The Personal Finance Podcast - 7 Habits of Highly Effective Investors

Episode Date: August 11, 2021

66. 7 Habits of Highly Effective Investors We launched a Youtube Channel! Check it out here. Master Money on YouTube. Got questions? Ask me on Instagram Here. @mastermoneyco This is the fastest way to get a response from me. You can also ask questions on TikTok @mastermoneyco Sponsors Thank you to Fundrise for Sponsoring this Episode! Check them out a fundrise.com/personalfinance  Thanks to Ladder for sponsoring this episode! Go to Ladderlife.com/pfp to learn more!  Thanks to our sponsor Manscaped (Manscaped.com) for sponsoring this episode of the podcast. Use code PFP20 at checkout for 20% off + Free Shipping! Thanks to Mini Cooper for sponsoring the show! Check them out at miniusa.com. Want to Support the Show? Follow on Spotify or Follow and Leave a 5-Star Review on Apple Podcasts! Today We Discuss:  How to remove emotion. What great investors do.  Should you try to time the market? What the best investors do to shelter their money from taxes.  More Episodes You Will Love:  The Stairway to Wealth (Where to Put Your Money In Order!) How to Become a Roth IRA Millionaire How to Become a 401(k) Millionaire Check out all the Stuff I Recommend!  M1 Finance Open a Roth IRA Personal Capital Free Wealth Management + Budget App and Fee analyzer!  CIT BANK (Best Savings Account) Best Personal Finance Books  The Simple Path to Wealth - J L Collins  The Millionaire Next Door - Thomas Stanley I Will Teach You To Be Rich - Ramit Sethi  Rich Dad Poor Dad - Robert Kiyosaki ** Some links may be affiliate links and we earn a small commission at no extra cost to you. We only recommend products we truly believe in.  Check us out on social fam!  Twitter Dollar After Dollar Instagram www.thepersonalfinancepodcast.com www.dollarafterdollar.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Local news is in decline across Canada, and this is bad news for all of us. With less local news, noise, rumors, and misinformation fill the void, and it gets harder to separate truth from fiction. That's why CBC News is putting more journalists in more places across Canada, reporting on the ground from where you live, telling the stories that matter to all of us, because local news is big news. Choose news, not noise.

CBC News. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center.

Find your advisor at IG Private Wealth.com. On this episode of the Personal Finance Podcast, we're going to talk about the seven habits of highly effective investors. I'm your host, Andrew, founder of dollar after dollar.com. And today on the Personal Finance Podcast, we're going to talk about the seven habits of highly effective market investors. If you have any questions about this episode, hit me up on Instagram and I'll link it up in the show notes and follow us on Spotify. Apple Podcast or whatever podcast player you love listening to this podcast tune. If you want to help out the show, leave a five-star rating and review on Apple Podcasts. Now today, we're going to be talking about these seven habits of highly effective investors.

And the reason why we're talking about these seven habits is I want you guys to understand, specifically if you're a new investor, what you have to do to become a great investor. because anybody can actually become a great investor, and I'll talk about exactly why, and you don't have to have a ton of skills to be able to do it. What you do have to be able to do is control yourself. And understanding how to invest is so incredibly important. You've heard me talk about it a number of times.

But if you don't invest your money, your dollars are losing value every single day. Why is that? Because inflation is eating away at your business. buying power. See, if you don't understand inflation, what inflation does, it's the rise in cost of goods. So let's say, for example, you've probably noticed as of late, your grocery bill is a little higher than it was last year. The reason why is because prices are inflating. So you could see that over time, this gets out of hand. And if you don't allow your money to grow and you keep all your

money hoarded in cash, you're never going to be able to get ahead financially. Because you can never save enough cash to actually live on for the long term unless you have millions and millions and millions of dollars in cash stashed away, which that is extremely difficult to do in a normal situation. Most people can't save up millions of dollars in cash without actually investing their money and allowing their money to grow. This is the power of investing because if you invest your money, you can combat against inflation and make a profit on top of that so that your money can grow and you can allow compound interest to get to work because if your money's not working for you what are you doing my friend see your boy is here to help you out your boy wants to show you how to

