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[Music] When I grew up, everyone said to me that to generate wealth, get a job, get money, then get a mortgage. That's one of the worst pieces of advice
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you can give somebody. Your future self is going to be poorer because of it. But that's what everyone's doing because we're not taught this stuff. So, what do
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you think the biggest money mistake the average person makes is? Being a saver. So, just having your money sat in a bank account.
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Yeah. It's a guaranteed loss. You're becoming poor every single day. But there are plenty of ways to retire early
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and be financially independent. And that's including secret hack that makes people fortunes. So, let's talk
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about making more money. This is the ultimate money-making master class as we are joined by three financial
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gurus with very different opinions and methods to build future wealth. So, I want to
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talk about pensions, credit cards, renting, bad money habits, debt, passive income, spending money to look rich. But
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first, what is it that rich people know that the average person doesn't know? Rich people are more disciplined and
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they're doing the little things that compound into huge results like investing. But for example, the average American spend more money on Netflix
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than they do on their investments. And if I invest $1,000 a month for 30 years in something like the S&P 500, I will
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have about $1.9 million. Or there's no asset in all human history that's ever generated as much wealth in
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a short period of time than Bitcoin. There's one problem. Bitcoin is high risk. And if any of those risks happen,
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I don't Let me let me finish. Do you want to have hope that you have the Bitcoin or would you rather have more security?
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You can reduce risk. It's our job to educate them. So, if someone was $1,000, what would you suggest they did?
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I have a different take on this. If you're trying to make more money, I would. And what about bad money habits? Because when you look at the stats, money is the
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number one source of stress for Americans, topping work, family, and health. There's a three-step framework,
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cuz I want to get into that. Number one, I see messages all the time in the
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comments section that some of you didn't realize you didn't subscribe. So, if you could do me a favor and double check if you're a subscriber to this channel,
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that would be tremendously appreciated. It's the simple, it's the free thing that anybody that watches this show frequently can do to help us here to
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keep everything going in this show in the trajectory it's on. So, please do double check if you've subscribed and uh
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thank you so much because in a strange way you are you're part of our history and you're on this journey with us and I
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appreciate you for that. So, yeah, thank you.
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I think the the first place to start is people want to know how they can make more money because if you don't feel
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like you have money, saving and investing in these kinds of things appear to be pointless. I also
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understand that that's not necessarily true. I think you can you can start investing and saving with a very small amounts of money. But for those people
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that are asking that question, if they're listening to this now and going, "How does one make money?" Like, you know, I've got this job. I'm working a 9
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to5. it's paying me £30,000 a year or £40,000 a year, whatever it might be, is
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the right question to be asking. How do I make more money? And if so, how do I do that? I always think it's it's a combination
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of making more money and also saving more money. But let's talk about the making more money piece. I think that everyone is unique in their own way,
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right? You've probably spent more hours doing some sort of hobby that I have no idea about. You play paddle, for
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example. I've never played paddle in my life. So, let's say you were Steve Steven from age 20 and you're a really
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good paddle player. You can start to monetize this type of skill, which you have that I don't, but perhaps you know
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more than me. I could take lessons from you. Even if you're not, let's say, the pro paddle player that you are, I might
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still be willing to pay you 20 25 an hour for a lesson, right? Just cuz you're naturally better than I am. And
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so, I would encourage people to to kind of lean into what makes them unique and where where they've spent a lot of their
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time. I think everyone has something that they're good at inherently. Figuring out what skills you have
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internally and how you can kind of monetize those. What you think? I think one of the the hidden things to
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do is you really are a function of who you're surrounded by. Invest in your
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network. And I don't mean that in a kind of coldhearted, you know, I want to network with these people, but just
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surround yourself by people who are who are also trying to push themselves to push their income, push their
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opportunity set, and it makes it so much easier. If you're the only one doing it and you're around a group of friends,
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you're the odd one out and you're castigated for it. Find other people who want to do the same thing and you kind
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of help each other in that journey. So at an early stage, that's just one of the key things is to find people who also want the same journey as you. M
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uh that really helps. Then it's still about the best leverage of your skill
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set and being honest with what your skill set is. Just because you you're a doctor doesn't mean you should be a
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doctor just because you've graduated because you can do other things. And it's it's figuring that out. That's not
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an easy bit, but you figure out over time by trying stuff. You know, we've all done multiple jobs and we know what
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we're terrible at and what we've been good at and you kind of overindex on the things you you're better at and that works. So if you're if you're early,
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it's the time to make bets in yourself and your network and that gives you the foundational tools to then earn more
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income and then invest more. Was there a pointless seemingly pointless job you did that ended up in hindsight making you the most money? And
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what I mean by that is I think about my experience doing teley sales between the age of 16 and 19 as probably the most
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important thing I ever did. Like not only do I spend a lot of time talking now, but sales is a transferable skill
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across raising investment persuading employees to come and join you. And I think there's nothing I did that was more important than telly sales.
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The single best skill you can acquire in life is is to learn how to sell. To be comfortable around people and to be able
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to get a message across is the single most powerful tool you can have in life. Everything you do finding a partner in
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life doing anything you do is basically sales. And it's all people.
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It's all people. So if I'm this 24 year old and I a 25-year-old and I'm ambitious. I want something big.
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Yeah. You got to find more income. You got to have more income to do it. If I'm a 25-year-old and I just want to be okay,
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I don't mind my job. I just want to invest, you know, whatever. You got to find the right investments. You got to
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have a system for your money. And then you got to create a plan. Anytime you get paid, you know how much money you're
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going to save. You know how much money you're going to invest. And then you spend what's left. Because the difference between the person that becomes wealthy and everybody else is
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wealthy people save and invest their money first. Everybody else, especially
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in America, I spend all my money. I wonder where all my money went and then if there's anything left, I'll
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try to save and maybe invest and hopefully I'll get rich. For me, it's all around based around
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what is your vision of your future self. You know, how do you see yourself living? Because that is what we do. It's
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one of the sources of unhappiness is if your current state is not moving on the path of where your future self wants to
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be, how you imagine yourself. So practically and tactically, how do they do that? How do they create this this
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financial vision board? Is there do they need to know certain numbers? Do they should they get clear on if they want to
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be on a private jet or easy jet? Like oh man, I think I think you know if if if you have to ask yourself, hm, do I
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want to fly on Spirit Airlines or do I want to fly on a private jet? I think you already know that question. But is it important to be explicitly
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clear with yourself? Because actually, if I think of most of my life, I I wasn't entirely clear. And so you either
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end up chasing because more and more because it's generally not a materialistic outcome. It's generally an
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emotional outcome. Yeah. And that's why it's hard to to pinpoint exactly what it is. But you need to
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position yourself in that future self and say, "What does it feel like? Do I feel secure? Do I feel this? Do I feel
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that?" So it's it's an emotional thing and not a material thing. Is that is that central to a lot of
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this? You talked about emotional elements. is being okay with
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what other people think of you. Yeah, that's the other thing is social pressure, right? So, you may have the
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vision of yourself and you just say, "I want the the three bed house, you know, with a little strip of lawn and your
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barbecue and that's great and around you people like you should try harder." Yeah. So, they're questioning your own sense
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of happiness and society does that at scale. And then even the whole media
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complex is about kind of how unhappy and how miserable you are and should be. It doesn't make it an easy place.
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We're talking about emotional and psychological barriers here. How do we get over people not just being scared of what other people will think, but so
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many people are scared of their own money? When you look at the stats around avoidance, 82% of Americans admit they
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avoid thinking about their own finances. And one in four Americans have avoided medical care because they're afraid of
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the the bill and thinking about how much it might cost. For Gen Z's, 67% of Gen Z
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and 58% of millennials say they avoid checking their own bank account because it's too stressful, which is compared to
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only 30% of boomers. And on in terms of mental health, money is the number one
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source of stress for Americans topping work, family, and health. 36% of people with debt experience
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clinical anxiety and 23% depression. So people avoid their own money. A lot of
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people avoid it because the financial world's full of jargon. Y you need to go to a professional for
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advice. That's what people think. It's intimidating. You don't feel like you've got enough money. You're going to let them down, yourself down, your
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family down. So, there's this whole kind of thing around it. It's the confidence that you can learn
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because a lot of people say, "No, no, unless you're from an investment bank or you're in a RAIA or something, you can't
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do this." Right? but just a little bit of confidence to say, "Yeah, you can do this." A simple tip that I think people can do
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is just kind of figure out how much they spend on a monthly basis. Track your expenses for 30 days, 60 days, or 90
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days. And you're going to learn so much more about just your personal habits of what you do. Cuz sometimes I'll forget
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that I door dash something for $30. Or I'll forget that $15 or $20 Uber charge and I'll just kind of file it away
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because I'm swiping my credit card. I don't really I'm not aware of it. It's like if you're going to the gym and you're not aware of your weight, how are
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you going to where where's your starting point? So you I like to give people a starting point because then they can kind of have that small step to kind of
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start working towards their finances in that sort of way. 65% of Americans have no idea what they
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spent in the last month according to the US Bank. And 60% underestimate their monthly spending by a significant
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margin. Right? And that's exactly what I found. I track my expenses for a month in 2014. I thought I was spending 1,500 bucks a
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month. Guess what? I was spending $2,800 and I wasn't making that much and I was like, how am I off by an order of
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magnitude of I don't know 60 70%. And I find that even like all my friends I issue this challenge to mo most of them
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don't make it to the 3 months. But I think as long as you have an approximation of what you're spending that can help because that that means
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then you're going to have a little bit of a difference of what you make and what you spend and then you can save that money and I think that's one of the
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bad money habits of Americans is they don't save right. So, it's a really good point which is a a practical step to just heighten one's
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awareness because you need to have sort of informationational awareness of where you're at to even understand what you
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need to do to get to where you want to go. So, yeah, I think you need to start with the mindset. You have to build the basics.
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You got to get rid of the credit card debt. You got to save a little bit of money, but you got to have some breathing room because investing is all
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about taking the extra money that you have, throwing it somewhere to grow that money. And this is where uh there's a
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three-step framework that I'll talk about because there's a lot of ways to invest. At the very simplest is I could
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be completely hands-off. I can work with a financial adviser. I can give them my money and they can do everything for me.
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If you don't have a lot of money, you're not going to get a very good adviser. But there's a con and a cost to a
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financial adviser, which is the amount of money you have to pay because they're going to charge a fee. So, if I invest
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my money, $1,000 a month with a financial adviser, I get a good financial adviser who beats the market.
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They get 11% a year, but I have to pay 1.5% a year. After 30 years, I'm going to have $1.8 million after paying
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$600,000 to my adviser. Stage number two is I can be a completely passive investor. It's a little bit more
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involved than an adviser, but I can just put my money into the stock market,
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something like the S&P 500, which is a group of the 500 largest companies in the stock market. It's kind of like
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investing your money into the United States economy. This has historically averaged 10% a year, which means if I
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invest $1,000 a month for 30 years, I will have about $1.9 million. a little
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bit more work than completely hands-off but still pretty passive. Then we have
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the people that want to be more involved. What we call is a active
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investor. And an active investor is somebody who now wants to invest their
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money themselves. And I don't mean trading. I mean actually investing their money. And now I'm going to be doing the
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research to find which investments I want to own. Maybe it's real estate that I want to own. Maybe I want to invest in
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individual companies. So it's more risk for more potential return. A small edge
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can give you outsized return. Because if now I don't get a 10% return,
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I can get a 13% return, which you know, we're not talking about 200 or 50% returns. A 13% annual return means that
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my $1,000 a month over 30 years is now going to grow to $3.5 million. So about
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$1.6 $6 million more than before just with this slight edge. And you got to figure out how involved you want to be
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on this point of being an active investor and picking stocks yourself versus being a passive one. The data
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shows that passive investors who invest in the S&P 500, like you said, consistently outperform most stock pickers over a 20-year period, more than
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90% of actively managed investors, so talking about funds there, underperform
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the S&P 500 after fees. So, should people be actively investing or should
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they just put the money in an S&P 500 and be patient? I say most people should not be active investors. In fact, I say 98% of America
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should not be active investors. Just be a passive investor because if you don't want to put in the work, if you're not
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willing to put in the time and the effort to research, you're probably going to lose. And many people do.
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So, why do people want to be active investors if the if the probability is stacked against them? Well, if you get a
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little bit better returns, if you're willing to put in the work, you can get better returns and it is possible. We do
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see people that are doing it consist. Is there an element of fun in entertainment? Absolutely.
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People like sports betting and that's the problem because the fun is I like researching versus, oh, I want to
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see my money go up tomorrow. If I buy a house tomorrow morning, am I going to go on to Zillow in the afternoon, check,
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what is my house price? I'm going to check in the evening, what's my house price? No. because you know that this is something I want to own for the long term. Well, when I go into the stock
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market because it's so liquid, I buy a stock in the morning, I'm checking it 15 minutes later, I'm checking at lunch,
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I'm checking in the bathroom, I'm checking in the evening, I know I'm getting anxiety cuz if it's going up or down, I'm I'm a very emotional and
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that's that emotional control as an investor, which is just as important as the research that you're
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putting in. I see I fundamentally differ on all of this stuff is people are so
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screwed. They are coming out of university with massive debts. We looked at the stat earlier um off camera when
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we were talking about the fact that percentage of 30-year-olds who have a mortgage and a and and are married has
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gone from 52% in 1950 to 12%.
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Nobody can afford anything. So if you look at the average millennial in the US and a Gen Z, they generally have a 401k
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if they've got a job, right? They have some sort of savings, but they're taking massive amounts of risk. A lot of us
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would look at them and say, "This is ridiculous." Why are they taking risk for anyone that doesn't? Because there is no way of closing the
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gap between buying, getting the deposit on the house, getting into a house, realizing that future vision of themselves, however reasonable that is.
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Why it's so far away? because the ass the cost of assets has gone up so much versus the incomes don't go up.
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You mean the cost of buying like a house for example? Yes. Or even however much percentage share of the stock market the average
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salary does, you know, stuff like that. That you're you're getting less for your money. So your future self is
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automatically going to be poorer because of it because you could buy less of a house, etc. Explain that to me like I'm
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an idiot, like I'm like I'm 10 years old and maybe in the context of this mug
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here in terms of the how why is that worth
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less now based on what you said? The way of explaining it is money is the
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medium of exchange, the thing that you buy something with. If we all have a lot of money, we've all got a stack of cash
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on this table and you want to sell that mug. We can pay anything for that mug
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because we've got a stack of cash. Mhm. So that mug suddenly is worth not the
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$10 it's supposed to be worth. It's suddenly we're paying $150 for the mug. Why? Because that money has no value to
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us because we've got excess money. So when you create excess money in the system, it's this debasement of
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currency. It's an optical illusion that the value of assets are actually going up. They're not. It's the value of your
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money is going down. And this is this pain point because your earnings
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only grow with economic growth generally plus your progression of your career or whatever it may be. But those things,
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the scarce assets are going up optically by the amounts they're lowering the
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thing. So what you find is salaries go up at about 2 or 3% a year.
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And the house of the cost of the S&P is about 12% 13% up every year and a house
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price is about the same. Gold is about the same. And that's because they're printing more and more money.
