He said tony beyond a shot of it's a doubt is they don't
take full advantage of the power of compounding
he said einstein said it was one of the single greatest inventions of humanity
understanding it can change everything in your life and
everybody says they understand it he told me
but very few people tap it he said understanding something intellectually
it's not the same as doing it if you're doing it then you know it if
you understand intellectually you know like i've said before that and three
dollars will almost buy a starbucks buck of coffee
so what you really have to understand is how it works and so i asked him said but
what's the best way to teach it and he went into this riff and you know
he's in his late 70s and it was kind of like
i've read him this him described this before but
watching him do it there in front of my eyes
is his eyes sparkled he got all in state you can see he's done this so many times
but it's like a great musician you know it's like a
bruce springsteen going off and doing a riff there directly for you
and his riff was to tell me the story about william and james
he said let me just give you a real example let's take two guys william and
james and let's say william starts out at 20
years old and he starts taking a little bit of his
money and just locking it down and setting aside and investing it
let's say he takes 300 a month four thousand dollars a year
and he puts that aside and he doesn't touch it and he puts in the stock market
and let's say over time he averages 10 percent and let's say he does in an
index fund so he's not being taxed continuously
so it grows tax-free until the time he's going to take it out
and let's say he makes that investment stay with me now willie makes that
investment from the time he's 20 puts away that 300
bucks a month at fourth 000 a year until the time he's 40
he never makes another investment again that's it and then we see what he has at
age 65 and then on the other hand he has a
brother named james and james he doesn't get started when
he's 20. he doesn't get started when he's 30. he waits till he's 40 and then
he starts to say god better start doing something so he does
the exact same thing his brother did he starts putting away 300 a month 4 000
a year roughly he gets the same exact return let's say
of 10 in a tax protected environment and at 65 from 40 to 65 is 25 years so
he spends 25 years putting money in the system
think of it 4 grand times 25 years 100 000 his brother
william he only did this for 20 years 20 to 40
20 years times 4 000 80 000. so the second brother william and james
james put in significantly more money into the system
done it longer but at age 65 they both got the same
rate of return who do you think is doing better off i
know you know the answer but the real question is
how much better off and that's what most people have no clue of
william who started earlier and quit earlier has
600 percent more money not 20 not 50 percent not 600 more money
at age 65 both these men who got the same rates of return but one
started earlier and quit earlier he has 2.5 million dollars for william
and james who started later and put more money into the system but he started
later so he got less compounding he ended up with 400 000 a 2.1
million dollar difference now that could be a difference between total financial
freedom for somebody or doing okay for a while and at 70
having to get a job to be a you know somebody greeting people at
walmart see this understanding of compounding is how you
can free yourself from this idea that somehow
you've got to make this giant score because the more you try to create that
giant score even if you get it it usually isn't kept how can i say that
because i've been in this business working with people some of the greatest
entertainers actors musicians sports stars government officials who go
off and make money afterwards and i can tell you one thing rarely do
they keep it because they've never understood how to really tap into this
power and i'll give you one more example because bert gave it to me at the time
he said ben franklin when he was you know living alive there
were two cities that were kind of like sister cities for him
it was philadelphia and boston he went back and forth between them they felt
like hometowns to him so when he died in 1790
he gave both cities a thousand dollars but the control and the guide was they
couldn't be touched the money had to be invested
and to be left alone for a hundred years after a hundred years
he already calculated what he knew would be worth he said they could both take
out a half a million dollars that one thousand would be worth five hundred
thousand he had calculated or more it was actually worth a lot more and
then at 200 years they have to leave the rest in
and let it accumulate and at 200 years they could take all the money out for
both cities well both cities got a half a million
dollar hit from a thousand dollar investment 100 years out
that's pretty amazing mathematics when it grows you think about that
nothing was added to it it was just natural interest growing the growth that
happened in the market and then what happened in 200 years that
a thousand dollars had grown to 6.5 million dollars even though they'd
already taken half a million out and it didn't get to compound for 100 years
6.5 million that's a 3 000 return so compounding is amazing and i know
you've heard of it i'm sure you've got examples you've heard but what i really
want to do in this particular session with you is get you to take
step one to financial freedom and that is to start tapping this power
and the way you're going to tap this power is give up the illusion that
you're going to get this home run i'll help you with the home run don't
most americans really like instead of fight say
work earn the money spend the money work that cycle is the worst cycle on
earth and that's a cycle i want to get you out of
right now today by tapping the power and making step one the most
important investment decision in your life so what the heck is it
well what if you decided that you were no longer going to be a financial trader
