5 Things Millionaires DON'T Invest In!

five

things

millionaires

don't

invest

in is brian preston the money guy yeah brian I'm really excited about this show because a lot of times what we tell them is what they should do with their money, how they should make financial decisions, where They should say it if it follows the financial order of operations, but we were talking in our showcase meetings last week and we said we should talk about some

things

that maybe get a lot of press and a lot of attention and a lot of attention. uh, you know, there are people who sell it, a lot of people like to promote it and maybe you should avoid it if you want to set yourself up for financial success.

There are many. I want you to think about if we go through these five elements that I want. You have to think about how many people make a living selling these products, I mean, because that's really what's happening and I think there's a direct correlation between the size of the sales force and how awesome the product really is. , you know, because if it sells itself, I don't need it, I don't need a big sales force. You know, you need to push them into activities, so it's probably a big transition to number one, which is permanent life insurance.

Now I think it's very important that I like it. because I can already feel people's blood pressure rising, remember that what we are going to talk about today are five things that

millionaires

are five things that rich and successful people don't

invest

in, don't hear us wrong. that we do not like life insurance and we do not believe that life insurance is useful, but we recognize that people who understand money and finance well use life insurance, they do not invest in life insurance, that is the key we have . We are big advocates of people having life insurance.

We want you to have disability insurance. A life insurance. We say 10 times your income on term life insurance, add outstanding debts and you're usually in a pretty good situation, but a lot of people we know probably have a relative or someone they go to church with or a friend on the street a neighbor who is constantly trying to push you into some life insurance and investments, that's right, so let's talk about this. The first question I would have because with any investment is what can I expect this to return? Well, the good news is that it doesn't.

They don't have to be the bad guys, so for all the life insurance agents getting ready to sharpen their troll pencils, we're not the bad guys. Consumer reports actually went out and tried to figure out what is the typical rate of return that people get who invest in life insurance total get their investments within life insurance is one and a half percent one and a half percent is the average annual rate of return on whole life insurance and this is what I think is so funny why people even think about wanting to invest in life insurance because what we all expect is to pay for life insurance and we never use it , most of us hope that when we buy life insurance that it's not something that actually pays out because fortunately, if a life insurance policy does not pay out, it means we survive, it means we survive the term, which is something well, so I think the financial world often realizes, how can I play around with something to sell people something that maybe they wouldn't think of otherwise?

You know all these terms, people pay for this life insurance for 20 years, 30 years and then the insurance goes away, so they're just wasting that money, it's just a waste, something they never really took advantage of. Well, let's find a way. so that we actually give them some of that money back, come up with a way for them to invest to grow it and then we're going to start this thing that will allow them to do that, but when you actually pull back the curtain and look at what that does on average, on average, it returns about a percentage and a half annually, well, I think it's good to talk a little bit about the concept of what permanent insurance is versus term insurance.

Look, you know when you're a younger person who buys permanent insurance you're overpaying, that's right for the cost of the insurance, because some of that money is perceived as investment, so as you get older and the insurance costs more, that investment will cover it, that's right. extra premium this is how it is presented to you so yes you are overpaying but that is because this is permanent it will not go away insurance of course will cost a lot more money when you are older this will be the bridge . that covers it, so we want to talk about, let's compare term insurance, whole life insurance and see how much they really cost because I think it's important to know what you're really paying for and what the real cost is and what we What we really want insurance is to be there if something happens to us prematurely, so none of us are arguing that insurance is necessary, specifically life insurance, if you have those who depend on you, then the question is, what is the biggest cost? ? effective, what is the most efficient, what is the best way to implement that coverage and exactly we said we established how much the term costs versus how much the whole life costs, so we take a very healthy male person and this is a man. that's in excellent physical condition because we wanted to make sure we were taking the best step forward on how low the premiums can be on a 20 year $1 million policy and guess what we found 25 years ago, look at that bo, it was less than 31 for that protection on a monthly basis, so if I were talking to a 25-year-old person and I said, hey, you need a million dollars of coverage to make sure that you can support yourself, your spouse, and your family, and you I'm going to give You have two options, you can pay 31 for that million dollars of coverage or for the exact same million dollars of coverage, you can pay 688 dollars, which would you probably choose?

That's a big deal, let's talk about a 30 year old, now I thought the numbers are kind. It worked out interestingly because he still says that a 30 year old is 31. Now we ask Daniel what's going on. How come the 25 year old has the same price as the 30 year old? This is what clarified that the 25 year old was like 30, 30 and 81. cents the 25 year old the 30 year old was actually like 31.25 so it was cheaper or more expensive but it's um but look at the difference but look look the difference in a lifetime is incredible because we all know this uh as we get older, the fact of the matter is it's more likely than not, it's not more likely that as we get older, it's 100 for sure that we're closer to the death, that's how this life works, so the closer we get, the more likely a policy will have to pay, so the more expensive the coverage gets, both coverages get more expensive, but they don't get more expensive in the same proportion, so a 30-year-old person 827 for life 31 per term monthly for a 35-year-old person, it is 34 per month for term life insurance, which is insurance only for life, costs a little over a thousand dollars a month and then for a 40 year old it's 50 a month for that million dollars of lifetime coverage.

