00:00:00
Ah, this is driving me insane. To make a lot of money, you don't need to be a genius. You just need to remember a few
00:00:06
key things. Ramit Sati, financial expert, the money man, New York Times bestseller. Has more than 20,000
00:00:12
documented success stories. This is your chance to never worry about money again. You can live a rich life regardless of
00:00:18
where you came from, regardless of your income. How many people are clear on what their rich life looks like? Less
00:00:25
than 1%. When I talk to people who have a spending problem, 100% of the time they always say the same thing. I just
00:00:31
need to earn more. If you doubled your income today, do you think your problems would disappear? No. Some of the stats I
00:00:36
pulled out from your book, about 25% of people who make $100,000 a year plus are still living paycheck to paycheck. Makes
00:00:43
us realize that maybe the things we think we need are things that we have been socially taught are important. For
00:00:49
example, owning a house is the best investment. It means you are successful. But it can be a very bad financial
00:00:55
decision. There are far better, far simpler investments. So, I've got ÂŁ100 that I want to invest. Where do I start?
00:01:02
I love that we're getting into the nuts and bolts. Let's do this exercise together and everyone can do it with us. First off, and then Got it. Now, there's
00:01:09
just one more thing you have to do. Do you know the math? I would have 736,000
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in my account. Yeah. Reit 10 money rules. This is where the
00:01:22
real wealth is created. Number one,
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this episode changed my perspective on money. I'm an investor. I've been investing for the last six, seven years
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at different levels. Big companies, small companies, the S&P 500 funds, you name it. But Rammit changed my mind. He
00:01:49
changed my mind on money, spending, investing, and he changed my mind on
00:01:54
something that I think 95% of you that are listening to this podcast and that are about to listen to
00:02:00
this need to have your mind changed on too. that if you have the right philosophy towards money, the right
00:02:07
perspective and mindset towards money, then there is a path to living our rich
00:02:15
life, to becoming rich that enough people are not talking about. He debunks
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the myths of money, the limiting beliefs about money, and he confronts all of the
00:02:26
unhelpful advice about money that stands in the way of you becoming rich. There's
00:02:33
an app on my phone that I now have installed because of this conversation. And there are three big investments that
00:02:40
I've now made in my life because of this conversation. And there is one key idea
00:02:48
that I now believe will make me 10 times more wealthy over the next three decades
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because of this conversation. You're going to love it. Enjoy.
00:03:00
[Music]
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Remmit. Someone's just clicked on this podcast on YouTube, on Spotify, on Apple, and
00:03:13
they saw the title, they saw the thumbnail, they thought that sounds interesting. Tell me why you think they should stay
00:03:21
and listen to what we're going to talk about today, what they stand to gain if they give us their time. Whenever
00:03:27
someone hears someone talking about money, they get rigid. They instantly
00:03:32
think that someone's going to come in and tell them, "You can't spend money on lattes. You can't go on vacation. You
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can't buy any new clothes. Save all your money until you're 90 years old." And
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maybe, just maybe, then you can spend it. And I don't believe in any of that.
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I think you should spend extravagantly on the things you love as long as you cut costs mercilessly on the things you
00:03:55
don't. I think you should live a rich life today and an even richer life
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tomorrow. And so when you combine money and psychology, you start to understand
00:04:06
that there is more to a rich life than just some number in a spreadsheet. People already know they should be
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saving more. They know about compound interest. They may not know the intricacies, but they understand if they
00:04:18
invest some now, they're going to have more later. So, what's stopping them? That's been the central question that
00:04:23
I'm fascinated with for the last 20 years. That's why when I studied human behavior and persuasion and psychology,
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I was obsessed with this question of what are the things we know we should do, but we still don't. You can live a
00:04:37
rich life regardless of where you came from. You can live a rich life regardless of your income. Now, of
00:04:45
course, having a higher income dramatically helps, but just like fitness, we can all improve where we
00:04:51
are, and that's what we get to talk about today. When you talk about the language, language of money, what do you
00:04:56
mean? I mean understanding the nuts and bolts of money. So, just the same way that we all learn how to drive, we learn
00:05:03
the rules of the road, when to use our turn signals, most of us do not have even the equivalent knowledge of money.
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For example, the basic language of money would be what percentage of your income
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are you saving and why? What percentage are you investing and why? When will you
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have $100,000 or $500,000 or a million dollars and what will that money get
00:05:28
you? Because just having a million dollars in the bank is pointless. What does it get you specifically?
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This is the basic language of money. You've got to know your key four, six
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numbers in your life. Not many, just a few. But once you understand those numbers, it's like understanding the
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speed limit. Understanding the speed limit means you understand a lot. There's a rule of the road. If you go
00:05:53
too fast, what's going to happen? Why do these rules exist? And these rules are similar in money. You can break them.
00:06:00
That's okay. But you got to understand the rules first. What are those numbers that I need to know? There's four
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numbers that I really like to track. I track these myself and these are the numbers I encourage. The first is your
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fixed costs. Okay, those would be your rent or your mortgage, your in uh your
00:06:17
uh any debt payments, groceries, the money that you are spending every single month that is essentially fixed. And the
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number I recommend for that is 50 to 60% of your take-home pay. So that would be
00:06:31
if you're spending 50 to 60% of what you make, what you take home on your rent, your groceries, any debt payments, your
00:06:37
car, you're in good shape. Okay. The next one is your savings. That would be
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roughly 5 to 10%. Savings would be things like an emergency fund, savings
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for a down payment, for a car, things like that. Third is investments. Uh this
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is where the real wealth is created. And for this, 5 to 10% of take-home is fine.
00:06:59
Of course, the more you put in, the more you're going to have. And then the fourth category, the one I love the
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most, is called guilt-free spending. This is going out for cocktails in New
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York. It's buying a beautiful shirt. It's treating your friends, whatever you
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love, yoga, 20 to 35% of your take-home pay. So, if
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you're watching or you're listening to this, just take 15 minutes back of the
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napkin, jot down your approximate numbers. You don't even have to get them perfect. And you will be able to
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benchmark how you are spending compared to those numbers. I'll tell you that
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those numbers tell me a lot. It's almost if you just show me those four numbers of your spending, I can tell so much. I
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can tell what you love spending on. I can tell what you don't. I can tell what your priorities are.
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And I can also tell where you are out of alignment. So I'll give you an example.
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When I ask people, "What is your rich life?" One of the common answers they say is, "I want to do what I want when I
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want." I go, "Oh god, not this answer again." I hear it every day. I go, "Wow, that's so interesting. So what do you
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want?" They go, "Uh, most people have never thought beyond a trit answer." So
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then the next answer I often get is freedom. I want freedom. I go, "Great. That sounds good. What is freedom?" I
00:08:23
want to do what I want when I want. I look at their numbers and I see a huge payment that they're making to a
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30-year mortgage. I see debt payments. I see car payments. And I go, "Now, this
00:08:36
is interesting. You want freedom, but you have essentially anchored yourself down to not be able to travel or to
00:08:45
pivot or to move. How can those two be? How can you reconcile those two? And
00:08:50
that dissonance is actually a fascinating moment. I love when we experience dissonance. We all do. I say
00:08:56
that I want to work out more, but I don't work out more. Why? And what
00:09:02
you'll discover is people often they simply have never thought about it. What what our rich life is these gener these
00:09:08
generic phrases, freedom, flexibility, it's just words. What I really want
00:09:14
somebody to say, I want them to go a lot deeper, is to say,"I want to be able to travel for six weeks a year. I want to
00:09:21
go to London. I want to go to New Delhi. I want to go to Thailand because I want
00:09:27
to visit my family." That's a good start. If we get even more specific, they tell me what seat on the airline
00:09:32
they're sitting on. They tell me where they're eating. They tell me who they're bringing with them.
00:09:37
But to simply say I want freedom is so vague that when I look at your numbers
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there's often a huge inongruity with how you're spending versus what you claim your rich life is. How many people from
00:09:50
your experience of interviewing people and doing this research are clear on
00:09:55
what their rich life looks like down to you know what you described there I want to travel for a couple of months a year
00:10:01
and then even further down to which seat I'm going to be in which class I'm going to be on as I travel less than 1% less
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than 1% of people know that no most people literally say I want to do what I want when I want that is their the
00:10:14
extent to which they've thought about a rich life why does it matter to be? What
00:10:20
did that one that less than 1% of people that have that planned out have as an advantage or a benefit from that
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meticulous thought that the other 99% don't have because they can craft their
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rich life that is uniquely theirs. Almost like getting a handmade glove.
00:10:37
And in fact, the more you craft your rich life, the more bewildering it looks to the outside world. So, I'll give you
00:10:44
an example from my own life. I love to travel. I spend a lot of money when my
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wife and I, we go, we'll travel for months at a time. I love hotels. I love the hospitality. I
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love the details. I I love it all. I don't really care about cars. Not at
00:11:03
this phase of my life. It's just not that important to me. So, when I talk about my money dials or the things that
00:11:10
I love to spend money on, I might spend a crazy amount on a hotel per night just
00:11:16
because I love it. But I drive a car that's almost 20 years old. It's just not important to me. And I want that. I
00:11:24
want to hear in your life what you spend extravagantly on but then you cut costs mercilessly on because I want that
00:11:31
duality which indicates you are intentional about your rich life. What if we're buying things to impress other
00:11:38
people and we don't cuz it's hard to looking in from the outside especially it's hard to know if someone actually
00:11:43
likes Lamborghinis. Yeah. or if they're buying Lamborghinis because they were beat up when they were 9 years old on
00:11:50
the playground and they're trying to overcompensate and make the world and does it matter why they're buying it. Does it matter? I don't know. H first of
00:11:56
all, how would we even know? How would they know? Is there a is there a difference? Do you think just on your in
00:12:01
your opinion on the impact that that purchase has on us? Whether we're doing it intrinsically or we're doing it exttrinsically because I reflect on some
00:12:08
of the things that I spent money on and I go that was for someone else. Whereas there's other things I spend money on
00:12:14
which are maybe health related or travel related like convenience flying in a nice class on a plane which I go no
00:12:20
that's actually adding a lot of benefit to my life. Whereas that mansion I bought out in the countryside when I was 23 or whatever was a terrible decision.
