Vanguard says 4% returns… now what? Your Next Move!

I spent most of my time viewing what I want from the outside I comb it over like it's the scene of a cry the only guilty I find staring back at me in the mirror at night Stuck in place just waiting for a green light But I can lie for someone else to say I can live my life the only comfort I found is blending in with another crowd when things go wrong well past the labor round.

Cause I can.

Lie awake for someone else to say I can live my life.

My life.

But I keep asking for permission no I keep asking for permission oh I keep asking for permission why do I keep asking for permission when acting lightweight? For someone else to say I can imagine sa one little piece of the thought there on your face hold on tight oh baby coming loose all this back and forth has killed my you promise me that our days will run smooth until we crumble we're close to something new Cause all I need is you no more goodbye we start on something new I know you wanted to no more goodbyes no more goodbye Peachy drink was the first thing we lost all these days life's gone on you should know how it feels hold on tight this back and forth let's kill my you promise me that our days will run smooth until we crumble we're coming something new Cuz all I need is you no more goodbye we start of something new I know you wanted to no more goodbye no more Good.

All right, let's, let's get this party started. Let's get going and everything. How are you all doing? Let me know that you can hear me, see me and all the stuff. All right. So good to be here. For those of you that don't know, I've been in the middle of filming, live filming a whole new program that is is going to be coming your way. And it is, I think, one of some of the best work that I've done. Can't wait to get it to you. Lots of fun things in store for you, some cool stuff. So I wanted to try, you know, today is when I do these live shows and I'm trying to get them every week and I seem to be hitting them. I'm going into a really mean travel schedule, so we'll see how we go with that. But this money, mentoring mornings is all about you. And typically I want to come on, talk about some things that I see going on in the market, the economy with money, wealth, different things and then open up for questions. Now the questions come in as DMs or on my question hotline that I have on my website or as comments and everything, or they come in from you live, where you post them in the comments. And so it's a place that I'm here to try and help, to give an understanding, give a perspective. Not here to. I don't sell investments, I don't sell insurance. But I have been an advisor and someone who's been on this same journey that you may be on to financial freedom for, for decades and have helped many people navigate it and continue to do so. So what I want to hit on this this morning is that was. So here's the thing. There was a new study that just came out. It's, it's an annual study that Vanguard does for, for those of you that don't know who Vanguard is, Vanguard is probably the biggest index fund broker out there. It was founded by Jack Bogle. He was the, he was the godfather, I guess, of low cost index funds. Okay. Well, they do a study every year and they just released their current version of the study. It's called Vanguard Capital Markets Model vcmm. And they test the markets and they create this forecast of what we can expect as investors and people that are trying to build wealth. And so in their current study, they run an analysis and a forecast for what they anticipate is going to happen for the next 10 years. Not tomorrow, not next year, but 10 years, a decade. And those of you that listen to me speak a lot, you know that I think that we should be thinking in terms of decades and generations and not years, weeks and months, but we break it down to years, weeks and months to get to the generations and the decades. But we should be thinking in terms of decades. Here's what they said. They ran 10,000 simulations of what they anticipate the returns are going to be. And they came back and said U.S. stocks somewhere between 4% and 3.8% and 5.8% per year. Okay, not very high bonds, 4 and 5% value stocks. They're the stock, they're the teacher's pet. They're at 6, 6 to 8%. So not, not tremendously high returns. So in short, what Vanguard was saying in their study was like, hey, temper your expectations because, you know, for the next decade, because right now US stocks are trading in their eyes at 44% above where they believe fair value is. In other words, this is like code for, hey, you overpaid for the Buffet line. I mean, that's, that's the reality of what, what they're trying to get at. Now. What does that mean for you? And this is one of the reasons, one of the reasons I wanted to make sure that, that we, we touch on this is that it's too easy to get caught up in, in someone's stats and, and, and forecast. And before you start selling your index funds to hoard, I don't know, canned beans and go into crypto, let's look at the reality of what's going on because it's easy to take the headline and it's easy to take the surface level stuff, but Vanguard's been doing this forecasting gig for a whole while now and in fact for years. And so one of the things to look at is say, okay, in the past have they been right? What have they done? So let's look at their reality because Vanguard in fact has forecasted typically between 5 and 6% for U.S. equities over and over and over and over again. So they continually come back with this forecast. Yet when you look at the S&P 500 returns over the same 10 year window, the same decades that they look at the returns, the actual returns are 12 to 14%. Yeah, okay, they're, they're two to three times what their, their forecasts are. So either the market didn't get Vanguard's memo or the model's way ultra conservative. So here's the thing, I think it's the latter. The, and they'll admit that the forecasts are probabilistic kinds of models. They're not prophetic, they are not determining things. They aim for the middle of the range. They're not looking for the moonshot. They're looking at it in a way and saying what can we look at probabilistically? And here's the other thing. I think that they may be playing and, and I heard another commentator say this too, and I, and I agree, they can be, they may be playing the hey, let's just undershoot it. And if we, you know, it's a whole lot easier to walk back, hey, we predicted a 5% growth and we had 12%. Shame on us versus we predicted 12% growth and you only got 5%. And so I think that there's a little bit of that going on in there. So in the end, the question becomes, so what do you do with this? I mean, what is it that we're gonna do in making this happen? We get to ask ourselves what to do. Well, here's the thing. You don't invest based on predictions. You invest based on your priorities, based on your vision, based on your goals. Based on your timeline and based on your plan and the market, the market ultimately is going to do what the market's going to do. They don't try, you know, when you look at, when you look at the wealthy, they certainly are not trying to time the market. They know that they're gonna play the game to be in the market no matter what's going on in the market. And so they're gonna continually do the things that they do. So, number one, what, what we wanna make sure we're doing is to make sure that we are in the market, stay in the market. The second thing that the wealthy do and what we should be doing is to understand that we need to diversify, okay, that we diversify along, along these, these things to keep a diversified portfolio, to, to make that happen. Now the other thing is to stay the course, stay the game. Okay? You have a plan. When we work with our clients, we put together what we call a money machine master plan. And they have this, this plan that they're working, and they get a chance to look at it and say, what is the plan? We test it. We put the