It's 1289 a month, so again what we want you to keep in mind is that what you are buying is a product to protect you against a certain type of risk and that type of risk is that you will leave the game early, even if you are 40 years old . If you can buy that million dollars of coverage and pay $50 a month or you can buy that million dollars of coverage and pay almost thirteen hundred dollars a month, our opinion is that it makes much more sense to get the same amount of coverage for a long time. The cost of term life insurance is much much lower.

First, I think we have to ask ourselves if it's okay for insurance to go away. I mean, ultimately, you have to ask yourself if it's okay, because that's what you're going to do. being thrown about the term is that you're going to throw away the money, it's gone, no one calls those policies because you just don't die with it, well I'll tell you here's a simple answer, what's your hope. What you are ensuring is that you die prematurely, that that risk really disappears and how that risk disappears. The way the risk goes away is if you self-insure, you really build financial independence, you get the kids out of the house, you pay. pay off all your debts, you've saved enough money to be completely, you know how to retire without worrying about where you're going to get extra money, that's the whole purpose of graduating from insurance is that you can self-insure, so that's really the goal .

You know, what makes that goal a lot easier is when, instead of costing yourself as a 25-year-old 688 a month, you only pay 31 a month because then you can have 650 dollars. You are investing correctly in assets that generate more than one and a half percent and really build your dollar army so you can self-insure faster and easier. That's why super successful people don't buy a lot of permanent life insurance and look. I always get the huh, the insurance salesman comes up to me and says yes, but you're throwing money away, you're just throwing that away at our money, that's good, I'm okay throwing away money if it means I'm surviving and surviving the deadline because, just like you said, I know deep down that my army of dollar bills is working and I'm going to work quickly toward a point where I no longer need life insurance.

Be people, I actually recommended permanent insurance for someone who had major wealth problems when those were problems where the ex-state exemptions were worth like a million dollars and also, if you are worried about health problems, make sure you get a policy at term gives you some protection if you ever have health underwriting issues or if that's a concern with your family history so keep in mind those things you know we can't unfortunately we don't know each of you individually so We always have to give the disclaimer that there are unique circumstances, but I think for many people you will find that that term insurance policy where they actually purchase the premium for the policy covers the risk that they take. worried for now that it will disappear in the future this will be very useful to you I love it I love it I love number two this is man this one hits close to home literally it hits very close to home cds I mean and look I grew up in a house , this is what we did, I think we should clarify it, because I recognize that we were having this conversation with our content team that when we say CD in my generation, that could have meant two things, it could be compact disc or it could I have meant certificates of deposit and what I recognize is that the younger generation coming up doesn't know what any of those things are, they haven't heard of compact discs and they haven't heard of certificates of deposit, obviously, we're talking about here. about a depository institution that will allow you to invest cash and they will pay you an interest rate so that when you reach the end of the term, you have earned your interest and you get your principal back, that could have been a great slot instead of daniel's as decorations older Christmas ones, but it's interesting and the fact that I'm talking about a certificate of deposit I think this is kind of old school and the reason it's old school is because when I was a kid I didn't even think you had that you didn't have access because there was no Internet, so you didn't have online savings banks that primarily pushed their FDIC protected savings accounts, where they pretty much matched what CDs did and that's where we are. with interest rates is that you just don't get a big premium for keeping your money for a long time in banks and that look is sad that cash generates almost nothing right now, but in recent memory it was working. decent, I mean, as recent as a couple of years ago, you're a high-yield money market, you pay like two and a half percent, I mean, that's not happening today, but it was happening, you know, in the last two or three. years, yes, but I would warn people: there is one thing about CDs that bothers me if you leave because you know they pay you more the longer you stay, but who wants to stay five to seven years in a CD where we are currently with rates of interest and that's where we are because if we ever recover or raise interest rates, you'll be very sad to be stuck in that long-term interest rate, but there's more to it and this is the point I wanted to make about creating wealth and those of us who don't come from rich families is that we don't realize the mental block we have in the face of great risk, which is the opportunity cost of the situation, and this is what I grew up in is what You really know, a tale of two stories.

I look at my wife's family and I look at my family while she was growing up. My parents had no idea how to invest in the stock market, in the financial markets, that just wasn't something you could do. That was something that was so classy that the other people were, yeah,alright, yo guys, where they kept their money was CDs and then I think about my father-in-law, who you know, he's still very similar to my parents, I mean, them. They didn't make a lot of money but they worked hard and invested in the magellan fidelity fund and the difference in that simple decision is shocking, I mean there is a material impact between someone who thinks their long term investment is CDs or cash versus someone who lets that army of dollar bills really work as hard as you do with your back, your hands and your brain, yes, I think.

