MASTERCLASS: How To ACTUALLY Manage Your Money Like The 1%
Published: 2024-03-10
Status:
Available
|
Analyzed
Published: 2024-03-10
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Financial education is presented as the key to achieving financial success, rather than simply becoming a doctor.
"if you want financial success the solution is to be financially educated"
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Wealthy individuals prioritize saving and investing before spending, contrasting with the majority who spend first and save/invest what remains.
"The difference here is the majority of people make money they spend their money and then if there's any money left that's when they save it and that's when they invest it wealthy people the 1% what they do is you make money and then you save it and you invest it first and then you only spend what's left after saving and investing"
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A specific financial plan is proposed: spend a maximum of 75%, invest a minimum of 15%, and save a minimum of 10% of all earnings.
"for every dollar you earn here so you make $1 from your paycheck or your business or however you make your money every time you make a dollar it's going to flow down in this way out of this dollar. 75 cents is the maximum you can spend 15 cents is the minimum you should invest and 10 cents is the minimum you should save"
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For younger individuals with fewer financial responsibilities, a more aggressive savings and investment plan (50% spend, 30% invest, 20% save) is recommended to build wealth faster.
"if you're younger and you don't have a ton of financial responsibilities then this is your time to build what you should be doing is following our 50 302 plan that means now you're spending less money you're only spending 50 cents out of every dollar you earn but you're investing 30 cents and you're saving 20 cents"
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Individuals should aim to save 3-6 months of expenses for emergencies, with 12 months recommended for higher risk aversion.
"your goal should be to save something like 3 to 6 months worth of expenses in your savings account... but if you really want to protect yourself and you want to be really risk adverse then you should have something like 12 months worth of expenses saved"
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A strong recommendation is made to prioritize paying off credit card debt as quickly as possible to prevent financial drain.
"What you need to do right now is stop bleeding cash because you need to pay off your credit card debt as fast as possible"
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Investing in personal education, particularly financial education, is highlighted as a crucial investment.
"You should also be investing in yourself and your own mind because like everybody says you are your own best investment"
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Compound interest is emphasized as a powerful wealth-building concept, even referred to as the 'eighth wonder of the world'.
"Albert Einstein called compound interest the eighth wonder of the world"
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The concept of compounding money with increasing contributions (growing income and investments) is presented as a method to significantly multiply wealth.
"if you can understand that idea of compounding your money with growing contributions you will know how to double your money triple your money quadruple your money"
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An investment strategy focused on generating cash flow, starting with a specific annual income goal, is presented.
"I like Investing For Cash Flow and when you invest for cash flow you do your investment analysis a little bit differently because now I start with the end If my goal is to make $40,000 a year from cash flow from my investments"
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Specific dividend yields for 3M, Walgreens Boots Alliance, Philip Morris, and AT&T are provided as examples of dividend-paying stocks.
"3M is paying about a 5.8% dividend Walgreens boot Alliance is paying around 5.7% Philip Morris is paying around 6% and AT&T is paying around 6% as well"
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Several specific high dividend paying ETFs (SCHD, VYM, NOBL, SDIV) are mentioned as investment options.
"a few of the high dividend paying ETFs that this article maintain are s CHD v ym n obl and sdiv"
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A target of 7% cash-on-cash return is set for real estate investments, meaning 7 cents of profit per dollar invested.
"if you look for a 7% cash on cash return on your money meaning for every dollar that I invest I'm looking for 7 cents of profit from cash flow from the property"
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Investing in physically or financially distressed properties is identified as a strategy to acquire assets at a discount.
"I look for distressed properties and these could be physically distressed or financially distressed... I like these types of deals because now I can come in and find a deal that nobody else wants to buy so then I get to come in and buy it at a discount"
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Manifesting wealth requires understanding the interplay between subconscious thoughts, conscious thoughts, actions, and outcomes.
"if you really want to manifest wealth... you have to understand this entire process how the way you think is impacted by your subconscious how the way you think is going to impact your actions and how your actions impact your outcome"
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Aspirational goal: transforming an annual salary into a monthly income is presented as a possibility through significant shifts in value creation and monetization.
"you could take this $50,000 a year and you could turn this into your monthly salary which means you could make $50,000 a month"
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The true cost of time-consuming leisure activities is framed in terms of lost earning potential, using an example of $30/hour earning and 2 hours of Netflix daily costing $10,000 annually in lost opportunity.
"if right now you're making $30 an hour and you're watching 2 hours of Netflix a day that means your Netflix is costing you the opportunity to earn an additional $10,000 a year"
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Achieving multi-millionaire status requires more than just earning a high salary; it necessitates owning assets or businesses, as opposed to solely relying on labor.