what are you talking about tony i'm not a financial trader i don't invest in
stocks i don't i don't do that stuff all day long most
americans are financial traders even though they don't think of themselves
that way why because if you're trading time for
money you're making the worst financial trade
in the world your goal and the goal i have for you with this
book is to make money your slave you want money to work for you so you
don't have to until that happens you'll always have
some level of uncertainty or fear or stress
or insecurity because there's only so many things that can happen that mess up
your income flow and you're in trouble what would it feel like if you could
build what i would call a money machine something that made money while you
slept something that literally every day of your life
even if you weren't working could provide you an income
without ever having to work again because you ask people all the time what
are you investing for and people say well i don't do my 401k
so someday i can retire or i'm investing so that i can get
you know more assets or a bigger nest egg no you're not
you're investing for one thing and one thing only you're investing because you
want an income you want an income that will last longer
than you live in fact i mentioned before the number
one fear of baby boomers today is that not they're going to die that's
their number two fear the number one fear is i want to run out of money while
i'm alive and millennials have the same fear
because according to statistics about 70 to 75 percent of the people are
going to run out of money before they die and we're all living longer so the
chance of that happening is off the charts unless you and i create
a money machine what does that mean it's really simple
the most important financial decision of your life
is deciding that a portion of all the money you earn in your life
is yours to keep that you're not going to give it up it's for you
and for your family and you're going to keep a portion of what you earn forever
and you're going to grow it that you're not going to give it to you
know kate spade you're not going to give it to the gap
you're not going to give it to whoever you normally gave it to you're going to
keep that for yourself and you're going to grow it
into something that literally will make it so you don't have to work
as long as you live i call it a money machine because it's really
simple if you were just thinking of yourself right now as you're a money
machine if you take a look at this graphic here you are you worked your
tail off and what happens you use your efforts to
get money you trade time for money you take work and effort for money
but what if you just did something so simple you already know to do it you're
just not probably doing it the level that you could
what if you made a decision that a percentage of what you earn
you're never going to see it it's just going to instantly and automatically be
put into building this money machine where
you're going to take a portion of what you earn
10 15 8 20 you get to decide the number but a
proportion of what you earn no matter what before you ever see it
it's almost like a tax but the tax is paid to you instead of the government
the taxes for your future self the tax is about creating financial
freedom so you're not like most people who can end up their life being stressed
out all the time where you're the person that can do what you want when you want
where you want with whomever you want because you got freedom how do you get
there you take a portion of this money that you've done right now and you've
earned you automatically start to fill up
this money machine and just visually imagine
as you work more goes in you feel it up up and there's a point
a trip you know a tipping point if you will we call the tipping point a
critical mass there's a point where the money you've
saved and invested will have grown to a point but there's
enough there that if you were to get just a small
return on your money in a secure environment
the income off your investments just the income the investments are still there
the money is still there that critical mass that nest egg is so big
that the interest you make on it alone that interest
gives you the income you need to live your life as long as you live without
ever having to work again as long as you live period
and i've never ceased that adventure i'm still going for it in the 90s i want to
get better and better i want my craft to get better my
business operations to get better the things i do to get better
because once i picked up this simple formula i'm telling you it's easy to
figure out where the problem is if you go to work on it
now let's talk about personal development and in helping kids
understand personal development i always start with money
now money's not the only place to start money certainly isn't the only value but
we've all got to start somewhere and money's something you can count
right kids are interested in money okay a lot of things are a little tougher to
measure but economics is pretty easy right because you can count okay
somebody says how are you doing so i don't know
let's count now this is not the only count
i understand that there's a lot of other things to count
but to see if there may be some errors in your judgment
and lack of disciplines in your life we might as well start with
money because it's so easy to count so let's just start there and see
whether or not maybe we have messed up okay so here's how i explain
it to kids we get paid for bringing value to the
marketplace key to understanding economics
we get paid for bringing value to the marketplace
marketplace is also described as reality
reality the marketplace now it takes time
it takes time to bring value to the marketplace but we don't get paid for
time it's very important for kids to
understand as well as adults we don't get paid for time
mistakenly the man says well i'm making about twenty dollars for an hour
not true not true if that was true you could just stay home have them send your
money no it's not true you don't get paid for
the hour you get paid for the value you put in the time
so we don't get paid for time we get paid for value now since that's true