scenarios in. We know your goals, we know your timelines, we know your priorities, your expenses. We build it out, and then we have all the little levers and dials to push to make sure that we understand what it is. And then we play to the plan. We play to the plan. We don't play to the market. Because if the plan's done right, it should work in, in up markets, down markets, sideways markets, and make it happen. So the real message here is this. Forecasts. Yeah. Can they be helpful? Sure. But are they your future? No, they don't. They don't create your future. That future is built by you. Not some prediction model, not some esoteric thing that is generic. And if Vanguard says the stocks might return 4%, you don't throw your hands up. You build, you continue to build your money machine to make sure that you get the freedom either way. And there's steps to do it. And so given even the Vanguard study, given where they are, here's the things I want you to focus in on as you start to, to look at this going forward. And the first is, do you know where you're going? What is your lifestyle number? What is that number that you need, that freedom number? Okay? And there's two ways to look at it, is figuring out, one, what the vision for your life is and what it's going to take to support that vision. But two is to look at the costs around it to make it happen. But the bottom line is that your job is to dial in your lifestyle number. Not your neighbors, not your siblings, not your parents, not the expectation of your degree, but the expectation of you. Okay? So number one is to figure out where you're going, what number you need to get to to get there. The second thing is to build the financial foundation. When we talk about the wealth priority ladder, which is the sequence to optimize wealth building and build an unshakable financial foundation, that foundation is the first thing because we need safety first, growth second. And that comes from first, liquidity, making sure that you have enough liquid cash available to take care of you in, in any kind of downturn situation that you need. And this combination of liquidity with debt strategy. So we can't be buried in destructive debt at that point. So this is a time, no matter whether Vanguard's right or they're not, this serves you in all markets. And the fact is that I need a debt strategy to make sure that I'm not taking on destructive debt, debt carrying destructive debt, meaning debt that is for lifestyle or consumables, but rather that I've got a payment plan to get out of that debt. We can use strategic debt, that's productive debt, to build net worth and to build cash flow, but not destructive debt at the same time. I want to make sure that I'm building that peace of mind fund as we call it in my book building your money machine, which others will call it an emergency fund. I call it a peace of mind fund for a couple reasons. They call it emergency fund and they use three to six months as the metric. And I think that that is a problem because when you see what happened in the pandemic, and I've been calling it for years before the pandemic, that I thought it was too short of a timeframe. And you see what it takes to get a new job if you lose your job or you see what it takes to get on your feet when things go awry. Three to six months is the minimum I think you need if you truly want peace of mind. Nine to 18 months is what we suggest. Now that's going to take a while to do and you're going to do it over time. And you may not need 18 months, you might only need nine, you might need eight. It's a guideline to making sure you're able to care for yourself. If you're a two income family, it's a different game than if you're a single income family. If you don't have kids and you don't have a mortgage, it's a different game than if you have five kids and a mortgage. Okay. And then the other part of building that foundation is to have what I call cash flow clarity. Do you know where your cash is going? Every expense? Not that I want you to cut it out. I just want your awareness there. Too often we go into a mindless spending spree and we don't realize and we get to the end of the edges of our check and the edges of our bank account go. I don't know where the money went. That's not the way to get there. Okay, Number three. Number three needs to be the focus and the objective of, and this is the purpose of building your money machine. Finding the path to separate your earnings from your efforts to earn it. See, we are all on that earnings journey. We've been told, get a good degree, get a good job, get a good career, get a good profession, build a good business, make money, make money, make money, make money. At least as if, if that is the solution to all the financial problems. Oh, it's the fuel to it. But is it the solution? It's not the solution unless you do the right things with the money you earn. Because earnings alone will not give you the financial freedom you want. It's not going to give you the life of choice in that freedom based life. Think about it. How many people do you see that we know have made tons of money? They have. They are extremely wealthy and they end up broke. People like Mike Tyson, Burt Reynolds. You know, there's so many of these folks that end up broke. I just saw someone who just filed bankruptcy. He got hundreds of millions of dollars and he ended up with 50,000. Okay? So it's not the income that matters, it's how we get that income to work for us. Remember the sub text of my book is how to get your money to work harder for you than you did for it. That's the key in this process. So our focus is to sit back and say, how do I create a machine so I have a work option so I can separate my ability to earn from the efforts to earn it. And then you look at it from the other perspective. Number four, diversify like you mean it. Okay? Don't put your eggs all in one basket. I get it. You can be some US tech bro, you know, basket kind of person. I'm tech, tech, tech, tech, tech. But when tech goes south on you or has a bad year or a bad, you're going along for the ride versus sitting back and saying, what happens if I diversify across geographies, across asset classes, risk levels, building the right portfolios that make sense for your age, stage, and circumstance. Because one portfolio, there is no one size fits all. And I know some people out there that are recommending one size fits all, no matter age, stage, or circumstances. I think it's a mistake. We build the machine to fit your life. We build the machine to get you to where you want to be. We build the machine to fulfill what you need. Okay, that leads me to number five. Focus on behaviors, not predictions. Yeah, Vanguard gave us a prediction, but let's focus on our behaviors because we can't predict. We can't determine what the market's going to do. We can't determine what Vanguard is going to do. We can't determine what inflation is going to do. We can't determine any of it, but we certainly can determine what we're going to do. So focus on your behaviors. The reason most people fall short isn't the market. It's their habits, it's their choices, it's their behaviors, it's the lack of consistency. It's the fact that they're not staying invested. Okay. Or they're reacting to things that are going on emotionally rather than strategically. And from a plan. Okay. Which sets into step number six. Use your plan, not your feelings. When we bring emotions into our financial journey, when we bring emotions into that journey, our financial intellect goes down. Okay? So what we want to do is eliminate emotions, create a plan, and let the plan inform the path. And the path will then be the thing that gets us there. Because in the end, wealth creation and all that, it's a math equation, and math always maths out. Okay, so what's your plan to get you from wherever you are, no matter what your situation is, to where you want to be? And if you don't have a plan, why not? That's the game. We got to get the plan in place so it tells