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Correct. Okay, that makes perfect sense to me. So I'm imagining you all have a big stack of paper in front of you which you're
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using it to take some notes on. And if if I was saying I'm going to sell you guys this mug for some of the paper you
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have there, but then my team said you guys can have unlimited paper. this mug loses value because you can all just
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offer a gazillion sheets of paper for this mug. Well, it doesn't lose value. It optically will give you a gazillion for
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it as opposed to, you know, three sheets of paper because we've got so much paper. It matters not.
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So, I'll be I'll be thinking, "Wow, like this mug is worth a gazillion sheets of paper, but actually the each sheet of
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paper is now worth nothing." Correct. Okay, got you. And this is the problem that people are finding is they put money in a 401k, you
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compound it at 10%. for my generation. Yeah, that was that was how the world worked and it was great and it worked
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and now it doesn't work. So, they need assets that go up 50% a year, 100% a year, which is ridiculous, but luckily
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we've been gifted a few. Um, and so that's helped. Go on and say it. Well, it's crypto. Simplistically, it
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just outperforms all other assets even with the excess volatility. So, Bitcoin, for example, produces about since 2012,
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it's produced about 145% a year returns. So that's 10x the stock market
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and that's including three 70% draw downs in the middle of it.
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A draw down being a drop. Yeah. Well, you feel like you're an idiot. You're losing money. It's all going to go, you know, you've made the
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biggest mistake in your life and it recovers and it keeps going because it's a it's a technological network adoption
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model that's happening. So, it's just sucking in more and more people. So there's now 650 million crypto brokerage
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accounts in the world, which is more than all the stock market brokerage accounts added together in the world.
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And we're seeing it all around the world because everybody can buy a share of something. So as opposed to be able to
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buy, nobody can buy a Fifth Avenue apartment here. Everybody can buy a fractionalized share of Bitcoin, which
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is in theory $100,000 asset. But we can all put in 10 bucks, five bucks, a
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thousand bucks, 10 billion. Let me challenge it then. So, Bitcoin
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isn't based on anything, though. Okay, I'm being I'm being a futter here. That's my job.
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Bitcoin isn't based on anything. It is a database in the sky that isn't backed by gold or it doesn't produce any sort of
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valuable asset as its byproduct. So, why how can we have faith in Bitcoin? It's essentially in its essence before
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someone clips me, this is I'm playing devil's advocate cuz I know they're going to clip this part out. It is essentially many would say a Ponzi
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scheme. Mhm. Which is it only goes up if other people take part in it and if everybody decides
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that it's um not worth anything then it's going to go to zero. So all money is social consensus.
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Everything. Gold has no real value. I can build a table with gold though. I
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could rest some things on it and it's a good it doesn't rust. If you're building a table of gold, then
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the value is going to be much less if everybody's building gold tables. Trump has we do
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um and so really it's just social consensus. What do we as humans ascribe value to?
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But the problem with the 145% like you mentioned, Bitcoin has fallen by 70
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plus% on multiple occasions. If we let's go back to the S&P 500. A
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lot of people invest in the SPY, the S&P 500, and still lose money. Why? Because
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when the we go through any downturn, people panic and they sell.
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And and if we look at I mean Bitcoin's I think Bitcoin's 2009 if when it started
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if I'm not mistaken. Um if we look at the crashes from you know
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recent history 2020 stocks fell by 30%, Bitcoin fell by 50%. 2022 stocks fell by
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20. The S&P fell by about 20%. Bitcoin fell by 60%. So in those times, people
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who are in the S&P are freaking out selling. Yeah. But here's the thing. This is the
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riskreward that people don't understand. If you've got a time horizon, let's say the average draw down in the S&P during
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a a bare market is 25%. A draw down being a a drop. A lot. Yeah. A drop. A drop in prices.
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you're getting compensated 15% a year returns for that at best. In Bitcoin,
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the average draw down over the same period will be about 70%. But you're getting 150% return.
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If you're on the winning side, though I buy it and I can sell it for a higher price,
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hold it. Just hold it. That's the key. So all of these are in a nice trend channel. They go up. So anybody can buy
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something and hold it long enough it will go up. Well, what about let's look at housing. We could say the same thing about housing. 2008, housing crashed.
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Just hold it. I have too much debt. I'm underwater. My bank's taking it from me. People are buying Bitcoin with debt.
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Yeah. I mean, that would not recommend that. But housing's different because you can endlessly create more housing.
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And we have a demographic problem in housing that makes it more complicated. Demographic problem is A, everyone's
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leaving the cities now. B, the generational gap. Nobody can afford the boomer houses. We don't have
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enough cheap housing for young people. People are relocating, moving around. So, we got a very interesting mismatch
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in real estate now that makes it more complicated than it used to be. Absolutely. And and I do want to say I think the part that we fundamentally
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differ is not that there's value in crypto. I own crypto, but the difference between you and I is
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you are all in crypto. For me, it's a speculative piece of my portfolio. So, I invest in my own business. I have real
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estate, stocks, my speculative assets, and then a little bit of gold. Imagine how difficult to replicate what
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you've achieved in your amazing career is for the average person listening to this versus buying one thing in your
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Coinbase account, your Robin Hood account, and doing nothing. It's so there's no cost. It's not like buying a house. It's like servicing all the
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stuff. There's no debt involved. There's nothing in theory, but theory isn't reality. How
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many people end up losing money when things go down? How many people panic especially with Bitcoin? Because if we
00:23:58
look at especially the early adopters of Bitcoin, who are those people? These are the people that well a lot a lot of the
00:24:05
average person is I want to get rich. I want to get rich quick. It's I want to make money fast versus the average
00:24:13
person who's buying the S&P 500. This is somebody who is I want to invest and build wealth for the long term. It's a
00:24:18
very different mindset. The average investor of this is 32 years old. And we said, "No, you need to invest for the
00:24:23
long run. They're never going to have a house. So they their whole vision of their future selves is utterly
00:24:29
destroyed." So it becomes a logical thing to actually take more risk. It's logical
00:24:35
for them because they've got nothing to lose. So Bitcoin you're saying is 145% a year.
00:24:40
Yeah. And in recent years as the trend rate of adoption grows, it's probably down to about 100% a year. Let's call it
00:24:47
that for easy maths. But now let's think about this just from a practical long-term perspective. Warren Buffett is
00:24:53
arguably the best investor in the history of time. He has averaged about 19% a year over
00:25:02
the course of his decades making him a multi multi multi-billionaire.
00:25:07
And so when we compare a 20% return from one of the top investors in the world versus hey Bitcoin is going to give you
00:25:13
100% a year there's there's some sense of something wrong. So, even if I'm wrong by 50%. You still outperform
00:25:20
Buffett. To put it in perspective, Bitcoin since 20 2010 has done I think
00:25:28
it's about 90 million% returns. There's no asset in all human history that's ever generated as much wealth in the
00:25:34
shortest period of time. And because it's not a random thing, it's actually a technology. It's a network model of
00:25:39
technology. as more people use the network and we see with Bitcoin, governments buying it and asset
00:25:45
management firms buying and everybody else you have this network adoption model and so what it creates is the same
00:25:51
chart as Google or Amazon all of these it just goes up in a log trend over time with some volatility so you've got a
00:25:59
secular bull market which means that over time prices go up for measurable
00:26:04
understandable reasons and it happens to be the highest performing asset of all time. There's one problem
00:26:10
and it's volatile. The psychological thing you're dead right about. It's re very hard when it falls 70%. I've gone
00:26:16
through three of those. They're hard. The problem is just like with real estate,
00:26:22
everyone has said real estate only goes up. Well, how do you make money on the real estate? You make money when you
00:26:28
sell or you lose money if you sell. Ultimately, it comes down to that. You make or lose money only if you sell.
00:26:36
Well, what about everything along the way? And what if I need to sell during
00:26:41
that 70% crash? Because what happens during those crashes? A lot of times people lose jobs. A lot of times people lose their income. A lot of times people
00:26:47
need that money during that time. And so now I'm desperate or I'm panicking. There's there's two things happening and
00:26:53
now maybe it's the end and I go in and now I lose money thinking that I'm going
00:26:58
to make all this money. I think I can appreciate your love for cryptocurrency and your 100% concentration in cryptocurrency.
00:27:05
You're saying it's suitable for everybody, right? I've got my the you know bottom of Maslo hierarch of needs
00:27:10
taken care of. I've got houses. I don't have debt. You know, it's easy for me. I've got multiple sources of income that
00:27:15
I can take that back. I'm not saying that for everybody, but I can also understand why a 25year-old can do that
00:27:21
too because they got nothing to lose. But do you think that if a 25year-old
00:27:26
puts their entire salary and savings into Bitcoin and they lose it, let's say they run through a 70% draw down, aren't
00:27:33
they just putting themselves in a bigger hole for their future as well? like maybe before there was a a glimmer of a
00:27:39
chance that they could that they buy a house and then now they can't. The most important um part of financial markets is the least understood is time.
00:27:47
Mhm. It's not just price, it's time. So if you're 25 years old and you get wiped
00:27:52
out, we've all done it. We've all kind of screwed up and you know had to move home to our parents or do whatever. We've all
00:27:58
done it. You can do that several times when you're young and it's okay. You just don't want to do it.
00:28:04
At age 50. Sure, you really really don't. You become more risk averse generally speaking.
00:28:11
It just depends where you are and how much time you've got to take that risk. But now, if I'm investing my money in
00:28:18
Bitcoin or really anything, a lot of the value is what some people refer to as like equity. It's it's I bought it for
00:28:25
like I started buying Bitcoin when it was $3,000. That other stuff is equity. It's invisible money, which in my view is is
00:28:33
theory. It's not actual money in my bank account. It's sitting there waiting for me to sell, hoping that when I go to
00:28:39
sell, it's going to be a profit versus cash flow. If I buy a dividend paying stock,
00:28:46
what's a dividend paying stock? Some companies have big profits. For example, McDonald's has billions of
00:28:52
dollars of profits. There's three things that they can do with their cash. They can save that money for an emergency.
00:28:58
They can take some of that money and reinvest it and open more stores and create better burgers. Or the third thing that they can do, which some
00:29:04
companies do, not all, is they can just give this money away to their investors, the shareholders. It's called a
00:29:10
dividend. So, it's a cash payment for doing nothing except owning that investment. So, if I buy something,
00:29:16
whether it's ETF, stock, or whatever, that's paying a dividend or a rental property that's putting money in my bank account every single month or year,
00:29:23
that's money I can use to buy food, go on a vacation, do something. Here's here's what Let me tell you.
00:29:28
You're getting paid 4%. Listen, who cares? I started buying Bitcoin at $3,000 a coin when it was at
00:29:36
I went through multiple crashes. I remember when $20,000 of Bitcoin was the oh my god, we did it.
00:29:42
And once it hit around 70,000, I looked at this and I said, "Wow, I have my real
00:29:48
estate, my stocks, my speculative, which is crypto and startups, and then 2% gold, which is now looking extremely
00:29:54
inflated. I need to lower this. That way I can have some more income." So what did I do? I sold some Bitcoin about
00:30:02
rental properties. That now rental property is putting money in my bank account every single month.
00:30:10
The Bitcoin, it's a big number on paper, but it doesn't actually mean anything
00:30:15
unless I do something with it. Could you have staked it, which means you can stake the cryptocurrency and
00:30:20
make a monthly yield from it, get a loan against it? Now, that's adding risk. Well, what
00:30:25
happened into if I take a 80% loan, 70% loan? Let's let's uh 50% loan.
00:30:31
Yeah, it's it's very volatile. So So let's take let's take a 50% loan and Bitcoin falls by 70%. Which it has.
00:30:38
Now I'm underwater. Now what? Now the bank comes knocking on the door. Margin call. You're forced to sell and it's a
00:30:45
foreclosure. My point being on my Bitcoin. I mean, I don't disagree and really speaking, people should have the ability
00:30:51
to have cash flow or cash for if things go wrong, right? That's really a super important thing to be able to have a
00:30:57
long-term view to be comfortable with draw downs to be able to invest in startups or to to invest in crypto or
00:31:03
technology and all of this stuff. Um, that makes sense, but I just don't think a dividend of 4% makes any difference to
00:31:11
anybody. Well, it does if you do it consistently month after month, year after year. You need huge capital to start with to
00:31:17
be worthwhile. No. If if you if you start investing for
00:31:23
dividend income, I call it a decade of sacrifice. And this is why it's so hard. Yeah. But if you're 33 years old now,
00:31:29
you're sacrificing till you're 43. You're going to become 43 at some point. And imagine if you're 43 and now you
00:31:35
have the income to pay for that car, to pay for the house, you don't have to worry about it. Well, do you want to
00:31:40
have hope that you have the Bitcoin or would you rather have more security? I'm again Bitcoin in my perspective high
00:31:48
risk high potential return and I'm not saying don't buy it. I'm saying allocate
00:31:54
it in your portfolio in a way where you understand you are arguably one of the
00:32:00
top crypto experts in the world. I'm not I also am not the stock expert
00:32:07
in the world. I'm also not the real estate expert in the world. What I doing is I'm probably going to be wrong. If my
00:32:13
stocks crash, I have my real estate. If real estate crashes, I got my stocks. Crypto crashes, well, that's part of my speculative portfolio. I really don't
00:32:19
care. And if everything crashes, I got some gold. So, for me, I have to
00:32:25
diversify against myself because I know stocks crash. I know crypto crashes. I
00:32:31
know real estate crashes. But if you're not starting with a lot of money, your your strategy is the
00:32:37
strategy of a rich person. Oh, I've got houses and I've got dividends and I've
00:32:43
got some gold and I've got a bit of this. That's the strategy of being But I didn't start with all of those. I
00:32:48
didn't start with all those at all. I started with one. Where did you make most of your money? Being an entrepreneur. What would you
00:32:53
taking obscene risk? I did. That was me. An entrepreneur is taking obscene risk. But if I'm making $50,000 a year, the
00:33:00
first step, let's assume now I'm putting $5,000 aside, $7,000 aside a year. I can
00:33:06
take high risk, high potential return or I can be conservative or a hybrid
00:33:14
and not everybody should be taking all the risk because there's Bitcoin has
00:33:21
risks and again I'm telling you somebody who owns it the government could come in and change policies on Bitcoin.
00:33:28
Quantum could change Bitcoin. people could stop caring about Bitcoin.
00:33:35
And if any of those things happen and all my money is in this very speculative asset, I'm the one that's carrying all
00:33:42
the risk. So, if you if someone was $1,000 in disposable income to invest, what would
00:33:48
what would you suggest they did, Humphrey? My take on $1,000 is as has changed over the years. I used to say you could
00:33:54
invest $1,000, but as as rule probably mentioned, 10% on $1,000 is is not that
00:34:00
much, right? So, like, you know, if you invest $1,000 bucks in the S&P 500, you get 10%. Next year, you'll have $1,100.
