i have some bad news for you you are
probably not going to be rich
not a particularly positive message to
start a video on but it's something that
people need to hear from time to time
unfortunately this is not something that
most people want to hear
so there is no shortage of people out
there telling you exactly the opposite
normally as a way to pitch some kind of
product now of course most of you
watching know that youtube ad saying
that you can earn six figures a month by
selling on amazon forex trading or
flipping real estate are full of
but they still all follow a pretty
similar routine
hey you can get rich as long as you are
willing to do
xyz while listening to the advice i give
you
again when it turns out that this advice
is something that you have to pay for
most people get wise to the fact that
it's all just a massive scam
of course some don't which is tragic and
there really genuinely should be more
done about this
but that's a story for another time or a
coffeezilla video
instead the focus of this video will be
on a group of internet gurus with much
more influence
a much larger following and much more
credibility
the personal finance personalities so
it's time to learn how money works and
find out why you probably shouldn't be
learning to work your money like these
popular youtubers might suggest
now i want to preface this by saying
that i personally enjoy watching people
like ram stefan
andre dick and from time to time even
dave ramsey as a guilty pleasure
none of these guys are outright
nefarious scammers like the hustle bros
you'll see pitching an amazon automation
course
and this automatically makes them a
million times better than this other
group
what's more is that they are genuinely
entertaining they give people a sneak
peek into their own success while
presenting relatively dry content in a
way that is funny
and easy to understand the problem is
though is that personal finance
should be boring there is a common
saying that everything you need to know
about personal finance should be able to
fit on a postcard
and some authors have actually done it
but when you are committing to an upload
schedule of 15 minute videos every
single day every single week
you are going to run out of things on
that postcard to talk about
now this is no good because as these
people will show you
they make millions of dollars a year
from their daily videos
so they are not exactly going to turn
around and say oh well i've taught you
everything you need to know
so long and thanks for all the fish of
course not
that would be silly and i'm sure any one
of us in their position would do the
exact same thing that they are
which is writing that damn gravy train
for as long as they can
but to do this they need to create more
and more content than what this postcard
can hold
so they branch out into a few different
broad categories
personal stories about their success
reactions predictions
and making up new lessons now to start
off with let's look at the least
problematic of these formats
reaction videos reaction videos are
everywhere on youtube
and they get a bit of a bad rap but when
you think about it this video format can
range from
absolutely terrible all the way to
genuinely value adding and informative
the videos that people like graham or
kevin make are normally towards the good
end
they will normally react to personal
finance by watching video series
like millennial money or they talk about
high-end real estate which is obviously
an area of expertise for these guys
there are others like dave ramsey who
will do live reactions to people that
call into his show and despite this
being a bit repetitive
they aren't really doing any harm if you
want to argue that these live interviews
are not really reaction videos
just think to yourself am i watching
this to see a solution to the person's
problem
or am i watching this video to smugly
partake in dave's reaction to this
person's situation
even still this is just a bit of light
entertainment and who knows
maybe we'll pick up a nugget of
information along the way
no problems there apart from when these
reactions turn
into predictions financial predictions
are almost impossible to make
even the largest financial firms in the
world with teams of phd quantitative
analysts
struggle to outperform regular market
returns consistently
if at all it's therefore frustrating to
see someone like me
kevin make predictions about the future
of a highly volatile stock like tesla
before his audience
and yes i know he gives a standard
disclaimer that this
is not financial advice don't sue me bro
but when a supposedly reputable figure
that positions himself
as a personal finance expert brings up
an official looking spreadsheet and
predicts 100 growth within the next 12
months
well it's not unrealistic to see how
some of his impressionable audience
would follow his
not advice now this is just one of the
most blatant examples
but all these personal finance
personalities is guilty of giving this
not advice pieces of advice throughout
their content
this can range anywhere from investing
to dividend stocks all the way up to buy
a duplex
and rent out the other side both pieces
of advice are not necessarily bad
but are grossly over-generalized and
make no accommodations to the financial
situation
of their viewers now my friend richard
over at the plane bagel
actually made a video last week that
explored the issue of picking stocks and
why he doesn't offer stock picks
on its surface this should be taken as a
bit of wisdom considering it is his
literal career to analyze investments
and he also has taken the lucrative test
to become a chartered financial analyst
i was actually considering not making a
video after seeing that one because i
thought mr bagel did a pretty fair and
well-rounded argument against all of
this
but then i saw this
all right this is where the serious
issue starts
making up new rules for people to follow
i hate to break it to you
and i truly do mean this in the nicest