us what to do. Because with the plan, it'll help us create the behaviors, It'll help us make the decisions, It'll help us have the habits we need to move to the number that we determine. All right, so here's the deal. I get it. We're going to see these forecasts over and over again. We can't control what the market gives us, but we can certainly control what we build with it. And as much as Vanguard can forecast, let them forecast all they want. In the background. You build your money machine and you build your life of choice, a freedom based life, the way you want to. All right. I hope that this puts us in perspective and that all the stuff that goes on to kind of polarize and create fear and everything puts it in perspective where you kind of go, ah, I'm okay, we're okay. And you just kind of keep going. Follow the principles, follow the habits, follow the behaviors, follow your path. Not some prediction or forecast that has been wrong year after year. All right, all right. I hope that helps. Now let's turn to some questions or if there's any comments on it or anything like that. I am game. Let's have some fun. Let's take it from there and see what we can do and, and everything. I've got some questions that came in. Let me just pull those up. In the meantime, if you have a question, do me a favor, pop a Q with a colon into the chat and then let me know if you're on Facebook or YouTube. I will get those comments. If you're on LinkedIn, do me a favor. I know that they don't like this, but I can't get your comments off of LinkedIn directly. So they got to fix that. And until they do, I need you to drop the comments in Facebook or on my YouTube channel so I have it. Okay. All right, here's a question that came in from Jason. Let's start with that. He says, should I shut down any contributions to Roth Iris so that I can focus on building my unshakable foundation? All right, so. So this is a great question. What we want to do is follow something that I talk about called the Wealth Priority Ladder. It is in chapter 12 of my book, it looks like this. Okay. And one of the things that we want to do is when we come into play, we want to make sure that we're starting to get free money and that kind of thing. So the first thing, Jason, is I want to make sure that you have the Comfort Fund in place that's at $1,500 or one month's expenses in place. It's not your peace of mind fund, your emergency fund or anything like that. It's just the Comfort Fund. Second, I want to make sure that you have a debt payment plan that is being funded and working to pay down any destructive debt. So that means that you're using a debt snowball, you're using a debt avalanche or some other method that you're on a payment plan. So it is getting funded and it is getting paid down. Third, you are also funding that Peace of mind fund. So as long as we have those tiers in process, I have no problem with you taking on a Roth IRA at some level. Because here's why I'm saying this. The power of the Roth IRA is huge, especially when you have time on your side. Now, I happen to also know your age because we know each other. And so I think if we can get a way for you to do both. I would do both. But the first things first, let's make sure you have the debt payment plan in place and that is being funded. That you have some liquidity in place and that's being taken care of, and that you have your cash flow control in place. So we are, we are. No, we're not going into debt each month, but we're coming out of debt and we're getting better each month. That, that's how I would, I would play that. So it's a great question. Other questions coming in. Let's see. Let me look at this. So here's a question that came in. I am self employed and not saving for retirement. What account should I use and how much? All right. Well, it's a great question. I wish I had a little more information like your age and that kind of thing. But the bottom line is this. As a self employed individual. As a self employed individual. And Dean, you will see me in Napa. Man. Good to have you here. Jared Holley. Oh, my God. All right. So as a self employed individual, you have the opportunity to use a couple of different accounts as a retirement account. One, you can use a SEP ira, which used to be really, really popular because of the flexibility of it. It's kind of fallen not from grace, but not as popular because of the Solo 401K. So the Solo 401K will give you the opportunity to put money in as a salary deferral, depending on age, somewhere between 23 and $30,000. But you can put a profit sharing element to it that can push it up to close to $70,000. So I like the Solo 401K. The challenge with it, there's two things to be careful about with it. One, you cannot have any other employees other than yourself and your spouse. That's it. So if you're self employed, but you have other employees, you can do a solo 401k. You might be subject to a 401k or something like that. Second, in a solo 401k until the assets get to 250,000, it's pretty simple. But once it gets to 250,000. You have to file what's called a Form 5500 every single year. It's an information form. There's no tax due on it, but there's certainly a penalty due on it if you miss it. So it's something that your accountant would have to do. You could possibly do it, but you know, it's just an additional form. But the bottom line is, is that even as a self employed individual, I want you in the wealth creation game and I want us to use tax advantage accounts to do that. And the other beautiful thing is if you're setting things up, you could set up a 401k, a solo 401k. That has a Roth element to it. So watch what happens. You put $23,000 in as a salary deferral, but you don't take the deduction for it and you make it a Roth contribution. So you get a Roth contribution for the 23,000. You then max out the profit sharing, call it another 40,000 you put away. That's the deduction to the company. So it saves you on tax. So you have two different elements in your 401, one that's completely tax free, one that will be taxable down the road. So you're building both buckets at the same time. So I would look at that and I then put it on automatic. Okay, great question. Jared Holley, My friend Jared is in the house. So cool. Have you ever heard of Mark Chalkens market crash that happens regularly every second year after an election. And he thoughts, you know what? I wish I heard about it, but I will look at it. I have not heard about it. Is that, I mean is it true? Is that a consistent thing? And the question I have is it, is it a cause? Is it an effect? What is it? That's the of that. Is that is that's the question. But I have not read it. I will look it up if and, and Jarrett, you know me. So if you have a link to it, man, pop it to me and I'm more than happy to give you my thoughts on it, especially when I see you because I'm going to see you in a week. So Sandy King, of course there's a recording. We record everything we do. So it'll be on YouTube. So you'll be able to watch the replay on YouTube under the lives and all that stuff. So keep me posted. Other questions, anything else coming up? Let me go to the, let me go to my questions that I have here. I held. This is a great one. I got a raise. Congratulations. But I'm still stressed about money. Why doesn't more income fix the stress? Okay, fix the stress. Well, here's the deal. Believe it or not, more income can actually even make you more stressed because you're not sure what to do with it. Or you, you know, you're. It's a weird phenomenon. This is such an interesting question because there, when people are starting, let's say they're starting their business or their career, the. The thought in their mind sometimes is like, am I going to make it? Am I going to make it? Am I going to make it? I'm going to make it. And all of a sudden, when you realize you're making it, the thought shifts to a different thought. And that sometimes it's like, am I going to lose it? Am I going to lose it? Am I going to lose it?

It.