00:12:27
It took me away from my friends because it was an hour and a half outside of the city. Yeah. And none of my friends ever
00:12:32
came to it. So, I was just arriving at midnight after work in this mansion with this tennis court by
00:12:37
myself, sleeping for 3 hours and then driving another hour and a half back to the city where all my friends in work were. I go, that was a stupid
00:12:44
decision based on extrinsic external, you know, motivations. It's a great question and you know, particularly in
00:12:51
America, we love this idea of ownership. We are taught you've got to own. Owning
00:12:57
a house is the best investment. It means you are successful. And if you're renting, no one really says this, but
00:13:05
what they deep down say is you're a loser. Yeah. Okay. This individualistic
00:13:10
strain really runs deep. And it has led a lot of people to make poor financial
00:13:16
decisions. Uh first of all, you might be surprised to hear my view is that owning
00:13:21
can be a good financial decision, but it also can be a very bad financial decision. In fact, I rent by choice. And
00:13:29
living in New York, for example, I lived here for a long time, I knew that if I were to buy, I would be
00:13:38
losing thousands of dollars every single month because it actually cost more than
00:13:45
twice as much to own than to rent. But can you imagine the type of
00:13:51
pressures even I got from people who would come over and say, "Oh, so do you
00:13:57
own this place?" the place that I was renting. I said, "No, I rent." And there
00:14:02
was this visible moment of confusion. They're shaking my hand. They know that I'm the I will teach you to be rich guy,
00:14:09
but I rent. How can you be teaching money, but you rent? Isn't renting for
00:14:15
losers? And I have to say, because I was rockolid confident in my decision, that
00:14:22
pressure did not affect me. But I want to also say that a lot of us buy things
00:14:27
based on status. Like the idea that we don't buy things based on what people
00:14:32
around us think is is nonsense. We buy things based on status. To deny it is
00:14:38
absurd. But I do think that for the big purchases in your life like a house, a
00:14:44
car, the big things, you've got to run the numbers. And if you decide, hey, you
00:14:50
know what? I want to buy a house even though it's going to cost me an extra $600,000 in opportunity costs and
00:14:56
phantom costs, but I'm going to do it because I like it or it makes me feel good. I say God bless. But if you simply
00:15:04
make decisions based on what other people around you do, then you will discover like you did, I thought I was
00:15:10
going to feel a certain way and I don't really feel that way. And that for me is
00:15:16
an opportunity for you to interrogate your own beliefs. And money is a like a personal zero sum game, right? Like so I
00:15:22
can't just spend indefinitely. So buying that ridiculous house out in the
00:15:28
countryside takes away from something which might have genuinely brought me closer to happiness like I don't know
00:15:34
going away with my family or whatever it might be. Exactly. You you talked there about buying property. I find that really curious because the the popular
00:15:40
narrative is for most people the minute they get any decent amount of money is to buy your first house. And that's what people do. they get they take a 10%
00:15:47
deposit or 20% deposit, whatever it might be, and they buy a house. Um, why is that a poor investment? Why is that a
00:15:55
bad thing to do? Because that does kind of sit counter to the popular narrative. Well, we have to remember first of all where the popular narrative came from
00:16:03
America. If you ask people, what is the American dream?
00:16:08
Yeah. The answer is inextricably tied up with a single family home with a white picket fence. That's not an accident.
00:16:14
That is the result of decades of messaging. Some might call it propaganda.
00:16:21
First of all, most people in the world do not live in single family homes like we do in America. That has caused a lot
00:16:27
of issues. But to leave that part aside, this is how most people think about
00:16:32
buying a house. They think grandma bought a house in Austin, Texas in 1970
00:16:38
for $100,000. Grandma just sold it 50 years later for
00:16:44
$1 million. Grandma made $900,000. They go, "It's the most profitable thing
00:16:51
you could do. Buy a house." I go, "Okay, uh, that sounds really nice." Did granny factor in how much she spent on
00:16:58
maintenance for the past 50 years? Uh, no. Uh, did Granny factor in inflation
00:17:04
and how that affected her return? Uh, no. What's inflation? Uh, did Granny factor in the opportunity costs of what
00:17:11
that down payment could have been used if invested in the S&P 500? Uh, no. And did Granny look at all these phantom
00:17:17
costs such as interest on the loan? Uh, no. It's not simply the bigger number
00:17:24
minus the smaller number. That's wrong. That is simplistic. For the biggest purchase of your life,
00:17:31
you've got to go deeper. Again, when I was living here, I kept a very close eye
00:17:36
on real estate. and the place right right next to me, same square footage,
00:17:42
same number of bedrooms, same everything, it would have cost 2.2 times what I was paying in rent. So, just to
00:17:48
give you an example, if I was paying $3,000 a month, it would have cost about $6,400 a month to own. Okay? I said,
00:17:56
"You know what? I like renting. If I have a problem, I just text my landlord." I took the $3,400 I would
00:18:03
have spent owning when factoring in phantom costs, maintenance, interest, taxes, all that and I simply invested it
00:18:10
and I made more money doing that than I would have owning. What about if you're
00:18:15
buying somewhere to for the rental income? That can work. That can work. So
00:18:20
owning real estate as an investment can be part of a well- diversified portfolio
00:18:26
if you run the numbers. Right now there's a lot of hype. People go, "I'm going to buy a house and if I don't like
00:18:33
it or whatever, I'm just going to rent it out." Okay, fine. But you've got to remember that if your mortgage is
00:18:41
$1,000, that's not just the amount you're paying. There's a lot more. In fact, in
00:18:47
my estimations, I add 50% to that price. So, $1,500 a month, which would include
00:18:52
a roof repair happening 19 years from now. We've got to advertise that out. uh labor costs, interest, all that. If you
00:19:01
can rent it out and make a profit, fantastic. It cash flows. That's
00:19:06
awesome. What you discover is that most people who buy a primary residence, the place they want to live in, they buy it
00:19:13
because they want it and then they tell themselves it's an investment.
00:19:18
Buying a house can be an investment, but oftentimes it's not. And there are far
00:19:24
better, far simpler investments. Here's my key message. I want to make sure nobody misunderstands me. I've been
00:19:30
accused of saying buying a house is bad. No, I never said that. In fact, I will buy a house myself one day. And when I
00:19:36
do, it's going to be a terrible financial decision. And I'm going to do it anyway. My key message is for the
00:19:42
biggest purchase of your life, you've got to run the numbers. Sometimes buying can be a good financial decision. Often
00:19:49
renting can be a good financial decision. run the numbers and never feel guilty for renting. As it relates to
00:19:57
buying a house, I've always been hesitant because I'm scared really of the point you mentioned
00:20:03
about being anchored to a location. So, I the way that I've kind of justified that away is by saying, "Well, I'll just
00:20:08
Airbnb it when I'm not there or I'll rent it out when if I decide to move to New York or whatever." Is there a a cost
00:20:14
in the opportunity of being less flexible about where you can be um that
00:20:21
people don't think about especially when they're younger? Yes. And they're probably a little bit unencumbered by
00:20:26
you know life at that point. Yes. Buying a house is one of the most profound
00:20:32
financial decisions that will affect your lifestyle ever. You can sell a car even at a minor loss,
00:20:40
but selling a house involves massive transaction costs and labor that most people don't anticipate.
00:20:47
One of the reasons that I rent is for lifestyle reasons. Financial, yes, I
00:20:52
make more money renting and investing the difference than I would owning, but also lifestyle. I don't know that I'm
00:20:58
going to be in the same place for 10 years, which is one of the key things that I would encourage people to decide
00:21:04
before they buy. You want to know that you're going to be there for at least 10 years because then you can spread all
00:21:10
those transaction costs. Spread them out over 10 years. They become much more affordable. It's kind of like buying an
00:21:16
expensive jacket. If you buy it and you wear it once, that's really expensive. If you buy it and wear it over 10 years,
00:21:23
becomes a lot more affordable. Now, take that, multiply it by a thousand, and that's a house.
00:21:29
Particularly for young people, I don't give a lot of unsolicited
00:21:34
advice. I used to do it when I was young, when I just learned about money and I realized nobody really wants to
00:21:40
hear it. They really don't. If somebody comes to me, they come to my blog, my social media, great. Otherwise, I'm not
00:21:46
going around telling people, you should do this. Once in a while though, I get a young person asking me, I'm just about to
00:21:53
graduate from college. What advice do you have for me? And at that moment, the
00:21:59
the best piece of advice that I have is move where the action is. And typically
00:22:05
that's a big city. So that would be where there's more jobs, where there's
00:22:11
simply more people if you're looking for relationships. And there's a lot of tacit knowledge that happens in big
00:22:18
cities. Like, oh, have you tried this? Oh, what? Have you seen that musical? Uh, have you tried this thing? This idea
00:22:25
that's going around. So often surrounding yourself geographically can be hugely rewarding to you as you grow.
00:22:32
You can't do that if you bought a house because everybody told you that it was going to be the best investment. And if
00:22:38
I were to say, "Show me where you calculated the numbers that it was going to be an a great investment."
00:22:44
75 plus% of people have never created a simple spreadsheet. How does buying a
00:22:49
house compare in terms of returns to something like investing in the S&P 500?
00:22:55
It's quite poor actually. Really? Yeah. Over about a hundred years, there's great research showing that it has
00:23:01
essentially matched inflation. It's been slightly above inflation. People find this mind-boggling again because they
00:23:08
think somebody bought a house for 100K and they sold it for a million, so it's 900K. But they don't properly factor in
00:23:15
inflation, opportunity cost, phantom costs, all that. It's really hard to factor these numbers in. But it's
00:23:21
critical because it's the biggest purchase of your life. I'll give you another example of where people don't
00:23:26
properly factor it in. Uh some people pay a financial adviser 1%. They go 1%
00:23:33
it's not a big deal. I'll pay 1%. What they don't realize is that that 1%
00:23:38
over the course of their lifetime will take 28% of their returns and hand them
00:23:44
over in fees. Think about it. If you make a million dollar in investing over the course of your life, $280,000 are
00:23:52
going right out of your pocket into that advisor's pocket. Now, that's super counterintuitive. 1% turns into 28%. How
00:24:00
does it work? You can simply go online and search for uh investment cost calculator and plug in the numbers, add
00:24:07
a 1% fee, and you will see. The point of this is that sometimes money is highly
00:24:12
counterintuitive. Really counterintuitive. It's unlike anything else. If you and I go to sushi
00:24:18
right now and we get sushi for 20 bucks, it'll be fine. If we get it for a
00:24:25
hundred bucks, what do you think? It probably be a little better, right? And if we get it for $1,000, the fish will
00:24:31
have been flown in from Tokyo this morning and it will be served in an absolutely stunning setting. So, in
00:24:38
other words, you pay more, you get better results. We're used to that. If I spend more on a sweater, it's probably
00:24:44
going to have a different type of fabric. More on a car, it's going to look cooler, have cooler features.