make your money work for you because if you're working day after day and your money's not working for you then you're missing out on a tremendous opportunity the biggest opportunity there is because compound interest is one of the most powerful things in this world and you have to take advantage of it if you spend all of your money you spend all your cash and you're you live paycheck to paycheck, what will change your life is just understanding the simple concept of compound interest. It's the eighth wonder of the world. And this is why you have to invest because you have to combat against this inflation because inflation will kill your wealth. And if you want to get wealthy, investing your money is the biggest thing that you have to do.

Now before we jump into this, if you're not sure what order to put your money in, should I pay off debt? Should I invest it first? When should I actually? do this, then we have an episode called The Stairway to Wealth. That episode is extremely important. One of the most important episodes we've done thus far, because the stairway to wealth will show you the exact order in the way to do things. When should you pay off debt? When should you build your emergency fund? When should you start investing in retirement funds and where should you put that money? That episode will help you out tremendously if you're in a position where I have no idea where to put my money next. And I'll leave a link to that episode in the show notes as well. So if you're

If you're interested in becoming a better investor, if you want to make sure that you're investing in the right things, if that is your cup of tea, then welcome to the show. Let's get into it. So the first habit of highly effective investors is that you have to remove your emotion. When it comes to investing in anything, whether it's real estate investing,

investing in the stocks, investing in dividend stocks, investing in the market, investing in index funds, investing in businesses, no matter what you're doing, if your emotions run high, you're never going to make the right decision because emotions destroy your cool, calm, collective decision making. And removing emotions from the majority of things in life, specifically when it comes to

money, is one of the biggest things that you can do. Why? Because emotions can cloud your judgment. And clouded judgment when it comes to investing means that you're going to lose money. You're going to definitely lose money if you have clouded judgment, and you're not going to make the best decision for you and your family long term. So when you remove your emotion, you remove a bunch of factors, one of which is the herd mentality. So people who try to jump in on GameStop or AMC or the tech bubble or all of these things that get pumped up over time that actually don't have intrinsic value, that's what people pumping up on emotion, where they see a stock go up, or they see the market going up. at a specific time and they want to get in.

All of a sudden their heart starts to flutter. They want to make some money. So they want to get in. That's the herd mentality. And followers are the people who do that. Folks who jump in and out all the time, as we'll talk about soon, those are the folks that won't make as much money as people who are in it for the long run. The second thing is when you remove your emotion, you also remove the emotion that is fear.

Because when markets go down, what a lot of people do is the opposite of what we're all tot. When the market goes down, people start to sell, which is the worst time to sell in an investment is when markets go down. It's buy low, sell high. But what most people do is they become fearful during a recession. They start selling off their stocks. And these are very smart people who do things like this. I've talked to many people who said, oh, I lost so much money in 2007. I said, what did you sell? And the stuff that they sold is worth a tremendous amount more than when they sold it at that time. And so understanding when to buy, when to sell, and removing the emotion of fear that when the market goes down, it doesn't feel good, but you should be buying more because

guess what? Stocks are on sale, my friend. And that is when it is the best time to buy. The third emotion is greed, because greed will kill you when you're investing. You're seeing stocks getting pumped up and you just want to get in, you want to make that money and make as much money as you possibly gan and so instead you hang on to a stock for as long as possible and want to make even more money but understanding when you need to get out of that investment and having a plan in place will allow you to make more money in the long run so greed can absolutely kill you frustration or impatience so a lot of people who are holding a stock and i've done this in the past myself i've made this mistake where i'm holding a stock and i need to be holding it for the long term but i get frustrated