But it's this weird phenomenon of. Of kind of the human element that I see that psyche goes through. But what we have to examine here is, is the stress a result of the money or something else? Because if the stress is a result of something else, more money doesn't solve it. And so you get a raise, yet you're still stressed about money. Part of it is this, you know, this is. This person's name is Jenny. I said part of it is, do you have a plan? See, back in the day, 2009, is when this happened. I didn't have a plan. I was just running a race. All I knew was, more, more, more, more, more. Just keep earning, just keep earning, just keep earning. I was on the earnings treadmill. I was doing the things that I thought I needed to do, and all I had to do was try and increase it and increase and increase it. And the problem was I didn't know where the finish line was. I didn't know what my enough was. Not that I'm ever going to stop, but there's a point where you tip over and you go, we'll be good. And we got to know when we're going to cross that line. This is why it's so important to get that freedom number calculated. So you know what the target is. Doesn't mean that when you land on it, you stop. I have not stopped. But when you start to drive income without a plan, the stress comes in with a bigger paycheck because we don't know what it's doing. We don't know if it's enough. And it's the stress of not knowing that that, that starts to induce it. So part of it is plan. Second Is systems. Okay, Systems. One of the things we say is that, all right, first we have to deal with the stuff in our head and our heart, the stories and our mindset around money. The second is, is that we need, we need to then translate that into the proper decisions, habits and behaviors to do the right things with money, to build wealth. The third is we need to build systems around it to make it effortless and put it on autopilot, to automate it. Because then all of a sudden we've taken the friction out of it. And our money that comes in knows exactly what it's going to do, when it's going to do it, how it's going to do it. And the more we remove that friction, the more we reduce the stress. So if Jenny, you don't have a plan and you don't have systems and you don't have a process, then therein lies the foundation of where the stress comes in. And no amount of money is going to help solve that. But a plan and systems that know that are getting you to a number, that are giving you the life you want so you can walk in peace will. Okay, that's, that's how I, I would start to look at things. Follow. If you don't have a process, get my book. Follow that process. Lot thousands have, it works. Okay? Build margin in your life with intention so you have space to maneuver. Follow a plan, build systems. All right, cool. Awesome. Let's see what we got. Let's see. Paval. He always has good questions. What did he say? Hi, Mel. I found this compounding mindset before life forced it on me and I just saw it in the system. When did it really start for you? What flipped the switch from building success to building freedom? This is a great question. What got me to focus on building freedom and realizing that our ultimate currency is not money, but time was literally at the hands of a six year old. You know, I've told the story, I tell the story from stage. But I was a single full time dad. I was raising my son. You know, he came to live with me at five and a half and I raised him from five and a half on. And I was building my business, I was doing my things and I did what most people do. You know, I was on the treadmill, I was running, I was traveling, I was speaking, I was doing, doing all I needed to do to build something that we could do. And, and one day Jeremy came running in, he says, daddy, daddy, I drew a picture of you in school today and I knelt down and I looked at this picture and it wasn't us having fun, it wasn't us Disneyland or playing ball. It was, it was literally us, me standing in front of two computer screens with a phone in each ear. And if a five and a half, six year old boy understood what prophets were, he would have looked me in the eye and say, dad, I don't need your prophets, I need your presence. And that was the thing. This six year old boy put a mirror into my soul to say, hey, I need you and you're screwing it up. That wasn't what he meant when he drew the picture, but it was the vision he had. But that's when I realized that if I don't change and separate my ability to earn from the efforts to earn it, at some point in my life, I will always be imprisoned by the hour, by the minute, by the time. And that no matter how much money I had in the bank, if I didn't have agency or control my time, it would be a poor life because it wouldn't be a life of choice. And so that started the obsession of building the money machine. That's what gave birth to the money machine. The power of the money machine, though. And having that freedom and agency over time came at the hands of cancer when I was able to shut things down and know that the machine would take care of us. And so it was literally based on a picture in blue felt, a pen from a six year old. That really got me to start investigating because I came, I was an accountant, so I came from one of the worst business models in the world. We lived and died by a timesheet, so we were selling time and that's finite. And it never dawned on me until that moment to sit back and go, how do I get off the timesheet treadmill? So hopefully that helps. But that was the tipping point for me because I so wanted to be a good father and be a role model for him. And ultimately our relationship completely transformed because it transformed the way we did things, our relationship. He's now 35, he's got two little girls of his own, and he's been indoctrinated into my thinking and the Systems. And he's 35, his wife's 33, and they've got four homes and a multimillion dollar net worth. They're doing well and our relationship is real close, but it changed because I had to make him a priority and make sure that he knew he was a priority in that process. And the only way to do it was to, to basically Buy back my time, Jose. Sandy. The name of the book is building your money machine. It came out, it came out last year, USA Today bestseller. The paperback version just came out literally two weeks ago. If you go to YourMoneyMachinebook.com you can actually get it here. Because if you go here to get it through Amazon, you'll go through Amazon to get it. But this, this site will give you some additional trainings and free gifts and bonuses to do that and everything. So, so, yeah, it's, it's the, it's the latest edition. Cool. All right, let's look at this. Jose is asking, what do you think about ETFs based in gold and in bitcoin? Thanks for your great mentoring online here. Oh, thank you. You are so, so, so welcome. Jose. I don't make any bones about it. I am not a bitcoin fan. Okay? I am. I am not a bitcoin fan and I'm not a huge gold fan either. I think that I am looking to invest in things that have business models, cash flow models, growth models behind it. Not that they have to be pushed up by other