One of the interesting things about CDs is that the siren song used to be again. This is a little older now. It used to be security. It is a guaranteed interest. It is a guaranteed rate of return. Well, many times we don't realize the things we think are safe actually have a lot more risk than we recognize when the opportunity cost is taken into account and we did a little case study to illustrate this, for example, if we We look at the dollars of savings versus investment and the time period. Chosen was about the same time period as both your parents and in-laws.

Yeah, we're investing well, so we said, "Okay, let's take both of them and let's take a portfolio of 50,000 and let's have one of them invest in the Fidelity Magellan Fund from 1985 to the year 2000 and we have one of them just with a One year CD, so every year just with a new one year CD that will pay a guaranteed fixed interest rate when we actually look at the results of the CD. Investor, they still made money during that 15 year period where 50 thousand dollars became about 118,000, so it more than doubled, however, for the individual who understood investments and understood the risk premium and understood how to let your army of dollar bills work for you, yourselves.

Fifty thousand dollars invested over exactly the same period of time turned into almost eight hundred and thirty-six thousand dollars and here's the thing, this is where I count on my inflation trolls to get off their bridge and jump This is what I believe fallacy from someone who doesn't understand money or who doesn't come from a family with money is that my parents would probably see 50 becoming 118 as a victory, that's great without understanding that the purchasing power of that money, if anything, is maintained or lost purchasing power due to the detrimental impact of inflation, while putting your money to work your army of dollar bills not only fights inflation but creates wealth and that is the most important thing I tell people to have be very careful because this I will tell you another thing that I see bo and this is not in our show notes, but I see it in us doing 401k presentations, it is not strange, wow, I think about when I was on a school board and the teachers and the four or three B's and many of the teachers would choose the stable value fund.

You know, I'm talking about 25-year-old teachers or 30-year-old teachers, as a man, I don't want to accept. There's no risk so I'm just going to buy the stable value guaranteed interest rate, yes because it's guaranteed and I won't lose any money which makes me happy, meanwhile they can't touch the money until they're over 60 anyway and if I can't touch money for 25 to 30 years, guys, I'm going to tell you, get excited about innovation, get excited about what's happening with technology, you can be part of the success of economic expansion and growth of the world if I'll just do it versus if you just want to be safe I tell you you're taking more risks than that 25, 30 year old kid who's sitting on the sidelines thinking, hey, this is good, I can never lose, yeah, you're losing.

There's a lot you need to unpack to make sure you understand what creates long-term success and it's very interesting. I would like to say that we are very strategic, we put them in a specific order and yes, that is what we did, but since we are talking about CDs being the reason why people buy them is often because they are afraid, yes, and I think the financial market has recognized it. Man, if I can, if I can play on people's fear, maybe we can sell them things, maybe we can get them to make decisions and that's what we think.

The third thing that rich millionaires don't invest in is fear products, yeah, because look, there's a high cost to that security, we know we're talking about the efficient frontier and guys here just to give you a basic understanding, you know the basic component of investment, the more risk you take, the expected return is higher, I mean, you see this with real estate. You see this in companies when investing in the financial markets, the more risk you take, the better you get a premium for taking on that risk. Well, on the other hand, there are products that say that we are going to do exactly the opposite, we are not going to do it.

To try to get you a premium for the risk you're taking, we're actually going to eliminate all risk, but you have to understand that that also comes at a high cost and that's what we want to talk about. because there are two scary products that came to mind quickly when we were doing the preparation for this show, the first look, we've been talking about this since 2010 2011. I don't remember when, but gold, gold, yeah, now gold is one of those things. you can touch it, it's shiny, it's pretty, it's something that lets you know that this has always been the value of the long-term holder when people panic.

Warren Buffett has had so many discussions about gold that you could fill a stadium to watch. Go and admire this big mountain of gold that's in the ballpark, but you come back 10 years later, you go look at it and it's not that it's grown, it's not that it's innovated, it's not that it's generating income or rent, it's actually you. . I probably had to pay rent to preserve it and house it in this stadium, it will still be the shiny gold mountain nugget that you left there 10 years ago, well we want to talk about what's going on and I've been doing this since it was 2010, I think I mean, look how scary it was, you're talking about that fear, uh, this is, uh, we were doing youtube before it was cool to do youtube back then and I think it's amazing and look, I mean, actually instead of use it like we have a TV behind me now, well, but we put it on the screen, I think we're sitting at my desk and it's like my computer screen, I'd say we've come a long way. since then, but even though our show and our appearance have changed, the advice we give still hasn't changed even a decade ago and I mean how many things have happened in the last decade when we think about changes in management and eurozone crisis and pandemics and all that.