that the stock isn't moving whatsoever but i believe in the company i believe in the company i've I think it has a good long-term trajectory. But instead, I'm not making you money. So I get frustrated, I get impatient, and I sell the stock for barely any profit. What happens is over time, if you just hang on, if you hang in there and it's a good company, that stock will go up over time, specifically if you have great management in place, if you've looked at the financials and the financials look great, that will go up over time. And the same thing goes for if you're buying mutual funds or index funds or anything of that nature

and you get impatient because you want to make a lot of money right away, There's no get-rich-quick scheme when it comes to making money steadily and building wealth. If you want to get-rich-quick scheme, you're out of luck, my friend. We don't have it here at the personal finance podcast. But if you're here for the long term and you're here to build tremendous wealth over a long period of time, that's what we are all about here. When you remove emotion, you remove hope. How many of you have bought a stock or bought an investment and hoped it went up and it just keeps going down?

But you have hope so you want it to go up. Hope is an emotion that will kill you because having hope without having logic based behind it is not going to help you at all. But hope will kill you every single time. And the last emotion that'll kill you that if you remove your emotion will allow you to not have to feel this is pride. Mark Cuban had one of the better quotes of all time. He said, everyone is a genius in a bull market. Everyone thinks they're a genius because everything goes up all the time.

But what happens is when the market starts to go down, as we talked about earlier, people get fearful and they start. start to sell. But your pride being in place thinking you're an amazing investor and anything you invest in will turn into gold is not something you want to do. You want to hedge risk. You want to be able to actually see issues with each investment that you look at. So how do you control your emotions? How do you do this? The first one is you build an investment plan. And we have an episode that coming up where we're going to talk about exactly how to build out your investment plan so that you don't waver around and go from buying index funds to maybe a little dividend stocks and taking your money and buying a little more index funds back and forth. Maybe you're buying some growth stocks and

then you're buying some Bitcoin, you're buying some tech stocks instead of just sticking to your plan. Now your plan can have all of those in it. That's not the issue. What you want to make sure that you do is have your plan in place and stick to your plan for the long haul. Another way to control your emotion is look at your portfolio infrequently. So index fund investors, start buying index funds, set it up automatically and lose your password. Just allow your investments to do their job. Now, individual stock investors, just look less frequently, look quarterly when the 10Ks come out so that you can monitor it, but the less frequently you look at it, the more you worry about the daily ebbs and flows. I check my portfolio once every three months, if that. The reason why is,

I don't need to look at it because I have a long-term plan. I'm a long-term investor and I'm in this for the future forever. So I don't have an issue checking my portfolio in frequently, especially if you're a new investor, if you start checking it day in, day out, you're going to start to get nervous because it's going to go up and then it's going to go down, then it's going to go up and it's going to go down. That's normal. Stop checking your portfolio so much and letting your emotions take over. And the last way to control your emotions is to make sure that you're in it for the long haul, that you're a long-term investor. Because if you're not a long-term investor, if you're there to jump in and out, you're a day-trader. And day trading is not the way to build wealth or the long-term if you want to do it safely unless you know

what you're doing. And very few people know what they're doing, but you can build wealth with day trading, but you have to know exactly what you're doing. And it takes a lot of training, and it takes a lot of time to learn about ebbs and flows of the market. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in actually matches the life that we're building. And that's where PolicyGenius comes in.

PolicyGenius isn't an insurance company. They're an online marketplace that helps you compare life insurance quotes from some of the top insurers in America, all in one place for free. And their licensed team works for you, not the insurance companies. So they help you find the right coverage for your situation without all the guesswork. And they walk you through everything. Answer your questions, handle the paperwork, and help you get the coverage that actually fits your life today.

and where it's going. So protect your family with a policy that grows with your life. With PolicyGenius, you can see if you can find 20-year life insurance policies starting at just $276 a year for $1 million of coverage. Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save. That's PolicyGenius.com. I remember when I needed to hire someone fast,

but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure it reaches the right candidates. And it makes a huge difference. Sponsored jobs on Indeed get 45% more applications than non-sponsored ones. And there's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75, sponsored, job credit to get your jobs more visibility at Indeed.com slash personal finance. Just go to Indeed.com slash personal finance right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash personal finance. Terms and conditions apply. Hiring. Indeed is all you need. Amazon presents Jeff versus Taco Truck Salsa, whether it's Verde, Roja, or the orange one.

