, took all the money I had, changed dollar bills, and threw it right there.
In front of him.
You look at me like this. He goes, I can't take that. I said, Sure you can. He said, why? I said, because I'm bigger than you are. And he got this big grin on his face, his eyes got this big. And I didn't, I just shook his hand. I didn't look at this, his mom. And I just walked out the door. But he's gonna tell you the story is, I had no car, I had no money. I did not, I was euphoric. I was like flying home. I was like, you know, I probably looked like an idiot probably skipping or something. I was just, and what I felt was, I should have been like, what the hell did you just do? I have no meal or I was gonna eat I went home that night, I laid out a plan, and the plan was gonna take me, you know, 10 days, two weeks. So I thought, well, people fast for a week, I could fast for a week, you know, that type of thing. And I was in this great mindset about it. I woke up the next morning and I get the old regular snail mail shows up, and it's this guy I've called a zillion times. He wouldn't return my call. I open it up, there's a check, thousand bucks, plus interest and an apology. So I'm sitting there and I started to cry, honestly, and I was just like, why did this happen? you know? And I don't know if it's true, but I decided that day this happened because I did the right thing. Because I didn't have a plan, it wasn't a strategy. I just thought this little soul beside me, I knew it was right and I did it. And I didn't do it because I thought I could or I couldn't. I didn't even think about it. And that's the day I became a wealthy man because I didn't have any money, but scarcity left my body. And I had plenty of ups and downs since that time in various times in my life, but I never went back to that, oh my God, you know, it's going to happen? It's like breathing. Do you stop and say, God, is there going to be the air before you take a breath? You know it's going to be there. You don't run your life by that aspect. And so that to me is what it's about, is showing people, if you won't give a dime out of a dollar, don't bullshit yourself. You'll never give a million out of 10 million or 10 million out of 100 million. It's just not going to happen. But if you can do that now, you don't ever get beyond scarcity. You start behind it. You make a decision to get What.
Are the three or four main things you invest in with that 10 to 30% a year? And does it change year to year?
Yeah, I'll kind of walk you through for the high earners and then we can talk about people 100K and less. So once you have a certain amount of capital, you do have a few opportunities that you probably didn't have before. Everybody has this idea that, you know, the rich have all these crazy tax breaks and captive insurance and this and that. And I've looked into all that stuff, right?
I know.
Insurance companies and all these other things, right?
Yeah.
Here's the truth.
The truth is, some stuff is a.
Little sketchy, but yeah. Definitely. And I'll say my core values are that when it comes to things like taxes, I love your principle on this. I'm very conservative. I'm like, dude, only in this country could I have been this successful.
I love this mindset.
I'm happy to pay my taxes. It means that I had the opportunity to create something great. and if I pay an extra 5,000 or 30,000, it doesn't change my life at all, and I want to be able to give back to the society that enabled me to do what I do.
That's a powerful mindset, and it gets you away from, you still want to optimize tax breaks that are out there, but it gets you away from trying to constantly look for some of the shortcuts or like schemes or something.
Yes, especially entrepreneurs who talk about tax breaks all the time are typically the most unsuccessful ones. Two reasons. One, why are you talking about tax breaks instead of growing your business? And two, it's a very scarcity driven mindset. Ooh, I only have this much that I have to protect when really you can just grow the pie and your taxes are simply a proportion.
Just make more.
Just make more. Now, yes, you do want to optimize and take advantage of all legal tax breaks. So as you earn more, you do have more opportunities. You have not only your 401k, you have all kinds of advanced IRA options, you have HSAs, you have a variety of things. But at a certain point, if you're making enough, you're going to max all of those out.
Yeah.
Okay.
So what do you do when you.
Max it all out? So then the next step is to simply create a taxable account. It's just a typical non-retirement account, just that Vanguard or where I use Vanguard, whatever you want, and you just continue to invest. So that's one and that's going to keep making you money over the long term. It's just you're not going to get those tax breaks from a 401k and IRA, etc. The other thing is as you accumulate more and more assets, you're going to start to notice a lot of different people are going to come with opportunities. Dude, I get text messages from these crazy start like, hey, I'm opening up a bar in Brooklyn. I'm like, I don't want your stupid bar. I'm not investing in that. I could burn my cash easier. But you're going to want as you start to accumulate a lot, you're going to want to do... have a little fun with your money when it comes to investing. So, some people want to do crypto. I think a lot of these people are complete nut jobs.
-Great. -Look, you crypto... -I put a little bit in there just to like have.
Fun, but I was like, thank goodness I didn't put more in there because everyone's losing their money. -Exactly. And they're, you know, they're all... Okay, I don't even want to get into crypto because I'm going to get a lot of angry emails. Hey, if you want to email me about your angry crypto opinions, just send it to trash@iwillteachyoutobirch.com. Don't send it to But you know what? I like what you said. You took a little bit, you had some fun.