Things have happened and yet the advice has not changed. I feel like the time I most often see gold promoted. The time I most often see people really pushing is when people are scared. Yeah, I think it's good, everyone says oh. Well look what the price of gold has done, they normally say that in the midst of uncertainty in the middle of a time when things are not going according to plan, so we actually put the numbers together to see what gold has done for a for a long period of time and we did it for 40 years, yeah, and if you look at this, it's kind of amazing because we take one ounce of gold that's equal to five hundred and ninety-four dollars, just down from $595 in 1980 and it's pretty exciting, I mean, if you look at what it did over the next 40 years, it grew until 1876, so again, if you're triple, if you get over that money, I had 600 then and now I'm almost 1900, that sounds pretty good , you say, okay, great. my money grew gold was a good investment gold made me money it was a wise thing for me to invest in gold but that's only if you don't know the rest of the story yes because the s p 500 500 largest companies in the America and that changes By the way, you know that this is not static because we know that things are changing as the times evolve.

I mean we know Tesla was added to the SP 500 last year this is always updated but look at this $595 if you just bought the s p 500 in 1980 it would now be worth 60 to over 62k now that makes 1876 seem like Tiny, yeah, so what would we say? It was almost three or four times that money drawn and yet, with the S p 500 the opportunity cost. If you had chosen to invest in gold, your money would not have turned 105 times many times we talk about risk, we talk about the risks that we see, we do not usually talk about the risk that we cannot see, what is the opportunity cost of what we are doing with our army of dollar bills, well I bet humanity if you want to know what, how can they be so sure that the markets look like this over that 40 year period?

It sounds like it was a great time to be an investor. What if it was a one-time thing? Are we done after that 40 year period? Guys, I'm telling you I'm investing. I'm betting on humanity because we continue to expand. and by the way, it's accelerating, I want you to understand that we as humans always think in a very linear way, we think, hey, eight percent this year, nine percent, you know, in those kind of terms, I'm talking about exponential innovation, once again, I will repeat. you have the opportunity to be part of that expansion the problem when you buy products that fear you don't get everything you are basically when you buy gold you get a shiny piece of metal that you probably have to pay someone to keep safe it's not going to innovate no is going to generate income you have to worry about those things and that leads to the next opportunity cost because this says this takes everything positive.

I'm talking to you about humanity that invests in innovation, invests in this market and is kind. of attempts to make you feel like you are getting all those negative aspects that gold has, this next product fixes that, that's how it is with these stock indexed annuities because this is what they tell you. I'm going to tell you that the sales pitch is that As a man, wouldn't you like to invest in the innovative, ever-growing economics of the financial markets without the risk? So I want you to have the opportunity to win money, but no risk of losing.

I remember when Brian started working. Together in 2008 we had a conversation about this has to have been the easiest product in the world to sell because I still remember it. Remember the thing about the ratchet but wine? It's like a fallen shelf. You know you make money but you can't. go back down, that's like an increased return and so when you talk to someone who has recently weathered the bursting of the dotcom bubble or has recently weathered the great recession or has recently weathered a pandemic recession, you start to say hey, you know? How painful was that, maybe you were assigned wrong, you had your risk in the wrong place, that painful fall you had, what if I could take it away from you?

What if I could completely inoculate you from that and I have a product you can buy? giving you the advantages but not making you suffer any of the disadvantages, sounds too good to be true, well that's because look again, I explained to you that there is always someone who tells you that they have a product that will take the risks out of things. There will be a big premium for that security, that's the only way they can do it. They will restrict your access, meaning they can control your behavior by not allowing you to touch your money for 10 years while they invest it.

How do you think these people who are harbingers of I'll keep your money safe? What are you after you give them the money? What do you think they do with it? Have you ever asked yourself that question? Yes, they go and invest. they diversify exactly, you could do it yourself, but they will give you the premium of being safe, the peace of mind that comes with it, in the meantime, they will publish it in the financial markets and do what the financial markets do. paying you what they told you they would pay you and pocketing the difference, that's how it really works, so when we talk about equity index annuities, I want to talk about the concept of the only way they can offer you that ratchet premium. where it goes it only goes up it keeps going up but it never goes down is that you have to give up something that is right and this is what you give up, they limit what you earn in good years, so it is very common that you normally see the The top goes up to seven percent, so in those years when the financial markets earn twenty percent, you earn seven percent, I mean, that's how they do it, they can maintain that extra rate of return, but that still sounds good because you're like me.