For Jeff, trying any salsa is like playing Russian roulette with a flame thrower. Luckily, Jeff saved with Amazon and stocked up on antacids, ginger tea, and milk. Habaniero? More like habanier, yes. Save the everyday with Amazon. This episode is brought to you by Tell Us Online Security. Oh, tag season is the worst. You mean hack season? Sorry, what? Yeah.

cybercriminals love tax forms, but I've got TELUS online security. It helps protect against identity theft and financial fraud so I can stress less during tax season or any season. Plan started just $12 a month. Learn more at tellus.com slash online security. No one can prevent all cybercrime or identity theft. Conditions apply. Number two, always be learning or reading or listening. Warren Buffett, who I believe is the greatest investor of all time, attributes his success to reading

500 pages a day. Now, will you read 500 pages a day? Probably not. Will I read 500 pages a day? I don't have the capacity to do that. What you have to understand is the more you read, the more you learn, the more you listen to podcasts, the more you watch YouTube videos, the more you do all of this stuff, the more the world opens up to you. And the more the world opens up to you, the better investor you become. There's a book called Rich Habits, and they found that 85% of self-made millionaires, read two or more nonfiction books per month. So the first time I read that book, that is when I implemented my read one book per week habit. Now, we have an episode talking about that habit and how I read a book per week. So if you haven't listened to that episode, I'll leave a

link to it in the show notes. But this is one of the best things I ever did. Because when I started to read a book per week, all of a sudden I understood so much more of how the world operated. specifically, I only read nonfiction. So maybe you want to dabble a little fiction in there, but the statistics show folks who read nonfiction books frequently are more successful than folks who do not. So why not take advantage of that? Because reading offers you perspective.

It allows you to come up with new ideas. It's like a mental gym for your mind. And whenever I get slack or get behind on my reading, I always feel more foggy mentally. And that's why I just don't want to fall behind. It changes the way you think. It keeps you motivated. which is a huge one and allows you to learn.

Now there's a bunch of other ways you can learn as well. You could take courses. Courses are fantastic and they've been tremendous for my personal growth because every course I've ever taken, I've always having a takeaway. Now, some of them have been less effective than others, but at the same time, I always learn something and it's a deep dive into a specific subject.

Or you can listen to a podcast like this one. I can't tell you how much I've learned for podcasts over time. I listen to all sorts of podcasts, and it's just like taking in deep dive, information so that you can learn as much as possible. You can listen to audiobooks now. If you don't have time to take a physical book out, you can listen to audiobooks where the book is literally read to you. Maybe you're at work or you're working out, whatever. And then you can watch YouTube videos. If you're more of a visual learner, if you're a learner that really likes to take in visuals and

different charts and demographics and things like that, then YouTube is a fantastic resource. And I learned so many things just from being on YouTube. So make sure that you are putting your learning as a priority, whether it's reading, whether it's listening to things, whether it's taking courses, puts your learning in the forefront of your mind.

Number three, automate everywhere you can. So here in the Personal Finance Podcast, we always talk about you need to pay yourself first. Whenever you get paid, you need to put some of that money aside for your emergency fund,

for investing. And the best way to pay yourself first is to automate it. So every time you get a paycheck, you automatically transfer an X amount to your savings account or to your brokerage account so that you can pay yourself first. Then you pay all your other bills after that.