"98% of earners are making under 26 $6,000 a year if you want to be a multi-millionaire... you're going to have to do something a little bit different which means you might need to earn more money now if you can't earn that from your job then maybe you need to own something"
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Building wealth through business involves a process of repetition and scaling, starting from small monetary milestones and working up to millions.
"you keep repeating that to make your first $100 and you keep repeating that to make it first $1,000 and you keep repeating that to make it first $100,000 and you keep repeating that to make it first million do"
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True investment success comes from holding assets for the long term, not short-term trading.
"the people that actually make money from their Investments are not the people that make an investment for 6 months or 6 days or even 6 years these are now the people that are investing their money for the long term"
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Wealthy individuals prioritize converting cash into income-generating assets like stocks, real estate, businesses, or hard assets, rather than hoarding cash.
"wealthy people want to turn their cash into Assets... they use the cash to buy stocks they use the cash to buy real estate that's producing rental income they use this cash to buy businesses or they use this cash to buy other hard Assets"
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The minority of financially successful people prioritize saving and investing before spending, reversing the common majority approach of spending first and saving/investing what's left over.
"what the minority people do is first they get paid so let's assume for this example that you're getting paid from a paycheck again Now I'm going to go right to left this time this time they start by saving money so you put some money aside for your savings first and then you invest some money so you put some money aside then you put some money to work for you and after you save and after you invest that's when you spend so it's a different order of events"
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Wealthy individuals (the 1%) prioritize saving and investing their income first, and then spend only the remaining amount, which is crucial for wealth building.
"wealthy people the 1% what they do is you make money and then you save it and you invest it first and then you only spend what's left after saving and investing because investing and saving what's going to build your wealth investing is going to build your wealth even more savings just really protecting your wealth but you need to do these two things first that way you can build your wealth"
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The 75/15/10 plan suggests allocating 75% of income for spending, 15% for investing, and 10% for saving, as a minimum guideline for financial management.
"follow our 75151 plan what that means is for every dollar you earn here so you make $1 from your paycheck or your business or however you make your money every time you make a dollar it's going to flow down in this way out of this dollar. 75 cents is the maximum you can spend 15 cents is the minimum you should invest and 10 cents is the minimum you should save"
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A 50/30/20 plan is recommended for younger individuals with fewer financial responsibilities, allocating 50% for spending, 30% for investing, and 20% for saving, to aggressively build wealth.
"if you're younger and you don't have a ton of financial responsibilities then this is your time to build what you should be doing is following our 50 302 plan that means now you're spending less money you're only spending 50 cents out of every dollar you earn but you're investing 30 cents and you're saving 20 cents"
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The recommended emergency savings goal is 3 to 6 months of living expenses.
"your goal should be to save something like 3 to 6 months worth of expenses in your savings account"
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For individuals seeking maximum protection against emergencies, saving 12 months of expenses is advised.
"but if you really want to protect yourself and you want to be really risk adverse then you should have something like 12 months worth of expenses saved up"
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Carrying 19% credit card debt is equivalent to losing the opportunity to earn a 19% return on investment, potentially costing over $420,000 in lost growth over 10 years on just $1,000 monthly payments.
"if your credit card company is charging you 19% a year what would happen if you invested that money and got a 19% return on your your money now I know it's not very easy to get a 19% return every single year but your credit card company's doing it so if you invest $1,000 a month and you can get a 19% return on your money every single year and you do this for 10 years which is what a lot of people are taking to pay off their credit card debt this $1,000 a month investment would grow to over $420,000 over those 10 years"
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Investing in the stock market with an expected 7% annual return can double your money in 10 years, significantly faster than a 1% return in a savings account (72 years).
"if you take your $100 into your savings account in the bank you might be able to get a 1% return on your money if you're lucky and it's going to take you 72 years to double your money if now you take your money and you pass massively invested into the stock market you can expect to get a 7% return on your money over the long term that doesn't mean you're going to get 7% every year some years are going to be more some years are going to be less but over the last 100 years we've seen that you should be able to get a 7% annual return on your money which means it will take you 10 years to double your money"
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Active investment in good companies and real estate, aiming for a 10% annual return, can double your money in 7 years.
"now if you want to be a little bit more actively involved with their Investments where you don't just passively put it in the stock market but you're looking for good companies you're looking for good real estate investment you're actively finding better Investments well now you might be able to get a 10% return on your money if you can get a 10% annual return on your money it's going to take you 7 years to double your money"
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Achieving a 20% annual return on investment can double your money in approximately 3.8 years.
"but if you can get an even better return if you can get a 20% return on your money well now you can double your money every 3.8 years"
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A hypothetical 500% annual return on investment could lead to doubling your money every five months.
"if you can get a 500% return on your money well now you can see your money double every five months"
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Compounding returns combined with increasing contributions is a key strategy for significantly multiplying wealth.