I'm not greedy, that's right, if I can earn seven percent every year, who cares if they keep the excess? Because at least I have my seven percent rate of return in most of those years, so what we want to do is something like that. Let's look at a very simplified example. There are many things that we don't even take into account. Here we do not take into account the rates. We know these things are expensive. We do not take commissions into account. We do not take into account participation rates. which they say, okay, I'm going to limit it, but you only get periods ofwithdrawal and delivery of 50 percent and other things, all kinds of things that we are not, we just want to talk about the basic concept to make it as simple as possible so that you could I could see if they could if it were as easy as I can never lose meaning in the low markets I don't lose but in good markets I get everything up to seven I don't get anything above seven what does that really look like?

So, let's say you purchased one of these products in 1990 and were able to select. By the way, I just wanted to invest in the spf s p 500, although I don't know if you have looked at these products recently, it is even complicated. How are investments selected? Do I want a product s p month to month? Do I want a s p product year after year? I want a few different days, they don't make it easy, but again we are oversimplifying this illustration to show you an image and this is what the image is in white or silver, right there you can see the s p 500 1990.

The path through 220 is like an EKG, there are ups and downs and there are ups and downs and some of the dips even turn negative, they drop below zero, they go into negative territory and then you have your stock index annuity going down. represented by the rs and you can see it's like a little ladder rung and it never goes down it just stays positive or sometimes goes to zero but it never actually goes negative so if you were to ask two investors take your money. Take your retirement, take your army of dollar bills, which of these two would you rather have?

And if I were an annuity salesman, I said, "Hey, I want to draw your attention to the early 2000s, or 2008, or maybe them." It's like 2018. I want to draw your attention when you look at these two, what would you rather have and I think your answer might be I don't know, that orange feels a little safer, yeah, it just feels that way. always make money, I don't really have to worry about losing, I'm going to make money and I'm not greedy, so seven percent sounds pretty good, I'm good to me, here's the problem guys, when you pile this up over that 30-year investment and think about that's how long we're typically saving for retirement.

You're saving for 30 to 40 years, so this could end your savings career. You know you should accumulate financial assets for retirement. The stock index annuity is. it's going to be below five percent, without taking into account fees, commissions or anything like that, this is just the concept of doing a mathematical calculation of the concept, while the s p 500 during that same 30 year period was over 10 percent, what extended that duplication is enormous. for wealth creation, so that's the part I want you to know that there is an extreme cost and an extreme premium for what you feel is security, but in reality there is a huge cost to your army of dollar bills when you go for those fears. products based on now again, one of the things that I love about Brian is that we've been doing the show long enough that you can go see us if you want, you can go out and listen to podcasts dating back to 2006, you can go. watch videos going back over the years on youtube so we did a whole episode if you want to go deeper into annuities and it was called the hard truth about annuities so you can go to youtube and just type. youtube the hard truth about annuities or go to moneyguy.com and write it down if you want to delve into this topic even further check out the program that is available and you will see that the advice of the council the guide does not change when it comes to that type of products, yes, it may make you feel good in the short term, your long term self will not love the results, so keep that in mind, yes, let's talk about number four, this is the fourth. thing that rich people don't invest in because they understand it, using assets, yeah, I think this is a very common misconception and so arbitrarily misinterpreted, so I'll have a friend and they're thinking about buying their first house and they're like They gave me all these reasons why they can fund one hundred percent and even though they don't, they don't follow my rule of 25 and even if they don't follow the general rules, that's okay.

Let them stretch a little more because they tell me it's an investment, I'm going to buy this, it's an investment, there's no more land, real estate only goes up, it's an investment. I'm also surprised at how people look now, let's talk about cars because I don't think that's the right thing to do. latte effect, it's the car effect, it's really blowing up people's retirements, but I will, I will choose if you know, the primary residence and the fact that I'm a little sad for some of you who watch and then post comments on youtube as they say because when we do an incremental analysis it means they have the same dollars but they are doing one thing with this dollar versus this with this dollar and what are the long term ramifications of that incremental decision the difference between those two and you always in the comments it says no one saves money, they might as well put it in the house because otherwise they'll blow it on something else, that's a horrible way to think. about your peers because I'm thinking about the money guy program, we're changing people so you understand the difference between using assets with the power of your army of dollar bills, the opportunity cost of using this money working for you , that's what I'm here for first, because I feel like there are some traps that trap young people and I can tell you because you had friends, you graduated from college and you are proud of yourself because you have achieved your achievements.

I've passed the challenge, it's time to reward you and you know it's not like 22 year olds go out and buy houses normally unless they are very good looking but most 22 year olds reward themselves with a vehicle Yes, I have heard it. this is how we do it, here's the thing about vehicles, although you look great, that new car smell is amazing, but these things depreciate, they cost money to maintain, you have to pay money to fuel them and then there are a lot of other ancillary costs . like insurance and then it's a matter of time before a grocery cart comes up to it anyway and makes you feel like, oh good man, that special peach you had is now damaged, so we have proof of this, I mean, if you believe about the typical vehicle and it's napalm to your personal finances, they depreciate like a rock, that's right, we even had Daniel put them together.