here's one of the key questions of the afternoon
is it possible to become twice as valuable
and make twice as much money in the same time
is it possible to become three times as valuable as you now
are and make three times as much money in the same time is that possible
of course if you want to really emphasize something that's a good phrase
of course of course
okay now all you have to do to earn more money in
the same time is simply become more valuable
america's unique it's a ladder to climb starts down here what about four dollars
an hour
big argument last year in congress about the starting place should be five
should be five should be five well no it doesn't need to be five why
not start with four it's a ladder
right this is not a bed this is a ladder it's a ladder decline
it starts at four dollars now somebody said well should be five should be five
well maybe if you're going to stay at the bottom for the rest of your life it
probably should be fine
but that's kind of a pitiful way to live start and not grow
start and not change start and not become more valuable
hey the whole scenario of life is to start number one
and what become more valuable number two so america is a ladder to climb starts
at four dollars an hour and the more valuable you become you
just keep moving up the ladder top income last year what 52 million
guy that runs disney
would a company pay somebody for one year's work 52 million dollars and the
answer is of course this is one of those of course
places of course if you help a company make a
billion dollars would they pay you 52 million the answer is
of course it's chicken feed i mean it's not much money
now why that much money because he has become
so valuable
now why would we pay somebody only four dollars an hour
they're not very valuable to the marketplace now we've got to make that
distinction to the marketplace might be a valuable brother a valuable
member of the community a valuable member of the church
valuable member in the sight of god to the human family of course
those kind of values but to the marketplace which is called what
reality reality is if you're not very valuable you don't
get much money those are called the facts
i mean that's how that is well then how do you get more money
simple answer somebody says well i'll go on strike for more
well
here's a major problem with that here's a major problem with that
you can't get rich by demand
somebody says well i'm waiting for a raise i'm telling you it's easier to
climb than to wait for a raise why not just
become more valuable rather than wait i'm telling you that's the key to all
good things becoming more valuable why would we pay somebody four
hundred dollars an hour they've become more
valuable to the marketplace
see how this works i'm telling this stuff is so easy
this is america it's a ladder
how far is it from four to five i'm telling you it's not far four to five
dollars an hour if you work for mcdonald's haul out the
trash they'll pay you five dollars an hour
if you whistle while you haul out the trash they'll pay you five dollars an
hour i'm telling you you'll get an extra dollar just for a
good attitude yay mcdonald's where the hat incredible
five dollars and then you just keep becoming more valuable more valuable
more valuable
now how come how come i got a telephone call worth millions
i had become valuable now i'm a farm boy from idaho
i was raised in obscurity one year of college and i thought i was thoroughly
educated made all kinds of mistakes galore at age
25 the creditors are calling me saying hey you told us to check within the mail
i got pennies in my pocket i got nothing in the bank i'm behind on my promises
how come i get a telephone call five years ago and it's worth millions
i changed i changed i turned my life around
is it possible to become worth millions speaking economically now there's a lot
of values to become but let's just talk economics is it
possible to become that valuable the answer is
of course of course now let me give you the secret
show said here's the secret mr own learn to work harder
on yourself than you do on your job once i got that it turned my life around
learn to work harder on yourself than you do on your job
he said if you work hard on your job you'll make a living
if you work hard on yourself you can make a fortune
wow if you would have known me at age 25 you would have said jim rohn's a hard
worker if you'd have known me you'd have said that
i'm the guy i don't mind coming a little bit early stay a little bit late i don't
mind that you'd have said well jim rohn's a hard
worker you say well how come he's got pennies in his pocket nothing in the
bank and behind on his promises well i was a hard worker but i was
working hard on my job not on my cell i'm telling you if you'll
learn that simple little principle and start the process today
latest tomorrow i'll give you tonight to think it over
and start this whole process of personal development work on yourself
make yourself more valuable to the marketplace i'm telling you
you can so dynamically change your income
and economics is the least of the values that you can start earning in terms of
equity if you'll start working harder on
yourself than you do on your job work hard on yourself and
develop the skills work hard on yourself and develop the
graces all of the stuff necessary to become
more valuable to the marketplace i'm telling you your whole life can explode
into change promotions no problem becoming more
valuable to the company i'm telling you no problem money no
problem economics no problem future no problem if you just go to work
on the right thing not get things out there to change don't
try to change the seed don't change the soil
don't change the sunshine don't change the rain don't
change the mix of seasons let the miracle of everything that's available
work for you and start working on the inside work on
your philosophy work on your attitude work on your personality work on your
language work on the gift of communication
work on all of your abilities and if you'll start making those personal
changes i'm telling you everything will change for you
you