00:24:49
Money's not like that. If you spend more, you don't get better returns. You
00:24:56
don't get better anything. In fact, if anything, you get worse returns. People
00:25:01
find this mind-boggling because it is. It's counterintuitive. But in investing,
00:25:06
costs matter. In buying a house, you've got to run the numbers because they are totally counterintuitive. Quick one
00:25:13
before we get back to this episode. Just give me 30 seconds of your time. Two things I wanted to say. The first thing is a huge thank you for listening and
00:25:20
tuning into the show week after week. It means the world to all of us. And this really is a dream that we absolutely never had and couldn't have imagined
00:25:27
getting to this place. But secondly, it's a dream where we feel like we're only just getting started. And if you
00:25:32
enjoy what we do here, please join the 24% of people who watch this channel regularly and have hit that subscribe
00:25:39
button means more than I can say. And if you hit that subscribe button, here's a promise I'm going to make to you. I'm
00:25:45
going to do everything in my power to make this show as good as I can now and into the future. We're going to deliver
00:25:51
the guests that you want me to speak to and we're going to continue to keep doing all of the things you love about this show. Thank you. Thank you so much.
00:25:58
Back to the episode. So, what is the S&P 500 for anybody that doesn't know? Yeah.
00:26:04
And what are the returns that I'm likely to get from investing in the S&P 500? I really want to simplify this for people
00:26:10
that are at the very start of their investing journey, you know, because I mean, this is what you spend so much of
00:26:16
your time doing that. I just think about my my team here, say the diary of a CEO. There's about 30 people and we started
00:26:22
talking about money one day and it was mindblowing how nobody in my team's
00:26:27
lives had ever had the conversation with them about investing. We all think of investing as something that rich people
00:26:33
after the age of 40 do once you have a million dollars. Um or if you don't have
00:26:38
a million dollars then the only other way to invest we're taught is to buy a house. Ah this is driving me insane.
00:26:45
It's true though, isn't it? Yes. And that's that's the central part of my work is that you can live a rich life
00:26:52
and that rich life can be richer and more vibrant and more personal than you
00:26:57
ever imagine. If you want to travel, you can travel for longer than you ever thought. You can travel for me at nicer
00:27:05
hotels. You can uh spend more time with your children, with your loved ones. Whatever your rich life is, you can do
00:27:11
that. But you've got to learn a few key basic things about investing and money.
00:27:18
So let me tell you what I would tell my family when they come to me. They go, "How should I start investing?" The
00:27:24
simplest simplest way that I advise my family is I say, "Get a target date fund." So let me explain what that is. A
00:27:31
target date fund is one fund, just one, and you pick it based on the year that
00:27:37
you're going to retire. So, if you're going to retire in 2050,
00:27:42
if you're going to be 65 in 2050, you go and you find that one fund. It's called a Vanguard 2065 fund or Fidelity 2065 or
00:27:52
Schwab 2065. There's lots of brokers. These funds, it's one fund. All you do
00:27:57
is put money into it. That's it. The fund, like a pie chart, is automatically
00:28:03
diversified. So, as you get older, it gets more conservative because somebody
00:28:08
who's 75 years old should be investing differently than someone who's 25.
00:28:13
One fund, all you have to do is set your money up to go into it every single month. What is a fund? A fund is uh a
00:28:23
set or a basket of stocks and maybe bonds. So, we've all heard of, you know,
00:28:28
companies like Microsoft, Google, whatever. A fund owns lots of these,
00:28:35
right? And that's important because we've heard diversification, like you should have diversified your
00:28:40
investments. Okay? Well, how do I do that? You don't need to go and buy 20 stocks and then figure out how much of
00:28:46
each to do. That's too much work. And honestly, most people are not good at that, even professionals. You buy a fund
00:28:54
which automatically owns lots of stocks like hundreds of them and over time all
00:29:00
you the individual investor like me have to focus on is putting money into it
00:29:05
automatically. So a fund essentially I've got ÂŁ100 that I want to invest. Um I find a fund. Where do I find these
00:29:12
funds? You can go to Vanguard, Schwab or Fidelity. All those are great companies. uh what you're looking for regardless of
00:29:19
what country you're in is you're looking for a lowcost brokerage firm. So, but there's also apps and stuff that I can I
00:29:25
can you can use apps. I don't like a lot of the apps because they gify you to try to invest. They want you clicking and
00:29:33
trading. I hate traders. Trader, you do not want to be a trader. Traders lose
00:29:38
money. Investors treat investing like watching paint dry. That's how sexy it
00:29:44
is. Trust me, I'm not getting my entertainment from investing. I'm going out, go watch a movie, go watch Netflix,
00:29:51
but investing is boring and automatic. That's how it should be. I used a a a
00:29:58
company called Hogre Lands down in the UK who have an app. When I first started investing, um when I first started
00:30:03
investing in funds, they they had a very ugly app, so I wasn't very compelled to use it. I think it's better now. But I would use just do it on desktop, which I
00:30:10
do get your point because you don't want to you don't want to be game. You don't want to screen all of that notification.
00:30:15
I like ugly. It should be ugly. And you don't want it to be too accessible as in I don't want to be able to check it
00:30:20
every day. No, look on my phone. You will see no investing apps. There should not be. Why do you need to log in and
00:30:26
check it every day? What's the point? In fact, I log, you know, most people should check it every 3 to 6 months. And
00:30:35
here's how you check it. You log in on your desktop. Wow, it's up. Wow, it's
00:30:40
down. Okay, bye. You're not tweaking anything. It's like making Thanksgiving dinner. Once you've put the turkey in
00:30:47
the oven, just let it sit. Do not fiddle with it because you're only going to
00:30:52
mess it up. And in this case, you're letting the turkey cook for decades. And that fund. So, I've got a ÂŁ100. I go on
00:31:00
a website. Yep. Vanguard, Fidelity Schwab, whatever they are. I have no alliance to any of them. Neither do I. Um, there's various ones in the UK. I
00:31:06
actually do recommend Hogrey Lands down just because it's quite simple and I think investing in funds, there's no fees. There's no fee associated with the
00:31:12
investment itself. Obviously, they take a, you know, they might take a percentage depending on which fund you're investing in. I take my 100
00:31:18
pounds and investing in Hargrave landsdown, you don't need, there's no um minimum. Great. From what I understand,
00:31:25
and there's no if you invest in a stock, they charge 12 pounds per investment, but if you invest in a fund, it's free. Um, I put myÂŁ100 into a fund. The fund
00:31:32
is essentially taking one pound, one of those pounds and investing one pound into Facebook. It's investing one pound
00:31:37
into Google, one pound into Shopify, one pound into Spotify, one pound into Nvidia or whatever. It's doing that for
00:31:44
me. It's managing it for me. It's making the decisions for me. I just put the money in every month. Whatever I can and
00:31:50
I leave it. Yeah. And let's go even deeper. I love that we're getting into the nuts and bolts here because, you
00:31:56
know, honestly, most people, they do not know how to invest. Literally, what website do I go to and then what do I
00:32:03
do? The fund owns these different stocks and
00:32:09
some will go up and some will go down and it's inconsequential to you. All you need to know is you own this fund.
00:32:16
Now that you've opened up an account and you've sent a hundred bucks or a thousand bucks, great. You've made one
00:32:22
of the most important decisions of your life. Now, there's just one more thing you have to do. Set up an automatic
00:32:27
transfer so that every single month you have a certain amount of money going in.
00:32:33
Now, if you don't know how much money, use my conscious spending plan guideline. What did I say? 5 to 10% of
00:32:39
take-home is a good guideline. All right? You should be able to do 5%.
00:32:44
Trust me, anyone who comes to me, they go, "Reie, there's no way. Must be nice. I can't afford." I go, "Show me where
00:32:50
you're spending your money. I guarantee you I can find 5% to send in every month." Now, you're not trying to send
00:32:57
it in. I don't try to brush my teeth in the morning. It's a habit. Investing is even easier than brushing your teeth
00:33:03
because you set it up automatically. The investment fund will automatically draw
00:33:09
from your checking account. And it will pull in a hundred bucks, 500 bucks, a,000 bucks, whatever your number is.
00:33:17
And so, you're not going to log in for three, four, five months. You're going to log in a few months later, you're going to be like, "Oh my god, I didn't
00:33:23
even realize that all this money is in here." When you add that plus
00:33:30
compounding over many years, that is how real wealth is created. So I don't want
00:33:35
anyone to think that you have to be rich in order to start investing. One of the
00:33:40
ways you get rich is by investing. I've got a friend that's currently actually
00:33:46
in this building at the moment and I had this conversation with them about a year ago. Gave the advice that you've just
00:33:52
given there. And about 2 months later, this individual who I shan name came to
00:33:58
me and I said, "How's your uh you know, your your your investments going in that in that fund?" And they said, "Oh, yeah.
00:34:03
I had bills. I had a credit card bill, so I I took took it out." Oh, yeah. She she treated it like a checking account.
00:34:09
Investments for me are places to accumulate wealth. I don't
00:34:15
draw from it. That's what a checking account is for. So, if what that is is
00:34:20
there's two parts to what your friend is saying. one is um mentally she's thinking that this investment account is
00:34:27
just money I can draw from if I need it. So I would sort of gently change the way she thinks about it. The second is I
00:34:33
guarantee her account structure is a little um subpar. So here's how I would set it
00:34:40
up. This is in chapter five. Uh it's all automation because trust me, I don't
00:34:45
want to spend time transferring money back and forth. That's I don't spend any time on that. You get paid, your money
00:34:52
goes into your checking account. From your checking account, it is automatically transferred to a savings
00:34:58
account. In fact, I have subsavings accounts for vacation, car, down
00:35:05
payment, all that stuff. So, you have money set up for specific goals. Money is transferred to your investment
00:35:10
account. It's transferred there. I'm not gonna touch that money. I'm gonna let it cook. And then I have my guilt-free
00:35:17
spending, which is going out with friends, whatever I love, and my credit card bill is automatically paid off
00:35:24
every single month. That's how you want to set it up. It takes a couple of weeks to set everything up and then you never
00:35:31
have to think about it again. C how can you prove to me that this is the way to make wealth? What case studies have you
00:35:36
got that investing in funds over a long period of time is the path to financial
00:35:43
wealth? Because you know it's you said earlier about the paint drying thing. The narrative that we see about how why
00:35:49
people and how people get rich is you know they sell a company or they have a lottery win or maybe they buy some
00:35:55
cryptocurrency and it goes up. Yeah. That's what we hear. So that's what we try and emulate. Totally. We prove to me
00:36:01
that that's that this fund strategy is better. Well, there's there's a couple things. First off, the research over
00:36:07
more than a hundred about a hundred years shows the returns of the stock
00:36:12
market and the returns tend to be at least in America they tend to be around
00:36:18
11% 10 to 11% and if you take out inflation
00:36:23
you get about 7 to 8%. Per year. Now for anyone listening they go okay well what
00:36:29
does that mean? That number means nothing to me. 7% whatever. If you go right now and you Google
00:36:36
investment calculator and you just plug in your age, you plug in let's say 200
00:36:44
300 bucks a month and you plug in 7% return and you just watch how that money
00:36:49
grows. You will be shocked. Jack, get me my phone. I'm going to do it now. Okay.