00:34:05
That $100 is not going to change your life dramatically. So, if I had $1,000, I'm investing in myself. So, trying to
00:34:12
improve my skills to make more money at some point. How exactly would you do that? When I was uh still coming up, I was
00:34:19
trying to take a lot of courses online. So, I try to figure out different types of skills that I could that I could use in the marketplace. So, I took a AdWords
00:34:26
course back in the day for like 150 bucks that taught me how to do Google Adwords and I would try to consult for
00:34:32
for businesses out there to try to make more of an hourly income on the side. And Google Adwords, for anyone that
00:34:37
doesn't know, is Google's advertising platform. Yeah. And now there's Tik Tok ads and Facebook ads, but you know, anywhere
00:34:43
where I could be more of value to another business, I knew that economically speaking that I could command more in the marketplace.
00:34:49
So, something with that like that would be great. So, so right now clearly that is AI because what what you saw there is
00:34:55
like a knowledge arbitrage with a new technology where most people didn't didn't understand AdWords and you could
00:35:00
be the young guy bridging the gap for people's ignorance. So most businesses now would be dramatically more efficient
00:35:07
and effective if they understood even the basics of AI. Yeah. So a kid could take a a course in AI and
00:35:13
do you know what's crazy? If you read the top 10 books on AI, you'd be in the top 1% in the world in terms of
00:35:19
knowledge. Yeah. I mean if you just read the instruction manual of how chat GBT or you know quad works you you could
00:35:24
probably be in the top you know 1% of prompt engineers right and that could be a that could be a value to a business or
00:35:30
service right so that's probably where my career came from was we were the kids 18 19 20 years
00:35:36
old that knew social media cuz we'd messed around with it so we sold it to companies right and that started my first business and
00:35:42
then there was soon hundreds of us and there's there's a lot of these apps right now coming out from 18 19 20 year
00:35:47
olds have you seen that that one profile of that guy who created Calai. Uh Calai
00:35:52
is this this app where you take a photo of your food and then you know it sends it to to AI and it tells you how many
00:35:57
calories are in it. Well, the guy's making 50 million bucks a year or whatever it is. And yeah, I saw that this morning, funnily enough, for $4 million a month he's
00:36:04
making from a like Chad basically it's an AI rapper obviously. I think he has some, you know, secret sauce that he puts into it,
00:36:11
but a lot of a lot of kids these days are using AI to try to leverage that and and try to turn bit turn them into
00:36:17
businesses. I do want to say though, I think with $1,000 and with with what Jess Breit said, I think you can still
00:36:23
make a decent if you can make a decent income, you can start to slowly save and invest your way to some sort of
00:36:29
semblance of retirement. I think you can still be able to retire and be financially independent without having
00:36:36
to, let's say, bet your life savings on on crypto. I know that I personally
00:36:42
bought Bitcoin at $100, but I've sold it many time. You know, I bought and resold it so many times because, you know, when
00:36:47
it's up 10x, you're like, "Oh, like, you know, if if you had given me a 10x return when I first bought it, I like,
00:36:52
yeah, I'm taking that any day of the week, right?" Mhm. And so, I think that's why it's so hard. It's like Bitcoin does produce 145%
00:36:59
return since 2012, but in 2012, no one knew how to buy it. I bought it on some random sketchy website. I got this like,
00:37:05
you know, this this string of characters for my wallet and I I try to buy, you know, I try to buy a coffee at a cafe in
00:37:11
Palo Alto and I didn't know that bitcoin transactions took 30 minutes to go through. So, I sent Bitcoin twice for a
00:37:18
$5 coffee. Now, keep in mind this is 0.1 bitcoins, right? This is 10k worth. It's
00:37:23
an expensive coffee. I sent it twice and they didn't get it. And guess what? I still had to pay for the coffee with my debit card.
00:37:28
So, where did my go? You spent what? 20k on I spent 20k on coffee. Yeah, that could be the title of this video. just
00:37:35
spent 20k on coffee. Yeah, I literally was I I sent it to Koopa Cafe in Palto if anyone wants to go there.
00:37:41
I think the average person psychologically speaking, it's really hard when it goes down 80%. And if Jasp Breed says you need money
00:37:48
like at that moment, you're going to sell it. But your your point about I mean the
00:37:54
primarily important thing is income. Yes. I mean, and that and we talked about last time I was on the podcast,
00:37:59
he's like, "How do you just leverage the same skills in different ways that you can earn more money from it?" Like the story I was told when I left university
00:38:06
was speaking to a friend of my dad's, he was like, "Well, what are you going to do?" And my father was in marketing and
00:38:12
I liked marketing and but it was like late '8s Wall Street thing was going on.
00:38:18
And I'm like, well, I'm thinking about either going uh to work for somebody like Mars, do marketing, you know, great
00:38:24
company, or or going work in the city in London. And the guy looked at me and said, it's really simple, Ral. It's the
00:38:31
same job. You're a salesman in both. One, you get free miles, and the other, you get free money. And he realized, oh,
00:38:39
there's actually arbitrage in what you can do with the same skill set. Mhm. Well, I would say there is a point.
00:38:45
So, I agree. If it was me with $1,000, I'm going to go out and invest in my income, read some books, get whatever I
00:38:50
got to do, go start something because that's enough. But if we look at time,
00:38:56
$1,000 compounded is decent. If I if you go back 1971,
00:39:01
but how do I pay for my college loan and my house deposit and I want to get married and have kids?
00:39:08
You're telling me I can't do that for another 20 years? If I took $1,000 in 1971, I invested that into the S&P 500
00:39:17
and I did nothing else. I keep doing whatever I'm doing, my job, and I only invest $1,000. I never invested another
00:39:22
penny again. Today, that would be worth if I reinvested my dividends about
00:39:28
$330,000. And I never invested another penny after the first $1,000 investment. Why?
00:39:35
because the S&P 500 has grown by a little bit over 10% a year from 1971 to
00:39:40
now. It's something. Now, imagine if I invested $1,000 a year, $1,000 a month.
00:39:47
Now, I can't say that about Bitcoin because Bitcoin didn't exist 50 years ago. I can't say that about Bitcoin
00:39:53
because Bitcoin didn't exist 25 years ago. And so, how about Amazon?
00:39:58
What about Amazon? That's that started trading in 2000 or even better, Facebook 2012.
00:40:04
How do I do we not invest in it because it wasn't around? It hasn't been around as long as gold. I mean, it's been has been around less
00:40:11
than Bitcoin has shorter of time creates a profit. It has a tangible
00:40:16
value that you can see and feel because I can go on to Amazon and order myself a brand new guacamole set. They'll be
00:40:23
there in 2 hours. They didn't make a single profit until what, 2018? Well, but that was that wasn't because
00:40:28
they weren't producing a value. It's because they were growing so aggressively. So, you think if you had $1,000, you should you should invest it
00:40:34
in the S&P 500. Well, I'm not saying you should. I think personal finance is personal. I think if it was me, I'm if I have $1,000 extra
00:40:40
and I'm just trying to figure things out, I'm going to go buy some books. I'm going to buy a class. I'm going to do something about how do I increase my
00:40:46
income? Going back to what you said, but if I'm saying I just want to work my job. I don't want to go out and do all
00:40:52
that. I would do half into the S&P 500. Yeah. And I would go half into uh individual
00:40:57
companies. So, more risk than the S&P 500. not as much risk as the Bitcoin. And the reason why I would do this is
00:41:03
because this is something I enjoy. I like that research side of things and I understand this is something that I
00:41:08
could see returns with. Like you talked about Amazon, like you talked about Microsoft and whoever, there's
00:41:13
potential. And what about you, Humphrey? If $10,000, does your strategy change? My strategy is a little probably more
00:41:19
conservative or traditional. It's probably 90% index funds. Uh so tracking the S&P 500 and then 10% speculative.
00:41:26
And my whole goal for that 25-year-old would probably be to get to $100,000 as quickly as possible because at that
00:41:31
point I think they have more options and flexibility and they're able to kind of use that capital to maybe take more risk
00:41:37
after that's still 10 years with the S&P. Well, eight years of the S&P about 7.84 years. Yeah. But that
00:41:43
also assumes that they're only doing the 10,000 bucks a year. Maybe they they can save and invest a little bit more.
00:41:48
That'd be nice. But I think for a lot of people in America, if they can get a guaranteed $100,000 in 7.84 in 84 years.
00:41:55
I I think a lot of people might opt for that. So, I agree, but I'd remove the S&P. You do all crypto?
00:42:01
No, I just do NASDAQ. Oh, yeah. You do NASDAQ. So, NASDAQ compounds at 18% a year. What is NASDAQ?
00:42:07
The NASDAQ is um the NASDAQ 100, which is the top technology stocks in the United States, right? We live in a world
00:42:14
that tomorrow will be more digital than today, guaranteed. Um and so therefore, these stocks tend
00:42:20
to generate the most performance. And we've talked about many of these names that is all in the NASDAQ. So a little
00:42:27
arbitrage is if you want to shorten your 7.8 years to 5 and a half years, 6 years,
00:42:34
buy the NASDAQ 100. It's an ETF, zero cost, easy. And then I would say and then do 70% that 30% crypto and you
00:42:42
don't have to care about anything. True. You're fine. Now, if you have a different risk tolerance, you can tweak those dials. Or if you are more
00:42:51
risk averse, then you up your cash dial or or some other more stable flow, whether it's gold, although gold is
00:42:57
still driven by the debasement of currency. They're all the same thing. They're all driven by the same macro factors. But so, yeah, similar kind of
00:43:03
idea. And the NASDAQ is great. If I just say one thing, but just like with Bitcoin, the difficult part with the 18% is you
00:43:09
got to be willing to go through the downturns. And I want to make sure that that's clear because I mean the big drop
00:43:15
2000 the NASDAQ fell by 78%.
00:43:20
From its peak during that time the S&P 500 fell by 40%. So it's a bigger drop.
00:43:26
Not to mention the NASDAQ didn't get to its level until 2015.
00:43:32
15 years later of no money. It is still compounded more returns than the S&P. Absolutely. If you held on,
00:43:38
you can't live your life of the drop. 100%. It's got to be in the riskadjusted
00:43:44
returns versus the gains. But how many people can hold on for 15 years and say year one, h no big deal.
00:43:50
Year two, okay, year three, year five, it's going to go up. Year 10, it's going to go up. And by the way, year 10 was
00:43:56
also another crash because all you have to do is dollar cost average. What's that? So dollar cost averaging is
00:44:03
if you're young and you're you've got a bit of excess cash now. You know, you've sold your income a little bit as opposed
00:44:09
to just chucking everything in or you do you put your large sum in. You've saved up your 10 grand, but now you've got
00:44:15
maybe $500 a month of of free capital you want to put into your savings. So
00:44:20
when you have these drawdowns, you're actually keep buying. And what happens is it lowers your average cost over time
00:44:28
and you get to new all-time highs in your portfolio much before the market did. So for example, in the last crypto
00:44:34
down cycle in 22, in 22 all I did was add as much as I
00:44:40
could to my crypto. So I was at new all-time highs in my portfolio well before the market was because I'd
00:44:47
lowered my average entry. That compounds your profits over time incredibly. And
00:44:52
is there something psychological there where if you commit to the habit of just putting $500 in regardless of what
00:44:59
happens, you remove emotion. You remove a bit of emotion from it. And the emotion is the thing that people struggle with. If you're investing in
00:45:06
things that are more volatile, um you firstly understand that you will
00:45:11
see larger draw downs when markets go down. Usually they're all correlated. They all go down at the same time, all up at the same time.
00:45:17
So you're going to do that. But if you tell yourself that's an advantage for me because I can buy more, that's a secret
00:45:25
hack that makes people fortunes compounding. This is Warren Buffett's thing. I% agree with that.
00:45:31
More companies in a bare market than in a bull market because I agree.
00:45:36
Yeah, I I 100% agree with that part. I call it poop. Uh panic leads to overselling leads to
00:45:44
opportunity leads to profit. So I am on board with that.
00:45:50
But that requires a specific level of financial sophistication. No, even your Coinbase app can just you
00:45:56
can dollar cost average. But how many people can dollar cost average down 70% for 15 years waiting to
00:46:04
see that? It wasn't 70% in 15 years. It was it was 70% in one year and then rallied ever
00:46:09
since. Every single year after year after year it went up. Did you see that down? Well, no. After
00:46:16
the 2008 crash, the Nasdaq also again crashed more than the S&P 500.
00:46:21
And then step back and look at the returns of the NASDAQ first. I agree. Over the long term, it's a great investment, but volatility is hard
00:46:28
for the average person who doesn't have the emotional IQ and the financial sophistication to understand.
00:46:34
That's our job to educate them. Yes, our job is to help people in this journey
00:46:39
and not get them to make decisions that compromise their future. we have to help
00:46:45
them. I agree. And riskadjusted returns and time horizon are two of the single most important thing.
00:46:50
And so what I hear I mean through history contrarians have made the most money. Um and also I think what the
00:46:58
other thing that I've really pulled out from what you both were just saying there is you need to set up a system that removes emotion and requires you to
00:47:05
not make decisions because it's in making decisions that your amydala the emotional center of your brain is going
00:47:11
to do make a bad one. And it's that I think that that self-awareness emerges from what you were both saying, which is okay, my brain is going to panic. It's
00:47:18
going to poop or whatever you were talking about there. And I need a system which is panic proof. So you know that
00:47:24
the best performing brokerage accounts in the United States are dead people.
00:47:30
That's true. It's a known fact because they don't do anything. So they have these accounts that haven't been closed
00:47:36
and they're inactive. They outperform all the active people. You are 100% in crypto in terms of your investment
00:47:42
portfolio. Yeah. So, you must be sat here thinking that
00:47:48
actually when I ask that $10,000 question, what what would should someone do with $10,000? You must be thinking
00:47:54
that the right answer is to put it into crypto. The right answer for me is that to his point,
00:47:59
but you you I actually would say but you know this is it's an audience of people
00:48:05
and people misinterpret things. Yes. The answer is we've been given the gift of the greatest performing asset the world
00:48:10
has ever been given. That's not just Bitcoin. That's the the crypto complex. If you're very careful in investing in
00:48:17
like top projects, you can even have a more a broader diversified portfolio of that. Like you've had Ethereum, Bitcoin,
00:48:24
Salana, Sui, all of these things great they will definitely outperform for a
00:48:30
period of time and that's based on macroeconomic factors which is the debasement of currency which we've talked about. That means all of these
00:48:36
assets go up by a certain amount and some outperform it. The only two assets that outerform the debasement of currencies is the NASDAQ
00:48:43
and crypto. This has been a persistent trend that is observable and measurable. So this is
00:48:49
not a speculative asset. What it is is a met law adoption model. Bitcoin is the adoption of let's say a money or
00:48:56
collateral layer like gold, digital gold we'll call it. While the rest of crypto is the new rails for the internet. So
00:49:03
it's a tech technological investment. It is growing at twice the speed of the internet in terms of adoption and has
00:49:09
been since the first 5 million IP addresses for the internet and the first 5 million wallets. Twice the speed of
00:49:15
the internet makes it the fastest adoption of any technology the world has ever seen aside from AI now which is now
00:49:21
outpacing it. If if we sit here in 20 years time Yeah. and you were wrong.
