(soft music)
(register ding)
- Stocks.
There's stocks, index funds, mutual funds, options.
What I notice is rich people they like stocks,
they have a stock portfolio
because of liquidity that they could sell
and get cash anytime they want.
They can turn their shares into money
and also in some cases of course,
future earnings and appreciations.
Sometimes they invest for the dividends.
So dividend stocks, so they have paper assets.
(air whooshing)
Now most wealthy people,
they either have created their wealth through real estate
or they hold their wealth in real estate.
I'm talking about rental properties,
it could be condos, houses,
commercial properties, apartment buildings.
Right, there's so many different kinds of real estate.
It also could be land,
land that they lease out to farmers or vendors.
It could also be mortgages,
we call them notes, right, papers.
That could be also part of the investment strategies.
It could also be parking lots, those are cool.
Or self storage units, those are cool too.
Or it could be REIT, R-E-I-T,
Real Estate Investment Trust, right.
So what I notice is they have their money,
they hold their wealth in real estate, one form or another.
(air whooshing)
100, 10, three, one.
It means you look at a hundred deals,
100 potential investments,
you might break it down into 10,
from that 10 you will narrow
down to three that has got possibility
and then you might do one.
So everyday that every investment
that comes across my table, I turn down 99.9% of them.
I look at hundred and hundred and hundreds of investments
and I do very selectively, very selective, just a couple.
Do you just anything that looks that comes across the table
and see online, "Oh, that sounds pretty good."
Or if you had to buy a stock,
you fucking look at two stocks and jump into one.
Or you buy a piece of property,
"Hey, that looks pretty good."
Hey I look at three properties and you jump into one.
Again, you're not doing your research.
Always remember, investigate before you invest.
(air whooshing)
Imagine this, you are, let's say,
making (air whoosh) $2,000 a month,
(cash register dings) $24,000 a year
but by using the $1,000 and you invest in yourself,
improving your skills, improving your confidence,
improving different areas of your life
so you can deliver more value to the marketplace.
Now lets say hypothetically you double income.
(air whooshing) (cash register ding)
Instead of making 2,000 now you're making $4,000 a month.
$4,000, that's $24,000 in additional income to you.
That kind of return, from $1,000 to $24,000 a year,
my question is,
what kind of investment would give you that kind of return?
None in the world.
(gavel pounding)
And that's just the first year.
Once you get good you keep earning and earning
after year after year after year,
you're still producing income
from something that you learned
could be two, three, five, 10 years ago.
I am still creating wealth,
(bell chimes) (air whooshes)
earning more from the skillsets
that I developed many many many years ago.
(bell dings) No one can take that
away from you.
The government cannot tax it,
no one can steal that from you.
It is yours.
It is yours! (bell chimes)
So that $1,000, invest in yourself.
You will never go wrong.
Your first $10,000, invest in yourself.
Reinvest in yourself, believe in yourself.
(air whooshing)
When you have a habit accumulating money,
your accumulating more money.
- Right.
- When you don't have the habit accumulating money,
you always have no money.
- Right.
- It doesn't matter how much money you make.
- Okay.
- So that's the second bucket.
- Second bucket.
Got it. - Second bucket, okay?
The third bucket is the investment bucket.
- Okay.
- So that's also 10%.
(air whooshing)
So 60%, right? - Yes.
- 10%, 10 with this, that's your,
think of that's your future,
that's your retirement.
- Got it.
- So with this money, pile on top, while pay yourself first.
This is the "Pay Yourself" bucket, that 10%.
Right? - Got it.
Okay - So it's that 10%.
(cash register ding)
And then you have 10% is what I call your "Learning" bucket.
- Okay.
- This is (air whooshing) where you learn your skills.
- Right
- When you go to events, get coaching,
seminars, online courses, 10%.
So imagine you have a thousand bucks, right?
600 bucks goes into the first, necessities.
- Yes.
- Right, then you have a hundred bucks
goes into the emergency.
- Yes.
- A hundred bucks goes into investment.
- Right.
- A hundred bucks goes to learning.
- Right.
- Could be reading a book.