This is Edmonds data. This is kind of typical depreciation for a new car, so on the lot, it's worth a hundred. percent of what you are going to pay for it as soon as you drive it off the dealership like the day after, it is no longer worth 100 and on average a one year old car is worth about 81 of what you paid. your car 69 58 49 40 33 27 21 15. and by year 10 you have about 10 of the residual value of what you paid for the car, so we'll always like it if you're going to buy a used car that works for your family, try to get it.

It's between years three and six, I definitely want to say that's the key part, letting someone else pay that big part of the depreciation, but just respect the car thing, you know, there's a reason when we talk 23 8, you know, someone asked me recently on youtube in the comments section, they said, where did you come up with that? The purpose of 23.8 is that we are trying to prevent their eyes from becoming bigger than their wallet and we are trying to give them the flexibility. I think that's one of the things that makes money guys different from a lot of other commentators is that they give you absolutes and a lot of times we know that life is not as black and white as people make it out to be, so we try to give you flexibility, but we are.

We count on you to be responsible, that's why we require a 20% down payment, don't finance for more than three years, that's to protect you from depreciation and then we don't want it to be more than eight percent of your income, so manner. is that you are leaving a lot of life there with the other 92 percent and we want to make sure that the investments are greater, your monthly investments have to be greater than your car payment and remember that the biggest of all, don't go buying a luxury car unless you can afford it it's the same as cash now one thing uh if you're listening on itunes or i heart radio stitch or you're not on the live stream we do this show as a live stream right on tuesdays and there's actually a talk going on right in front of me and I think it's wonderful uh and one of our vinyl friends made this comment and said uh look if a car can ruin your retirement you probably won't I have enough money and I want make it clear what we are not, we are not talking about buying a car blowing up your time, it is a behavior, it is a behavior we are trying to get you to understand that when you buy use assets, whether that use asset is a car or a house, or we'll talk about whether you're just filling in the blank, it's not about that singular purchase that you're making, it's about a lifetime, a lifetime, making those decisions that are ultimately not They bring you closer to your financial goals, but they take you further away from them.

The sooner you recognize it, the sooner you realize it, the quicker you can work toward that place where the car decision won't. affect your long-term finances that's exactly right, especially I'm thinking I'm looking at my 25 year old kids, my 30 year old kids, my 35 year old kids, every dollar has so many opportunities, there's a reason I have this koozie, he says that this beer cost one dollar They recognize me 88, now I realize that this is a person who retires when he is 66, not 65 because we respect everything, but it is one of those things where I want you to understand that every dollar has a lot of potential and I don't do it.

I don't want you to later regret what you mentioned before about housing because this is a look back to 2008. I think a lot of people thought they were saying well, they're not creating more, they're not creating more land, so I know it was like if you couldn't lose money investing in real estate before we got to 2008 and then we realized, oh, you know, we can run this long enough that you can lose money, but I want people to understand this too. It's one of those things that you can turn from positive to negative, where your primary residence a lot of people think they're going to keep stretching, stretching, stretching, getting bigger and the problem is you can actually value yourself outside of happiness if you think about Every time you improve your home or if you make an effort, larger square footage will cost you more to heat and cool, yes, they will have more insurance costs and there will be more rooms that you will have to put furniture and stuff in.

The truth is that I can be honest when I went to my first house, my second house, I didn't think about that one, I was like man, I have these rooms, I don't have people in these rooms, but I can't just have them. Sit there empty and the further you go in life, the less able you are to let the rooms in your house sit empty. A lot of people only think about the purchase price, that thing you know, when I go to Zillow or mls, that's the cost of the house is just one part of it, yeah, and if you don't recognize that again, you're not setting yourself up to be able to move forward. towards your long-term financial goals and then I have another risk that I think is financial mutants specifically that you run. the risk of us all thinking we are one country, I mean financial mutants, you are watching the money guy show that you are contrarian and many of you are thinking you know what is better if I am going to stretch.

It's better to be the cheapest house on my street because, and many of you, if you tried to be the cheapest house on a very nice street, you might as well be the poorest person on your very nice street and that sounds good because the The idea is that when you go to sell the house in 10 years, if it is the cheapest house on a very nice street, it will probably be easier for you to sell it and you will also have more opportunities for appreciation. To be a great return, the problem is that you may not be taking into account that if you are the poorest person on your street, it could also create a lot of unhappiness, because we all know the people we hang out with who influence where you reside our happiness.