00:49:26
Yeah. What happened do you think? Well, firstly, in terms of investments, you
00:49:33
have to always once you have a high conviction bet, your entire job is to question yourself, not to keep
00:49:39
reaffirming yourself. Sure, you end up reaffirming by questioning and then you you figure it out. For it not to have
00:49:45
been true, what would have happened? The AI would have had a new system of
00:49:51
money that it created. This there has to be a competitor to this because we're
00:49:56
now in the game of nation. nations are acquiring this. The Middle East nations, nations in Asia, the US
00:50:04
wants to acquire it. So we've got and we've got South American nations. So it's now the game of nations,
00:50:09
geopolitics. This is a real thing. But what changes in 20 years time? Well,
00:50:15
in 20 years time, we're in a very different world. The economic engine is driven by robots and infinite
00:50:22
intelligence. We don't know how the economic machine works. We don't even know what the value of money is when we go into that world.
00:50:29
So I've talked about this before, the economic singularity. Past 2030, the economic model breaks down.
00:50:36
So the the economy generally grows by a
00:50:41
measure of population growth, how many people are in the economy um or coming into the economy or being
00:50:47
born. Productivity, how much output they create, and then debt growth is is the
00:50:53
other lever. What's happened here is the population of the entire western world
00:50:59
plus Japan plus China has been aging. So the rate of change of population
00:51:05
growth is shrinking. They tried immigration but that became politically unacceptable. So that's stopped. So
00:51:10
you've got this slowing economy. GDP growth has been slowing over time. Productivity. Old people make less
00:51:16
things. So it makes less economic output. So we've got this mess and then
00:51:22
we got this debt and we stopped that whole engine in 2008 and we need to service this debt. So okay, so that's
00:51:28
the system we're in and this is why we're printing money to service this debt cuz we're not generating enough output in the economy.
00:51:35
But after 2030, this population part changes. We've got infinite
00:51:41
artificial humans. You're talking about AI agents and robotics. Yeah, infinite. So what does that do for
00:51:48
that that the multiplier of that formula, you know, population growth plus productivity growth plus debt
00:51:55
growth? It breaks because you can have 20% GDP growth because you've had an
00:52:01
huge rise in the number of AI agents creating economic activity in robots. And so what does that mean for for me as
00:52:06
a average person? For me is like the economic system starts changing. We get to this world of
00:52:12
abundance. We don't know what has value. what we as humans do, we we we change and retool to become more humans because
00:52:18
AI and robots can't be humans. So, we have to figure all of this stuff out. Investing, we were talking about this
00:52:24
earlier, is like, well, does the the AGI is that going to be a better investor than any of us? Yes.
00:52:31
Artificial general intelligence. So, that's the next stage where it's smarter than any human that's ever
00:52:36
existed and we're very close to that. So, in which case, well, how do markets
00:52:42
work? And when businesses are agents selling stuff to other agents, where do
00:52:47
we play a role? So all I'm saying is my job my whole life has to been to look into the future sort of 10 years out and
00:52:55
try and probabilistically understand paths. Here I get to like 2030 and it's like a
00:53:02
dark curtain. Just to flip that for a second, how could AI actually positively
00:53:09
influence your hypothesis? I'm very positive about AI. I think humanity will come out this just fine. I think
00:53:15
economic growth that explodes is we can work a way of accreing it to to humans
00:53:22
or society or whatever we want to do with this. I'm not an AI doomer specifically on Bitcoin's value and
00:53:29
price. How could AI make it even more important in Well, in the end, an AI is a it requires
00:53:37
two inputs. It requires it's it's Maslov's hierarchy of needs is basically
00:53:43
two things comput and energy and it needs to be paid. These agents can't you
00:53:48
can't build all this agents of billions of agents running around doing things without paying for them. And agents will
00:53:53
use agents. So they will one agent will get another 10 agents to do all this task. They're all going to have to be
00:53:59
paid. And the way of doing that is using crypto rails, stable coins, whether it's stable coins, whatever it
00:54:06
is. But that whole crypto rail, you know, all of this new infrastructure for the internet, the the blockchain, that's
00:54:12
where it works. Often the difference between a company succeeding or failing isn't down to its product or strategy. It's down to the
00:54:18
people on the inside. After all, the definition of the word company is group of people. And some of the best
00:54:24
companies in the world have been largely built by a players. Because I'll let you in on a little secret. When you hire an
00:54:30
A player, they go on to hire more A players. And it perpetuates. The challenge is finding those first few A
00:54:36
players. I found the majority of mine on LinkedIn who are a sponsor of this show. LinkedIn provides talent I could not
00:54:43
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00:55:06
That's linkedin.com/doac and you can post your role for free there. Terms and conditions, of course,
00:55:12
apply. Do any of you remember a conversation I had on this podcast with anthropologist Daniel Lieberman. It was
00:55:18
one of our most viewed conversations of all time. And the most replayed moment in that conversation was when I talked
00:55:24
about this product. These are what I call barefoot shoes by Vivo Barefoot, which have significantly reduced
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support, which gives my feet the opportunity that they desperately want to need to strengthen. If you've learned
00:55:36
anything from this podcast, it might be that we're living in a comfort crisis. And that at all times in our lives,
00:55:41
we're making this trade of whether to have more comfort now and therefore more discomfort in the future or a little bit
00:55:48
less comfort now, but to be stronger and healthier in the future. And for me, that is the choice to wear barefoot
00:55:53
shoes. So, if you want to start strengthening your feet and your body, visit vivobarfoot.com/stephven
00:56:00
and you'll get 20% off when you use code Stevenb20 at checkout. That also comes with a
00:56:06
100day money back guarantee. What have you got to lose? I wanted to ask you a question. The
00:56:12
reason I went and got my phone is because um I had someone contact me that I knew from my childhood. Used to be one of my
00:56:18
best friends. Frankly, not spoke to them in 10 years. sent me a text message and
00:56:25
the text message they sent me is and I wanted to get your opinion on this
00:56:30
because I I said I ended up saying to him, listen, I'm not the guy to ask about this. I think you've misunderstood who I am.
00:56:36
Hi, mate. I hope you're well. I got myself in a bit of trouble with some debt about £40,000.
00:56:42
some more than a bit of trouble after I'm after some advice and direction in terms of maybe passive income slash an
00:56:49
avenue to try and work my way out of it. Is there some material I should be reading watching that you might know of?
00:56:56
And I asked him I said what kind of debt is it? And he said personal loans and credit cards, mate. Um and I said like
00:57:01
how I need to ascertain how urgent those debts are and if it's causing any any immediate issues. and he said, "Well,
00:57:08
they're not super urgent, but as a result of the high monthly outgoings, I'm a month behind my mortgage payment
00:57:14
this month. So, it like is, but it's not because I don't want to keep being in
00:57:19
that position moving forward. It's costing me circa $1,000, £800 a month in
00:57:24
repayments at the moment, and I can't get a consolidation loan. It's a perfect storm starting because I've just started
00:57:30
a new job, and my partner is on maternity leave, and I have this debt mountain. It's starting to affect my
00:57:38
family if I can't pay the mortgage, you know? So, I've got to change moving forward
00:57:43
and figure out what to do. And you're the man to ask for advice. I was like, "Fuck, I'm not."
00:57:49
And then he messaged me again within an hour and said, "Hey, sorry, man. If you're busy, just wanted to nudge this."
00:57:55
Then messaged again an hour later cuz I was on a flight and said, "Hey, I really need some help and direction, man. I'm quickly running out of places to turn."
00:58:01
He's kind of in a hard spot because £40,000 in debt with the interest payments of let's say your interest rate
00:58:07
is 15 to 20% that starts to spiral out of control a little bit. Like if he was under £10,000 in in debt, it's a little
00:58:15
bit more manageable. But at 40,000, the interest starts to compound quite quickly. So, you know, you said he had a
00:58:21
mortgage, he might even have to consider moving, selling, selling the home to at
00:58:26
least get the interest payments under control or like reduce that amount of debt. It's kind of that one of those situations where you just need to reduce
00:58:33
every single expense possible and start really pouring all your money into the highest interest rate debt that he owns.
00:58:39
So like, you know, you can rank your interest rates of all your debts from highest to lowest and start start at the
00:58:44
very top, right? If it has 22% interest rate, you want to get rid of that first because that's what's killing them. At
00:58:50
those levels of debt, it's really tough because I think a lot of people consider bankruptcy at that point just to kind of
00:58:56
clear that amount of debt. uh depending on what his income is. I know I've known, let's say, a waitress or a server
00:59:03
that had $50,000 in credit card debt and just unable to get over it because the interest payments were as much as her
00:59:09
salary. So, in those cases, unless you can get a personal loan from, let's say, a family member and, you know, kind of
00:59:15
clear that debt, you're in a really tough spot. Reduce your expenses as much as possible, put any extra money you
00:59:20
have towards that debt at the highest interest rate possible, the first the highest interest rate thing, and then consider selling some assets if he has
00:59:27
assets. Bankruptcy. Bankruptcy. When should someone consider bankruptcy
00:59:32
and what's the trade-off? The trade-off is seven years. Uh I believe your credit is shot in America.
00:59:39
So, um but I I believe that uh actually I think if you pull up a chart, someone
00:59:45
sent me a tweet the other day of like bankruptcy lawyer searches in America on Google and it's like been kind of like
00:59:50
going up and to the right, which is not a great thing. Uh bankruptcy just you know there's different types of bankrupt
00:59:55
bankruptcy that you can file for but I do know that it usually clears some if
01:00:01
not all your debt and you basically have to start over but as a result you lose a lot of your privileges like for example
01:00:06
no credit score. I read some stat I'm not you might know if this is true but I read a stat that
01:00:13
it said something to the effect that people avoid going into bankruptcy because of the stigma associated with
01:00:19
it. But when they looked at the financial performance over 10 years of
01:00:25
people that did go into bankruptcy, those that did typically were better off than those that tried to avoid it for
01:00:32
the next 10 years. Um, so yeah, I don't know. That could be anecdotal. I don't know. That's tough because if you
01:00:38
have $50,000 in debt and you make $50,000 a year, it's Yeah, it's different. Bankruptcy in some ways is a good thing
01:00:45
because it forces you to do crisis control. It's like your expenditure,
01:00:50
what you're doing, what everything becomes hyperfocused. Like you you led in the beginning with about you know how
01:00:57
people should look at their expense expenditure, right? When you're $40,000 in debt, you've not been doing that.
01:01:03
Correct. And bankruptcy actually forces you to to actually discipline that for a extended
01:01:08
period of time where it becomes a habit. So Stephen, that's why they outperform
01:01:13
in the end because you've created the habit that you talked about right in the beginning of this discussion. Yeah. So I I just found the stat here.
01:01:19
It said, "Yeah, this is one of the uncomfortable truths in finance." And the answer is often yes. Those who file for bankruptcy end up in a better place
01:01:25
long term than those who try for prolonged periods of time to avoid it. And the research shows uh that people
01:01:31
who file for bankruptcy typically get their debt wiped out and cleaned. And they um removing unpayable debt. Um and
01:01:39
it's bankruptcy can bring immediate mental relief removing the crushing stress of unpayable debts. People who avoid it often live in chronic financial
01:01:46
stress which spills into their health, relationships and work. So in short, those who fa face bankruptcy head-on often recover faster and end up in a
01:01:53
long a stronger position than those who keep limping along trying to avoid it. And I think somebody who's listening who
01:01:59
may be in a similar or the same situation ultimately wants to know how do I get relief? Bankruptcy is one
01:02:06
option, but at the end of the day, there has to be change. And that change is difficult. And that's the part that I
01:02:12
think a lot of people have hard time talking about or comprehending. There is relief, but it comes with severe,
01:02:20
extreme, and quick sacrifice. What do I mean? Number one, you got to cut back
01:02:26
your expenses as fast as possible. In that situation, you have to sell as much
01:02:31
stuff as possible. I mean bankruptcy obviously works but you also lose your house. You also lose other things along
01:02:37
with it. There's a lot of emotional toll with it. You have a family, you have a kid. I mean it's also a big reason
01:02:43
people end up getting a divorce. So it can also impact your life in many different ways. So you have to make
01:02:48
extreme sacrifices and I mean get rid of the Netflix subscription not because it's just costing you $15 a month but
01:02:54
because the average American is spending more than two hours a day watching Netflix. And if you're in that type of
01:03:00
situation and you're spending two hours sitting there watching whatever the heck is on Netflix, how do you sleep at night? You shouldn't be sleeping eight
01:03:06
hours a night. You better be getting up, going try to get some more money. I don't care if it's Uber. I don't care if you're working at McDonald's.
01:03:13
Find some extra money and learn how you can earn some more money. And I mean, it sounds harsh, but the reality is if you
01:03:20
want extreme change, it's not going to happen without extreme change. So, could he sell his house? Do you
01:03:26
think that assuming he's making the 50k, which I think is probably accurate, having a vague understanding of his job and where he lives, etc.,
01:03:32
sell his house and then move in, rent an apartment, would that free up capital?
01:03:37
I mean, that would alleviate his current problem immediately. Sure. He says here after some advice,
01:03:43
direction in terms of maybe passive income, this word passive income, I know nuts.
01:03:48
Why does it drive you nuts? It is a there's like a passive income industrialization complex that is I mean
01:03:55
it is literally every millennial's dream is I'm going to get passive income and it doesn't exist. We talked about
01:04:03
property. Property is the least passive income you can imagine. It is awful. Every time I've tried to rent out
01:04:09
property there are so many costs. Everything goes wrong. It's just endless. You're paying fees. And people
01:04:15
think there there's a magic passive income. Everything comes with effort. There is no such thing as returns
01:04:21
without effort. That's well even robbery comes with effort. You know there there's no way of making money without
01:04:27
effort or risking something. And so when you're 40 grand in debt, how on earth do you think passive income is going to
01:04:34
rescue you? But he's seen that on Tik Tok and uh on Instagram. Oh, we're we're
01:04:40
are millennials in our in our 30s and we're now living in in the in in Lisbon
01:04:46
and we've got passive income from our house. It's like it's It's social social media dream that doesn't
01:04:52
really exist and that's never going to save him from £40,000 debt.
01:04:58
Passive income can exist. The perception of what it is is the problem. I am struggling with money. I
01:05:06
have no money. I got bills to pay. I need passive income. Well, that's not how it works. So, how it works?
01:05:12
The way it works is you you take an extra money, right? I have I'm going to
01:05:17
work and I'm I'm I'm saving and investing some money. I take the extra money that I'm want to put my to my investments and I can put it into an
01:05:23
asset, an investment that can pay me for owning it without actually working, without going to work to own it. Now,
01:05:30
let me ask you about your real estate because I got to I got to keep coming back to you, man. Did did you did you
01:05:35
manage your real estate yourself or did you have a manager? I've done both. I've had management agent and a management myself.
01:05:40
Managing yourself is probably a a absolute nightmare. It's horrific. And managing it with a manager is also
01:05:46
probably a nightmare just in a different scene. Yeah. And because your yield is massively reduced as well.