"if you can understand that idea of compounding your money with growing contributions you will know how to double your money triple your money quadruple your money"
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Increasing annual investment contributions by 5% annually, over 45 years with a 10% return, can result in over $2.1 million, an extra million dollars compared to static contributions.
"if you do this for 45 years you get the same 10% annual return well now you're not going to have $1.1 million you're going to have over 2 .1 million you just added an additional million dollar to your bottom line to your Investment Portfolio to your cash because you started investing a little bit more aggressively"
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Combining growing investment contributions with reinvesting cash flow (e.g., 4% from dividends) can potentially grow an investment fund to over $4 million in 45 years, illustrating the mastery of compound interest by wealthy individuals.
"now you're not going to have $1.1 million you're not going to have $2.1 million but you're going to have more than $4 million in your investment fund because now you had the power of compound interest with growing contributions this is what wealthy people are learning to master"
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Market downturns, like the 2020 pandemic, can create opportunities to acquire high dividend-yielding ETFs at significantly reduced prices (nearly 50% off), effectively doubling their yield and potentially offering a 5-6% return.
"when you had the 2020 pandemic you saw the entire stock market get cut in and half well you have some high dividend paying ETFs these ETFs focus in on just High dividend yields a few examples of this are sdy SD and VM for a disclaimer I do have some of my money invested in SD and VM well when the stock market got cut in half the prices of these high dividend yielding companies and ETFs were also cut in almost half so you saw these high dividend yielding ETFs which normally yield somewhere between 2 and a half% to 3% now saw their prices cut in almost half which in effect meant that you could buy the same cash flow for almost 50% off and so you were almost able to come in and buy the same dividend yield and now get a five to almost 6% return on your money"
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The speaker's primary investments are in their own business (active) and real estate (cash flow producing), indicating a focus on generating income from assets.
"my number one biggest Investments are into my own business but I don't consider that your passive Investments because I'm actively operating and managing my businesses my next biggest investment would be my real estate investments I would put that here because I invest in real estate that's my largest investment and this is all cash FL producing assets when I invest in real estate I'm working to generate cash flow"
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The speaker separates investments into active stocks (individual companies) and passive stocks (ETFs/funds), utilizing an automated system for weekly investment in passive ETFs.
"then I have my active stocks and that would be me investing in individual companies and then I have my passive stocks these are me investing in ETFs and funds through a passive system like I was talking about where every week for me I have a system where money is automatically being pulled out of my check-ins account and it's automatically being invested into my portfolio ETFs"
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The speaker targets a 7% cash-on-cash return from real estate investments, focusing solely on profit generated from cash flow, excluding property appreciation.
"the way that I invest my money I look for a 7% cash on cash return on my money meaning for every dollar that I invest I'm looking for 7 cents of profit from cash flow from the property this does not include appreciation"
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The speaker's preferred real estate investment strategy involves acquiring distressed properties, either physically or financially damaged.
"my sweet spot because I look for distressed properties and these could be physically distressed or financially distressed"
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Achieving financial success requires understanding both the practical (spending, saving, investing) and emotional aspects of money, recognizing that actions driven by thoughts lead to different outcomes.
"there are two parts to really understanding money Number one is the Practical side which is down here and Number two is what I like to call the emotional side of money which is up here see when I got started in this financial education game I used to think that money was just a numbers thing that if you understood spending and you understood saving and you understood investing you have the tools to become successful financially and become wealthy it's understanding that the actions you take are going to have different outcomes"
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A limiting mindset, characterized by beliefs of inability to become successful or wealthy, acts as a roadblock to financial success, regardless of financial knowledge.
"all success starts with their mindset because you can know everything about investing you can know everything about saving you can know everything about how to earn more money but if you believe that you cannot become successful if you believe that you cannot become wealthy if you believe that somebody in your situation is going to be stuck for the rest of your life it does not matter what Financial education you have it does not matter how much you know you're never going to actually become successful because you have this roadblock right there which is your mindset"
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The scale of wealth attained (from $0 to $10 million) is directly correlated with the size of one's thinking, as individuals often self-impose limitations.
"the thing that separates somebody who go goes from 0 to $100,000 to somebody who goes from $100,000 to a million to somebody who goes to $10 million is how big you're willing to think because many times we create our own ceilings"
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It is possible to transform an annual salary of $50,000 into a monthly income of $50,000 or even a weekly income of $50,000, though this requires significant action.
"you could take this $50,000 a year and you could turn this into your monthly salary which means you could make $50,000 a month and now this might seem absurd but it is possible but you could also take that and turn it into $50,000 a week might seem absurd but it's also possible"
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Financial success is determined by the amount of monetizable value created within a 24-hour period, not solely by the intensity of hard work. Wealthy individuals create more value.