Always have money deposited automatically so that you can actually do this. Because if you trust yourself with your money, if you trust yourself every time your money comes in to save, fantastic. But most people are not trustworthy enough. The reason why is, I know that is, 80% of people in this country

don't have a savings account larger than $3,000. You can't be trusted, my friends. So you need to be able, to actually automate this process because once you start doing that and the money is out of your account, you're going to realize, wow, my money is starting to snowball.

And if you're investing your money and you're getting an 8, 9, 10% return, over time, you can't help but build wealth. You can't help but build wealth if you're constantly putting money into your investments. And as you make more money, always increase the amount that you save. Always increase the amount that you invest.

Every raise. If you get a 3% raise a year, what if you took half that raise? 1.5% and kept saving it. Let me tell you, my friends, you'd be saving 50% more than you do now over the course of time. So every raise, every bonus, every time you get a financial windfall, always increase the amount that you're investing. Because what wealthy people do is they ruthlessly increase the amount they invest each

time they get paid. Each time they get paid, they ruthlessly increase the amount that they invest. And if you automate it, you're unstoppable, my friend. If you automate the amount that you're saving and then you increase it over time, that's an amazing way to increase the amount that you're saving. Number four, start as early as possible. So a lot of times you'll hear me throw out numbers of people who are in their early 20s, how much they could actually have saved by the time they get to retirement age if they start

investing now. If you started investing late, we have an episode all about what to do if you started investing late, but the best time to start is now. It's never too late. You can catch up. The best time to start is now. But the earlier you start, the better off you'll be. So even if you never invested another penny, by starting earlier, you come out way ahead

of someone who starts out later. It pays to invest early and often. And the longer your money can benefit from compound interest, the bigger your gains will be as time goes on. Because compound interest, as I said, is one of the most tremendous things in this life. It's unbelievable what you can do with compound interest. So let me show you what I'm talking about here. I did some math on this.

And let's say you have two people. You have early Ellie and late Larry. So both Ellie and Larry, they start working at 20 and both want to retire at the age of 60. And let's say the market returns 7% a year compounded every single month. Now, the thing to look at about this is the market has actually returned more than that, but 7% is an extremely conservative number. So let's say Ellie invests $100 a month for 10 years, then stops investing when she turns 30, but leaves the money in the market for the next 30.

30 years until she's 60. So Ellie's investing 100 bucks a month. She stops contributing after 10 years when she turns 30. So she starts at 20. She stops at 30 and never invests another dollar but keeps the money in the market at a 7% return. Then you have Larry who waits 10 years and starts investing when he's 30, but then starts investing $100 a month into the stock market for 30 years. So Ellie only invested for 10 years but started at 20 and Larry invested for 30 years but started

at 30. Who do you think is going to have more money? This is the amazing thing about compound interest because Ellie, who started early but didn't invest for very long, has personally contributed 12,000 bucks and Larry has contributed 36,000 bucks. Even after all that, when they turn 60, Ellie will have $141,000. Guess how much Larry will have and he invested 20 years longer than Ellie? $122,000. That's how important it is to start early. As early, as early, as you possibly can because the earlier you start, the more you can reap the benefits of compound interest. I know we have a lot of you in your 20s who listen to this podcast. I know we have a lot of you in your 30s and your 40s, all different ages. Each and every one of you, I'm telling you right now,

if you've never invested a dollar, you need to start today. It's the most powerful thing you can do with your money. It's the most powerful thing you can do with your money. You have to understand this as soon as possible. Now, I know you might be scared. I know you might be nervous to invest your money, but you've got to do it. The math shows how important it is to do this. Number five, time in the market beats timing the market. What do I mean by that? What I mean is, instead of jumping in and out of the market, the biggest thing that you

can do is just leave your money invested because people who jump in and out of the market, the majority of them at least, have no idea what they're doing. And so what's happening is they will take their money out of the market at times when they think it's high and then the market continues to go up. Early on in my investing career, I did this. I took a big chunk of my money out of the market thinking, oh man, the stock market is way too high. And then it just kept going up and going up and going up and going up.