00:36:56
So, let's search for compound interest calculator. And there's a really simple one. This it's called Money Chimp. Okay.
00:37:04
Okay, I've got it. All right. All right. So, there's four numbers we need to fill out here. Let's take a look. The first
00:37:09
is current principle. That means how much you've got in the bank. I'm going to say
00:37:14
$5,000 and I'm going to start when I was 16. Cuz if id saved my money when I was
00:37:20
16 and not spent it irres recklessly, I think I could have had that $5,000 when
00:37:26
I was 16. Um, annual addition. What does that mean? How much can you invest per year? So, for most people, they think
00:37:32
about on a monthly basis. They might say 200 bucks a month, which would be $2,400
00:37:38
annual addition. Okay. So, what do you want to say? I'm going to say, can I say $5,000? Yeah, that's, you know, about
00:37:45
400 bucks a month. I think that's reasonable. I often find that with people making uh median or slightly
00:37:52
above median salary that there are hundreds of dollars a month of money that is unaccounted for that if properly
00:37:59
made intentional could be invested. So great 5,000 a year. All right. Obviously I could have once I got past a certain
00:38:05
age I could have increased that though. So we're going to talk about that. Hold on to that idea. Okay. How many years?
00:38:10
This was you at 20. This was me at 16. Oh okay. And how old are you today? 30.
00:38:16
Okay. So 14 years. Let's just do it until today and we'll see what happens. Okay. All right. 14 years. And then it
00:38:22
says interest rate. So what should we assume for that? Is that 8%. Yeah. 7 to eight. I you I do seven just to be super
00:38:29
conservative because I never want to be surprised on the downside, right? If anything, I'm going to make more. So 7%.
00:38:37
All right. Let's calculate it. Okay. What do you see? Damn. What do you see?
00:38:43
$133,000. 537. Yeah, that's what you would have had right now. Now, let's add some
00:38:50
context. So, this is really important. You see a number that says $133,000
00:38:55
at age 30. Yeah. Okay. Is that a lot? Is that not? Hm. I don't know. Let's break
00:39:03
it down. At that point, you started with $5,000 and you invested $5,000 per year.
00:39:10
We assumed no raises, even though you obviously made more than you made at age
00:39:15
16. We assumed you stopped investing at age 30, which is obviously ridiculous.
00:39:22
And you end up with six figures. Let's play it out. Let's take it until
00:39:29
40. So instead of 14 years, you invested for 24 years. What do you see?
00:39:37
I would have $336,000. It's getting better from just $5,000 a
00:39:43
year. Not much. It's fantastic. Again, 400 bucks or so a month is very modest.
00:39:50
Remember, people's income goes up typically in their 30s and 40s. And if you already are investing a little bit
00:39:56
automatically, all you have to do is just tweak a number and it will take an extra couple hundred, three, four, 500 bucks. Let's do one more. Let's go to 34
00:40:03
years just because I want to see what happens. and then we're going to play with the other numbers. Okay. So,
00:40:09
investing from the age of 16 until I'm 50, I would have $736,000
00:40:17
in my account. Yeah. Now, I want to do the full the full thing. I want to do a
00:40:22
more realistic number here. So, instead of 50, we're going to go
00:40:27
49 years. That takes you to age 65. Yeah. Okay.
00:40:33
and instead of $5,000 per year, your income obviously went up from being 16
00:40:39
years old. So, I'm going to pick a number out of thin air and and I'm going to tell you how I picked it. I'm going
00:40:45
to say instead of $5,000 a year, it's actually going to be $30,000 per year. Let me tell you why I
00:40:53
picked that. In your early years, you don't have as much money, but you were still investing
00:40:58
a little bit, which shows that you're dedicated. as your income goes up, you're going to start proportionally
00:41:05
continuing to invest. So, at a certain point, your income will be really high, and that will bring that average up.
00:41:11
That's why I switch this to 30,000 per year. I actually think this is quite modest, but I'm going to go ahead and do
00:41:16
it. So, here we have someone starting investing at $5,000. They invest $30,000
00:41:24
per year. Okay? They grow it for 49 years at 7%.
00:41:31
Do you know the math? No. Tell me. 12,33,000.
00:41:39
So that's me starting with 5K gradually ratcheting it up until I'm investing
00:41:44
well investing 30k on year a year per average across those 49 years. Yes. Which is a flaw in this because it's so
00:41:51
simple that money invested. You're not actually going to invest that much early on. you'll invest more later. Yeah, so
00:41:57
you won't actually you'll maybe have a marginal amount less, but we're talking 10 versus 12 million. That's a lot of
00:42:04
money. And then if I got 8% instead of the 7%, I'd have 17.4 million. Yeah, but
00:42:11
don't mess with that. Cuz this is what this is what people do. They go, "Well, if I got 13%, I'm going to invest in
00:42:16
this PE fund." I go, "Don't do that. You're going to lose all your money. Just stop." Yeah. 7% is safe. It's
00:42:21
conservative. That's why I am here. That's why I want to encourage people, you don't need to juice your returns. I
00:42:28
hope you do get 8%. But I don't want you to count on that. I want you to count on
00:42:33
safe, stable returns. And what matters for you is the time you started early
00:42:39
and the amount you have a considerable amount to invest. What about the richest
00:42:44
people in the world? You know, we think of the Warren Buffetts of the world or the Charlie Mongers of the world who
00:42:49
ended up becoming the richest investors on planet Earth. Yeah. What was their strategy? I'll tell you. Let's talk
00:42:55
about Warren Buffett. Uh there's a friend of mine, Morgan Hel, he wrote this amazing article. I love that book. Yeah. The psychology of money. He wrote
00:43:02
this amazing article about Warren Buffett. If you look at Warren Buffett's
00:43:07
returns, he started investing at a very young age and the money compounded. Again, it's
00:43:13
like putting the turkey in the oven and letting it sit there not just for an hour, but many hours. In his case, 60
00:43:20
plus years. He has made over 90 I think over 99% of
00:43:26
his wealth happened over the age of 60. Okay, think about that. It's all because
00:43:33
he started investing so far ago. And what is mindboggling is that you don't
00:43:38
need a fancy strategy. You don't need to be picking individual stocks. You don't even need to be a genius to make a lot
00:43:45
of money. You do not have to be the smartest person in the room. You just need to remember a few key things. Start
00:43:51
as early as possible, okay? And if you're not 16 years old, if you're 30,
00:43:57
40, even 45, okay, start now. Second, invest aggressively every single month.
00:44:04
That's critical. Third, keep your costs low. 1% in fees is going to take 28% of
00:44:10
your returns. 2% is going to take over 55% of your returns. Keep your cost low.
00:44:17
If you do those things, you will have more money than you ever imagined. What are the attributes of someone that's
00:44:23
probably going to be poor in 30 years in terms of their relationship and their behavior with their money? Easy. They
00:44:29
don't invest. They feel overwhelmed and anxious about money and they talk about it all the time, but they've never read
00:44:36
a single book about money. And there's these deeper attributes they
00:44:42
have. Uh, only rich people invest. They think that. Yeah. And that's why I'm
00:44:47
here. I want everyday people to know just like me. I started off, my parents
00:44:53
immigrated from India. I had no special uh investment knowledge, but I had two
00:45:00
parents who were educated and encouraged me and said, "Learn this stuff here. We'll do it together." And that was a
00:45:06
gift. Um, everyday people can build tremendous wealth, which in and of
00:45:12
itself is impressive, but it's even more impressive when that wealth is used to live a rich life, a rich life of
00:45:18
adventure and spontaneity and generosity. Some of the stats I pulled out from your book, about 25% of people
00:45:24
who make $100,000 a year plus are still living paycheck to paycheck. According
00:45:30
to a recent survey of millionaires done by the US trust, 83% of the wealthy
00:45:36
wealthy say their largest investment gains have come from small wins over
00:45:41
time rather than taking big risks. Yes, this is counter to everything we see on TV because on TV it's really boring.
00:45:48
What are you going to look at my Vanguard account? Oh wow, compounding 7% per year. It went down 8% last year and
00:45:54
it went up 9% this year. So boring. So, we see these cool stories of business
00:46:00
owners, and we're both business owners. It is cool, but a tremendous amount of
00:46:06
my own wealth will come from lowcost, long-term methodical investing. That's
00:46:12
like a rule of life, isn't it? That the the real returns, you know, in reality, the great returns come from patience.
00:46:19
Yeah. And consistency and things that really aren't sexy. Like, they're not Instagrammable. If I post on my
00:46:25
Instagram today, hey, I've got some advice for you guys to become wealthy. And I go, need to invest in this fund and just leave it there. But if I go,
00:46:31
listen, I've got this new NF this new NFT collection or cryptocurrency coin that's going to make you a million% this
00:46:37
year. People are going to go all in. That's just like a something within the human condition where we want we want
00:46:44
big returns with little effort. And today, we want to get rich quick. Same with a six-pack. We want the six-pack
00:46:50
abs in 10 minutes. You don't want six pack abs with diet restrictions and 9
00:46:56
months of work. That's not and that is why I have a lot of compassion for helping people unlearn some of the
00:47:02
messages about money because we all have them. Uh we all h have the equivalent of I want six-pack abs. But we also have
00:47:09
something in life that we've spent time to get really good at and we know that the secret is basically consistency. If
00:47:17
I go ask someone who's an amazing cook, hey, I want to cook like you. How do I do it? What are they going to give me
00:47:22
some use cinnamon? No. They're going to say, "Get in the kitchen and cook every single day for 5 years, and you're going
00:47:27
to learn about when to use salt and when to cook it for longer." Fitness, you want to ask someone who looks really
00:47:33
good or or feels really good about their body, they're going to give you some secret workout. No, they're going to
00:47:38
say, "I show up when I feel good. I show up when I don't. I show up." when you're
00:47:45
let's think about the people that might be listening now. So, there's going to be someone that is a they're a they're a bus driver or they are a social media
00:47:53
manager. They are a I don't know a cleaner. They're a teacher. They are a personal trainer.
00:48:00
If you were if your job was to make that person a millionaire in 20 years from
00:48:05
now, whatever age they are right now, what is and you were their financial
00:48:11
adviser and in fact, you were controlling all of their personal professional decisions. Uhhuh.
00:48:16
Talk me through what you would do with that individual at a very detailed level. I would do a few things. Number
00:48:22
one, that the most important things I would do would be set up automatic investing and be aggressive about it.