"the amount of money that you make is directly equal to the amount of value that you can monetize in your 24-hour day the more value that you create the more money you will make the reason why Elon Musk or Jeff basos or Bill Gates were able to become so financially successful isn't because they're working 10,000 times harder than the regular person it's because they were able to create more monetizable value than regular people"
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Watching 2 hours of Netflix daily at a $30/hour earning potential represents an opportunity cost of $10,000 annually, highlighting the significant cost of unproductive time.
"if you're making $30 an hour and you're watching 2 hours of Netflix a day that means your Netflix isn't costing you $150 a year that means your Netflix is costing you the opportunity to earn an additional $10,000 a year because that's $30 an hour of TV that you're watching when you could have been using your time to earn some more money"
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The 'eat the frog' productivity method involves tackling the most difficult and important task first thing in the day (e.g., recording YouTube videos) to ensure it gets done.
"I start with the hard the most important the most strenuous thing and I get that done first for me that is making YouTube videos making YouTube videos is pretty intensive because one I got to make sure all the scripts are done and all the work is done and then typically I'm standing up I'm in my recording room I got my whiteboard and I got to go and put in a solid couple hours to record every single day"
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Wealthy individuals use cash as a tool to acquire assets like stocks, real estate, businesses, or gold, rather than solely accumulating cash.
"the thing that wealthy people do is that they use the cash in the bank account as a means to an end they use the cash as a means to get other assets which is what they actually want to own they use the cash to buy stocks they use the cash to buy real estate that's producing rental income they use this cash to buy businesses or they use this cash to buy other hard assets things like physical gold"
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Having 3 to 12 months of expenses saved as cash is recommended for emergency preparedness, with the specific amount depending on individual risk tolerance.
"you want to make sure you have cash for three reasons Number one you want to have cash to protect you against an emergency so for that maybe somewhere between 3 to 12 months worth of expenses saved up to protect you against an emergency and this is going to depend on your risk tolerance"
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Cash should also be saved for making planned purchases, such as a home or car, or for strategic investments when opportunities arise.
"the second reason why you save cash is to make a purchase you want to buy a home you want to buy a car you want to buy something well you need cash to do that so you save up cash to make that purchase or you save up cash to buy one of these Investments"
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Wealth building involves two stages: first, saving cash, and second, converting that cash into income-generating assets.
"the way you become wealthy is not just by stacking cash that's good that you're saving cash that's good that you're stacking cash that's part one but now you want to do part two which is convert this cash into an asset that's actually going to pay you for owning it"
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True wealth creation from investments comes from a long-term, 'buy and hold' strategy, potentially lasting forever, rather than short-term trading.
"the people that actually make money from their Investments are not the people that make an investment for 6 months or 6 days or even 6 years these are now the people that are investing their money for the long term and now if you can become a Buy and Hold investor where now you're holding on to Investments for the long term maybe even forever now you have the opportunity to make much more money"
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Starting a business requires significant initial effort, potentially taking years to make the first dollar, but this initial success can be scaled by repeatedly applying the same principles to reach $100, $1,000, $100,000, and eventually $1 million.
"in the beginning it's going to be all you I've been there you got to put in the work to grow it to get it off the ground to make your first dollar it could take you two years to make your first dollar but once you learn how to make your first dollar now you can just keep repeating that to make your first $100 and you keep repeating that to make it first $1,000 and you keep repeating that to make it first $100,000 and you keep repeating that to make it first million do"
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Achieving multi-millionaire status requires earning more money, which can be achieved by owning a business or entity, thereby controlling its value creation rather than solely relying on personal labor.
"if you want to be a multi-millionaire you want to be super rich you want to be part of the elite wealth class you're going to have to do something a little bit different which means you might need to earn more money now if you can't earn that from your job then maybe you need to own something because when you're just working a job the only thing that you own is you and your own labor but if you own the business you own The Entity well now you control the ownership of the business"
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To increase productivity, keep your phone on 'do not disturb' mode and physically separate from yourself, especially during work hours.
"if you want to get more done in your 24 hours just get more stuff done when you're actually working and there are so many simple hacks that you can use to help you do this the first thing that I would recommend that I do is put your phone on do not disturb I keep my phone on do not disturb all the time especially when I'm working I put it on full do not disturb and I put it away from me"
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Utilize full-screen mode for tasks while working to minimize distractions from notifications and other applications.
"second when you're working put your tab whatever you're working on on full screen that way you're not bombarded with notifications you don't accidentally want to go and check out Facebook you don't want to accidentally check out what's happening on the news you keep whatever you're working on on full screen"
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Minimize distractions by turning off the TV and other potential interruptions to maintain focus, as exemplified by extreme measures taken during bar exam preparation.
"third turn off the TV turn off the distractions keep yourself focused when I was studying for the bar exam I kind of took this to an extreme where I knew I hated studying"
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