And I lost a tremendous amount of gains and compound interest just because I made that stupid decision. And guess what? I never did it again because the long-term investor never removes their money from the market and maintains it until they get to retirement age and they need money to live. on. We've talked about the 4% rule and how to draw down money from your portfolios. If you haven't heard of that episode, I'll leave it in the show notes. But market timing, in my opinion, is not the best thing that you can do.

Because leaving your money in the market, time in the market is what is the most important. And here's why I don't think you should time the market. If you don't time the market, you leave your money in the market, it gives you the opportunity to ride out the highs and lows. So all your emotions become removed because you're going to stay in the game, my friends. You're staying in the game. So instead of jumping in and out and trying to figure out, you're trying to figure out, exactly when you're going to time the market, you just stay in the game and you're going to

reap all the benefits of gains and you're also going to have the lows, but the lows over time always go up. And to prove this point, because investors are poor market timers. I mean, do you have a crystal ball to really understand when the market's going to go up and down? Do you actually, actually think you know when the market's going to go up or when the market's going to go down? In 2015, there was a study done that showed that the S&P 500 had an average annual return of roughly 10% during a 20 year period that ended December 31st, 2014. During that same time frame, the average investor who jumped in and out of the market had an annual return of 2.5%. So the differential there is that folks who just left their money in the

market and let their money ride received the 10% annual return. And those who jumped in and out of the market and tried to day trade and do all these things, the average came out to 2.5%. That is a massive difference. A massive difference. It's pretty hard to build wealth when the average inflation rate is right around 2% when your average investment return is 2.5%. Jumping it out of the market is not worth it. And you spend less time investing.

Once you start putting money in the market and you automate this, you can be a lazy investor, kick your feet back, drink, lemonade on your back porch and have a good old time. Because you don't have to worry about what the market is doing. That's the power of staying invested. And the third reason is because you have a lower tax rate when you just keep your money invested. Every time you jump in and out of market, your capital gains will go up. You're paying taxes when you have gains on the market. But if you're leaving your money invested and you're keeping it invested and not jumping in and out of the market,

the taxability of your money becomes sheltered because you haven't actually accepted that gain yet. So the less you jump in and out of the market, jumping with the eves and the flows, every time you sell and you have money that you've made, you have to pay taxes on that money. So these are the reasons why I wouldn't time the market, why I wouldn't jump in and out of the market. And even Warren Buffett states, if you're not willing to buy a stock and hold it for 10 years,

then don't even buy that stock. There's no reason to do so. Long-term investors, in my opinion, always win. Number six, you got to keep your fees low. So fees will actually kill your wealth building ability. And we've talked about this in our financial advisors. episode, but the higher the fees, the less you take home. I'm sure you're like, duh.

Even a 1% fee over a lifetime of investing can significantly reduce the value of your portfolio. And most people are thinking, well, 1% that's not truly that much. Vanguard came out with a study. From 1926 through 2019, an 80% stock and 20% bond portfolio returned 9.7% a year. Now, let's imagine that we invested $1,000 a month over a 40-year career. So if you invested $1,000 a month over a 40-year career at that 9.7% return, your portfolio would grow to about $5.8 million.

Woo boy, compound interest is a beautiful thing, isn't it? $1,000 a month to $5.8 million. Now, let's assume we pay a 1% fee for investments or services to an advisor or whatever else. Maybe you're just paying mutual fund fees. So what that means is your 9.7% return drops to 8.7%. Oh, that's worth it, right? 8.7% is a fantastic number.

But the result of that is your portfolio would drop to $4.3 million. So that 1% fee costs you $1.5 million. There's not many things in life that you can advise me on. That's worth $1.5 million, especially in this day and age. So that 1% fee is literally taking $1.5 million out of your retirement fund. Is that worth it to you? Because it would not be worth it to me. you can put it another way, based on that portfolio,

that's taking away 25% of your wealth that you built. Your hard-earned dollars, the hard-earned dollars that you saved, 25% of it is taken away with those high fees. Fees matter. So how do you reduce your fees? Look for investments that either have no fees or very low fees. Anything above a half a percent is really high. So try to at least keep it below a half a percent.