01:05:51
It is reduced. And then you take the trade-off between whether you're going to do short-term less or longerterm rentals. And there's
01:05:59
the volatility in the short-term less that you don't know what your yield's going to be. long-term different as
01:06:04
well. Then you've got the tenants and how bad the tenants have been and the damage that they've done. Y by the end of it, you walk away and
01:06:10
think really it was just wasn't worth the effort. Well, I would disagree with part. Yeah. I mean, obviously people can do
01:06:15
really well out of property. The work in real estate investment is learning the process. When I first
01:06:22
started investing in real estate, it was a complete nightmare. And it was not passive, anything close to passive. It
01:06:30
was a nightmare. What you don't know when you start is that there's a good property manager. There's also a bad
01:06:35
property manager. How do I find good property managers? By going through a lot of bad property managers and
01:06:41
learning that process. And that is a painful process, a very timeconuming process. But when you do have the right
01:06:48
team, it can be extremely passive. So I I invest in real estate. What kind of properties are we talking
01:06:53
about? Single family houses and multif family apartments. And do you have lots of them? Not lots, but I have a decent amount.
01:07:00
And how much of your portfolio is in buying properties and then renting them out to families? 50%.
01:07:05
And what are your returns been like over year-over-year for the last decade? So the way I look at returns when I look
01:07:11
to acquire a property is I want 7% cash on cash on the money that I put in. So
01:07:18
when I look at return, I don't care about equity. We talked about this kind of a lot that if I buy a house for, let's just call it $100,000 and it goes
01:07:24
up to $200,000. I don't care. My goal when I acquire real estate is not to sell it and flip it for a profit. My
01:07:31
goal is to grow the cash flow that I'm generating month after month after month rental payments. From rental payments.
01:07:36
It's really difficult though cuz if I someone that hasn't done a lot of property rentals and stuff like that,
01:07:43
the chance that I'm going to up is so high. And I'm one of those people and I
01:07:49
probably screwed up more than more than I could count. It has cost me a lot of sleep, cost me a
01:07:55
lot of stress. So, you have to kind of be an expert. Uh you don't have to be an expert, but you got to be willing to passive.
01:08:01
In the beginning, right, for the first number of years, it was extremely painful. But today, when I go and I
01:08:07
acquire a property, I will look for the property just like I do research on a stock or whatever I want to do. I do the work to research a property. In today's
01:08:14
economy, it's much harder, not impossible, to find those returns. acquire the property, hand over the keys
01:08:21
to the property manager, give them the goals, and now I oversee the manager because I have a team now that is
01:08:27
it's a business. It's a business. It's like starting a starting a startup, but it's not like starting a startup. Why? Because starting a startup,
01:08:34
when I work in my company, I am working at my company and I work a lot of hours.
01:08:39
So, I'm meeting with my employees. I'm leading the meetings. I'm coming up with ideas. I'm leading the vision. With
01:08:45
this, I acquire, I hand over the keys. I've already set the framework and now you are doing the execution. That's a mature business. With my
01:08:52
company, there's hundreds of people in the UK right now. But you're not the one that's the starting that startup. I was the founder. And now what have you done? You've
01:08:58
acquired more employees to get there, which is what you did with your property management. It's much harder to do with a startup though. How big does a startup have to
01:09:05
be in order to be able to displace you as a CEO to pay for the staff to make the money and then to hire a new CEO and
01:09:12
to lead it the way? Depends. My friends, my friend Ash, who was just with me last week in LA, has four people in his startup. He's out in
01:09:18
LA right now in my house in LA with my girlfriend and my other best friend who's still there. And I watched, he's in the hot tub right now. I know that
01:09:25
because every day at the same time he goes in the hot tub and then they go for this hike and my girlfriend sends me photos. What he's done is he set up his
01:09:30
team of four people. They do personal branding on LinkedIn for people and they're running it back for him in the UK. He's up in bloody the mountain with
01:09:37
my girlfriend right now. That's beautiful. But how many startups don't do it there? to start a business.
01:09:44
You described it to me. I was like, "Oh, that's just it's just a business." A steep learning curve to develop expertise and then you put systems in
01:09:50
place to make it sustainable. But it the systems are kind of pre-established
01:09:55
where you need to rent it out. You need a good manager. It's going to find a good tenant. They got to pay the bills. And it's it's not like a startup where I
01:10:02
have to innovate and create an idea. I don't have to go out and build the blueprint. I am going out. I'm acquiring
01:10:09
an asset that people already need that's already existing. Mhm. and then I'm going to put use to it
01:10:15
by having somebody live there or use it and then there's a team just maintaining it.
01:10:21
So what do you think then in terms of passive income and is it real? But specifically let's do this point of
01:10:27
housing. Do you advise people to buy rental properties and then generate rental fees from them as a source of
01:10:33
income? Well, you just heard Jasp breed at how much work it would take. So I I generally don't advise people to to get
01:10:39
into that business just because of the steep learning curve and not everyone is built for that and not everyone has
01:10:44
capital for that. So if you're just trying to get started and actually make some money, I just think the stock
01:10:50
market is the most liquid and easiest place to get started. I personally rent and I I plan on renting and just instead
01:10:56
investing the difference of what my mortgage payment might be in my my rent. I think in on the coasts like San
01:11:03
Francisco, New York, I think Miami, that might actually be the more reasonable thing to do. I was reading a New York Times article
01:11:09
that just came out yesterday and it said more millionaires than ever are renting in the United States and that it's
01:11:16
tripled between 2019 and 2023. So, in just a couple of years, millionaires are
01:11:22
choosing to rent more than ever before. What's going on? My guess would be a lot
01:11:28
of the millionaires are probably living on the coast because they invest a lot or they have higher paying jobs and
01:11:33
maybe it's slightly unaffordable for them to buy a house in say San Francisco, Seattle, New York, Los
01:11:39
Angeles. In the New York Times article, it says they're choosing flexibility and liquidity over ownership. Um, and they
01:11:45
don't want to be bothered with the inconveniences of home ownership, which includes paying a real estate tax and
01:11:51
insurance, especially in markets like Florida and California where we're seeing a lot of natural catastrophes. Yeah. So the US is a peculiar market
01:11:58
because there's this high real estate tax in owning real estate. Mhm. So all the time your returns are being
01:12:05
reduced by that you pay. So whether it's like 1 and a half% or 2% whatever the number is, there's that and then there's
01:12:11
the other real estate taxes that come on top of it. Interest rates have been high. They've
01:12:17
been high for a while now. So a lot of people have just been priced out of the
01:12:22
market just in interest payments. But now because of mortgage payments are here. The difference is actually with
01:12:28
the rental is a lot of rental people aren't trying to cover a mortgage cost because they own the property outright.
01:12:33
So you get cheaper rates. So it's to do with price. The US economy's not been
01:12:39
super strong yet at Main Street level. Wall Street's had a great period of time, but Main Street hasn't. So people
01:12:44
don't have excess earnings yet. So I think it's a function of that, but it's probably a larger trend as well.
01:12:51
Yeah. I think also it's understanding what the opportunities are. I mean, there's a lot of flexibility with renting. I mean, I finally bought a
01:12:57
house in 2025. I've been renting before this. So, you bought your first property to live in with your family this year
01:13:04
for Yes. me to live in was 2025. Why didn't you do it sooner?
01:13:09
Well, because when I was renting, I could take the capital and buy other rental properties, buy other
01:13:15
investments. So, it was uh it made more sense for me to put that money to work somewhere else. So, is buying a property
01:13:21
as a means to generate wealth a terrible idea? As a means to generate to buy for
01:13:27
yourself to live in or to Well, but you know, when you when I grew up, everyone said to me that you get money, get a job, then you get a
01:13:32
mortgage. And so, like that's what you did. That's one of the worst pieces of advice you can give somebody,
01:13:37
but that's what everyone's doing. That's still what the vast majority of people doing. And I know that because I look at
01:13:43
I look at my friends that um don't have the same financial advice that I have
01:13:49
from like my brother and my financial adviserss, my accountants, and the first thing they do when they get a bit of money is they go and get a mortgage and
01:13:56
that's because that's what their parents did and that's what everyone's always done. Is that a good idea?
01:14:02
Yes and no. No. I think these days with how the economy has been set up, don't
01:14:07
forget when I was 24, 25, I was working in an investment bank. I wasn't the
01:14:13
highest paid guy there. I was a 25 year old and to buy my first flat in London
01:14:18
was three and a half times my income. That equivalent flat and the equivalent income is 12 times.
01:14:26
So rent makes much more sense now. And you might as well invest, buy all the stuff that you think will drive returns.
01:14:32
But a house, a primary house is not an investment. Never will be because once you buy it, you don't sell it. You don't
01:14:38
realize the equity. Maybe your kids do if you've got kids. So it's not an
01:14:43
investment, but it can be an investment in your future. But there's like some optical illusion going on here because when I think about
01:14:48
renting, I go, "Well, that money, I never see it again." But with buying a house, I'm paying into
01:14:54
it. So it's like me depositing the money in a piggy bank. So logically, of course, renting is wasting money. It
01:15:00
goes to someone else. I never see it again. But that's not exactly true. If you go out today, I buy a half a million dollar
01:15:08
house. I put 20% down. So I put $100,000 down. I finance $400,000.
01:15:14
I get a $6.5% mortgage. 30 years, my mortgage payment is $2,500 a month. Now,
01:15:21
what am I doing? I'm not renting. I'm not giving money to my landlord. I'm building equity in my property.
01:15:27
But banks also understand the same game. They frontload your mortgage. What does that mean? When I pay $2,500,
01:15:35
it's not 12250 going to principal to build equity in my house and 1250 for interest. It's
01:15:41
principal being buying your house back for yourself. It's not half and half. It's almost all
01:15:47
interest. In fact, if you go on and buy the half a million dollar house today at
01:15:52
a 6.5% mortgage, 20% down for the first 20 years of that mortgage,
01:16:00
more than half of that payment is going to go directly to your banker's pocket with interest. It's not until you're 21
01:16:07
that half of your $2,500 payment is going to go towards equity in your
01:16:12
house. So it's all interest zero equity and then slowly it moves like this. It
01:16:19
takes 20 years to get there. And then what happens along the way for a lot of people for not everybody for a lot of
01:16:25
people is along the way interest rates go down. I need some extra money. So
01:16:30
what do I do? I refinance. As soon as I refinance that amortization
01:16:36
starts all over again. And so now I'm paying all this interest again. and my real equity that I'm building is not
01:16:44
there. This is why I say it's not bad to buy a house. I think it's great if you buy a house, but don't treat your house
01:16:49
like like you said, don't treat your house like an investment. Treat it like an expense. Buy it buy it because you can afford it, because you want it,
01:16:57
because you're ready, but not because you're going to build wealth. I agree with both their takes. I think that um
01:17:03
you know, a home is an asset that you can't sell very easily, so that's also a good thing. Like if you have $100,000 to
01:17:09
put into stocks or $100,000 to put on a down payment and you know you were just such an emotional person that the moment
01:17:15
that the stock market goes down 2% you're selling probably better to buy a house, right? You can't really sell your
01:17:20
house in the tap of two swipes. But in terms of an investment, it's like
01:17:26
usually it's much more than an investment to people. They they buy them for psychological reason or emotional reasons or this the sense of security.
01:17:33
So, I would just say like if you're interested in buying a house and you you can afford it, then that that's great. Yeah.
01:17:39
And let's let's actually go with the best case scenario. So, like I think you were mentioning this. I buy a house for
01:17:44
let's call it half a million dollars. It goes up in value to a million dollars. Oh my god, I'm rich, right? Well, it's
01:17:50
invisible, but but yeah, I could take a cash out refinance, but now I had to pay all that. But here's the problem. You
01:17:56
now own a million dollar house. What does that mean? You have to pay property taxes on a million- dollar house. So,
01:18:01
you got to pay a lot more property taxes. you have to pay insurance on a million dollar house. And so now if you
01:18:07
pass this house down to your kids, great. They got a million dollar house. But if they can't afford the property taxes or the insurance on a million-
01:18:13
dollar house, now they have to sell. Insurance is one of these really hidden costs that you don't realize. Um
01:18:20
particularly if like if you're in a hurricane area like Texas or Oklahoma or something, suddenly your house insurance
01:18:26
costs are prohibitive on top of the taxes you pay. People don't think about
01:18:31
So Jasper, you're saying by Bitcoin, right? Go all in. You're one coin away from
01:18:36
everything. Zero cost. They've just clicked that. Clipped that. Gone viral.
01:18:42
But none. No one at this table would adopt buying a house as a wealth creation strategy.
01:18:48
No. You would all do many things before then. Yeah. Correct. Would that be almost at the bottom of the list of things?
01:18:54
It's part of its age cohort. Who are we talking about? If you're kind of like 38 years old, you've got a kid, you kind of
01:19:01
cleared up some of your student debt payments, you okay, that security thing is fine, but
01:19:07
it's not an investment. Um, anybody younger, just no. Yeah. If you're just talking pure dollar
01:19:12
investment returns, I probably would rank it lower on the list for sure. Yeah. Is there any such thing as good debt?
01:19:18
Because I remember at the start you said clear up your debt. Is there is there a good debt? People make a lot of money on
01:19:23
debt, but people lose a lot of money on debt. I just try to stay away from debt
01:19:28
altogether. Yeah. I mean, I think, yeah, there is such a thing as like good debt if it's working for you and you're able
01:19:34
to to leverage that money to make more money. But a lot of people, you know, with leverage get comes a lot of risk. And I know a lot of people got wiped out
01:19:41
because they took on quote unquote good debt, right? What's leverage? leverages. So, for
01:19:47
example, in Jasper's example, you put 20% down on a house and you take an 80% the rest of it as a mortgage. That's
01:19:53
technically leveraging your money because you're taking the 100k that you have and now you are affording an asset that's 500 worth $500,000. If your home
01:20:01
goes from $500,000 to a million, you have a $500,000 gain, but you only put
01:20:08
in $100,000. So, technically, your profit or your return percentage is much higher. It was leveraged by that debt
01:20:15
that you carried. Well, I don't think most people know that they can leverage their crypto. That's right. You can borrow against it.
01:20:22
So, anyone can. You don't need to go to a bank. No, you can do it instantaneously in what's known decentralized finance or
01:20:28
there's there's a whole bunch of companies that do this. Well, you can borrow against your assets. You can even
01:20:33
do it against digital arts. I I'm a huge digital art collector, much like the art market. You can actually go and borrow
01:20:39
against the value of the art. Maybe 40 50% against the value. Explain this to me super simply if I as
01:20:45
if for someone that's like never even bought a Bitcoin before and is thinking about potentially buying one, but they would also like some way to have a
01:20:51
little bit of cash. Look, I I don't like it. Okay,
01:20:57
I understand why. But the issue is you've got an asset that does this. It's volatile. It's very volatile. and you're borrowing
01:21:04
a certain amount against it and you don't know whether it falls below that that value and you get liquidated then
01:21:09
you've lost all of your Bitcoin. The whole game is if you're in a secular bull market it's don't lose control of
01:21:14
your tokens own your Bitcoin all the way through and you have a risk of screwing that up for the extra 5% income or 10%
01:21:22
income in in Ethereum very different world because you're staking so you're getting
01:21:27
naturally rewarded in the network. What does that mean staking? What it means is in in Bitcoin you actually get
01:21:34
miners basically get rewarded for solving the the algorithm the computation in Ethereum and Salana and
01:21:42
Suie and the other big blockchains you basically get rewarded for securing the
01:21:47
network. So you stake your tokens to secure the network as the more people
01:21:53
then have this network connectivity between them and you get paid for that. So in Ethereum right now it's probably
01:21:58
4% yield. Okay. Okay. So, just uh I'll try and summarize this like a 10-year-old. There's no risk in that. You're not
01:22:03
getting leverage in that. I So, if I choose to buy Ethereum, which is a form of cryptocurrency, I can take
01:22:09
my $100,000 of Ethereum and on my phone in a couple of clicks, I can move it. I
01:22:16
can press a button and move it so that it is staked. And when it's staked, I am
01:22:23
basically using my Ethereum to secure the network to make the whole thing more secure so it can run properly. And in
01:22:28
return, they'll give me 4% of it as a payment every month.