Our spending patterns are, so I know it's counterintuitive to think that because it seems like a great value to get the cheapest house on the street, but I'm telling you, you may be setting yourself up for a lot of other things that you don't want to use. The assets are what you consider an investment because you are actually living in this house and I think you have to understand what makes you happy and what the evaluation is. You know, we live here, just south of Nashville, and it's really hot. real estate market and I have some friends who bought a house a couple of years ago and its value has gone up, I mean it's just exploded in terms of the equity that they've built and they keep saying, man, I'm going to sell it I'm going to get paid I'm going to ask for what do you realize that when you sell this house that 20 30 40 50 percent that you made on your house when you buy the next house unless you move somewhere else you just have to buy a bigger one, it won't, so no always try to swimgo against the grain just because you can, just because you can't, move to the bigger house, the nicer neighborhood, have something better if that's not part of your plan don't do it just because you can because it's like you said Brian, you'll put a price on yourself for happiness, I thought, so I always love to give some statistics to close a segment, put an exclamation point on something in the millionaire next door you know the follow-up Sarah did to her father's house the millionaire next door actually it was published what the median home value was for millionaires and it was CU850,000 3.4 times their average current income or the median that should let's say, and then the median purchase price was 4.65, so that a lot of these people appreciated it, yes they have been, that's what I'm saying, they stayed in the house.

For a while I didn't say that most millionaires went out and bought an 850,000 house, they say they bought 465,000 our house and they lived in it, they used it and it grew, it became an expensive house, a nice, uh, price appreciated, yeah. I mean, it ties into why they're the millionaires next door. I thought about the latter because I talk about secondary residents because this is another use asset. People think you have this mental checklist of what success looks like. A lot of people think well, I'll do it. I'm buying a second home and that's when I get the vacation property to repay the family for everything I've done. 64 percent of millionaires have never had a second home or a vacation home, yes, because again, if we talk about the use asset that you have, it has the insurance, the furniture and the utilities, it is an asset that is using every day.

Imagine if that usage asset is one you can only use a few times a year, those costs are still there and the withdrawal of your armored dollar bills is still there. So before you make that decision, make sure you know the why of why you're making that decision, without a doubt, so let's talk about number five. This is the fifth thing that millionaires don't invest in or at least understand better than the typical person is what about speculative assets? Yes, this is one. I feel like it's huge right now. Because without being too polarizing and without throwing stones, I feel like there are a lot of speculative investments floating around in our financial world right now, very frothy.

I mean, if you think about all the things, I mean 2020 was the year of the pandemic, of course, it's still going on, but it was definitely the year where people were talking about Bitcoin, talking about Tesla stock, all those behaviors. , now look, you can be an investor. something like tesla, you can even be an investor in something like bitcoin, but all the people out there are running it on momentum which is not investing, that's speculating when you're trying to catch the momentum of a short term swing. You're not going to hold this for five to seven years, you're speculating, i.e. gambling versus investing, which means you don't care what's happening with it because you're a long-term holder and that's what many of you think. and they look.

You're going to misunderstand this and say, oh, they just hate bitcoin, oh, they hate individual stocks. In fact, I would give you permission, especially if you've reviewed the financial order of operations and done, well, have fun. a percent a small percentage of your assets I mean, I have some neighbors that we've had, you know, we get together on Friday or Saturday night having cocktails and talking about this kind of stuff and some of them have told me, ya you know, hey, I'm joking with this, I don't have a problem with it as long as it's less than three to five percent of your investable assets and now, Brian, I can imagine I can already hear people saying, but guys , no, no, I heard them before.

I've been paying attention, I've got my notebook, I've been writing down my notes and you specifically said that there is some kind of efficient frontier that I can live within with investments and the more risk I take on, the higher my rate of return will be, so if I want to have all my money in speculative investments if I want to put it all in a bitcoin or all in a tesla or all in a game stop we're all filling in the blank because that's very very aggressive and very very risky means I'm going to make money no, that's not the case just because you take on more risk doesn't mean you're going to have a higher rate of return and I think a lot of investors, especially in a very mature bull market sector forget about that, yeah, I mean, we've actually Had a perfect case study, this game stops actions, you know, we actually had a quick intro to our trivia show on a Tuesday, we had crazy changes that this doesn't even show you. the rest of the story because we all know gamestop stock as well as amc stock and some of these others that were played during this whole predicament, they were crushed, they were crushed and that's what worries me about all the investors who are I'm new to investing in brands and it's not about investing.

I'm being very generous with them, but people who are new to financial products heard about this through the radio, through television, through a dock and said, "Oh, I have to participate with that free money ". and then lo and behold they are going to lose 70 80 90 of their investment and they will always curse and poison the next generation of oh that game isn't real, it's rigged, it's horrible so you just have to understand what you're doing. you are actually making speculative investments you are actually gambling you are not doing this without fundamentals no one you think no one cared about the fundamentals of gamestop.