00:48:28
Two, they have to increase their income. Okay. I'm going to be that person. I'm going to embody that person I've just described. So increase my income. I'm a
00:48:34
personal trainer. Perfect. Okay. So, so what should I do? All right. You're a personal trainer. So, first off, I would
00:48:40
say, how much are you charging? How are you finding your clients? We talk about that. And let's say you're charging a
00:48:46
hundred bucks an hour and you have clients, they say, "How long do they stay on average?" Uh, that's exactly what I'm charging. Perfect. Great. They
00:48:54
stay longer than two months. I'm very good. How long do they stay? Three months. Three months. Wow. Okay. You're
00:48:59
very good. All right. So, your average client is worth four uh few thousand
00:49:05
bucks. Yeah. Great. So, you're making let's say 60,000
00:49:10
a year. All right. Uh the first thing after I understand all this information, I would say, all right, we're going to
00:49:16
double your income. How are we going to do that? The first answer everyone gives
00:49:21
is I got to find more clients. Okay, you should you should ask your clients, hey, I've got a few slots available. Who
00:49:27
would you recommend? So, you should get more clients. Second, you're going to listen to your clients and you're going
00:49:32
to say, um, what else are you looking for? I know you've got your fitness journey you're going on. They're going to tell you, I've got a 10-year reunion.
00:49:40
I want to plan for that. Uh, another person is going to say, "Gosh, I I know I should be eating healthier, but it's
00:49:47
really hard for me." So, you're thinking about it. Here's what you do. You create uh you package up uh meal planning
00:49:54
services. You can either um do their macros for them and charge them a little
00:49:59
bit extra. Let's say an extra 200 bucks a week or 200 bucks a month. You can
00:50:05
also partner with a food delivery service and you coordinate with that company to feed over their macros and it
00:50:11
gets delivered to them and you take a small cut right there. You've added thousands and thousands of dollars per
00:50:17
year per client as long as they stick with you. In addition to that, um you
00:50:22
can do group sessions. So you go, "Hey, um I'm going to do a weekend session. I'd like for you to invite your friends.
00:50:29
Invite them for free." And of course, of the people who come, let's say you get 15, 20 people to come, you do a free
00:50:35
little session on Saturday. You go, I'm a trainer. I work in Soho. I have three
00:50:40
open slots. That's how you're finding new clients. Now, so you're doing two things. You're finding new clients.
00:50:45
You're increasing your average lifetime value per client. Okay, that's the
00:50:50
that's two things. Now, let's do one last thing. Let's increase the duration that they stick with you. They're
00:50:56
sticking with you for three months. Give them a special offer to stay with you for six months. So, when they sign up,
00:51:01
they work out with you for a month. You say, "Look, it's a hundred bucks right now. If you stick with me for a six-month plan, I will give you my
00:51:08
sessions at $95 per plan. You'll save x 5%."
00:51:13
One, two, three. You've increased. And if we did the math, you may have doubled your revenue. You certainly boosted your
00:51:19
profit in a huge way. All of a lot of that's about making sure you're getting a better return per hour you spend at
00:51:25
work, but also making sure all of those hours are full, but then doubling down and making sure each hour because that's your your currency when you're a
00:51:32
personal trainer. You're trading in your time. I need to make the most from every hour I spend. Um I thought about
00:51:38
something recently as I've been writing my new book, The Diary of a CEO. Um which I've written these 33 laws for
00:51:44
building and becoming great. Essentially, it goes across marketing and business and whatever. And one of the chapters that I investigate is this
00:51:50
idea of making sure your skills are on the right market. So my company went
00:51:55
public. And what one of the things that I I came to learn from sitting with investment bankers for many many years
00:52:01
was that if you put a company the exact same company, let's just say it's you know the company that make these silver
00:52:07
mugs in front of me. If I take this company public on the London Stock Exchange, I might get for example four
00:52:14
times revenue. If I take the exact same company and I list it on the New York Stock Exchange, it will be valued at
00:52:21
eight times revenue. It's the exact same company, exact same people, exact same business, just moving it to a different
00:52:26
market. And what upon leaving the social media marketing world when I was 27
00:52:32
years old, one of the first calls I got was from a biotech company ran by a billionaire friend of mine that was
00:52:37
going public and they brought me in. And on the first week when we were
00:52:43
discussing what they might pay me, I'm thinking there's no they can't really pay me in cash because I've got enough cash. I don't really need that. They can
00:52:48
maybe give me some stock. Their offer to me for my skill set was $8 million,
00:52:54
roughly $8 million in options that I would earn in 9 months from taking the
00:52:59
company from where it was, building out the marketing team, handling the storytelling, and taking the company public, which we did at about 3.2
00:53:05
billion valuation. Their offer was $8 million in options. I reflect on that and go I'd spent the
00:53:11
previous 10 years using the same skill set to sell consumer goods like dresses and iPhones for Apple and Logitech and
00:53:19
big fashion brands. I took the same skill set and applied it to a market and industry where it was rare. Biotech
00:53:26
people know nothing about Reddit and Twitter and Facebook and social media. So my skill set was rare, scarce in that
00:53:32
market. So it was incredibly valuable. And I think about this a lot with with especially as this AI thing rolls in. I
00:53:39
think people should be looking at their skill sets and going where is my skill set as a writer going to yield the greatest returns. I could be a social
00:53:46
media manager. I could be a uh um a blog writer or I could add a little bow
00:53:53
string to my bow and become a a scientific writer and or like work a writer in biotech and you'll get paid if
00:54:00
you can add that little bit of knowledge to your to your writing skills. you'll get paid I'm going to say five times
00:54:06
potentially five times more. Yeah. And people don't think about the fact that they're they they need to use place
00:54:12
their skill sets in the most lucrative market where it's scarce. Yeah. And I So
00:54:18
yeah, just throwing that out there because it's really front of mind for me at the moment. Like personal training, you know, like you could be at a gym and
00:54:24
you lose 75% of your income to the gym or you can do it virtually. you can
00:54:29
specialize on um just preparing people in in the beginning of the year. It's
00:54:36
like your best year and every January that is your focus. It can be celebrity clients. It can be uh uptown um
00:54:44
mid-career executives. That's a very lucrative. You choose but you choose carefully. I I agree that's a bit of an
00:54:51
advanced concept. I think most people they start off they go just how do I make more money? I'm a trainer. I have
00:54:57
free hours. But once you kind of master that and you go, like, for example, there's a trainer I know here who
00:55:02
charges 175 bucks an hour. That's very good. After you get that and you fill up your
00:55:08
entire calendar, you go, "Okay, I'm making $35,000 a year. I want to make more. How do I do
00:55:14
it?" Now, you need to get creative. You move to different markets. You add in package things that scale when you
00:55:20
sleep. You have video courses, etc. There's so many different ways, but I think everyone would do well to listen
00:55:25
to what you're saying, which is think about how to move up market or potentially to a totally different market where your skill set is really
00:55:32
scarce. Yeah. And that's the problem a lot of people have. There's, you know, their skill set might be too abundant in
00:55:38
the industry that social media managers, social media managers is one thing, but that's a slightly different skill set
00:55:43
because there's there's there's a wealth of knowledge there that is unique to that. Knowing the algorithms, knowing the platforms, there's a real creative
00:55:49
element to it. But I think about my friend Anthony. He was He was a graphic designer. Uhhuh. The greatest graphic
00:55:55
designer I ever knew in Manchester. But he was designing nightclub flyers. And he's talked about this publicly before
00:56:02
every nightclub flyer he designed, he got $50, the equivalent $50 to $100, right? I had a conversation with him a
00:56:08
couple of years ago about this. And I said, "You're you you're really specifically good at like luxury design.
00:56:14
M he's got that really like beautiful chic simple but you know elegant design
00:56:20
style. I always go to him when whenever I need design work like that. So I said to him move to Dubai
00:56:28
and and go there and help design um luxury brands. Yeah. And this guy did
00:56:34
it. So he went from Manchester where he was doing nightclub flies to moving to Dubai. And without revealing his
00:56:41
financial position, what I can say is the same hour per piece of work is now yielding him tens
00:56:49
and tens more in returns. You know, instead of getting $500, he's getting $50,000 for for a project. And it's just
00:56:57
moving his skill set, the same thing, designing on the same software to a different industry which will appreciate and pay him more for the same skill. The
00:57:05
lesson I take away from that beyond his willingness to actually make a change, which is
00:57:12
amazing, is that most of us do not think in terms of discontinuous jumps. We
00:57:17
think, okay, I'm making I have a 100 bucks a a month. What if I had 120 bucks a month? Well,
00:57:25
20% is like quite good. That's amazing. But what if I had 500 bucks a month or
00:57:31
5,000? That's a discontinuous jump. And to get those kind of numbers, something big has to change. In business, moving
00:57:39
markets, developing a new skill, partnering, all those things. But it's different. In investing, it's primarily
00:57:46
time. And that's where we're not attuned to it. We go, well, you know, I only have like a couple hundred bucks a month
00:57:52
to invest. That's nothing. It's only going to turn into a few thousand. You go, no, you're not thinking about time.
00:57:58
Because the human mind is not made for compounding. So, plug it into a calculator and you will be blown away.
00:58:04
Same thing buying a house. You're only thinking of how expensive your rent is, which granted rents are very expensive,
00:58:12
but you're not actually factoring in how much time and money it costs to pay taxes and maintenance and interest on
00:58:18
your loan. You've got to get smart about running the numbers. And when you start
00:58:23
to sit back, when you learn the basic language of money and you understand how you feel about money, whether it be I
00:58:31
like status or I like luxury or I don't really care about XYZ. When you
00:58:38
understand your own feelings, suddenly you can almost look at the chessboard dispassionately. You sit
00:58:44
back, you go, okay, I see what's going on here. I even see how I am a player on
00:58:49
the game of life when it comes to money. And then you start to say the most powerful question of all. What if? What
00:58:57
if I earned more? What if I spent less? What if I decided I actually love
00:59:05
traveling two months a year or buying a house cuz I can decorate it the way I want? What if? What if? What if? And
00:59:10
then you can start to make moves that line up with your rich life. Someone comes to you and they say, "What about
00:59:15
crypto?" I get that question a lot. Oh god. What about crypto? Should I be investing in that? My friends told me
00:59:21
about this new coin and um I'm thinking of putting a couple of thousand pounds into it. I get this all the time. God,
00:59:27
should I invest in that coin that my friend told me about? So, I get this question a lot. I I got it a lot a few
00:59:33
years ago. Yeah. Let me tell you what happened. You know, people read the book, they know that I'm a fan of lowcost long-term investing and then all
00:59:40
these crypto nuts grow up and well, they grow up to be, you know, 19 years old and they go, "Oh, Ramit Sati, such an
00:59:47
old guy, such a ly. He doesn't understand investing. This is the new future. Fiat is dead. I go, "Um, I have
00:59:56
a couple of questions for you. Number one, what is the rest of your portfolio look like?" They go, "Portol, I put it
01:00:02
all in on crypto." I go, "Oh, God." Okay. Um, second, do you think that it's
01:00:09
normal to get uh 4,000% return per year when over about a hundred years the
01:00:15
stock market has returned approximately 7% per year? They go, "Yeah, that's cuz fiat is dead, you idiot. It's going to
01:00:22
be we're going to the moon." I go, "You're going bankrupt." And many of them did lose a tremendous amount of
01:00:28
money. My view on crypto is if you have a well- diversified portfolio, well
01:00:35
diversified, and you want to have a little bit of fun with one, two, even 5%
01:00:41
of your portfolio, go ahead. And that could be crypto, it could be an individual stock, it could be investing
01:00:47
in your friend's bar in Brooklyn, it could be whatever you want. But you got to limit your risk. And what you find is
01:00:54
that the type of people who tended to be attracted to crypto tended to be
01:00:59
extremely risk-seeking. And in fact, they saw diversification
01:01:05
and risk management as boring for old people.