01:22:36
Well, not 4% a month, but monthly payments. Monthly payments of 4% annualized. Yeah.
01:22:41
So, you can you can get interest on your crypto. Yes. And then if you're a little more
01:22:47
sophisticated, a little bit racier, there are then yield enhancements. And we talked about high yield bank
01:22:52
accounts. There's high yield versions in crypto and you can get up to 20 30%. But now you're taking risks
01:22:58
and I can also loan against my Ethereum. So I actually did this at one point. I don't do it anymore, but I I had a,000
01:23:03
Ethereum and I and I put it um I took $1,000 or a,000
01:23:09
Ethereum. Yeah, Yeah, I know. I actually I switched it into Bitcoin a little while ago. So a couple of months
01:23:15
back, but probably bad timing. This is why Melon Terrible timing. You should have called me first.
01:23:20
I know. Um but yeah, this people are emotional. Um, I had a loan against
01:23:26
it. So, I borrowed a couple of million dollars a at one point to buy some more other crypto assets against my Ethereum.
01:23:33
And it was surprising to me that I didn't have to call anybody. I didn't have to ring a bank. I could just click a couple of simple buttons on my phone.
01:23:40
And this thousand Ethereum I had, I managed to get a couple of million dollars paid straight away in cash straight to me.
01:23:45
Um, but I chose not to do that cuz the markets are super volatile. But but it is incredibly efficient effective way of
01:23:51
people if you were to let's say you had $100,000 of Bitcoin, one Bitcoin to
01:23:57
borrow $20,000 against it. Yeah, that's not very risky. Or $5,000 against it or$5,000, whatever it is, it's not very
01:24:04
risky. Or if you're in a different currency where you can stake it, very little risk, very very little risk. It's
01:24:10
like lending to the US government, i.e. lending to the to the government of Ethereum, the Ethereum network. That's a
01:24:16
pretty decent way of of of enhancing. It's hard to do that with stocks. It's hard to get a loan against your stocks
01:24:23
if you have $5,000 of stocks, isn't it?
01:24:28
Yeah. It's typic I mean, when I was when I was younger and I had I bought $10,000 of Facebook stock when I finally got some
01:24:34
money, I couldn't think I couldn't see a simple way of taking a loan against my Facebook stock. It wasn't until later
01:24:40
when I had a private investment bank in Europe that my private investment bank were like, "Do you want 50% of your blue
01:24:45
chip stocks as a loan. Yeah, it's probably usually reserved for people with more assets. But I do want to push back a little bit on the staking
01:24:52
yield. I do understand it's 4% virtually risk-f free, but there are are always going to be risks with, you know, the
01:24:58
price of Ethereum, right? So like you're getting paid in Ethereum. And so this is a key thing, right, is
01:25:03
your your risk is the is the currency you're staking. So if Ethereum goes down 50% then your fiat value of Ethereum
01:25:13
sorry of your stake could go down versus you know if you're getting a 4% high yield savings account it's backed by the
01:25:18
FDIC it's virtually this and there is another risk as well is Ethereum is actually annual staking.
01:25:23
Oh I see. And most of it is being done via a few businesses like LADA which are
01:25:30
turning into short-term staking. And so there's a duration mismatch that has some elements of risk in. Sorry, go
01:25:37
ahead. I was going to say when do you get paid the with the Ethereum staking you get paid every month or do you get paid on
01:25:43
the year? I was getting paid monthly. Monthly. Okay. What about pensions?
01:25:49
Retirement. Retirement. So in the UK we call it a pension. And I think you guys call it a 401k. Okay. But over across the world, it's pretty
01:25:55
much the same across the western world anyway. If I'm 25 or 30 or whatever, should I
01:26:01
should I be paying into my pension as a way to generate to make myself wealthy someday?
01:26:07
Is that a smart idea? I don't have a 401k. I don't have an IRA. But the reason why people like
01:26:14
these accounts and why they can work for some people is because they are tax deferred accounts. meaning I can put my
01:26:20
money in whether I pay taxes now or later. The money will then sit there, grow, and
01:26:28
I don't pay taxes until I pull my money out. But there's a couple problems. Problem
01:26:34
number one is I have very little control where my money can be invested. Maybe this will
01:26:40
change. Uh the Trump administration has passed a new executive order on 401ks to change what you could potentially invest
01:26:46
in 401ks, but that hasn't happened yet. you have very limited options. They're primarily just mutual funds and many of
01:26:52
them have a fee. I think Nerd Wallet said 92% of Americans don't know what the 401k fees are. So, if you don't have
01:26:58
know what your 401k fee is, this is your uh notice to go check what the expense ratio is, and you should know that. So,
01:27:04
you have very limited options. You're going to have to pay a fee, which means somebody on Wall Street is going to be paid forever until you retire. Number
01:27:12
two, I can't touch this money until I'm 60 years old, 59 and a half. if I do, I have to pay a 10% penalty.
01:27:19
And number three, the whole discussion is you're doing this for tax benefits, but kind of like we talked about earlier, there's a lot of tax benefits
01:27:25
that you can get outside of a 401k, which is why for me, I don't like it.
01:27:31
But I'm not everybody. For some people, it can be a great place because your employer might say, "We're going to give
01:27:36
you a 3% match." So, if you invest, let's just say, $3,000 into your 401k
01:27:42
and and they match it 100%. they might also just throw $3,000 into your 401k,
01:27:48
but you have the same risks and concerns um along the way. I don't think most people even know what a pension is to be honest. I think we
01:27:54
pay into it, but we don't really know what's working. And I saw this really interesting debate take place on X the other day where someone was a guy was
01:28:02
saying in the UK, I've paid into my pension my whole life. Um so I deserve
01:28:08
it and it'll be there when I'm ready. And then everyone underneath it was telling him that by the way it's not
01:28:13
like some piggy bank that you get to break open. The money you paid into a pension was used to pay for the people
01:28:19
that needed a pension when you were working. So you're talking about social security in the United States because as an
01:28:27
employee in the United States, you have to pay into social security. So 6.2% of your income. So you you have a
01:28:35
lot of taxes. you're going to have to pay income taxes on what you make. And then you have social security tax. So on
01:28:41
your income, you're going to pay 6.2% of that separately from your income tax, but 6.2% into this social security fund.
01:28:48
And then your employer is also going to pay 6.2% into this fund. Yeah.
01:28:53
This money in theory is supposed to grow and compound. That way when you retire, you have this retirement fund that's
01:28:59
going to pay you every single year. You don't get to choose. I mean, you can choose when you pull it out, but you don't get to do anything with it. The
01:29:05
government's going to be in charge. Yeah. This is what is running out of money in the United States today. Why? Because
01:29:12
people that are in their 20s, 30s, and 40s that are paying into it today, it's not paying for their retirement. It's
01:29:17
paying for the people who are retiring today to pay for their social security benefits.
01:29:23
And that's what people don't understand. They think they're paying into a piggy bank that they get to crack open and that will pay for them as long as they
01:29:29
live for the rest of their life. I was looking at the biggest misconceptions around pensions. And the first one was that my pension is guaranteed money for
01:29:36
the entirety of my life once I retire. Well, there there is some truth to that.
01:29:42
The part in the United States at least that you are guaranteed what what the
01:29:47
what the wording is that you're going to get the social security until you pass away. But the part that they never tell
01:29:53
you and there's no asterisk about this either is how much that value of the check will be. So here's what's going
01:29:59
on. People are paying into the social security fund thinking that they're going to be able to fund their
01:30:05
retirement. Every financial adviser historically has said that retirement is a three-legged stool. You have your
01:30:11
401k, your your personal retirement. You have your own personal savings and then
01:30:17
you have social security. Well, you pay into social security by force because you don't get to opt out of it unless
01:30:22
you are an investor. You don't have to pay your social security income or social security taxes on your investment
01:30:28
income. But you pay into this until you hit retirement age and then you get to
01:30:33
pull this money out. Well, the government is running out of social security money. But people misconrue
01:30:38
that because they say, "Oh, that means the government's no longer going to pay social security." That's not true. They'll still pay it, but they'll just
01:30:46
print their way to pay it, which is what you've been talking about. So great, they they're giving you a bigger check.
01:30:52
The problem with that bigger check is that bigger check can't buy you as much stuff. So yeah, you're based off what
01:30:58
the United States government says, assuming that they don't default, you're going to get the social security check,
01:31:04
is just not going to be able to buy you as much as you thought before. The other big misconceptions are that
01:31:09
people think their employer is putting enough in to cover their full retirement. They think it's the same as a savings account. They think they can
01:31:16
access it whenever they like. Um the government will cover them when it runs out and I don't need to think about it
01:31:22
until I'm older. And lastly, my pension pot is taxfree. So the big shift that happened around 20 years ago was a shift
01:31:29
from what's known as defined benefit to divine contribution.
01:31:35
So defined benefit used to work for Ford or an American Airlines or whatever
01:31:40
company. You retired, you got 60% of your final year salary forever.
01:31:47
Oh that was bankrupting all of these pension plans because people were living longer all the other stuff. And so they
01:31:54
kind of changed it to define contribution. Basically, you get out what you put in plus the investment returns, but there's fees. Maybe you
01:32:02
didn't give it to a good manager. Maybe you didn't know when they said, "Well, do you want to put it in bonds or equities?" You like bonds and it didn't
01:32:09
grow as much or whatever it was. And in the end, you're just not sure that your
01:32:14
the average 401k in the United States for a baby boomer, I believe, is about
01:32:20
$100,000. What age? a baby boomer like 65. Yeah, I think it's right now around 200,000.
01:32:26
Oh, 200. Okay, but it's not enough to retire. 200 is not enough to retire. There's 10 years of 20 grand a year, right?
01:32:31
So, there's so little money in the US pension system particularly um that
01:32:37
there is no hope for these people. And this whole video on this called the retirement crisis became a huge kind of
01:32:42
viral success years ago just explaining there is no way out of this for the pensioners, the boomers or the
01:32:49
millennials and everyone's going to have to change within this to figure this stuff out. I think you said it earlier today. You
01:32:55
were talking about a Ponzi scheme here. You have one but nobody wants to say that. But everyone is paying in to keep
01:33:04
funding this thing but the only way it's running is because people are paying it in. problem is there's not enough money coming in
01:33:10
because because the remember the remember we talked about at the beginning the demographics there's less and less young
01:33:15
people there's less and less young people because we're having less babies but there's tons of these retired people
01:33:21
so and this keeps going in perpetuity because we're having babies so that's workers in 20 years time the babies now
01:33:27
workers in 20 years time we can forward project this it doesn't stop so how the hell are we going to pay for this
01:33:33
massive amount of baby boomers which is in the United States is 78 8 million of them, a largest cohort in history at the
01:33:40
time. We can't pay for them. And this is where the proposals are to tax your Bitcoin, the value of your
01:33:46
Bitcoin or tax the value of your assets or tax your investment income. But the UK's got the same this whole
01:33:52
wealth that everybody's got the same problem. Everybody What do you think, Humphrey? In terms of retirement crisis,
01:33:58
I think that so I have a different take on Well, I think first of all, I think Jess Breed row you guys were talk and
01:34:03
you were talking about social security, right? Yeah. But I I I have a different take on retirement altogether. I think
01:34:10
uh I think 401ks are good for the average person because it's a forced savings mechanism. A lot of people
01:34:16
wouldn't contribute to a retirement account unless they the employer offered it, right? And so the the whole match
01:34:21
thing is a great thing for behavioral behavioral finance. It's like, okay, if I if I do this, I get some free money
01:34:27
from my employer and at least I'm saving some money instead of nothing. You are working for that money. It's not really
01:34:33
free. A 401k for anyone that doesn't understand is you agree to invest in a investment pot alongside your employer.
01:34:41
It is more like an individual retirement account that is awarded to you because
01:34:47
you work for an employer. You have the option to invest within a 401k and that 401k is typically tax deferred
01:34:55
uh which means that you pay taxes on it later in life. And what's the difference between that and a social security? A social security
01:35:02
is a government program where you are required to pay into it every paycheck that goes into this big pot and then
01:35:09
when you do retire the government will send you a social security check every month. Okay.
01:35:15
But I I still think that there are plenty of ways to retire and retire with
01:35:20
some sort of freedom. Retire early. Have you heard of Coastfire before? No. Coastfire is another newer thing
01:35:27
that's uh that's kind of on Reddit, but it's a variation of financial independence retire early and it's
01:35:33
essentially you get your nest egg to a point where you don't have to invest any dollar into it after that, but because
01:35:40
you get it to let's say a certain number and that number is usually pretty reasonable. The investment returns if
01:35:46
you're invested into the S&P 500 will get you to a full retirement by the time you're able to retire at 65. So, it
01:35:52
doesn't mean you retire early completely, but it means that if you get to your Coastfire number, which is what it's called, maybe you have more freedom
01:35:59
of choice in what you're working on. So, like maybe you don't have to work for the employer that you absolutely hate.
01:36:04
You can maybe go do something that's a little bit more suited to your lifestyle. You're still working, but
01:36:09
you're not working to save for retirement anymore because you hit that coastfire number. So, for example, at
01:36:14
the age of 35, I think the coastfire number is like $150,000. If you can hit 150k by 35, if you have
01:36:22
30 years of investment returns at 8%, you'll have $1.5 million by the time you retire, which is a little bit more
01:36:28
palatable for people that are having a hard time wrapping their heads around, am I ever going to retire. They're not
01:36:34
going to retire in that they're not going to be kicking up their feet on the sand beaches of Aruba, but you're still
01:36:40
going to be doing something. And I I personally think if I was retired, I'd be so bored out of my mind doing nothing, right? So, I'd like to work on
01:36:46
something. The idea is you just don't have to work for maybe the job you hate or something like that. So if I hit the $150,000 in savings and
01:36:53
I put it into the S&P 500 and get the 8% return. 8% return by the age of 65 I'll have 1
01:36:59
something million. 1.59. Yeah. What's that worth then? That's true. There that is another part
01:37:04
of the equation is with inflation what is it going to be worth? And is this what you're trying to do?
01:37:09
Cuz I remember an hour ago you said I'm just trying to retire early words to that effect.
01:37:14
Yeah. Yeah, I mean I'd like to be Coastfire and uh Coastfire is, you know, however you would like to define it.
