The 5 Money Lies That Keep Americans Poor
Published: 2025-05-29
Status:
Available
|
Analyzed
Published: 2025-05-29
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
It takes 20 years for half of a mortgage payment to go towards principal (equity building) rather than interest.
"And it isn't until year 20 where half of your mortgage payment is going to build equity and not padding your banker's pockets."
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The 401k was not intended to be a complete retirement plan.
"I hate to break it to you, but your 401k was never designed to be your full retirement plan."
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The creator of the 401k has stated it has failed because people are relying on it as their only retirement savings vehicle.
"In fact, the founder of the 401k has come out and said that the 401k has gone ary because so many people are using the 401k as their sole retirement plan."
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Market crashes and recessions are inevitable and will occur again.
"Market crashes will happen. Recessions will happen. It's going to happen again."
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During market downturns, one should invest more aggressively, leveraging time to their advantage rather than regretting not starting sooner.
"When it happens, invest even more aggressively, but use time to benefit you instead of being on the opposite side of time and wishing you would have started earlier."
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Banks are eager to lend money for purchases at high interest rates, such as 25% APR for a $900 loan on a $1,000 item.
"If you have a $100 in your bank account and you want to buy this $1,000 Gucci scarf, your bank would love to lend you the $900 at 25% APR"
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Warren Buffett earns significant income from dividends from companies like Coca-Cola without directly working for them, illustrating wealth generation through investment.
"For example, Warren Buffett makes hundreds of millions of dollars a year in dividends, meaning profit distributions from Coca-Cola, but he never has to go into the Coca-Cola factory to work at Coca-Cola."
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The S&P 500 has historically grown at an average rate of 12% per year over the past 50 years.
"Now, for the last 50 years or so, the S&P 500 has grown by 12% a year"
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It takes 20 years for half of a mortgage payment to go towards principal and build equity, with the other half going to interest.
"And it isn't until year 20 where half of your mortgage payment is going to build equity and not padding your banker's pockets."
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Retirees without income may struggle to afford the increasing property taxes and insurance associated with a highly valued home.
"So, if you're retired and you have no income, well, you're going to have a tough time paying the bills to keep living in the house."
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Owning a house is beneficial, but it's crucial to have investments outside of your primary residence and to ensure you can afford all associated costs.
"And the key is to own investments outside of the house that you live in. It's great to own a paidoff house. I encourage you to do that. I encourage you to buy a house, but make sure you can afford it first."
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The primary legal obligation of a CEO is to enrich the company's investors (shareholders).
"The CEO's job is to make the shareholders rich. And who are the shareholders? Well, this is the investors in the company."
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Earning a salary requires active work for payment, whereas profit-based income (from investments) can be generated without direct labor.
"When you work for a salary, you have to go to work to get paid. You don't work, you don't get paid. When you work for profit, well, you don't have to work for the profit."
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To build wealth, individuals should convert their salary income into investments to generate profits.
"If you want to become wealthy, you need to transform your salary into investments. That way, you can get the profits so you can actually become wealthy."
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Investing $100 a month for 46 years, assuming a 10% annual average return, could result in over $104,500.
"So, you do this for about 45, let's call it 46 years. Now, when you do this, you're also investing your money and you're growing your money by the average rate of the market. Now, for the last 50 years or so, the S&P 500 has grown by 12% a year, but let's assume you only grow your money by 10% a year on average."
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It is possible to start investing with even a small amount of money daily ($1-$5) and gradually increase the investment over time.
"Everybody can start somewhere. If you have $5 a day, start with that. You have $2 a day, start with that. You have $1 a day, start with that. Start with something and then work to add more."
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Continuously investing money, regardless of market conditions (up or down), and increasing investment amounts with income growth is a proven path to wealth.
"As you earn more money, invest more money. And keep investing your money when markets go up. Keep investing your money when markets go down and over the long term what we have seen is that this is a proven way to become wealthy."