buyers. When the only reason gold goes up, the only reason bitcoin goes up is because more people are buying and, and everything that if I am, I'm not dependent on the growth of the, the cash flows. I don't like those as investment place. Now, do I have precious metals? Yes, I have some precious metals. But it's a very narrow, narrow slice of my portfolio. Most of my portfolio is sitting in equities of businesses that are good businesses going to grow, develop cash flow and do that. So I don't spend a lot of time in that. Have I bought bitcoin in the past? Yes, I have. I wanted to experiment with it and understand it. There's some things about it. Let me separate bitcoin from the blockchain. Blockchain and the technology there has legs and I think there's something there. Bitcoin itself or cryptocurrency itself, I think there's still some things that need to be developed. It is a volatile, volatile asset class. Therefore, I'm not going to put much into it to begin with. Now, the fact that they're creating ETFs now and all that stuff is starting to give it some legs. Is it possible that this thing takes off? Yes, and I'll look at it differently. I'm willing to change my thinking. But the other side of it is I'm talking about it for myself. I don't need the Volatility in my portfolio, not at my age, stage or circumstance. It's not something I want to do. I can assure you that my son has got some of it, but there's 30 years difference between us. Okay. So I think that there's a place for it, but I'm not one that is all in on it and say let's just bet on it. Because if we look at the volatility of it, yes, it's up now, but it was up before and it just tanks. So I want to see that volatility lesson, if you will, before I'm willing to use it as a long term play on things to do that. So hopefully that, that makes sense. But that's just me and I know that there's, there's going to be people out there that just absolutely love, love the, the crypto space and, and, and that's it. But there was a lot of people that, that you know, loved tulips once and that went out too. So I mean there's, there's some NFTs, all of that stuff. So crypto, I mean Bitcoin in specific specifically and Ethereum are probably the two most developed and likely to succeed long term. And so if I'm looking at those, that's fine, but I'm not, I'm not looking at some of these other meme coins and things like that. People have gotten hammered in that stuff and I think that they're, unfortunately there's, there's been some, let's just say, improprieties in that, in that space. So I'm, I'm very careful about it. Okay? Remember, I lost one third of everything I own in a Ponzi scheme because I didn't follow my rules, because I didn't listen to my voice, because I didn't do the due diligence. And out of that, okay, me and three friends lost over four and a half million dollars. Out of that came some rules. And I am, I have trading rules and it's what I teach and, and what I do with my clients and, and I teach to my students. But the bottom line is I'm dogmatic about it. And that means that I might be leaving some money on the table. Table. That means that I might leave some profits out. But I am more focused on making sure that people aren't destroyed by something bad. I have someone recently that got caught into a ski what turned out and I told them not to do it based on what I saw. I said do not do it. It doesn't smell right. It doesn't feel right. There isn't enough information. And they went ahead and did it anyways. And they did it at five, six times what they told me they were going to do, and it turned out to be a scam and it had to do with crypto. So my concern is that if we don't have our arms around traditional investing and doing it properly, then we need to be really careful about speculative investing, because that speculative investing, which is how I got caught in the Ponzi scheme, they know how to trigger the emotional triggers. They know how to trigger the aspiration, the desires, the dreams, all that stuff. And it. This sounds great. And you get in and then you get slammed. That's what happened to me. And I refuse to let it happen to me again. My family and anyone that I have anything to do with, not on my watch. And so I'm very dogmatic about it. And does it mean that I might leave some money on the table? Absolutely it does. And I'm okay with it. So cool. Great question, Jose. Thank you. Thank you, man, for being here. So, other questions, Anything else coming in? I got others that are on the, on my sheet that my, my team gave me. Oh, this one, I feel guilty. So this one, this one's this guy Bill signs in and he says, hey, Mel, I feel guilty spending money even when I can afford it. What the heck's going on with me? I said, what's going on with you is your human. So if you look. Oh, Sandy, I didn't see that. Let me get to your. To your question after I answer this one. So there's something that, like I said, when I first got in this game to work with people, I literally thought that what I was going to do is I was going to give people the math to wealth. Here's the columns, here's the rows, here's the math. You're good. Go ahead and go. But I quickly figured out that you can't deal. If I don't deal with what's in the head, the mind, and in the heart first, I'll never be able to help them touch their pocketbook. And so we need to explore some of the stories that you have going on. Like, for instance, the first story I tell in my book is seeing my dad cry, and it had to do with money. Now, I don't remember the specifics. I was only five years old, five and a half years old, but I remember my dad in tears with my mom saying, I'm trying to take care of you all. And I feel Like, I'm letting down the people that I love the most. And in that moment, I took it in. What I didn't realize is it put that drive into me that got me to keep thinking about, I got to earn, I got to earn, I got to earn, I got to earn, make money, make money, make money. Because I believed the meaning I gave it was that if I don't make enough money, I'll let down the people I love. And lo and behold, I was making enough money. Jeremy drew a picture, and I was still letting the people that I love down. So it wasn't the money. There was a story behind it. And so what we need to start to do is unpack the story that you have that's causing the guilt. What did you see? What did you observe? Most of our money lessons, they're not taught. They're caught. We see our parents, we see the media, we see social media, we see even cartoons displaying what the rich are like. And so there is something there that causes us to sit back and go, I feel bad now. Maybe it's a level of lack. Maybe it's guilt from upbringing. Maybe. And I don't know, if we had a conversation, we could dig into it and start to understand what the money story is. But here's the way to break it down. I call it the money story dynamic in the book. Look, the observation isn't the problem. The interpretation is. See, when I saw my dad crying, my. The fact was he was crying. The fact was he wanted to take care of people, but he felt he wasn't. That's the facts. Everything else I gave it. It was an