I think most investors who participated in that over the last month would be willing to bet yes. They didn't look at the balance sheet, they didn't look at the income statement, they didn't look at the financials, if you were someone who did it and you're still invested in it after looking at the financials and the income statement, you know? maybe your version of fundamental analysis is different than mine. I think you said something that is very powerful: when I mentioned the efficient frontier earlier, the greater the risk, the greater the anticipated rate of return. This is a great transition to what happens if you have a family member or a friend who wants to start a small business and we all hear the statistic, you know, the millionaire next door and other things, I mean, we're even products of entrepreneurs, we're a lot of millionaires, so you think, hey, if my family or my friend is.

By doing this guys, you talked about the efficient frontier, I'm taking more risks, I'll get a better rate of return, you realize the reason the rate of return is so strong is because there is a high failure rate, That's right, we always tell people when. you're talking about speculative assets, look, entrepreneurship, small businesses, we love it, I mean, we're proof that this whole concept works, but it's a scary concept. I want you to know that if you do this, you are just like us. I have mentioned setting up this entire section. Speculative investing should not be the majority of your financial assets.

Three to five percent is what you should consider, considering you know when you're helping a family member, a friend, or something you're getting. something that's a little bit further out on the risk spectrum that might be so far away that you're running a really big risk that you're going to be a sneaky coyote that you know is going to cut it and it's just going to fall off You have to know that you could lose that money. Yes, if you are going to be an investor in one of these businesses, one of the best advice we can give you is any sum of money you are thinking of investing. to make sure that your financial situation is strong enough that if it went to zero, you would be fine, it's not a coincidence when we see these stories of celebrities who had big multi-million dollar contracts for a million to 100 million dollars and were in the top. the world and fast forward and 10 years later their dead broke many times it's not because of the mansions they bought or the houses they bought or the jewelry they bought or whatever, it's because they had friends who wanted to open the car dealership or open They opened the restaurant or they co-signed on all of these different endeavors and they didn't really anticipate what their true risk was, so before you're willing to take that risk look, we all love our children, our grandchildren, our nieces, our nephews, we all love to our families, but just like on a plane, you have to make sure you put on your oxygen mask before you can help the person next to you.

Your finances are no different before you can invest in someone else's well-being, a future opportunity, or a business endeavor. You need to make sure you're on solid financial footing and that if that goes wrong, it doesn't completely derail your entire financial life, so we're just covering the five things millionaires don't invest in. I want to close it. Let's look at what I think creates long-term success and people who are successful with money, especially, invest and make this simple for you, the most important thing you can do is focus on the behavior of paying yourself first. focus on saving money for the future and I want you to get to the point where you are saving at least 20, 20 to 25 of your gross income as quickly as possible, get to that threshold so your army of dollar bills can start to grow .

The kids ask well, where does that money go? How should I do that? It's simple guys, if you can tell me how much you can save each month, when you need the money, you can go buy an indexed target retirement fund. Some of the two most important providers are loyalty. Investments with their cutting edge index fidelity freedom funds and their target retirement funds are going to check those things out and then after they've had enough success they figure out where that money becomes 500 600 700 000 you'll say guys this It's great, but I feel like there's another level and that's when I'm counting on you to graduate through the cycle of abundance at that stage.

That's why we give you all this free advice and that's why we can do this because we know our only question is when you arrive. So successful that you realize, oh my God, I'm the CEO of almost a seven-figure empire, now I'm worried about screwing this up or ruining it, I don't know what, I don't know. I would love to have a co-pilot. We work with clients all over the country and that's why I love it. We're going to invest in you and it may be years before we get anything out of this, but man, does it work?

We have been doing this program since 2006 and it works time and time again. I have many of you who started seeing this in college. Fast forward. I hate to say it. I'm getting this old, but fast forward. Now, as an executive, you have started a company, you have done something that has created success and you remember who planted the seeds that have led you to success and that is why we know that the cycle of abundance bears fruit, do what we talk about and you will be successful, also in the short term, if you want to know what you can do to pay us back, you know, invest in the like button for us on our YouTube channel, subscribe, you will see how subtle you just left that and we are working on the investment.

Yeah, let us know if you like that one. He can see it, so guys, but definitely subscribe. We love creating this content. Check out moneyguy.com, by the way, also moneyguy.com resources, which are a lot of free resources. free stuff to keep investing in your success because we know you do good things for the people you are generous with, come back right away you just have to give it time, yes, I love it, I love it, the money guy, backslash, resource as you are . Brian said if you answer two questions, how much do I want to save and when do I want to retire?

That's a very good start, but if you think I want a little more, how about I should make it raw? Should I do it before taxes? We have something available to you called a financial order of operations. We have a free deliverable on the moneyguy.com website. If you haven't used this or at least shared it with four different friends, you should because we think it's great to allow you to have an instruction manual for your dollar bill army and you'll be surprised to know that once that army acquires something of momentum, you'll be ready to take over the money guy team of the financial world.