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Bankers are primarily motivated by selling loans, not by acting as objective financial advisors.
"And your banker is not your financial advisor. Your banker is incentivized to sell you loans."
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Bankers often receive commissions based on the size of the loans they originate, creating a conflict of interest.
"In fact, most bankers are on commission, which means the bigger the loan they sell you, the bigger the commission check is."
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The 751510 plan suggests allocating 75% of income to spending, a minimum of 15% to investing, and a minimum of 10% to saving.
"What the 751510 plan says is for every dollar that you earn from here on out. 75 cents is the maximum you can spend. 15 cents is the minimum that you invest and 10 cents is the minimum that you save."
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Adhering to the 751510 plan ensures that one lives within 75% of their income while dedicating the remaining 25% to saving and investing, thus prioritizing financial growth.
"And now you know no matter what you go out and buy, this is the max amount of money that you can spend. And if you can live off of three quarters of every dollar that you earn, and you're working to save and invest a quarter, well, now you're always working to pay yourself first."
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Once an emergency fund of 3-12 months of expenses is established, the 10% savings allocation can be redirected to investments, increasing the investment percentage to 25%.
"And by the way, once you have enough savings, somewhere between 3 months to 12 months worth of expenses put aside in a separate savings account. Well, then you can stop saving this money and you can reallocate that additional 10% here. that where you're investing 25% and spending 75% of your income."
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The 401(k) was intended as a supplement to, not the sole component of, a retirement plan, according to its founder.
"I hate to break it to you, but your 401k was never designed to be your full retirement plan. In fact, the founder of the 401k has come out and said that the 401k has gone ary because so many people are using the 401k as their sole retirement plan. That's not what it's made for. It was there to supplement your retirement plan."
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While a 401(k) is a good starting point, it is insufficient on its own for retirement planning; additional investments outside the 401(k) are necessary.
"So, if you have a 401k or something similar, great. It's a great place to start. Use it. But don't stop there. That's not enough. You need to continue investing outside of your 401k as well."
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Wealth accumulation is determined by three primary factors: Time, Rate of Return, and Money (amount invested).
"There are three things that will determine how wealthy you will become. And it's ultimately very simple. T RM time, return, money."
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Higher investment returns and larger investment amounts directly correlate with increased wealth.
"The better your rate of return, the better returns you get on your investments, the wealthier you're going to become. And the more money that you can invest, well, the more your money can grow."
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Time is the only unrecoverable factor among time, return, and money in wealth building.
"There's only one factor out of these three that you cannot get more of. Want to guess which one? It's not money. It's not return. It's your time."
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Procrastinating on investing negatively impacts wealth accumulation because time cannot be regained, unlike money or investment returns, which can be increased.
"What you're doing is you're killing this part of the equation. You can always get more money which yes hopefully you'll work to increase your salary over time. You can work to increase the rate of return but the one thing that you cannot change is time which is why the sooner that you start the wealthier you'll become"
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Market crashes and recessions are inevitable and should be viewed as opportunities to invest more aggressively.
"Market crashes will happen. Recessions will happen. It's going to happen again. When it happens, invest even more aggressively"
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Many individuals express regret about not starting their financial planning and investments earlier in life, across a wide range of ages.
"One of the most common comments that I get on this channel is, 'I wish somebody would have told me this younger. I wish I would have started this younger.' It's people that are in the 30s, 40s, 50s, 60s,7s, 80s, and even 90s. Nobody over the age of 100 has told me this yet, but people have told me from the 30s onwards that I wish I would have started younger. Nobody says, 'I wish I would have started later.'"
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Banks are eager to lend money at high interest rates (e.g., 25% APR) for purchases, even with limited personal funds, as it benefits the bank through minimum payments.
"If you have $100 in your bank account and you want to buy this $1,000 Gucci scarf, your bank would love to lend you the $900 at 25% APR because when you make the minimum monthly payments, your banker gets richer."
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