interpretation. Everything else I gave, it was an interpretation. Okay? So the problem is that interpretation is what starts to drive our behaviors, and those behaviors become a money identity, and the money identity sets a money set point. So if you observed at some point in time some things that helped build this guilt about spending, whether it was overspending or not being able to pay bills. And so you were afraid to spend and you didn't. It happens unconsciously in many cases. And you observed something of a fact, gave it a meaning, which gave you a behavior, which gave you an identity, which gave you this money set point. And so the important thing is to sit back and say, what were the facts versus the interpretations? See, the facts are what a camera lens would see without sound. My Ponzi scheme. The camera lens would see me giving this person money, giving them more money, not getting money back. That's the facts. The interpretation was, was that I'm an idiot, I'm a loser. I shouldn't be doing this. That was the interpretation I started to give it. How would that have served me? But when I understood the facts, I could separate the interpretation for the facts and I could give the facts, say, what did I learn? What was my role? And how can I do it differently? And out of that was born my rules of investing. Out of that is the things that I teach today. And so I'm going to urge you to start to explore and go a little more introspective and start asking yourself where maybe these stories are coming from. You know, what are you? What meaning do you give money? What things that come into play? What were the observations, the occurrences? And try to separate the facts from the interpretation. All right, hope that helps. Sandy King asks. Okay, Sandy King asks, let me see, where's the other question? She says, here it is. How much should your business be earning to warrant having an S corporation or should you have an llc? I find an LLC easier to understand. My husband opened an S corporation and we don't understand it. Okay, so, Sandy, this is my cya. I don't know your facts or circumstances. I'm going to give you a general answer that will hopefully guide you in a place in a space where you can get more specific to your situation. However, here's the thing. Why do we want an entity in the first place? Most of the time, there's a couple of reasons we want to put an entity in place. You know, whether it's an LLC or an S corporation, it is to shield us from liability, to separate the different activities in our life, if you will, to shield us from liability. Or number two, for tax reasons or planning reasons. Okay? Typically, generally speaking, when someone starts out, if we don't know that there's legs under this idea, they'll start out as a sole proprietorship, okay? No real entity. And then they'll move from that to a single member llc and they'll do it like you mentioned in your question, it's easier to understand, it's easier to set up and everything there isn't. If it's a single member llc, there's no additional tax returns. It ends up on your. On your personal tax return, but it gives you the legal shielding that you need and that you want. And then you could go to an S corporation. Now you can be an LLC taxed as an S corporation. That's a tax election. But when should you do that? And if you do that, well, an S Corporation, as you're finding out, is A little more complicated, it's a little more nuanced, but why should you do it? Well, bottom line is this. If you think about your llc and let me actually see if I can draw this out for you in some senses. So I'm going to jump to the iPad for you. So if I have an LLC versus an S corporation, okay, let's say the income is $100,000 for each. Okay? Now the issue is this. Both of these are what we call pass through entities. Both of these mean that you'll pay income tax on the net that passes through to your personal tax return in a single member llc. It will automatically be there on a, on a schedule C. But the difference is this. 100% of the income of an LLC is subject to what's called self employment tax. That's currently 15.3% up to certain limits. Okay, so you don't take a salary out of an LLC. It comes through on what's called a K1. And that number on the K1 is subject to self employment tax. At some point that self employment tax gets really high. So at some point we turn around and say, hey, let's convert to an S corporation. The S corporation also has a K1, but the K1 is not subject to self employment tax. The difference in an S corporation is you have to pay salary to yourself. And if you pay a market rate of salary, you're not subject to self employment tax. You're subject to FICA and Medicare, which is effectively the same thing. But because you control the salary, you can control how much it is. Watch what I mean. In this scenario, $100,000, $100,000 would be subject to the self employment tax. And on top of that you'll pay income tax. If I turned around in this scenario in an S corporation and I took a $60,000 salary, salary, okay, that would be subject to the FICA and the Medicare tax. So it's like self employment tax, but the other $40,000 would come through on a K1 and I don't pay the 15.3% on it. So we use the S corporation indirectly to reduce our tax. Exposure to the self employment tax is one of the main reasons we do it. So when, when do you make this transition? Typically when your income is north of, say 70, your net income is north of $70,000 or so in the LLC. But it is more complicated because now you have payroll tax returns, now you have to file a separate tax return. And so you have a lot of other things that come into play. And this is why it doesn't. It may not make sense to do it right up front because you just may not have the volume and the cash flow in the business that warrants any kind of cost benefit and you just pay the self employment tax in the LLC until it starts to grow to a point where I can take a salary and save on the pass through. And so it's a. More. It's a technical answer, but that's the bottom line. It is very different. So. So Pavlov says, I see family can really make a difference. I like it. It does. How did it feel that moment when you knew you were the one to cut the path, who broke the cycle and create your own generation's wealth? You know what? I knew I wanted to. This is a great question. I knew I wanted to, but I didn't know how to at the time when Jeremy drew that picture. But I had this desire to do it. Then there was a tipping point where it was after I recovered from the Ponzi scheme and I was able to rebuild and I realized that I had control of my finances, that, that the processes I had worked, it allowed me to do. To do a couple things. And I think the biggest thing was that I had this piece about, about knowing that I could take care of the people I loved and the people I cared about, that I had the capacity to build, rebuild and do the things that I need to do. In fact, the rebuilding from the Ponzi scheme gave me even more confidence, you know, to know that, hey, I lost one third of everything, rebuilt it in 18 months and surpassed it by three, three times in 18 months.

Months.