Yeah, had some fun.
5 to 10% once you've got all your other stuff automated, you've got your index funds, locked down, HSA, your different accounts. I don't have any problem. I think you should take 5 to 10% and you should have some fun with it. For me, I did angel investing and I basically learned that I suck. My angel investing is not good. I haven't made any money. Yeah, my deal flow sucks. My choices were okay. some hit, most didn't. I basically just wrote that money off. But it was fun and it allowed.
Me to have an outlet. And you learned. I learned to meet people and you, yeah.
Yeah.
So if you want to do crypto, if you want to invest in somebody's bar, you want to do angel investing, if you're qualified, et cetera, be my guest. But don't jump to that first. Get all your stuff automated. And at a certain point, the compounding is so insane, you will start to actually earn more from your investments than you will from your income, even if you're making 500k a year.
From the index funds you're talking about, if you're investing in that. What if the market's going down or up? Should you even worry about that? Let's say you put a half a million in. It went up 100,000 over a couple of years, but then it went back to the original investment.
Should you be like, oh my gosh.
I need to take this out? Do not do that. I'll give you a real example.
I put two years of my money into this and it's still the same amount. I should have just left in the bank. No, you shouldn't have left it in the bank. All right, so this happened to me just about two weeks ago. So the market went down and I hardly ever log. I log in about once a month to my.
Yeah.
And really, you should not be checking your investments.
Check every 10 years.
Once a month is good. And, like, don't. You're not a day trader. Okay, so. So I happened to log in, and I saw that in the 11 days of that month, in one of my accounts, I had lost 75, 000. Okay, so. For everybody listening, yeah. How would you react if you lost $75,000 in 11 days?
Most people would be freaked out.
They'd be freaked out. They would pull the money out. Yeah, which is exactly the opposite of what you should do. So everyone says this common thing and they just roll their eyes, oh, buy low, sell high. But in reality, they actually buy high and sell low. So you know what I did? I did nothing. I logged in, I felt no emotion. It wasn't like, My life is over. It was like watching someone offer me concrete to eat. Like I felt nothing. I'm like, nah, it's fine, whatever. I just closed the window. The key there is every month my system is automatically investing. It's called dollar cost averaging. It's just automatically investing. And you should set the same thing up too. You shouldn't be paying attention manually. You shouldn't be sending a check. It just works automatically. And so I knew this month, Market is down. And if you think about any other thing you buy, if the price of toothpaste goes down, you're happy. If the price of milk goes down, you're happy. The only time we get weird is when the price of the market goes down and then we're like, oh, let me pull all my money out. Bad move. The price went down. If you're young and you have a long time before you need the money, you're getting the market at a discount.
You should get excited.
You should get excited. So I just said, Great, it went down. Fine. bother me and I just close the window and a few days later my system will just purchase it again. So it's up, it's down, it doesn't matter in the short term, but over the long term we know that the market tends to return about 7 to 8% over time. But it can go up, it can go down and so you do not want to be paying attention in the short term.
Let's say you've got a half a million to a million dollars extra cash laying around. You've maxed out all your IRAs, you've got five to 10 grand a month going to your index funds, you've dabbled in the smaller investments and startups and you've done it all. Yeah. Got a little bit in crypto, you've tried everything. What should you do with that extra million dollars a year?
Okay, great question. First off, this is like somebody saying to a fitness instructor, I've done everything. What should I do next? And you know what that fitness instructor is gonna say? They're gonna say, When you say everything, what do you really mean? Like show me, are you doing foam rolling? Are you doing this? Are you all balanced? For the person who's doing this, I'm gonna give you your answer, but I'm gonna first say, are you sure? Have you planned out, so you know that 10 years from now you're gonna buy a house. Do you have a 20% down payment set aside? I do, and I have no plans to buy a house anytime soon, but I have 20% set aside for a house. That moment.
Yeah.
Yeah, for when... So I already planned. for what I know is coming even though I have no interest in it today. What about the first year of your kid's life? Do you have that set aside? What about X, Y, Z? Are you taking care of your parents when they get older? One thing that I really love to do is talk about relationships. So I love to invite my family once a year for a big, big vacation where we can all stay in a house and there's a, you know, like a chef and all this stuff and we can all be there and the kids can be playing. Is that something that's important to you?
Cool.