01:37:20
But, you know, I already think I'm I'm pretty close or if not, I've already reached it, which is like I get to work
01:37:25
on the things that I love and I I think that my retirement nest egg will eventually grow to a point where by the
01:37:31
time I hit 60, 65, I'll be able to coast. Jill, did you create a number? Do the math on
01:37:37
what you'd need to get to? Yes. Okay. Yeah. So you can project out your expenses of what you think your expenses
01:37:43
are going to be on an annual basis and then kind of work backwards to that number. Okay.
01:37:49
Yeah. A lot of math involved, but you kind of have to do tragedy or something.
01:37:55
Retirement crisis. Hm. That's concerning.
01:38:00
That's concerning. So your approach is to do the Coastfire thing. My approach is let's stay disciplined, consistent
01:38:08
with our savings and investing and actually get to a place where retirement might be possible. I
01:38:14
I love that idea and that's the same as when I started with the manifesting your your destiny. You say, "Well, I need
01:38:19
this goal. How do I do it? We do this and grow it via investments, right? It's it's brilliant to do that and then you can take more risk." If you
01:38:25
isolate that and say, "Well, any capital I build now, I can do whatever I want." Um, that was the same idea that I had
01:38:32
with the home. It's exact. It's like I've derisked my life now. I can take risk. And that's a really nice thing to
01:38:38
do. And I love the way that you do it by saying, well, my future self wants this. For me to do that, I need to do this now
01:38:45
and then it should take care of that. Now, it's all there's always imagine, but yeah. And then you have extra dollars to do
01:38:50
whatever you want with, right? So, I also love that you've been disciplined on like what you like and what you know.
01:38:57
Yeah. And uh I appreciate that. Thank you. Because you said I think 90% are in index funds and ETFs.
01:39:03
That's what I would recommend for people. Sorry. For me personally, I'm like 50 60% index funds,
01:39:08
but still that's that's pretty high and and not having that, you know, shiny object syndrome or whatever you want to
01:39:13
call it. I mean that that may everybody here, but but whatever it
01:39:19
might be um to to to be disciplined. I think that's such a valuable trait. And
01:39:26
you know, you talked about the scarcity mindset. I think that's also a discipline mindset that you have that. So, I I would I would reframe that and I
01:39:31
think you've done an excellent job. I think personal finance is personal. All right, guys. Gonna go get Steve. The guest is here. Ready?
01:39:39
Come in. Oh my god. Steve, what are you doing? This is uh Bontage face mask. It's good
01:39:45
for blemishes, wrinkles, uh clears up the skin. It's red light. Have you not used it before?
01:39:51
No. I tried this before. It's um it's really really good. shines red light on your face which
01:39:56
helps increase and boost collagen production. Actually found it out because of the misses seen her wearing it. She terrified me a couple of nights
01:40:02
in a row. Um I thought it was to scare people with but actually it's really really good for your skin. So they are a
01:40:08
sponsor of the podcast and uh I've been using it every day for about a year and a half now. Wow.
01:40:13
Well, I'm glowing. Great. Yes. And Boncharge ships worldwide with easy returns and a year-long warranty on
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daccircle.com. I will speak to you there. On that point
01:41:23
of discipline, Humphrey, I have seen a couple of videos from you where you talk about the things that you stopped
01:41:28
spending money on. And there is a narrative that says, you know, in order to get rich or to save uh to get to
01:41:34
where you want to go with your financial goals, you should not have the Starbucks coffee. Sure. You should not do these things. What
01:41:39
what did you stop spending money on and what's your framework there? So, I looked at I took a look at my expenses
01:41:44
from 2014 and onward and just kind of like saw the differences in how my spending habits have changed. The first
01:41:51
thing I stopped spending money on are Airbnbs. So, Airbnbs used to be a great value. They used to be a unique
01:41:56
experience, but these days they're all kind of commercialized. And I feel like with the cleaning fees and all these fees, you end up paying more for less
01:42:04
convenience as a hotel. So, that's number one. I stopped buying food in bulk. I know that sounds kind of random,
01:42:10
but uh I'm a single guy. Sometimes I I get two gallons of milk and I can't finish it, right? So, I'm pouring milk
01:42:16
down the drain or I'm buying 48 eggs at a time from Costco and I'm just like, dude, like I I I mean, I like the gym,
01:42:22
but I can't eat 48 eggs in like 2 weeks or what whatever that that time is, right? So, that's that's another. And
01:42:29
then, um, another thing I did was I started to switch my car insurance because I moved into San Francisco, the
01:42:35
city, I'm driving less. So, I used to drive 15,000 mi a year. I drive 3,000 mi a year now. And just by calling my car
01:42:42
insurance, I was able to save like 40 bucks a month just because my driving requirements are much lower. So those
01:42:48
are like Explain that. Yeah. So, you know, a car a car insurance rates are dependent on how much you drive. And if you drive less
01:42:55
and you you move to a city, then your rates should come down. But I think some people are a little bit too loyal to
01:43:01
their providers. They're not willing to compare rates because it it's painful. You don't really want to do it. It takes
01:43:06
time. Uh, but I think doing that, spending an hour calling your insurance provider, looking at different insurance
01:43:11
providers, not just for cars, but for homes, too, you can save a lot of money because insurance is kind of commoditized. So, it's like you're going
01:43:18
to get coverage from many different providers. You might as well put them kind of in a bidding war for your
01:43:24
business. I used to work selling car insurance, you know, I used to it was one of my telly sales jobs that
01:43:30
Yeah. And there was interestingly, I don't think people know this, but as I sat there in the the car insurance call
01:43:36
center, there's this bar on the screen that I can move in either direction to
01:43:42
basically give you a discount based on how the sale is going. So, if I really think I'm going to lose your sale, all I do is slide the bar to the
01:43:50
left and it brings your your upfront payment down and your monthly payment down. But if I thought this sale was
01:43:56
easy, I could bring the bar up in terms of the price I quote you and give you
01:44:02
breakdown insurance and all these other upsells. And so I don't think people realize how negotiable all of their
01:44:09
insuranceances are, even their their phone insurance and all these other things. And sometimes you don't figure out until you you say you're going to
01:44:14
quit and then suddenly they give you some great offer where they're going to give you 50% off. Yeah. Yeah. And the other way of approaching
01:44:20
it is I never really sold for cost. I sold for income.
01:44:26
Okay. And that is saying that is saying okay your lifestyle as long as you're not being ridiculous, right? It's like
01:44:33
do I really want to not go to a go to a restaurant or get that Uber Eats or
01:44:39
whatever. I understand. Yeah. Because that's penalizing yourself and that's not a nice thing to do always,
01:44:45
right? It takes a lot of discipline and discipline is hard. But if you've got an equal and opposite amount of discipline
01:44:52
in solving for income, you actually move your lifestyle further ahead. So, you know, the rise of I mean,
01:44:59
I do three, four jobs. You do three, four, we all do lots of different things now. You do as well. We all got
01:45:04
different income streams. You're almost better off to spend your energy thinking about how do I increase my income stream
01:45:11
than your cost basis. At a certain point, we agree like Steven's friend who sent him the message, he needs to
01:45:17
desperately rescue his cost base. Um, but generally, if you're looking at a life plan,
01:45:22
you'll get to your coast fire or whatever it's called quicker by solving for income than you
01:45:27
will for cost. I just think lowering fruit is solving for expenses, which is like everyone can cut back a little bit, but everyone
01:45:34
can't just like say, "I'm going to make 2x more tomorrow." That's kind of a harder problem. And I think if you want
01:45:40
well you just trade off your time because you I mean you can if you're in a lower earning job you can drive an
01:45:46
Uber and earn extra money or you can do a bar. I see what you're saying. Yeah. It's like multiple revenue streams is now the way the world works because the
01:45:52
cost of living has become so expensive that everyone's having to do multiple jobs but with technology we can actually
01:45:57
do it much easier. I Trey's point as well though, you can get a 30% pay rise today just by maybe bringing a pack
01:46:04
lunch or sure walking somewhere or whatever else and it's probably harder to get a 30% pay
01:46:10
rise. Not sure about that. It depends. I think it depends on which stage of life you're in because now if
01:46:15
you just stick with a lunch, if you're on the lunch example, packing lunch costs time and depending on how
01:46:22
much your time is worth, that one hour of time could be $20, it could be $2,000. And I think that's that
01:46:29
key difference. And and I think there's definitely times and places you got to
01:46:35
cut. I fully agree with you on that. But I think at a certain stage, look, I'm I
01:46:41
have still cheap with my money in multiple places. Uh but I have on when
01:46:47
it comes to time. So our office is in downtown Detroit and my commute there
01:46:55
45 minutes and but I don't drive. What I do is I get driven there. U and the
01:47:02
reason why I do that is because I can sit in the back seat and work. And one of the things that you know we publish
01:47:08
daily financial news. So sometimes something will be happening in the with our market briefs where oh this is
01:47:14
important and if I'm driving I don't want to be texting and driving. So instead I pay for an Uber or whatever
01:47:19
and I go that 45 minutes there 45 minutes back and it's money out of my account every single day but I get back
01:47:25
an hour and a half of my time which is worth way more than whatever I'm paying in my driver fees. So I I think it
01:47:32
depends on where you are in the stage of life because I wouldn't do that if this was way before.
01:47:37
What is the biggest This is an open question to everybody. What do you think the biggest money mistake the average person makes is?
01:47:43
They spend all your money. The the two S's you you're spending all your money and if you get past that then you're
01:47:49
saving all of your money. Both of them are mistakes. Both of them are mistakes. So just having your money sat in a bank
01:47:54
account doing nothing, you're becoming poorer every single day. I don't think most people know this.
01:47:59
I've got a friend who's steadily compounded his his bank balance over time. And I remember asking him, I
01:48:06
like, "How much money do you now have in your bank account?" He's taken a really slow approach over time. He runs a business as a freelancer. And he goes,
01:48:12
"I think probably about a million dollars." And I was like, "It's just sat in your bank account." He was like, "Yeah." And because he's scared, like
01:48:18
he's scared. He doesn't know what to do with it. So he thinks just putting it in the bank account is the safest possible thing to do.
01:48:24
Well, it's a guaranteed loss. uh if your if your bank account the average bank
01:48:29
account in the United States today not the high yield accounts but the average account is paying 0.1%
01:48:35
0.5% I don't know something something super low if we just say inflation is 3%. Meaning the the the cost you have to
01:48:43
spend out of the bank account to buy something is going up by 3% and that's the reported number. It's not the the
01:48:48
real inflation that many people feel. Well that means there's a net loss of 2 and a.5% on that. So, if I have a
01:48:54
million dollars there, that's $25,000 of lost buying power. Ro, do you think companies, because a
01:49:01
lot of my audience are companies, whether they're, you know, one person companies or big companies, do you think
01:49:06
they should be putting their money that they have sat in their account into Bitcoin?
01:49:11
In essence, if you're Microsoft, they have huge cash piles. What does
01:49:17
Microsoft buy with their cash? really they buy
01:49:23
some investment stuff but it's generally cashbased and then they may buy another company or
01:49:29
they may buy real estate data centers let's say or they may buy their own shares back all of those three things
01:49:37
that they buy are driven by the debasement of currency and they get more expensive every year and they're holding a cash return of three and a half%. So
01:49:45
it's stupid what they're doing because actually all your shareholder cash is
01:49:51
not buying the equivalent of the actual things that drive the value of the company. What about small companies? What if
01:49:57
there's people listening now that have companies where they've got a million 2 million in the in the bank? They probably don't need it all for cash flow
01:50:03
reasons. And so I do think that investing versus saving is misunderstood to go back to
01:50:09
your original question. I think investing is much more important. I made the
01:50:15
mistake of being a saver when I was young because you know that the fear that you know all of that stuff meant I
01:50:20
was super riskaverse and I was an investment banker. I was investing but I didn't so I made money from being in
01:50:26
that industry. So I'm I'm just going to hoard cash. I did worse for doing that and then once we saw the banking system
01:50:33
fail I'm like I'm not doing this anymore. I'm going to take control of my own finances. So the same is true of a business. that they're generating cash.
01:50:39
They shouldn't be sitting on a massively large amount of cash, but some liquid investments, I think, massively help
01:50:46
because you're going to make your cash grow for you and your shareholders. Um, and that's important, but but don't let
01:50:52
go of your liquidity because when you really need it and you don't have cash, that's the worst thing in the world, particularly when you've saved the
01:50:57
money. So, in your business bank account for Real Vision, do you put some of the
01:51:03
the money into crypto? It depends. A lot of it gets reinvested for growth within the company. So you're
01:51:09
making a decision is does how's your capital going to grow? Is it going to grow grow your share price via reinvesting in the business or is it
01:51:17
better to use the savings pool and buy other investments and diversify away?
01:51:23
That really depends on your business where it is in the growth cycle. But if you're like a a cashg generating regular
01:51:30
non-growth style business then you're going to be generating cash.
01:51:35
You might have taken some de dividends out and bought a house and done all that thing. Yeah, there's no reason not to do
01:51:40
some relatively conservative investment strategy. Humphrey, you worked with lots of rich people advising them.
01:51:47
What is it that rich people know that the average person doesn't know as it
01:51:53
relates to money? Because there are money games that you discover when you get to see behind the curtain. What is
01:52:00
it that they're doing with their money that the average person isn't aware of or isn't able to do with their money?
01:52:05
Rich people are typically more disciplined. They're they're typically checking their bank account every day,
01:52:10
right? They they're doing the little things that compound into huge results at the end of 10 or 20 years and they're
01:52:16
they're thinking in decades, not just what am I going to do this week, right? They're they're choosing investment
01:52:23
choices for themselves in 10 years, 20 years from now instead of choosing sports betting on on the football match
01:52:30
for 1,000, you know, uh that night because they know that their,000 working
01:52:36
for them today will be worth, you know, 10,000, 20,000 in 10 or 20 years. So,
01:52:42
it's more just like a long-term mindset versus a short-term mindset. Like delaying gratification. Delaying gratification. Yes.
01:52:47
What were you writing down there? Okay. I was writing down how the system is rigged in the favor of rich people is
01:52:54
it's extraordinary because it's the it's the Charlie Munger quote of show me the
01:53:01
incentive and I'll show you the outcome. What people get once you get it's not
01:53:07
the 100,000 but it's like the people who've got 10 million in their bank account they get loans that are called
01:53:12
non-reourse loans. It's an extraordinary thing because unlike your friend, they don't have to
01:53:19
pay it back. So, a non-reourse loan means you're not legally liable for the loan in the end.
01:53:25
Now, there'll be some provisions and how to do it, but why are they doing this? Why are they getting these favorable terms? Why are they getting the private
01:53:31
placements in stocks before they go public? Why are they getting all of the best offers? Because they pay fees.