So it allowed me to, to navigate that. But there was a piece about me about it to know. Like when my mom got ill and she. We had to put her in an assisted living home and she was on dialysis and everything and she was stressed out, she was worried about it. And I could literally look her in the eye and said, don't, don't worry about it. And I think, I think we think about, well, we want the money. And I talk about money. Everything I do is about money and wealth and all that stuff, but it really isn't. It's about life. Because the money, in fact, I say that the money is simply the paintbrush used to paint the masterpiece called your life. It's not. We don't need big bank accounts, we need big life accounts. But the big bank accounts give us the choice to create the life account and to know that I can take care of the causes, the missions, and the movements, man, it is a peaceful feeling to know that the work and the effort you put in to create something is working and allows you to have a sustainable impact. Then to see my son perpetuating his family and, and doing it. But more importantly, I, I see him as a, as a father and a husband. And I'm telling you it is, it is living proof that you can transcend the genetics and the upbringing because he is such a, he's turned in such a good man and a good husband and a good father. And so that's my proudest success on this journey. And knowing, but then again, knowing that financially they're set and they're doing well means that they ain't going to be knocking on my doorstep going, hey, we, we need to move in with you and I being set also we're not going to do it to them. So they're never, they're not going to be, not that they would ever be a burden, but they're not going to be a financial burden and I'm not going to be a financial burden. And I think that there's a path to that. And this is actually the, the driving force to most everything I do because I truly believe financial freedom is a birthright. And I get it that depending on your age, stage or circumstance, it may be more problematic or maybe more difficult for some people. But it's simple if you understand the principles. But we confuse difficulty and believe it's impossibility. But the fact that it's difficult doesn't make it impossible, possible. And, and so I hope that the fact that I came, you know, I'm a son of an immigrant, dad didn't have any money. We, we, we didn't live lavishly. We lived in a tracked home all our lives. You know, we drove used vehicles. I, I had to build it, I was a negative net worth and then built it and then lost it and then rebuilt it. So I, I hope that I, I can be at least an example of what's possible and that you don't have to be born on a specific side of the tracks. You don't have to do that. I really believe now the challenges is on the person's side. Are you willing to put in the effort? Are you willing to do the work? Are you willing to do the things that are required to do that? And if you are willing to, the math will always math, but if you're not, the math will always math. And so that's why I say most of our wealth creation, everything is behavioral. It's decisions, it's habits, because it's really what we do with the money and how we get it to work for us that matters. But that's driven by decisions, habits, behaviors, not the money. So I don't know if that answered your question, but I hope it did. Cool. All right, y' all, that was, this was a fun one. This was a good one. And I hope that you got something out of it. I hope that you found it of value. I hope that you'll share it out and let people know that we are doing, that we're doing these weekly shows and that it's a place for people to go to have safe money conversations and everything. So this is. Do you have a victory dance when things go right, or is it silent winds and laser focus? This is a good last question to end on. So I don't broadcast most of it. Like, when my book hit USA Today, we were number four on USA Today best sellers. And I still tout the book. Book, okay. It's still in the top 50 retirement books on Amazon, you know, and it, it vacillates between, you know, it's, it's constantly in the top 100. It'll be down at 20. It'll be up, you know, so I look at it a year later, it's still got legs. It's making a difference. I keep seeing it in airports and people post it. So, so I, I internally do this victory dance going, yes, it's working, because when I put the book out, it was to change lives. And the only way it'll change lives is if I can get people to live the book, not just read the book. And that's why I do what I'm, I'm doing. I also believe that, that we are horrible at celebrating our successes, no matter how small. And I believe that we should be celebrating our successes along the way. And so if I have a big windfall, we take a sliver of it to celebrate. Now, maybe it's not some grand celebration with all the pomp and circumstance for public viewing, but it is in a way that my wife and I, or the people I care about get to join in the celebration and, and, and do it that way. But on the other side of that, I don't believe, and I've done a couple of episodes and I got another episode coming out on this very topic. I don't believe in broadcasting your wealth. Very. It's. You're not going to see me parading. Not that I own fancy cars. I own a nice car. But you Know, but you're not going to see me parading private jets and doing all that kind of stuff. One, I want to be that quiet millionaire. And I think we all want to do it. I think in today's world, with AI, with the hacking and all that stuff, I think we need to be a little more discerning with what we do out there in the world. So public displays of it, lavish displays of it are not for me. It's just not my nature anyways. And I always want to connect back to where I came from, my roots. I'm a son of an immigrant. I would not be where I'm at if it wasn't for a whole lot of people believing in me. Whole pop of people supporting me, my audience, my customers, the people that follow me, the people that spurred me on. There's no such thing as self made. And I want to be gracious and I want to be generous and I want to be grateful in that process. And too often I think when we parade some of it, we lose sight of that. And so I'll do a victory dance. Sometimes it's private, other times I will let people know because I want them to celebrate with me. But I will always celebrate the success and acknowledge the success because I think that as a humanity, we, we're not good at doing that and we should be celebrating the success in, in other people along the way and saying, you know, way to go, way to go. No matter how small it is, we, we, we want to sell it seems like we want to celebrate the destination. I think we're better served celebrating the progress and celebrating the progress from where they are to where they've come, not compared to someone else, something else to do that. When we celebrate the progress, we keep people in motion and we keep people moving forward. That's how I would look at it. I hope that helps. Man. Paval. I hope I'm pronouncing your name right. Thank you for all your questions and thank you for being here, all of you for being here. Because this is one of the fun things I get to do, to have conversations, answer questions, help people keep moving forward. You're giving a gift to me in this process and it doesn't go without gratitude. So I appreciate you being here. I can't wait to see you on the next one and hopefully I get a chance to see you. Those of you that may see me on the road as I'm speaking, make sure you come up and say hi. I mean it's, it's crazy where some people have come to say hi to me. I mean I, I've been in a coffee house in old town Scottsdale and someone said, I want. I've watched your views. My, the armored car guy that picks up the, the cash at the Starbucks by my house says watch my videos. You know, and it's just, it's just cool to know that we're having an impact. That's, that's the purpose of this channel. That's the purpose of what we do. So stay with me, share it out, let me know what you think. Let me know if you have questions. We'll bring it on the show next go round and we'll keep rocking and rolling. All right, you have a blessed, blessed day and I can't wait to see you on your path to financial freedom. See you soon. Cheers. Use the S Corporation indirectly to reduce our tax. Exposure to the self employment tax is one of the main reasons we do it. So when, when do you make this transition? Typically when your income is north of say 70, your net income is north of $70,000 or so in the LLC. But it is more complicated because now you have payroll tax returns, now you have to file a separate tax return. And so you have a lot of other things that come into play. And this is why it doesn't, it may not make sense to do it right up front because you just may not have the volume and the cash flow in the business that warrants any kind of cost benefit. And you just pay the self employment tax in the LLC until it starts to grow to a point where I can take a salary and save on the pass through. And so it's a more, it's a technical answer, but that's the bottom line. It is very different. So, so Pavlov says, I see family can really make a