01:01:11
This game is a marathon. You want to live a rich life, you want to be living it for 60, 70 years. I'm not trying to
01:01:18
get 10,000% returns and then blow out. And that's what happened to many of
01:01:23
them. I mean, part of the problem here is that when we do get our 10,000 returns, 10,000% return moment. Yeah. We
01:01:30
think it's going to be 10 million% if we just But we also go tell everybody. Oh, of course. You never hear anyone saying,
01:01:36
let me tell you something. Thank you for saying that. I went on Twitter cuz uh you know, I mess around with these crypto guys a lot on Twitter. I have a
01:01:42
great time doing it. I go, "Hey, where'd all the crypto bros go?" Everyone seems to have disappeared in 2023. Where'd you
01:01:49
guys go? And there's just like crickets where in 2020 they were really coming out, you know, guns blazing. I said, if
01:01:57
you have lost a lot of money from crypto, send me an email. I want to
01:02:02
share your story. I'll keep you anonymous. I have a lot of people who follow me on social media. I got less
01:02:08
than three responses. We love to share our successes. We love
01:02:15
it. We do it with crypto. We do it with buying a house and selling it for a profit. We do it with business. We do
01:02:21
with all that stuff. But you almost never hear anyone saying, "Oh my gosh, I bought this uh I sold it for um one the
01:02:30
price. Oh, and by the way, because of the transaction fees associated, I actually lost like 80% of my money, you
01:02:35
know, or 85% of my money." You never hear that. It's deeply shameful for people to admit that they lost money.
01:02:42
It's the opposite of status, isn't it? Yeah. Yeah. And we're not wired to seek the opposite of status. Exactly. We're not wired to voluntarily bring ourselves
01:02:49
down in the tribe. Exactly. We are safety seeking. We are status seeking.
01:02:55
And so this is what happens with money. That's why I talk about prenups and why I talk about investing and mistakes and
01:03:02
all of the above is that I want to shine a light and show people if you are only seeing the top of the iceberg, all the
01:03:09
successes, of course you feel like you're behind. Of course you feel like everyone knows something you don't. But
01:03:14
it's complex. Some people make good decisions, some make poor decisions. We got to look at them all and then we will
01:03:21
understand what's right for us. So on my my position on crypto is um I believe in
01:03:26
the underlying technology of the blockchain and I I'm I've been a big Ethereum holder for a very very long
01:03:32
time but it does represent less than 5% of my portfolio although I am a very big holder um in Ethereum and I've held it
01:03:40
for so long that although I'm at a I'm at a point of profit right now I'm well
01:03:46
aware that I could go um into a huge you know into the red. Yeah. Irrespective of
01:03:53
that, it a has is inconsequential to any decisions or my like my financial
01:03:58
financial portfolio at large and b because of that I have such a long-term time horizon that I could hold it for 30
01:04:05
40 years and I've never flinched. I don't check the price. Sometimes I just check my password works but I but but
01:04:11
I'm not in I've never traded. I have no interest in that. Reit's 10 money rules.
01:04:18
I just want to go through these 10 money rules because you mentioned prenups there and I was quite curious that
01:04:23
number 10 in these rules is marrying the right person. But let's start at number one.
01:04:28
Always have one year of emergency funds. Yeah. So for me, one year of emergency
01:04:34
fund is conservative. It's more conservative than most. Lets me sleep at night and I just keep the cash in a
01:04:40
savings account. It's not under my pillow. Cash does not mean it's sitting under my bed. Please don't try to rob
01:04:46
me. It's cash in a savings account, totally liquid, and that's what it's for, emergencies. Rule number two, save
01:04:54
10%, invest 20% of gross annual income. Yeah, this is all about the numbers that
01:04:59
I shared and being more aggressive with them. I know that paying myself first now turns into way more later, so I
01:05:05
invest aggressively. Rule three, pay cash for large expenses like engagement rings or big holidays or weddings. Yeah,
01:05:12
this one is controversial because for the things that are important to me, I
01:05:18
don't want price to be the number one concern. So, I'd rather save up for it. When I was in my 20s, before I ever met
01:05:26
my wife, I knew one day I would get married. And because I'm Indian, I knew we would have a big wedding and I wanted
01:05:32
it to be amazing. So, I started putting money aside every single month automatically. I do the same thing for
01:05:38
trips, house, etc. Rule four, never question spending money on books, appetizers, health, or donating to a
01:05:44
friend's charity fundraiser. Yeah. So, the books and the appetizers are a little weird. I have something called
01:05:50
REIT's book buying rule, which means if you ever see a book that you're even remotely interested in, just buy it.
01:05:56
Don't ask a question. Don't equivocate. Just get it. Because if you can learn one thing from that book, it can transform your life. Appetizers. When I
01:06:04
was a kid, we couldn't afford to eat appetizers. So, we would eat out every six to eight weeks if we had a coupon.
01:06:10
We'd usually go to a pizza place. Getting appetizers was inconceivable.
01:06:15
So, now when I eat out, to be able to see one or even two appetizers that look good, I go, "Yeah, I'll take them both."
01:06:22
It feels incredibly rich. And this is just an example of how our childhood
01:06:27
sticks with us. It feels awesome to be able to do that. Rule number five, business class flights on flights over
01:06:33
four hours long. Yes. Again, my money rules, not for anyone else. When I used to when I was in my early
01:06:40
20s, I would get on a flight and I would actually in my head scoff as I was walking from the front of the plane to
01:06:47
the back. Be like, why would anyone spend four times the money paying for a first class ticket? Makes no sense.
01:06:52
We're all getting to the same place. Haha. I wish instead of disparaging that I would have gotten curious and I wish I
01:07:00
would have said, "Wow, if somebody can afford to get those seats, why would
01:07:05
they? I wonder what they're spending money on. Aren't we all getting to the same place?" And if I had gone from
01:07:10
disparagement to curiosity, from D to C, I would have understood that some people
01:07:16
have their office paying for it. Some people do it for health because they
01:07:21
want to get there. They want their back to feel good. they maybe need to go to a meeting and some people just have enough
01:07:26
money that they can do what they want. And when I started to become more curious about money, that opened up my
01:07:33
eyes to be able to spend on certain things and spend extravagantly, but also to realize, wow, maybe I try this
01:07:39
certain type of food once. Cool. I don't need to do it again. So for me, my money rule so that I don't have to decide
01:07:46
every time I take a flight, boom, this is my guideline. It's done. It's written. Never have to think about it
01:07:52
again. Rule six, buy the best and keep it as long as possible. Yes, I love this. I think we all intuitively have
01:07:58
this idea of quality over quantity, but if you look in somebody's closet or you look at the things in their house, there
01:08:05
may be some inongruity. So, um, for example, my car is 17 years old. It's a
01:08:12
good car. I mean, for me, it was a fine car. I don't care. It rides fine. It's a
01:08:18
four-door Honda Accord. I told you very sensible, long-term. Great. Uh,
01:08:25
buy the best, keep it for a long time. It's the same with clothes. Um, those things matter to me. I like that. And so
01:08:32
I'll buy something that might seem very expensive, but I'll keep it for a long time. Good for the environment as well.
01:08:37
Yeah. Rule seven, no limit on spending on health or education. Yeah, this this
01:08:42
one is important. Um, I learned when I was in my 20s and I started training and learning from personal trainers and
01:08:49
nutritionists that I really loved it. And I also realized that I needed help. I needed great teachers. And so
01:08:56
eventually I just realized I'm gonna give myself unlimited spending on this.
01:09:01
Same for education. So I'm a teacher. I teach different programs. Of course, I'm a student as well. I want to learn from
01:09:08
great teachers. From taking accounting classes here at Colombia to buying every
01:09:13
conceivable book and digital program there is, I've given myself the freedom to do that. And all that came from uh I
01:09:21
had a scholarship I had many scholarships that paid my way through college and one of the scholarships set
01:09:27
up an account for me at the Stanford bookstore. So when I walked in there I could get literally any book I wanted.
01:09:33
It was like uh Willy Wonka in the Chocolate Factory. For a guy like me to have unlimited books, it was like
01:09:40
unbelievable. And when I graduated from college, I realized that would be going
01:09:46
away. And then I remember having this conversation with myself and saying,
01:09:51
"How much would it really cost to recapture that feeling, that feeling of
01:09:57
being able to get anything I wanted? See a book on the bookshelf, I'll get it." The answer is really not that much. So
01:10:05
over time, that then expanded to health and education. Health I find really compelling because
01:10:11
it's clearly clearly the most important foundation of all of this. It's clearly the most lucrative investment any of us
01:10:17
could make. Um because everything we've described, the rich life doesn't exist without that foundation. Yeah. So, it's
01:10:24
all good investing in your vanguard, but it doesn't matter at all if you're going to die. Yeah. If you ask people what's
01:10:29
important to you, they'll often give you the same answers. They'll say relationships, health, maybe travel,
01:10:35
career, maybe. Yeah. I go, "Okay, let's take a look at your spending. Show me where you spend on those things."
01:10:41
It gets really quiet really fast. Now, it's one thing to spend time on relationships, and we should, but we can
01:10:48
also spend money to enrich those things. It might be surprising your niece at a
01:10:53
showing of uh Michael Jackson, or it might be surprising your family by going
01:10:59
home and visiting them. There are lots of ways you can use money to enrich those experiences. Same for health. It
01:11:05
could be what you buy at the grocery store. It could be training or a gym membership. It could be whatever it is that's meaningful for you. But if we
01:11:12
claim something's important to us, it sure better show up in our time and our
01:11:18
spending. Rule number eight, earn enough to work only with people you respect and like. I love this one. I decided long
01:11:25
ago that I only want to work with people that I like and respect. And so I earn
01:11:31
enough money so that I can do that. And to me, who you surround yourself with
01:11:36
matters profoundly. Ideas seep into your consciousness. values seep in. If I'm
01:11:43
around people who when I look at the calendar, when I have a meeting with them, I dread it. I already know it's the beginning of the end. Most of us
01:11:49
have to work with though, right? Like we I say have to. I shouldn't use that word. I don't like saying have to, but most of us spend
01:11:55
most of our lives, especially the early part of our lives working with Um, we work with people that we may not
01:12:02
particularly choose ourselves. I think that's probably
01:12:08
so yes, I built a life where I could make that decision for myself. I'm the
01:12:14
CEO of my business, but I think what is important there is the intentionality
01:12:20
behind it. It's like even if I worked at a company, I would be deciding on which
01:12:25
division I want to work in, which boss I want to transfer under based on do I
01:12:31
like and do I respect him. That's it. the intention is there. You again, these are my rules, not anybody else's. But if
01:12:37
this one strikes you, then the way that I would interpret this is, wow, who in
01:12:43
my life do I not like? Who do I not respect? Do I need to be around them?