01:53:38
They pay fees to the investment banks. And the investment banks desperately want these people because they have a lot of financial activity. And so they
01:53:44
incentivize them. None of us get a look at all of that. It's the same thing that I talked about with the hedge fund industry in the beginning. It's like
01:53:51
they were incentivized by a phase to get information that was better than everybody else. And I think part of that
01:53:58
is is the ability that all we're trying to say to people is you don't have to
01:54:04
play the same game. You don't have to pay anybody's fees. You buy a Bitcoin, stick it in your
01:54:09
Coinbase thing or wherever. It cost you nothing to run and you're outperforming a venture capital investor. There's, you
01:54:16
know, simple things like buying an index fund. You're not paying the Wall Street complex thousands of dollars for active
01:54:21
management. There's ways of hacking this and it's not that expensive to do. Just
01:54:27
before we move to Jasper, one of the things that I think you kind of both alluded to a little bit and you said earlier on was about how relationships
01:54:34
make money and because what I was watching when I was sat in that apartment with this billionaire is his
01:54:39
friends and his contacts who had done business with him in the past were getting the allocation the prime allocation of
01:54:46
being able to invest just before this company went public which means that the next day it would multiply but those were relationships. So if if there is a
01:54:53
strategy to to build wealth, it goes back to what Ral said at the start. Being around people and having good
01:54:59
relationships is actually I think really really unappreciated. I've got a friend I can name my friend
01:55:06
um called Harry Stubbings. He runs a podcast called 20BC and on that podcast
01:55:11
he sits with extremely rich people. the podcast. Harry's podcast isn't as big as Joe Rogan's, but because Harry has had
01:55:19
two-hour conversations with the richest people on planet Earth and continues to do so, he's built one of the biggest
01:55:25
investment funds in Europe, especially as like a guy in his 20s. I mean, I think he's raised, if I'm not mistaken,
01:55:32
750 million just from the relationships. And he said to me, he said, you know, the biggest
01:55:37
value leverage I've built in the last 5 10 years isn't like the views. People have more views than him. It's he had he
01:55:44
knows everyone rich and and I think we underestimate that when we think about wealth creation because if you can do what Ral said and
01:55:50
get around rich people help them in some way build those relationships it pays dividends what forever.
01:55:55
There's a there's a great guy called Desh Mackan who runs a firm an investment firm in in San Francisco
01:56:01
called Iconic. He was a young investment banker at Goldman around the same time when I started there as well. But he was
01:56:08
he was hired into the internet banking team
01:56:14
at in 2000. He turned up the office but a month later the entire thing was gone.
01:56:20
Everybody was fired and he was too young. He was kind of too junior to bother fire. They fired all the senior bankers and um he thought what he do. I
01:56:30
think he had no bosses left. So he just basically went to Silicon Valley and
01:56:35
hung out in coffee shops and made friends. The people he happened to make friends with with Mark Zuckerberg, Reed
01:56:40
Hastings, Reed Hoffman, all of these people. But he then became their wealth
01:56:46
adviser at Goldman to Morgan Stanley and then built his own firm. Iconic and Iconic is massive. runs all the wealth
01:56:52
for these Silicon Valley people from this network of meeting these random dudes building businesses when nobody
01:56:58
else wanted to speak to them because you know they gone through the big bust and he made his entire life on that network.
01:57:05
Genius. Probably at that cafe where I spent all my bitcoin.
01:57:10
The one with the gold door. You were there at the same time sending zero bitcoin.
01:57:16
It's interesting because when we talk about systems and all these things for money, nobody ever talks about a system
01:57:22
for managing your relationships. And the way that most of us manage our relationships is we get someone's
01:57:28
number. Mhm. And we hope that we'll cross paths again. But I think I even I'm thinking
01:57:34
about obviously I do this podcast where I meet so many great people. I should have a much better system for
01:57:39
understanding those relationships, how I can be of service to those people, understanding their birthdays and all these other kinds of things. And uh not
01:57:47
only would that be good for my mental health in more friends, less all these kinds of sort of social psychological
01:57:53
things, but in business terms, there's going to be opportunities whether it's six years from now where I need your
01:57:58
advice. The the key to networks is it's what you put into the network,
01:58:03
not what you take out. Yeah. So the people who have the best networks I've ever seen are always the people say, "How can I help you?"
01:58:09
Yeah. Hey, I've got something for you. You should meet so and so. Oh, yeah. It's never,
01:58:15
hey, listen, what can you do for me? Yeah. That comes back. Karma flows back always. Give as much into the network as
01:58:21
possible and the network gives back. I think that's what in the case of Harry, he's also done because funnily enough about a month ago, I said, "Oh,
01:58:27
I've got this idea to do this thing." And Harry turned around to me 30 seconds within WhatsApp and said, "Oh, I know
01:58:34
insert name of this person who's the very top in investing in Europe. I'll put you in a WhatsApp group with him.
01:58:40
Put me in a WhatsApp group with this guy." Sent a voice note said, "Steve's the best ever." Then he said, he said, "Steve's way better than I am.
01:58:45
Everything." This is literally what he said. And then he said about the guy who put me in the WhatsApp group. He goes, "And this guy's also the best at what he does ever putting you two together. Good
01:58:52
luck." And immediately I thought, "Fucking hell, Harry's what a great guy." And then the guy he' introduced me to goes, "Isn't Harry such a great guy?
01:58:59
And so I measured her like listen if there's anything I can do for you. But that's the karma that
01:59:04
honestly I you know I really believe in networks. I think it's the most important thing. Your community your
01:59:09
network is everything. And the absolute answer is you have to keep putting into
01:59:15
the network cuz if you try and um extract from the network it collapses.
01:59:21
Yeah. because then you're just that guy who's making the phone call after 10 years saying, "Hey, Stephen, can I get
01:59:27
some money from you because I've run out of cash?" The last thing I wanted to talk about is the UK and the US and geographies
01:59:34
generally and how much that plays a role because right now there's lots of political social conversations about the
01:59:40
UK. People are a little bit doomer about the UK. Some people are optimistic about the US, some aren't. How much do you
01:59:46
think about geographies when you're thinking about your wealth creation, your finance strategy? Does it play a
01:59:52
role? So, I was fortunate enough to live in London for a little bit over a month or
01:59:58
so. And I did a number of podcasts out there and well, I guess I could just ask
02:00:03
you. The interesting thing about these podcasts is when I was talking to them, what they told me is that the majority
02:00:09
of their listener base is in the United States. The majority of their money comes from the United States. the
02:00:15
majority of their sponsors come from the United States. It's not from the UK. And
02:00:20
I thought that was very interesting because it's a it's a huge market. But what they were saying is people who are
02:00:27
really looking to grow in the United Kingdom, a lot of them at least, just from what I heard, would prefer to earn
02:00:33
from the United States because the dollar figures are much higher. Now, I don't have a lot of global experience outside of that, but I do think that the
02:00:42
United States is more friendly for people that are interested in wealth
02:00:47
growth, wealth accumulation. Uh maybe not the best. There's taxfree countries
02:00:54
out there, but in terms of for somebody who is more entrepreneurial in that sense, I think you have a lot of opportunities here that you don't have
02:01:00
other places. What do you think, Ram? I'm a huge believer in uh geographic location for a number of different
02:01:05
reasons. So, I've lived in the UK, India, Spain, and the Cayman Islands. I spent most my working career on this
02:01:11
side of the pond in the US. Spain is lifestyle arbitrage.
02:01:16
The cost of living is even probably half that of the UK and a third of that what it is in the US or the Cayman Islands.
02:01:23
300 days of sunshine, incredible people, culture, climate, cost is very cheap,
02:01:28
rent is cheap, to buy is cheap, everything. Perfect lifestyle arbitrage. Problem is network. you're not
02:01:34
surrounded by people who are ambitious doing different stuff. In a globalized world now where we can work online, it's
02:01:39
actually doable. So, we're seeing a lot of Americans moving down to Latin America. That's the arbitrage here, uh,
02:01:45
or Colombia as well. So, into South America, Latin America, it's cheap, high quality of life, relatively safe, and if
02:01:51
you're in a business where you can work online, okay, you you can get to your end goal, your coastfire thing super
02:01:58
fast by doing that. If you want to your point, if you want intellectual capital, there is only one place in the world
02:02:04
that has it in such high density, the US. Capital and intellectual capital. Asia has it, India has it. You know,
02:02:10
it's all around, but they're all missing different forms of it. So, it's using that for your end goals.
02:02:16
What about the UK? I can't do it because
02:02:23
the UK's attitude now has become we just can't have nice things. They don't want
02:02:30
to, if I speak to my friends, they don't want to invest. They they just want to
02:02:35
have the bigger house and and the next car on lease. People are institutionally unhappy in the UK right now and there
02:02:41
has been for a while. And so we don't have a culture of entrepreneurialism left. It's been stamped out Europe too.
02:02:49
So it's not just the UK. Everywhere in Europe, the same thing has happened. People just don't believe they can have nice things anymore. When you think
02:02:56
about the narrative that you understand of the UK, like what is the the message? So, if it was like a
02:03:02
marketing slogan, the UK, you're an investor, you're an entrepreneur, what in your head when you think of the UK,
02:03:08
what comes out? What is it in reality or what would be how would you sell the UK to others?
02:03:14
No, I'm saying like what do you think of what do you think the narrative of the UK is right now as an investor and entrepreneur?
02:03:20
I think it just feels like a backwater. Backwater. Yeah, it's an economic backwater.
02:03:25
So, don't forget in the late 90s and 2000s, it was this entire center of the world's financial industry. It was the
02:03:32
center of the world's advertising industry. It was some of the, you know, all the creative industries. It was all
02:03:37
based in London. We lost all of it. Why? Regulation.
02:03:42
So, you think it's the government's government have misstepped? Yeah. Yeah, the government misstepped and the US took the banking system back
02:03:49
because how they treated uh capital requirements in the UK and Europe was different than the US and they managed
02:03:55
to get the Wall Street back to Wall Street. It all moved. I was working for Goldman Sachs, London was their biggest office. Same for JP Morgan, Morgan
02:04:01
Stanley, everybody. And we just stopped it and now we're seeing it again. We've got new industries rising. We've got AI,
02:04:07
crypto, you know, AI came out of Cambridge. I think it was, you know, the Google Deep Mind. And I think it was
02:04:13
Cambridge University for most of that stuff. And we dropped the ball. We dropped the ball in the finance
02:04:19
industry. We dropped the ball in AI. We get this massive talent density coming out of Oxford and Cambridge, Imperial
02:04:25
College and all these others. And we we don't use it. They all move to the US. We had the crypto industry of which we
02:04:30
were part of that. We we dropped that ball too. We dropped the whole ball on everything. And Europe is actively
02:04:36
shutting the door on every opportunity um by saying we don't want to do this
02:04:42
there. Don't forget they're a nation of old people now, most most of Europe. So they rather just not have any change.
02:04:48
But if we go back to that economic formula for GDP growth, population growth is the key driver. You need a
02:04:54
growing population over time, but it just needs to be in a done in the right way. So they're blaming that, but the
02:05:00
whole economic machine is because nobody's had kids. That's the pro the demographic problem is the structure of
02:05:06
everything. And the problem is is nobody's had kids. So you don't have economic growth. So then you try and
02:05:11
bring in new workers to create growth. You don't want that. So they get thrown out. Meanwhile, the economy slows down.
02:05:16
People get pulled back. They don't want to take risk anymore. The whole system is now having to pay for the National
02:05:22
Health Service to pay for these old people. There's not enough kids to support all of that. The governments are getting more in debt. Bond yields are
02:05:29
going up. Everyone's like, "What's going on?" It's all been a function of demographics from day one.
02:05:35
Closing arguments. Um Humphrey, closing position. What's the most important thing people should be thinking about? How would you round off? Is there
02:05:41
anything that I didn't ask you that I should have asked you? Yeah, I think that my my personal philosophy is just that personal finance
02:05:47
just comes down to your income minus your expenses. So, know those two intimately. Know how to drive both of
02:05:53
those two. And then just really watch what you spend your money on, right? Like the car pay the average car payment in America is 745 a month. Stay away
02:06:00
from that if you can. Try to try to be reasonable. Everything is about about being consistent and reasonable. And I
02:06:05
think those small decisions compound to a much brighter future. real for me
02:06:12
first thing is educate yourself. You don't know you know we talked about what do your finances look like? What's your bank account look like? What are you
02:06:18
trying to achieve? Right? So educate yourself. Learn about investing. Invest above all things. Investing above saving
02:06:25
is the only way you're going to get there because if not your money goes down. And then just do it. Make a trade.
02:06:31
Make an investment. Fail. Learn. Do it again. And do it again. And keep learning, educating. And then surround
02:06:38
yourself by a good network. Just be whether it's
02:06:43
even on Twitter, on social media, find a network of people that you can learn from. Add to the network and those
02:06:50
things you will you'll get ahead. You can't fail if you educate yourself. Just get started and then learn, keep doing
02:06:58
it then and just grow a great network and buy Bitcoin obviously. What what what coins do you own in
02:07:04
crypto? So I am so this is going to get more contentious now. So I actually don't I own just one Bitcoin for
02:07:09
posterity sake. Oh Okay. So I own I'll delete the episode then. My I am own mainly Sooie which is the
02:07:17
which is the um the crypto network that came out of Facebook. But I'm also on the foundation as well.
02:07:22
But I actually put most of my liquid net worth into that. Uh and then I own a lot of digital art on Ethereum.
02:07:29
Um because that's a a long-term store of value for me. NFTs and I yeah NFTs and so I've moved around
02:07:35
a lot between you know Bitcoin, Ethereum, Salana and Sooie I don't trade
02:07:40
so these are long-term holds I might change once every two years change my allocation so but it's all generally all
02:07:47
the big big tokens and just pre closing statements well first off thank you Rahul Humphrey
02:07:52
and Stema for putting this together this is and to add on to everything that you guys said for me I think there's a lot
02:07:58
of for lack of a better word crap um on the internet of people romanticizing and
02:08:03
fantasizing how easy it is for passive income or for insane levels of wealth where it becomes uh sometimes hard to
02:08:12
see how you could actually do that. And what I'd like to say is look, nothing comes easy, but change can always be
02:08:19
made regardless of where you are, what your background is, where you come from, but it's going to take work. And I think
02:08:24
the best thing to help your outcome to get to where you want to go is hard work, sacrifice,
02:08:32
put in what I call a decade of sacrifice. That way you can have uh what most people dream of. And the only
02:08:39
reason why you're able to get there is because you're willing to do what the majority of people are not willing to do.
02:08:44
And in a word, AI positive about it or pessimistic? Positive.
02:08:50
Best tool we've ever been given. Optimistic. Yeah. Okay, good. Refreshing. Very refreshing to you.
02:08:57
Thank you all so much for giving me your time today. I'm I'm going to link the top three things that you tell me we
02:09:03
should direct the audience to below. So, I'll ask you after this conversation to give me three things where people can find you. The first is going to be your
02:09:09
channels. So, your channel's on YouTube. You're all very large YouTubers um and have incredible channels, channels that I followed for many, many years. Um is
02:09:16
there anything else that you guys would like me to link that you think is going to be pertinent to the audience? Well,
02:09:21
we have a free newsletter for investors that we publish every single day called Market Briefs. I think that would be a
02:09:26
great one. I'll link that one as well. Anything else? Real Vision is a simple place. It's a simple home for everybody to find what
02:09:32
they need. So, the website realvision.com or realvision.com. Okay. And Humphrey. And I'm building a website right now.
02:09:37
That's uh basically my my guide, but it's my guide on different financial products. So, it's humphreguide.com.
02:09:44
Humphregu.com. Appreciate it. Thank you so much.
02:09:51
[Music]