And then last one, the last 10%,
(change falling) (bell rings)
that's your "Fun" bucket.
- The fun bucket, okay.
- That's your, that's your Montblanc pen,
that's your chutoro, that's your sashimi.
- It might be a little bit big.
(laughing)
- That bucket might be a little bit big right now.
- It's a little bit big, right?
- It's a little bit big right now.
- A little bit big.
- If I'm honest, it's a little bit big right now.
- So then you know if it's 10%, then it's no guilt.
Right. - Right, okay.
- So when I buy something first, like AP watch,
- Yes.
- I use the "Fun" money.
- Got it.
- I do not touch all these other money.
- Got it, okay.
- 'Cause then, there's no guilt.
But if you don't put it in the bucket,
it's very easy to,
"Oh well" - Right.
- You know, I should take that vacation.
Suddenly, well, your "Learning" bucket, that's gone.
- Right.
- Your "Emergency" bucket, that's like next to nothing.
(air whooshing)
When this requires you to sit down, and you do it,
it won't happen, I'm just telling you, it won't happen.
It has to be done automatically.
- So, talk to the banker.
- Talk to the banker and say...
You're banker will look at you weird and say,
"Why did you set up like four, what the hell is this?"
Right?
And then you're like, you gotta pay some little,
the couple bucks for the accountant's fees,
and forget about that stuff, it doesn't matter, right?
It's the habit of it.
So then you know, cause then you have fun with this.
- Okay.
- At first when I did it, I had no money, right?
- Right.
- But I did it, it was 1%.
- Yeah.
- 1% just emergency, right?
I was spending more on learning,
but I was just, no money cause I wasn't there.
But I still do it.
And then it's like, "Oh, 1.5%, 2%, 3%, 4%"
Right?
And then to more and more.
One person inspired me so tremendously.
Sir John Templeton, from Templeton Fund, billionaire.
He started off investing 1% of what he earns
- Yes.
- And he spends 99%, not gonna have a lot of money.
- But before he passed away--
- Yes.
- He was only spending 1% of what he earns.
- Wow!
- And 99% invested.
- Wow!
- That's like he reversed that.
So you gotta think about...
And then you get, cause then you'd be excited
about looking at
- Your numbers
- The emergency fund.
Like, "Oh yeah." - Yeah.
- You feel good like, "You know what? Things are okay."
If something happens, I can hap...
I can take care my family, I can make that happen, right?
- Now the emergency fund is just like whatever I paid off
on the credit cards I guess, you know?
- That's what--
- I mean yeah, sure, I may have some good credit
but, yeah, that's the only emergency fund,
but it's not really that much.
- And then you look at your investments,
and you're like, "Oh, holy shit! I got next to nothing."
Most people have next to nothing.
- Yeah.
- Right.
And they're like, "Oh yeah."
That's why they think, "Let me buy some stocks
or crypto currency." - Crypto,
and all that stuff, right.
(air whooshing)
- But, when you look back at the VC private equity,
and especially hedge fund rates of return,
the last 10 years, for the first time,
for example, hedge funds underperformed the market indices.
(affirming)
They underperformed because when you set up a fund,
which I had, a third go bust/bankrupt,
a third break even, and a third make money.
- Out of the entire portfolio.
- Correct, out of the 100%.
So you're hoping that the third that makes money,
you'll find a Facebook, a Google, an Uber, et cetera.
But, out of 100 deals that you look at,
you might invest in two.
And just a fraction of those two
are gonna be those high performers.
But there is no shortage of money
because the people with the wealth,
four or 5% that control 85% of the money on the planet,
don't like to rates of return
that they're getting in the banks,
which are next to nothing.
- Yes.
- Okay, and so they're going to venture capitals
who allegedly, historically have given more rates of return.
So that cash, as an aside,
for every dollar that you deposit in a bank,
they can lend it out between 20 and 40 times.
I wanna say it again.
Between 20 and 40 times, depending on the leverage
of their balance sheet.
Okay, so the velocity of money,
which you don't need to understand,
but the velocity of money
is 20 to 40 times greater than Joe going home
and putting the money in a can
and burying it in the backyard.