01:12:48
Maybe it's not work. Maybe it's the friend that I hang out with socially on Saturdays. Again, we have a choice. Not
01:12:55
on everything, but in the things we do have a choice. What a shame if we don't use it. Rule number nine, prioritize
01:13:01
time outside the spreadsheets. Yeah, too many nerds love a spreadsheet and they
01:13:07
they go, I got to optimize, sell B43. B43 never talk back to me. I go, all
01:13:13
right, look, yes, you need to know your numbers. Yes, you should be automatically saving and investing all that. Yes, do the conscious spending
01:13:19
plan, but at a certain point, you won. The turkey is cooking. You won. You know
01:13:26
your numbers. Turn the page. Get out of the spreadsheet. A rich life is lived
01:13:31
outside of the spreadsheet. So on a personal level, that means I spend less than one hour per month on my finances.
01:13:38
It all runs. It's a machine. It's a system. I speak to my wife. We talk once
01:13:43
every couple of weeks about money. Besides that, do not spend time tweaking
01:13:50
because the rich life is lived having conversations like this, seeing friends, seeing my family. That's where I want to
01:13:56
live. not tweaking things endlessly for no marginal gain. Number 10,
01:14:04
you mentioned your wife there. Marry the right person. Yeah, maybe the most important one of all. Um, marriage is
01:14:11
the most consequential financial and relational decision we
01:14:16
ever make. And people, they're a little weirded out by this rule. They go, "What does this have to do with money?" I go, "What do you mean? The partner you
01:14:24
choose will affect where you live, what you spend on a dayto-day basis, what
01:14:30
type of house you buy if you do, how often you travel, the values if you have children that you pass down to kids. Of
01:14:39
course, it's important. And so these are conversations that if you are starting
01:14:44
to date, it's great time. There's natural moments in the dating process or
01:14:49
even the relationship process where you can bring up money. So, it's like the first time you take a vacation together.
01:14:54
Take a trip. You go, "Hey, um, just want to, you know, this is on my mind. I'd love to just like put it out on the
01:14:59
table. Love that you invited me on this trip. I'm so excited to go. I'm just curious. How are you thinking about
01:15:06
paying for the trip? Who who in your mind pays for it? How would you see us splitting this?" That's a great way to
01:15:13
bring it up. And you learn a lot about your partner. Um, there there are questions you can naturally ask. You know, how were you raised with money?
01:15:20
What do you remember your parents telling you? Here's what I remember about my parents. Genuine curiosity. It
01:15:26
also tells you a lot about your partner. And then there's a few other natural moments in a relationship where it just
01:15:31
makes perfect sense to talk about money. Uh when you get engaged, when you get married, uh if and when you move in
01:15:38
together pre or post marriage, uh if and when you have children, there are these natural moments where you get the gift
01:15:45
of being able to talk about money. Do people talk about money? couples, they talk about it uh when something goes
01:15:51
wrong. Outside of that, what sort of percentage of people, couples, do you do you think talk about money? Rarely. It's
01:15:57
very low. I know. I speak to them all the time. I ask them, "When do you talk about money?" They go, "When we're fighting or when they talk about it,
01:16:03
it's like it's these grooves that have been created for 40 years. Oh, every
01:16:08
time she goes to Target, she spends too much. Haha." And I'm like, "That's not that funny."
01:16:14
Like the running joke between you is that she spends too much at Target. Sounds like resentment. Yeah. Why not it
01:16:22
be something different so that when you talk about money once a month
01:16:27
proactively, you always start off complimenting your partner? You go, you know what? I really appreciate that when
01:16:34
we travel, you always pick the best flights. I I have total trust because
01:16:40
you always get us there on time and you pick the flights that are so comfortable and I just love you for that. That's a
01:16:46
great way to reframe how we talk about money. But instead, we often simply do
01:16:52
not talk about it proactively. We only talk about it when something is a problem. Do you think our partners
01:16:57
should know how much money we have? When you're married, probably a little before that as well.
01:17:03
Like I'll tell you what happened with my wife and me. So, in my book, in chapter nine, I talk about how to talk about
01:17:09
money and when to talk about money. And first of all, there's a lot of uh personal finance experts. They're like,
01:17:15
"You should talk about money on date one." I'm like, "Have you guys ever been on a first date? Can you imagine who's talking about their asset allocation on
01:17:21
the first date?" I'm like, "Get a life." So, uh she had um asked me like years
01:17:27
into our relationship some 401k question. And I was like, "Read this book. Learn it. It's in there." So, I
01:17:33
knew all about her money. We had talked about her finances and then as we started getting more serious one day she
01:17:39
came to me and she said I don't feel comfortable because you know everything about my finances and I don't know
01:17:44
anything about yours and that was a a sobering moment because I realized I had
01:17:50
violated my own rules in chapter nine of talking about money early and
01:17:56
proactively. Why didn't she feel comfortable? She didn't feel comfortable because she felt like I knew everything
01:18:01
and she didn't know anything about me. Being in the dark about your partner and their finances is very uncomfortable.
01:18:09
You're pl we were planning to get married. So what does that mean? Does he have debt? Does he not? Does he have
01:18:15
this much money or not? Does he expect me to pay the exact same amount for this
01:18:20
apartment because I don't know if I can afford that. There are mil What does it mean for children? What does it mean for
01:18:26
our elderly parents? All that stuff. This is what money means. Money is not just a amount in a spreadsheet. It's
01:18:33
where do we live? Security. Security. Who do we get to be? And you know
01:18:38
security is a really good that word haunts me because uh we we I realized to
01:18:45
my horror that I had not shared about my finances. So we had a series of conversations
01:18:51
and as we got engaged um we had more. We started talking about
01:18:57
money a lot and uh I mentioned to my now wife I said it's really important for me
01:19:03
that by virtue of me running a business for so long I've accumulated this business these assets and I love you but
01:19:10
it's important for me that we talk about a prenup and I was very very scared. I
01:19:17
had talked to a lot of friends and I'm sharing this because prenups are another thing that always happen in the dark and
01:19:24
I don't want that. I want people to shine a light and to understand how these conversations happen because
01:19:29
nobody talks about this. I'm going to talk about it. So, I was nervous and all
01:19:35
the advice online is awful. It's like, um, have the conversation. I'm like, what conversation? What do I say? Or
01:19:41
some people they tell you to blame your lawyer. My lawyer insisted I have a prenup. I'm like, if I can't be honest
01:19:47
to my soon to be wife, what kind of relationship do we have? So, that's what I said to her. And she responded like,
01:19:55
"Awesome." She was like, "Wow, I didn't expect that. I don't know much about prenups, but I'd be willing to learn
01:20:02
more." I said, "Fantastic." So, we start talking more about it. We both get lawyers, as you're both required to. And
01:20:09
it was going pretty well until it didn't, and we started really
01:20:15
disagreeing about money. and we were
01:20:20
we're just like fighting and she finally said we should go see somebody because
01:20:27
this conversation is not going the right direction and and I totally agreed with her. So we literally went on Yelp and we
01:20:34
searched like therapist near us and we found one right there. We went and we
01:20:39
sit down and this therapist was great. She asked us what does money mean to
01:20:45
you? And she asked me first, "It's so obvious. Money means growth." Like, I
01:20:51
could literally see the compound interest charts in front of my eyes. I know about the rule of 72 and expense
01:20:56
ratios. Growth, of course. She asked the same question to my wife.
01:21:04
My wife says, "Safety." Like, what? That's like somebody saying
01:21:13
metal. Money means metal to me. I go, "Huh?" And it was that that we realized
01:21:19
we saw money completely differently. Completely. It explained to me why my
01:21:25
wife wanted more money in just sitting in a checking account when I go, "But that checking account is losing
01:21:31
potential interest. Why would we lower our yield?" Blah blah blah. We were looking at it through two totally
01:21:37
different lenses. So that single question was very helpful in us reframing our conversations. It
01:21:44
didn't change everything overnight. We still had a lot of conversations we had to have. And even once we got married,
01:21:50
we still have conversations now. They're different. They're about spending and investing and prioritizing.
01:21:57
But it was a new way for us to look at the way we related to money. Where did
01:22:02
her lens come from? Childhood like most of ours. Same for me. In fact, every
01:22:08
time I talk to couples who are now in the seat that I was in, I ask them,
01:22:14
"What do you remember about growing up with money?" And they always tell me similar things. Uh, my parents never
01:22:20
talked about money. That's very common. Or, um, they said certain phrases like, "We can't afford it. Money doesn't grow
01:22:26
on trees. We don't talk about money in this family, etc., etc., etc." Imagine you hear we can't afford it a hundred
01:22:34
times, a thousand, 10,000 times growing up and you turn 25, 35, you start to
01:22:40
make decent money, but every time you go to buy something, you feel guilty and you feel anxious and
01:22:47
you feel like I should be saving this money and you can't figure out why because on paper you make more money. If
01:22:54
you came to me on my podcast, we would trace it back and you might realize it is something as simple and vivid as
01:23:00
sitting around the dinner table and hearing mom or dad saying, "We can't afford it." Our childhood sticks with us
01:23:08
and we can change, but it's so important for us to acknowledge that it sticks with us. If I approach my partner and I
01:23:14
say, "I want to get a prenup." And they say, "What? You don't trust me?" Yeah. And they say, "No."
01:23:22
Uh, what do you do? Is that the question? Well, I I would say first of all, I wouldn't start off like that. I
01:23:28
think there's there that is one of the most important conversations you're ever going to have in your life and the
01:23:33
subsequent conversations. So, take it seriously. You show up and you explain
01:23:38
it. I explain it perfectly and they turn around and say that and they say no.
01:23:44
They say you don't trust me. Uh, no. Okay, that's a contingency you might have to plan for. So, you might say,
01:23:49
"Okay, can you tell me why? Tell me what's going through your head. I want to understand your perspective.
01:23:56
This is a conversation. It's not a dictate. Trust. You don't trust me. Yeah.