way possible but graham steffen is an
ex-real estate agent and a social media
influencer
he does not know the five best
investments to make you rich
for that matter nobody knows any
investments that will make you rich
and if they did they sure wouldn't be
sharing them on a youtube video
despite popular opinion these days good
investments should not double overnight
they should instead continually provide
value over many years or decades and
return that value back to the investor
over the same time period
the generally accepted rate of return
for a well-diversified portfolio is
anywhere between six percent
all the way up to 12 percent if you are
doing really well the bad news here
is that it's not going to make you rich
just like we said at the beginning of
the video
well actually it's not going to make you
rich unless you have a decent income
already
and are very disciplined about
consistently contributing to this
portfolio over a long enough time period
for compounded interest to do its thing
even then it will make you old and rich
which is not what people want
what they do want is to hear about how
the people talking to them got so rich
which is where we get the last type of
concerning content
personal stories about their success now
who doesn't love a good success story
especially when it's the tale of a
scrappy underdog proving all the
naysayers wrong
which is something most these guys have
graham didn't get into college
meet kevin started from less than a
thousand dollars dave ramsey went
totally bankrupt and the same is true
for the rest of them
none are turning around and saying i
studied like crazy through high school
got into a good university and became a
doctor or an investment banker
why well because their backgrounds are
much more relatable to the average
audience which makes achieving fortunes
for that audience
sound much more attainable now that's
not to say that these backstories are
all a lie
but more so that they are just the
product of survivorship bias
for every dave graham and kevin there
are thousands of people that didn't have
the unique set of skills and the luck to
break into the incredibly lucrative
roles they found themselves in
sure graham didn't go to college but he
did work his way into an incredibly
prestigious real estate firm
so what he lacked in book smarts were
obviously made up for with personal
branding
and good old-fashioned sales ability if
you are a fantastic salesman
then sure go ahead there is actually a
widely accepted array of high paying
jobs with varying levels of effort to
certainty
sales sit somewhere towards the riskier
side of this array
something that is very high effort would
be becoming a surgeon or dentist
it takes years and years of medical
school but once you are practicing you
are all but guaranteed a high income in
a standard of living for the rest of
your life
of course at the other end of the
spectrum is something like becoming a
rock star famous actor
or yeah even a youtuber it doesn't take
too much effort when compared to years
in med school or 100 hour weeks in an
investment bank
but it's also incredibly unlikely to pay
off whether they do it intentionally or
not the personal finance personalities
perpetuate the narrative of dropping out
of school and building your own destiny
which has worked well for them
but will not work for most people it
also sounds eerily familiar to the
promises made by the more despicable
side of the financial gurus
drop out of college now there is one
last problem with all these personal
backstories
and that is that they are used to
justified all these other pieces of
content
to demonstrate this we are once again
going to pick on meet kevin
one of his most popular videos is the
tale of how he built up his property
portfolio from zero dollars to 5.5
million dollars by the age of 27.
you are welcome to go and watch the
video but the tldr is that through a
series of flips and equity releases
he built up a highly leveraged position
of real estate assets that were cash
flow
positive sounds great but it is
incredibly risky
take a five to one leverage position in
the stock market and most people will
think you lost your mind
but take a ten to one leverage position
on a house and you're an investment
genius
most people don't realize how risky real
estate can be
now of course kevin was lucky he started
investing at the start of one of the
longest real estate bull runs in history
and in his defense he has since
deleveraged his position significantly
but this is the definition of
survivorship bias
nobody is going to make a video of how
they lost their life savings trying to
flip
homes had kevin started his investment
journey in 2004
he certainly wouldn't be telling stories
of financial success on youtube
if anything he would be lucky to be an
extra on the big short
you just keep going to the bank and you
ask for more money hey there's a bubble
now if i sound overly cynical let me
follow all this up by saying that given
the opportunity to make as much money as
these guys are by uploading videos to
the internet i would sell out so damn
fast
sometimes youtubers can sound like
salespeople but they are still selling
something
it might not be a course or an ai that
can trade forex for you
or even a book but they are selling you
to keep on watching
bleak realities about the tough road to
reliably create wealth doesn't quite
grab the attention like an open mouth
and flashy headline
but in a world where attention is the
new currency you should spend yours
wisely
if you're watching this video you're
still like all this guy's investments is
because of his youtube money
you're 100 right anyway
if you do happen to get rich by
following in their footsteps you should
follow that all up by commenting how
dumb i am on this video and watching our
video on what to do next after making a
few million dollars if you did enjoy
this video
please consider liking and subscribing
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