Right, so plan for that. Now, if you've done all that stuff, you got your six month emergency fund, you've got your investments automated on autopilot and you still have money left over, you're in an awesome position and now you can do a couple of things. One, if you want to keep growing that money, you can simply invest it in a non-retirement taxable account and that money will grow like crazy. If you're putting in 10, 20 K a month, that money will turn into massive amounts and you can if you guys don't believe me, Just go search for compound interest calculator. Bankrate has a really good one. And plug in 20K a month for 10 years and that's it. Just stop and watch what happens at 7% or 8%.
What is that?
7% or 8%.
Yeah, at 7% returns and watch what happens. It becomes like a tsunami. You cannot stop it. So that's one. The other thing is if you want to invest in a little bit of fun stuff, if you're like, Hey, I want to take 10% of this and invest in like this crazy investment my buddy's starting a thing. Go ahead, just be prepared to write it off. Maybe it works, maybe not. And then from there, you should also remember a third thing and nobody really talks about this. Maybe it's time to increase your quality of life. Maybe instead of staying in the middle back seat, it's time to upgrade to the exit row.
Right.
Business class. Business class. Or maybe it's time to eat at a different restaurant. Maybe it's time to really think about your money dial and say, Hey, I always claim that wellness is important and yet I'm still eating like the same old thing I used to eat 10 years ago. Maybe it's time to upgrade what I eat and where I work out and all that kind of stuff. My gear, you can do that.
You've made it.
You already won the basic game. So now you get to benefit from it.
What about real estate?
It's a lot of people, you're either, I hear people that are all in on real estate investment or they're kind of like all in on the market.
Yeah, I think that real estate, so a lot of people are going to Hate me after I say this. I know you guys have all been told since you were like two years old, real estate is the best investment ever. And it turns out that's not really true. A couple of things that might surprise you. If you're buying one home.
If you're buying a house and living in it. If you're buying multiple units or buying.
Multiple homes and that's your business. Yeah. It might be a better investment. Correct. Let me make the distinction. So most people in America are told that the American life, the American dream is graduate from college, get married, buy a house, white picket fence, 2.5 kids, and you made it. And I think we all just have to look at people who are a little bit older than us to realize that might not be our American dream. We might want to travel more. We might want to work remotely. I mean, here we are in the middle of a weekday chit-chatting and sharing it with millions of people. This is our dream. So I want to challenge people to really question what you've been taught. That's number one. Number two, Most people who buy a house and live in it think that it is the best investment. But most people have never really...
It's like my piggy bank.
Yeah, they think that. They don't understand that when you spend money on a house, you've incurred tons of phantom costs. You have taxes, you have maintenance, you have all kinds of things that you don't count. And if you actually factor all those numbers in, real estate often, in fact, many times is not a great investment at all. It's a place to live and you have these phrases like you're throwing money away on rent. It's not true. Your landlord's making a profit, otherwise they wouldn't do it. That's not true. Your landlord can't charge you whatever they want. They can only charge you what the market will bear. So if you search my name in real estate, you'll see all the numbers played out. Now, on the other hand, if you are a real estate investor and you're disciplined, that's a different story and that can be effective. But mom and pop who are thinking that they bought their house in 1970 for $200,000, and now it's worth 600,000. They think they made 400,000. Actually not. If they had taken that money and put it in the market, they would probably have much, much more.
Really? Yeah.
Wow. And less headache.
Way less headache.
Well, depending if they looked at their.
Investment every week, maybe they'd be more stressed up the level that's going up and down. Yeah, yeah.
So, and listen, if you go, I will buy a house one day. Okay, so I don't want anyone to think that I'm telling you never to buy a house. If you want to rent for the rest of your life, absolutely can. Many people in New York, San Francisco and other high cost of living cities, they rent. No, there's no shame in that. I rent by choice. I could buy a place tomorrow, cash.
And I choose to rent. Why do you choose to rent? After you've been here for 10 years and you've been renting the whole time? Yeah, on purpose. And how much is that, do you think?
Over, over half a million dollars. Oh, yeah, it's a lot of money. I rent a nice place.
Yeah.
Why do I do it?
Because... Could have used that money in something else. You could have put it in...
I did. I put it in the market and I made more.
Because you didn't put it into a home. Correct.
Where it was a lot more money up front. It was more money up front. I used that money instead I put in the market. But there's also other reasons too. I couldn't get for the amount I'm paying where I live, if I were to buy a place in the same building or it would be four times more expensive. So that's the first. Second is maintenance. I'm gonna give you an example. I woke up one day and the doorman was knocking on my door. It's like 8:30 in the morning on a Saturday. He's like, Sir, sir, do you mind if we come in and take a look at something? I said, okay. And we go into the living room and there's a pool of water just sitting there. In your apartment?
Yeah.
It had dripped down three levels. So I was like, oh my God. They're like, Sir, go back to sleep. We'll take care of it. That day they came, they repaired the floors, not just of mine, the ceilings for the next two levels down. that's probably likely to have costed them, let's just say 50K, maybe 100K because it's Manhattan and it's a weekend service. Who knows?