01:24:02
Would you marry that person? I would have a lot more conversations. I can't say yes or no because you can't judge
01:24:10
someone based on their reaction in a situation they've never been in. How am I going to react if I got in a car
01:24:16
accident and I start crying? Can you judge me my entire life based on that? No, but let's say that we extend it and
01:24:23
and you and I are in a relationship and I ask you I it's important for me by
01:24:28
virtue of this and that and you go I don't you don't trust me. If you are
01:24:33
unwilling to even discuss it, if you're unwilling
01:24:39
to talk to friends, to talk to lawyers, to talk to people you can find on your own or I can introduce you to, then I
01:24:46
think we have a bigger disagreement about values. And you know, the way that most of us think about a prenup is it's
01:24:51
usually some rich uh telling someone who has way less money like sign this paper or it's over. And again,
01:24:57
that's Hollywood. prenup which I learned is all about if the marriage ends
01:25:06
what you had before or any agreed upon assets stay with that person. So if you
01:25:13
have a business and your partner and you get married there's no prenup and for
01:25:20
whatever reason god forbid you separate suddenly that business might be at risk.
01:25:25
the portfolio that you accumulated before you ever met your partner might go to them. And that when you explain it
01:25:33
that way, most people go, "Oh, that doesn't really seem fair." But the money that you accumulate together as married
01:25:39
partners, yeah, there definitely should be an agreed upon that money needs to be split, etc. And no person, especially
01:25:46
the partner who earns less, should be left out in the cold ever. Do do you
01:25:52
notice any differences when you speak to these couples or on your podcast? um in
01:25:57
gender differences as it relates to people's relationship with money because I read a lot of stuff about men being
01:26:02
more prone to gambling addiction and gambling generally. Yeah. Yeah. I think there are a lot of differences. I think
01:26:08
gender is one of the axes that people differentiate on. Um I see typically
01:26:13
more aggressive investing from men. I typically if I see a gender difference
01:26:19
in investing differences it would be much more conservative with women. I might see um words like safety and
01:26:25
security used more commonly by women. Um but I think there are also other axes.
01:26:31
Uh socioeconomic class is a huge one that we talk about and that's something
01:26:36
that's very uh under the covers particularly in America, but we talk
01:26:41
about it point blank. If somebody tells me I've been poor before and I can be poor again, doesn't bother me. I can
01:26:48
tell you how they were raised. I can tell you probably to some geographic area. In fact, um if they tell me um my
01:26:55
parents said be seen and not heard, that tells me a lot about someone in their financial behavior. So there are
01:27:02
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love I'd love to know. When you look at really successful rich people that are living their rich life that might be billionaires, millionaires or just
01:29:14
living their rich life, what are the unobvious things, the the character traits, the the philosophies towards
01:29:20
life that you see? Whether it's, I don't know, confidence, whatever that means, whether it's patience, what are those
01:29:27
like character traits? They're really good at multiple things. Like really good. When I was at Stanford my first
01:29:35
year, there was a Nobel laureate professor and the professor next to him
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was making a joke, but it wasn't really a joke. And he said, you know, you'll hear stories about a person being an
01:29:51
amazing chemistry professor, but they're just a disaster at home, etc. But not
01:29:56
him. He's a Nobel laureate. I think it was in chemistry. He's at the top of his
01:30:01
field in chemistry. And by the way, he's published papers in music and he's an
01:30:06
accomplished father. That was the first time that I had been exposed to the idea that you can be
01:30:13
absolutely amazing in multiple domains because it's a comforting story we tell
01:30:18
us that, oh, this person's really good at this, but they're probably a disaster in everything else. What I find is that
01:30:24
the people who are really good at something, they're actually good at a lot of things. They take those skills
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and they transfer them. They show up on time. They prepare even though they didn't need to. Look at all the
01:30:35
preparation you've done. That's cool. You didn't need to, but you did it. And
01:30:40
they're probably good socially skilled. There's a lot of things they're really good at. So, for me, that is
01:30:47
inspirational because it means that I have a lot I can work on. Flip that coin. Then on the other side, people
01:30:53
that you would bet on. Give me three character traits of people that you would bet on never living their rich
01:30:58
life in terms of character traits. Uh number one, they they're surrounded by
01:31:05
people who uh keep them down versus build them up. So that would be phrases like um why do you need to do that? Um
01:31:12
that's weird. Don't get too big for your britches. Okay. Number two, um
01:31:19
impulsive. M they make decisions based on what's in front of them versus
01:31:25
stepping back and looking at the entire chessboard and having a long-term perspective. And if I were to ask them,
01:31:32
tell me two things in your life that you do with a long-term perspective, they would probably struggle to answer it.
01:31:39
Whereas a long-term thinker would be like, "Oh my god, I could talk about this for four hours. Investing, parenting, travel, uh what I wear on my
01:31:46
feet, and on and on and on. Health, perfect." Um, and three,
01:31:54
no personal vision of a rich life. So if I ask them, "What is your rich life?" They go, "I want to do what I want when
01:31:59
I want." I go, "Yeah, yeah, what?" Uh, I want, you know, I want the house and I want the car. And I go, "Okay, what type
01:32:05
of car?" Like a Ferrari. Oh, okay. Like, how come a Ferrari? Oh, it's just cool. Like a red Ferrari. Like no personal
01:32:11
connection to it. If they were to say, "I want a Ferrari because uh you know, my uncle once had a Ferrari and I saw
01:32:18
the race in Italy and blah blah blah." I go, "Wow." But if it's just things,
01:32:24
objects, driving without a satnav. Yeah. Yeah. Super interesting. I wish I'd had
01:32:30
this conversation when I was 18. I' I'd certainly be in a much different position now. I think about if I if I'd
01:32:36
been even more savvy with my money and I'd had it compounding sooner in my life, my life would be
01:32:42
would be a lot different. I actually I ponder and that's why there was such a pause there whether it would be happier cuz I I don't even I don't even know if
01:32:48
Well, your story brought you here what you did. And look, I wish id started squatting when I was 14 years old. I
01:32:54
didn't know what a squat was. Yeah. And so we all deal we play the cards we're
01:32:59
dealt with and then we make the best with what we've got. And I never want anyone to feel like it's too late.
01:33:04
There's always something you can do. Honestly, your life has turned out obviously very fantastic. But I love
01:33:10
that you grapple with these questions just like anybody. We all wonder, is it too late? What if I'd started 5 years
01:33:16
ago? And of course, we can't do anything about that. We have a closing tradition on this podcast where the last guest
01:33:21
leaves a question for the next guest. And the question that's been left for you without knowing who they're leaving it for is,
01:33:27
oh, okay. What is other people's biggest misconception of you?
01:33:34
Uh, I think the biggest misconception is that I have a very specific way of
01:33:42
telling you what your rich life is. But that's not true. Uh, that comes
01:33:48
across because people will often interpret what I say about buying a house that I'm telling you don't buy a
01:33:53
house. Not true. I'm gonna buy a house one day myself. What I what I crave is
01:34:01
encouraging someone to build their rich life with intentionality.
01:34:06
Don't do it like me. My rich life is mine. Your rich life is never going to look like mine. Nor should it. The
01:34:13
misconception is that I'm telling you follow this exact formula and you will be rich. No. Follow this formula and you
01:34:19
will have a lot of money. But building a rich life takes your unique creativity
01:34:24
and only you can do that. Do you see that as a piece of work that
01:34:30
we all need to do? Like the kind of the exercise that you ran me through there. Do you think that everybody needs to um
01:34:36
do that initial piece of work to really sketch out what otherwise what are we working for? You're saving money
01:34:41
blindly. That's what the whole journal is about. You've got to know down to the intimate detail. What is my perfect
01:34:47
Saturday? What do I not want to do? I I guarantee you when I ask people what their perfect week looks like, 0% say I
01:34:52
want to spend three hours doing laundry. I go, great. Can we use money to solve that problem? Easy. Luggage in the
01:34:58
airport. Can we use money to solve that problem? Done. We never have to think about it again. So, we've got to design
01:35:05
our rich life. It doesn't just happen to us. Nobody trips and falls and lives a rich life. It is intentional and it is
01:35:11
ongoing work and in my opinion is one of the most important pieces of work that we can ever do. And that's you're right
01:35:17
exactly what this journal does. I will teach you to be rich journal. And throughout this journal, you kind of
01:35:24
hold people's hand through those exercises. But solo or you do it with a partner and you get to dream about
01:35:30
money. Most of us feel so nervous and rigid and scarce about money, we feel ashamed. This has almost no numbers.
01:35:37
It's all about what does your rich life look like? And if anything, you finish this and you dreaming bigger, not
01:35:42
smaller. When I look at this journal as I go through it, there's there's a real emphasis here on just heightening people's turning the lights on in terms
01:35:49
of what money is, but really heightening their their self-awareness about their relationship with money as well. Um,
01:35:54
which seems to be the foundation of getting good at money. And your other book, I will teach you to be rich, which
01:36:00
is the second edition of this book. The first one came out, I believe, in 2009, just after the financial crash, which is perfect timing. Um, this one
01:36:07
came out in 2019. So, this is an updated version of the book. I mean, millions and millions of people have bought this
01:36:12
book. the nuts and bolts of money. If you don't know how to get started investing, if you have debt and you're
01:36:19
not sure what to do, if you even have questions about uh should I buy whole life insurance, the answer is no. Uh
01:36:26
should I um buy or lease a car? It's all in there. No guilt, no excuses, no BS.
01:36:33
Just a six-week program that works. You're referred to as the new finance guru. And I think, you know, we do need
01:36:40
new finance gurus because there's not enough financial literacy from the very start of our lives as you saw from my
01:36:45
story where I just just my relationship with money was catastrophic and I could be in a much I'm very aware that I could
01:36:51
be in a much different position because of those early mistakes I made and mishaps and my early relationship with
01:36:56
money. So people do need to start getting educated with their money because as I said at the start of this conversation, it is about living your rich life and that is a subjective
01:37:03
thing. For me, it was having the freedom of choice broadly across every facet of my life about where I spend my time and
01:37:10
and who I spend it with. Um, but it is the foundation of that freedom of choice and that's what your book and your work
01:37:15
does so brilliantly and articulately. It gives us the the path to freedom of choice and we get to choose what our
01:37:22
rich life looks like. So, thank you so much for your time. Thank you for being an inspiration and being a loud voice in the conversation around money. I know so
01:37:28
many of the people listening to this podcast are completely in the dark about money. And so having these kind of conversations and having the practical
01:37:34
roadmap to how we can improve our relationship so we can unlock the future we want is um incredibly important now.
01:37:40
And I'm sure it will remain incredibly important in the future because there's going to be a lot of influences like Instagram and Tik Tok that are trying to
01:37:49
tell us a story about money and aspirations and what we should be aiming at that are unhelpful and counterproductive to our happiness. So
01:37:55
thank you Ram. Thanks for having me. Heat. Heat. N. [Music]