And beyond that, making sure that you keep it at least below 0.2% would be even better. seven, take every tax advantage that you can. So when you invest in a traditional brokerage, and whenever you make money, as we talked about, you're going to have to pay capital gains tax. But the beautiful thing is the government gives you tax advantaged accounts. Now, every country has a different tax advantage account. I know we have a lot of international listeners who listen to this podcast, but there are a tremendous amount of tax advantage accounts out there.

Things like your IRAs, your 401Ks, your Roths, all of these different things, your 403, Bs will allow you to take advantage of tax advantage accounts. If you're not investing in your 401k or your Roth IRA or any of those pieces, I highly recommend taking advantage of every opportunity the government gives you because reducing your tax liability is a great way to build wealth. And it's one of the big pillars of building wealth. So here, let me give you two examples. Let's say you invest $6,000 a year with a 10% return.

So if you put $6,000 a year with a 10% return into a $1,000. taxable account at the end of 30 years you'd have nine hundred and six thousand dollars but someone who invests the same amount into a 401k gets that tax advantage up front where you don't have to pay taxes on the money you put in now the account has grown to 1.4 million dollars it's a 500,000 dollar difference just by investing six thousand dollars a month this is absolutely tremendous and this is the power of actually taking advantage of tax advantaged accounts so you heard in the other where I said, well, then maybe it's beneficial if you want to retire early just to take the 10 percent penalty. Well, that will show you right there. The difference between 906,000 and 1.4 million,

if you take 10 percent from that 1.4 million because you're withdrawing on those contributions early, that's only $140,000. You still absolutely come out ahead. And here's example too. Let's say you max out your 401k every single year at $19,500. Well, at the end of those 30 years, you'd have $4.6 million, a tremendous retirement. That's almost $200,000 a year that you could draw down in retirement. If you did that in a taxable account, you only have $2.9 million because you didn't take advantage of those tax benefits. That's a $1.6 million difference right there. That's absolutely amazing.

So that shows you the power of getting your money in as many taxed advantaged accounts as you possibly can. Because this is how you build wealth. You take advantage of these types of things. Listen, I hope you enjoyed this episode about the seven habits of highly effective investors. These are the habits that you want to put into place and make sure you're doing because a lot of these aren't difficult. They're hard to implement in life, but they're not difficult to understand. So if you can implement all seven of these habits, you're going to build tremendous wealth

for you and your family, for generations to come. You can build generational wealth if you put these into play. If you have any questions, hit me up on Instagram. I'll leave a link to the Instagram. in the show notes and follow us on Spotify, Apple Podcasts, or whatever podcast player you love listening to it. If you want to help out the show, please leave a five-star rating and review on Apple Podcasts.

And thank you to everyone who has been leaving a rating and review on Apple Podcasts. We truly appreciate each and every one of you. Thank you guys so much for listening to this episode, and we'll see you on the next episode. Thank you guys so much for listening. And if this is your first time listening, consider subscribing so you never miss an episode. and share this episode with a friend.

And don't forget to leave a rating and review on iTunes as well, because our goal is to bring as much value to you as possible. And we're trying to spread this message that money can buy freedom. That's what money is there to do, is to buy more freedom. So thank you again so much for listening, and I hope you have a great day. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play.

Feel the fun with Playojo, the online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts, and no minimum withdraws. Hey, I just won. Woohoo! Feel the fun.

Play, oh Joe. Honey, forget about the lasagna. Let's celebrate! 19 plus Ontario only. Please play responsibly. Concerned about your gambling or that if someone close to you, call 1-86-531-2600 or visit connexontera.ca.