difference. I like it. It does. How did it feel that moment when you knew you were the one to cut the path? Who broke the cycle and create your own generation's wealth? You know what? I knew I wanted to. This is a great question. I knew I wanted to. I didn't know how to at the time when Jeremy drew that picture, but I had this desire to do it. Then there was a tipping point where it was after I recovered from the Ponzi scheme and I was able to rebuild and I realized that I had control of my finances, that, that the processes I had worked it allowed me to do a couple things. And I think the biggest thing was that I had this piece about knowing that I could take care of the people I loved. And the people I cared about up that I had the capacity to build, rebuild, and do the things that I needed to do. In fact, the rebuilding from the Ponzi scheme gave me even more confidence, you know, to know that, hey, I lost one third of everything, rebuilt it in 18 months, and surpassed it by three, three times in 18 months. So it allowed me to, to navigate that. But there was a piece about me about it to know. Like when my mom got ill and she. We had to put her in an assisted living home and she was on dialysis and everything and she was stressed out, she was worried about it. And I could literally look her in the eye and said, don't, don't worry about it. And I think we think about, we want the money. And I talk about money. Everything I do is about money and wealth and all that stuff, but it really isn't. It's about life. Because the money, in fact, I say that the money is, is simply the paintbrush used to paint the masterpiece called your life. It's not, we don't need big bank accounts, we need big life accounts. But the big bank accounts give us the choice to create the life account. And to know that I can take care of the causes, the missions and the movements, man, it is a peaceful feeling to know that the work and the effort you put in to create something is working and allows you to have a sustainable impact. Then to see my son perpetuating his family and doing it. But more importantly, I see him as a father and a husband. And I'm telling you, it is living proof that you can transcend the genetics and the upbringing because he is such a. He's turned in such a good man and a good husband and a good father. And so that's my proudest success on this journey. And knowing, but then again, knowing that financially they're set and they're doing well means that they ain't going to be knocking on my doorstep going, hey, we, we need to move in with you and I being set also, we're not going to do it to them. So they're never, they're not going to be. Not that they would ever be a burden, but they're not going to be, be a financial burden and I'm not going to be a financial burden. And I think that there's a path to that. And this is actually the, the driving force to most everything I do, because I truly believe financial freedom is a birthright. And I get it that depending on your age, stage of circumstance, it may be more problematic or Maybe more difficult for some people, but it's simple if you understand the principles. But we confuse difficulty and believe it's impossibility. But the fact that it's difficult doesn't make it impossible. And so I hope that the fact that I came, you know, I'm a son of an immigrant, dad didn't have any money. We didn't live lavishly. We lived in a tracked home all our lives. You know, we drove used vehicles. I had to build it. I was a negative net worth and then built it and then lost it and then rebuilt it. So I hope that I can be at least an example of what's possible and that you don't have to be born on a specific side of the tracks. You don't have to do that. I really believe now the challenges is on the person's side. Are you willing to put in the effort? Are you willing to do the work? Are you willing to do the things that are required to do that? And if you are, the math will always math. But if you're not, the math will always math. And so that's why I say most of our wealth creation, everything is behavioral. It's decisions, it's habits, because it's really what we do with the money and how we get it to work for us that matters. But that's driven by decisions, habits, behaviors, not the money. So I don't know if that answered your question, but I hope it did. Cool. All right, y' all, that was. This was a fun one. This was a good one. And I hope that you got something out of it. I hope that you found it of value. I hope that you'll share it out and let people know that we are doing, that we're doing these weekly shows and that it's a place for people to go to have safe money conversations and everything. So this is. Do you have a victory dance when things go right, or is it silent winds and laser focus? This is a good last question to end on. So I don't broadcast most of it. Like, when my book hit USA Today, we were number four on USA Today best sellers. And I still tout the book. Book, okay. It's still in the top 50 retirement books on Amazon, you know, and it. It vacillates between, you know, it's. It's constantly in the top 100. It'll be down at 20. It'll be up, you know, so I look at it a year later, it's still got legs. It's making a difference. I keep seeing it in airports and People post it. So, so I, I internally do this victory dance going, yes, it's working. Because when I put the book out, it was to change lives. And the only way it'll change lives is if I can get people to live the book, not just read the book. And that's why I do what I'm, I'm doing. I also believe that, that we are horrible at celebrating our successes, no matter how small. And I believe that we should be celebrating our successes along the way. And so if I have a big windfall, we take a sliver of it to celebrate. Now maybe it's not some grand celebration with all the pomp and circumstance for public viewing, but it is in a way that my wife and I, or the people I care about get to join in the celebration and, and, and do it that way. But on the other side of that, I don't believe. And I've done a couple of episodes and I got another episode coming out on this very topic. I don't believe in broadcasting your wealth very. It's. You're not going to see me parading. Not that I own fancy cars, I own a nice car, but, you know, but you're not going to see me parading private jets and doing all that kind of stuff. One, I want to be that quiet millionaire. And I think we all want to do it. I think in today's world, with AI with the hacking and all that stuff, I think we need to be a little more discerning with what we do out there in the world. So public displays of it, lavish displays of it are not for me. It's just not my nature anyways. And I always want to connect back to where I came from, my roots. I'm a son of an immigrant. I would not be where I'm at if it wasn't for a whole lot of people believing in me. Whole pop of people supporting me, my audience, my customers, the people that follow me, the people that spurred me on. There's no such thing as self made. And I want to be gracious and I want to be generous and I want to be grateful in that process. And too often I think when we parade some of it, we lose sight of that. And so I'll do a victory dance. Sometimes it's private, other times I will let people know because I want them to celebrate with me. But I will always celebrate the success and acknowledge the success because I think that as a humanity, we're not good at doing that and we should be celebrating the success in other people along the way and saying way to go, way to go. No matter how small it is, it seems like we want to celebrate the destination. I think we're better served celebrating the progress. And celebrating the progress from where they are to where they've come. Not compared to someone else, something else to do that when we celebrate the progress, we keep people in motion and we keep people moving forward. That's how I would look at it. I hope that helps, man. Paval. I hope I'm pronouncing your name right. Thank you for all your questions and thank you for being here, here, all of you for being here. Because this is one of the fun things I get to do to have conversations, answer questions, help people keep moving forward. You're giving a gift to me in this process and it doesn't go without gratitude. So I appreciate you being here. I can't wait to see you on the next one and hopefully I get a chance to see you. Those of you that may see me on the road as I'm speaking, make sure you come up and say hi. I mean, it's. It's crazy where some people have come to say hi to me. I mean, I. I've been in a coffee house in Old Town Scottsdale, and someone said, I want. I've watched your views. My. The armored car guy that picks up the. The cash at the Starbucks by my house says, watch my videos. You know, and it's just. It's just cool to know that we're having an impact. That's. That's the purpose of this channel. That's the purpose of what we do. So stay with me, share it out. Let me know what you think. Let me know if you have questions. We'll bring it on the show next go round and we'll keep rocking and rolling. All right, you have a blessed, blessed day, and I can't wait to see you on your path to financial freedom. See you soon. Cheers. Bye.