That's not my fee.
You didn't pay for it?
No.
And I said, Great, that's their problem. I'm going back to sleep, man. I got another hour of sleep here. So I want everyone, you don't have to believe me. You don't have to believe what someone else says. All you need to do is run the numbers. That is my only suggestion to you. Go to a buy versus rent calculator. Make sure you plug in all the fees. Not just the taxes, the realtor fee. If you get a bigger place, you're probably gonna get more furniture for it.
The HOAs or the lawn maintenance or trash service or whatever it is.
The key thing, I think, whether it's a house or investments, my point to you guys is take your money seriously. Once you take your money seriously and you put some time in it, whether it's this book or wherever you wanna get your information, you're gonna be better off for it. You don't wanna delegate this to somebody else. I want you to understand it. And once you understand it and you automate it, you make a few good choices in life, you never have to worry about lattes or appetizers again.
How did you make the emotional shift when you started renting an expensive apartment? And you're like, Man, if I added all this up after a year, that's close to a down payment on a nice house in the Midwest. Or they could buy a whole house in the Midwest, you know what I mean? How do you emotionally rationalize that? where you're not frustrated like oh gosh, I just spent 10 years.
Yeah.
Throwing this money away.
Because sometimes I feel that way.
Sometimes like man, I just spent a lot of money in these last few years. Well let me ask you this. But I like the freedom and the.
Flexibility of not having to incur all those other.
Yeah.
What do you like to eat?
You like strawberries?
No.
Okay, what do you like to eat?
Good steak and veggies.
Okay, steak. Once you, when you buy a steak, and you eat it, do you feel like you just threw your money away on that steak?
No, I enjoyed it.
But where is it? I don't see it. Where's my investment? In fact, isn't it coming out in the toilet in a couple hours?
It is, yeah.
So what are we talking about here? You get value out of a steak just like you get value out of renting. Now, if you want to incidentally build equity, that's great. But remember, you can also lose equity. Right now in Manhattan, do you know rents are down? Is it? Yes, and so are Prices of houses if you want to buy. They're going down every month. A lot of people like, oh my God, it's so expensive. Sometimes, but sometimes it goes down 5%, 10%. Some of these neighborhoods are down 15%. No way. Yeah, so a lot of people don't realize. In fact, I did a survey of my readers. I said, Do you think it's possible for real estate to decrease? Over half of people said no.
They had never even thought about it.
So I want to... 2008, 2009. Memories are short. You would think they would remember, but they don't. I hear people, dude, they had three houses. They bought it, they were destroyed financially. Their credit was ruined. They had to give up these houses and their identity as an investor. And three years later, they're like, I think I want to buy another couple of houses.
Wow.
It just goes to show, I'm not saying they're stupid. It's not that at all because a lot of people have gone through this. It's the idea that the propaganda to buy a house or to follow a prescribed set of rules for the American Dream is so powerful that even losing your own houses, doesn't change people's perspective.
So how do you teach people to overcome the emotional rationalization of blowing their money on rent?
Okay, it's funny.
Besides that story you just told, which helps me.
I'll tell you what. I I want to acknowledge that it's.
Real because it's a fear that people live with.
Yeah.
And I'll give you an example. Like, I call it the handshake effect. And it's when people would come over to my apartment and for the first time, and they would say, Wow, this is an amazing view. And then they always say the same thing in New York. Do you own this place? And we're like shaking hands, right? It's like we just met. How much you pay on this? Yeah, how much you pay for it? It's classic New York. And I say, no, I rent. And it's that moment where if I had said I bought, they would be like this.
Wow.
Pretty impressive. It's really cool, yeah. And you kind of get this pride. This pride, yeah. And then I, and then when I don't say that, they get really confused. 'cause this is the I will teach you to be rich guy, but also he rents and I thought renting is for people who can't afford it, but they don't understand. And they give me this look and I realized that so many of us are looking for somebody to approve of us while we are shaking their hand, someone we don't even know. And so instead of getting your approval from somebody you just met 10 minutes ago or from your parents who probably are not the most sophisticated investors, if you're watching this show, you know you talk about greatness and being great means choosing your own path. Sometimes you might choose to buy. I have no problem with that. If you ran the numbers and you consciously decided, sometimes it means you don't. But if you want to live the life of greatness, you need to be comfortable making different choices than what other people expect.
Thank you so much for watching this video. And if you're looking for more greatness in your life, then check out this next video, right?
Here.
I think if there's a lesson is that I'm looking for the challenge and some people are looking for security. They're two different people. They're very, very, they're extremely different people.
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