Despite everything that has happened last year, 2021 was the best year for corporations
since it was the most profitable year since 1950. New data show earnings jumped 35%
in 2021, while workers got an 11% bump. You can’t call that year a bad year when
profits are at their peak in 70 years. Now you know why we have so much inflation.
Even in 1971 when the USA abandon the gold standard, profits didn't surge this much.
But the problem is that not everyone is profiting from this surge.
45 percent of Americans don't own a single stock. These people didn’t just miss the
opportunity to profit from this enormous surge but also felt the effects of massive inflation,
which is really unfortunate. But even the 55 percent who own shares in the market
don’t own much. Most of the stocks are owned by a small minority. The wealthiest 10% of American
households now own 89% of all U.S. stocks, a record high that highlights the stock market's
role in increasing wealth inequality. That’s the nature of capitalism!
There is always going to be wealth inequality. We have tried multiple systems over the centuries
but we came to a conclusion that capitalism works the best because Soviet Union’s experience
with socialism was enough to let the world know that a centralized economy isn’t sustainable.
Even communist China has realized that early and integrated capitalism within its economy.
So if you want to succeed financially? If you want to be in the top 10 percent of
who owns most of the stock market? If you want to master the game of money?
Then give this video a thumbs up and let's dive in.
Capitalism There are a lot of reasons why people
are struggling to become financially free but all of them come down to one basic reason - they don’t
understand or embrace capitalism. What is capitalism? How does it
work? Why is it so important? Capitalism isn’t complicated.
It’s as simple as it could be. All you need to know about capitalism is the
Capital. Those who have the capital keep getting wealthier while those who don’t. keep getting
poorer. That’s why you keep hearing things such as - the problem with society today is that the rich
keep getting richer and the poor poorer. Because that's how it's designed to be in the first.
And you don’t get out of capitalism by reading books or getting better grades or working harder.
Yes, all of these steps can help you to build the capital that will keep making you wealthier but
not necessarily, they are some out of many other actions that you can take to build that capital.
So if you are thinking or planning to become financially free, you should ask yourself a
straight and simple question - how do I build capital?
Everything else is irrelevant. The moment you answer that question,
you will have a clear guideline on how to get financially free.
The good news is that - there is only one way to do that - is by saving money!
Either you are going to do that by getting a high-paying job,
starting a business, or taking a loan. It doesn't matter, you gotta do what works for you.
Some people are so good at the game of money that they can take millions of dollars in debt to use
it as capital to make a fortune and then give it back. Others short stocks in the stock market
which is also one of the ways to use leverage to build capital.
But building capital is not enough, it’s just the first step. You should also learn how to
let that capital work for you. Some people are good at saving money, they can easily save for
a wild wedding or an expensive vacation or a car but then go back to where they started.
That’s why you should learn how to invest that capital! Once you do these 2 things,
you are going to become one of those rich people who constantly keep getting richer.
2. Risk is the foundation of Capitalism
When I explain to people what is the stock market and why is it important to invest,
the first thing I hear is - it’s risky! Why would I do that? What if I lose my money?
It’s weird that people want to make money but are hesitant to take the risk to do
that. You can keep that capital under your mattress,
but as you keep spending it, it will run out and you will go back to where you started
but by taking some risks and letting it generate some income, you can let it grow indefinitely.
Any form of investment does include some level of risk. The only way to avoid risk is to know
the future which is impossible but what’s possible is trying to predict the future based on the facts
that we have today, that's how we can calculate risk. And even then you can get it entirely wrong.
For example, investing in crypto is much riskier than sp500. Because one consists of
hundreds of pretty stable companies while the other is volatile and unpredictable.
However at the same time, with crypto, you can double your wealth overnight while it's
impossible to do the same with s&p500. That’s why sometimes you can make
a fortune with pure luck, the market could be so risky that you are either going to make a fortune
or lose everything such as the case with bitcoin back in 2010 or Tesla 7-to 9 years ago.
3. Capitalism is great when you are disciplined and hard-working and horrible if you are not
Capitalism isn’t great for everyone. It’s really bad if you are weak,
and undisciplined because the system rewards those who take risks and work hard.
That’s why it leads to a lot of wealth inequality since we are not born equal.
We are born with different talents and interests. If your talent is highly demanded in the market,
you will be rewarded accordingly, and vice versa. That’s probably one of the flows of capitalism,
that's the reason why pure capitalism almost never exists. It’s always some form of a mixture
of capitalism and socialism, especially in Europe where you have high taxes but
in return, decent public transport, free healthcare together, and free education.
Even if you take the US, you have public schools and community colleges
that heavily rely on government funds. With pure capitalism, no society can survive!
Even if a military is a form of socialism, you can’t expect everyone to build a private army
to defend himself, so we pay taxes to sustain a functioning military that protects us all.
We can debate forever that capitalism is far from perfect and that's absolutely true. Capitalism has
never been perfect, it always had its flow. There are lots of ways it could be improved but the
fact is - we live in this system and changing the system doesn't happen overnight, it takes
decades and an entire generation to create any meaningful change. But time isn't waiting for you,
so if you are aiming for financial freedom, you should learn how to win at the game of capitalism
as it's today and not how it should be. Thanks for watching and see in the next one.