What's up everybody, I am Jaspreet Singh, and welcome to
the Minority Mindset. You are a young professional and you want to be smart
with your money, this way you can be rich while you're still young, this way you
can enjoy your life, and be financially stress-free. But uh, how do you do it?
Well, you're in the right place because today, we're gonna talk about the best
ways to use your money when you're young to build your wealth, so hit that thumbs
up button, and subscribe to the Minority Mindset YouTube channel, that way you
don't miss our new videos every single week, and now, let's get into it. You can
think of building wealth kind of like rolling a snowball. You start off with a
small snowball the size of your fist, and you pack it real tight, and then you go
on top of a snowy hill, and then you start rolling the snowball and slowly,
slowly, slowly, after a little while it's gonna grow to the size of your face, and
now, you keep pushing it and rolling it, and it's growing a little bit faster, and
after a little while longer, you've realized that the snowball grows to
about the size of your hips, or to your hips rather, and you're pushing it and
it's growing faster, and faster because now the snowball is bigger, so it can
attract snow faster, and you're going, and you're going, and you're going, and then
oh my God! The snowball is about to roll over your house! The earlier you start,
the faster you'll be able to build this wealth snowball, which is why the best
thing to do in your 20s is to invest very aggressively, this way you can
build a machine that's making you money faster and faster each year. Time is so
important for your wealth snowball to grow, this way once you get it really big,
it can attract snow, or money, much faster. Like, Warren Buffett, one of the most
successful investors of all time, ninety nine percent of his wealth was built
after his fiftieth birthday. Before he was 50, he was still super rich, but
after 50 he became unbelievably rich. Now that you understand the importance of
starting young, the next thing you have to understand is that investing isn't
just something you do once. Aaand done. I just bought some stocks. Well,
I guess I'll check back in 50 years... Being a successful investor means making
consistent investments to your investment portfolio every single month,
even if your contributions are small. The best thing you can do is create a
financial plan for yourself, this way you don't have to tell yourself how much to
invest, your plan will tell you how much to invest each and every month, and I'll
grab my whiteboard so I can show you exactly how to do it. If you are young,
and you don't have a lot of financial responsibilities, I want you to follow
our 50/30/20 plan, which says you should be spending a maximum of 50 percent of
your income on yourself, you should be investing a minimum of 30 percent of
your money, and you should be saving a minimum of 20 percent of your money. So,
for every dollar you make, you can spend 50 cents, you can invest 30 cents, and you
should be saving 20 cents. If you have more financial responsibilities, like you
have people relying on you financially, it's gonna be a lot harder for you to
live off of just fifty percent of what you make, which is why you should follow
our 75/15/10 plan, which says you can spend a maximum of 75 percent of every
dollar you make, you should be investing a minimum of 15 percent of every dollar
you make, and you should be saving a minimum of 10 percent of every dollar
you make. Now, I know what you're probably thinking: "But Jaspreet, why are we
investing more than we're saving? I mean my math teacher told me that saving is
the key to building wealth". Well, sorry Billy. Your math teacher is
wrong. Saving is losing. Investing is the real key to building wealth, which is why
we're gonna be investing more than we save, and not just that, after you save
six months worth of expenses, so after you've put aside six months worth of
expenses in your savings account, you will not save another penny, because
saving is losing, and after that, you will double down on investing, and then take
this saving money, and invest it. And if you don't believe me when I say saving
is losing, I already made a video where I explain exactly why, and I'll link it in
the description below for you to watch after this video. So, now that you've made the
decision of how much money you should be investing each and every month, now it is
time for you to make a decision: how hard do you want to work? There are two ways
to invest your money: you have the active way, and you have the passive way. The
active way is when you invest in yourself. If you have a business idea, you
can be your own investor by taking your money and investing in your idea, or you
can buy an existing business through a franchise, or buy an online business,
essentially you are investing this money to create more income, but you are
actively working to grow your money through this business creation model.
Passive investing on the other hand is where you send your money to work, and
then you walk away, and you let your money do its thing, and that's it.
At first glance the answer might be obvious; Why would I want to do an active
investment if I could just be a passive investor? Well, the returns are very
different. If you are a passive investor, the returns tend to be a lot smaller
than if you were an active investor. Like, if you invested one thousand dollars in
the stock market, after one year, you can expect to earn an average $70 to $100
after a whole year of doing nothing except just sending your money to work. But, if
you took that $1,000 and you use it to start your own business, you could turn
that $1,000 into ten thousand dollars after one year. If you are young and want
to live big, well then this is your time to go the active route and take more
risk and put in that time. And, of course, this upside does come with sacrifice too,
I mean, it takes a ton of time and work to build a business. It can be stressful
and there's risk involved, so it's not for everyone. But, if you can build your
own profitable business and you can start this on the side or in addition to
your work, well now you will have more money to fuel your passive investments.
And if you're young, and don't have kids, and you're not married, it's a lot easier
to do this, because you have less people relying on you. Whether you decide to go
this active route or not, you have to do this passive investing, and there are a
number of ways to do this sort of passive investing. Whoa! A beard oil company just
went public. Let me invest in that! I'm a very simple investor; I don't like to
invest my money and then have to wait 10, 20, 30, 40, years to see a return on
my money. I want to start seeing my returns a lot sooner, which is why I
invest for passive income. In the stock market that means investing in companies
that pay dividends. Dividends are regular cash payments that companies pay you
just for owning them. Like, I used to own a lot of shares of the McDonald's
Company, and every three months McDonald's would deposit money into my
account, and I never had to sell a single burger. You don't need a ton of money to
do this, I mean, you can start investing with a couple hundred bucks and start
getting those dividends. No, you're not gonna become a millionaire off of your
dividends from a two hundred dollar investment, it's just gonna be a few
bucks, but some passive income is better than no passive income, and everybody has
to start their wealth snowball from somewhere. Now, my favorite way to invest
for passive income is to invest in income producing real estate, which are
things like homes or apartment complexes that I buy not to live in myself, but I'm
buying them to rent out to other people who have to pay me rent every single
month for living in my property. The thing that a lot of people get
confused about real estate is they think: "Oh, I don't really want to do this whole
real estate investing thing, because I don't want to have to clean toilets, and
deal with tenants, and do all of that". Well now, my real estate investments are
completely passive. What you can do is after you buy some real estate that you
want to buy as an investment, you can just hand over the keys to a property
management company—who don't necessarily want any money upfront, they'll just take
a percentage of your rent that you get— and then they'll handle all the work.
Would you be surprised if I told you that I already have a lot of videos on
real estate investing? Yes? Well, then my friend, you are easily surprised, because
I have made some videos on this, and I'll link them in the description below for
you to watch after this video. But, don't forget about the financial system we
created in the first place! If you're making an extra $1,000 a month from
passive investments, well you want to send this $1,000 down this financial
system again, this way you'll be spending some of it, you'll be investing a piece
of it, and you'll be saving a portion of it, until you save six months worth of
expenses, this way, you can live a little bit better, you'll be investing some more
so you can make even more passive income, and you'll get to your savings goals
much quicker. The key to making smart financial decisions is, one, understanding
what to do, and second, knowing what's happening in the finance and business
world, this way you can make smart money decisions, and that's why we created the
free Minority Mindset newsletter, where we break down the most relevant finance
and business news stories, and then we show you how this news affects your
wallet, this way you can be money smart. This newsletter is completely free, and
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