The School of Greatness - Money Habits To Prepare Against Inflation, Market Crashes & A Recession EP 1283

Episode Date: June 22, 2022

Jaspreet Singh, the Minority Mindset, is an attorney, investor, and CEO of Market Briefs. Although he didn't receive any formal financial education - he is on a mission to make financial education fun and accessible. He's back on the show to share his thoughts about the current economic situation and help educate people on their best course of action moving forward.In this episode, you will learn:How to prepare yourself to create future wealth.How to manage your emotions when investing money.The three best habits to practice to pursue financial success.How to create wealth from within.How to use your money as a tool.For more, visit: lewishowes.com/1283Jaspreet's previous EP -- The Biggest Lies You've Been Told About Money, Debt & Building Wealth - EP 1257How To Prepare For Financial Freedom In A Changing Economy - EP 1254Overcome Your Beliefs Around Money w/ Grant Cardone - EP 1229Make These Smart Money Moves w/ Gino Wickman - EP 1225

The majority of people are very scared of slowdowns in the economy, slowdowns in the markets. However, for the minority of people, recessions, crashes are opportunity to build. Welcome to the School of Greatness. My name is Lewis Howes, a former pro athlete turned lifestyle entrepreneur. And each week we bring you an inspiring person or message to help you discover how to unlock your inner greatness. Thanks for spending some time with me today. Now let the class begin. How can people overcome the fear and anxiety of everything crashing right now and start to set themselves up for peace and protection moving forward so there's the r word recession which when people

hear that it gives them anxiety fear panic makes people scared because you think of layoffs companies going down. A couple of things that I want to mention regarding that is, you know, the majority of people are very scared of slowdowns in the economy, slowdowns in the markets. However, for the minority of people, recessions, crashes are opportunity to build wealth. You can think of it almost like a Black Friday for investors. So the first point that I want to make regarding that is some people will use slowdowns as an opportunity to build immense amounts of wealth. More millionaires are made during recessions than

any other time. How do they do it? So that's the thing. You want to find the opportunity. And the way that you find the opportunity is first to understand how you get there because history doesn't repeat itself, but it does rhyme. And so what happens is people say, oh, this happened in 2020, so it must happen again. Or this happened in 2008, so this is probably going to happen. Or this happened in 2001. That's not how how it works you have to understand what happened how you're getting to where you are right now that way you can look for the new opportunity because the opportunity is going to be similar but different and you want to be ready when times are okay and good and prepared that way when things go bad you can come in and pounce on the opportunity and take advantage of it so you got the stock market which which is, you know, have, it looks like record lows. It seems like every week it just keeps going down.

You've got the crypto market, which in the NFT space, which just seems like it's going down and down deeper into a hole. You've got the housing market, which seems like it's starting to take a turn and might pop in this bubble. What, where is the biggest opportunity right now? So let's talk about how we got here so you can see where the opportunity will be. and might pop in this bubble, where is the biggest opportunity right now? So let's talk about how we got here so you can see where the opportunity will be. So in the past, for the last number of decades, any time you saw an economic slowdown,

the response was to create inflation. The response was to stimulate. So go back to 2001, when the dot-com bubble burst, we saw interest rates get cut. There was stimulus by the Federal Reserve Bank. So anytime you inject more money into the economy, it creates inflation. Same thing happened in 2008. The 2008 bubble, real estate bubble burst, and then we saw a new quantitative easing. We saw cutting of interest rates, more money was injected into the economy. Same thing in 2020 on a extremely bigger, much bigger level. 2008 was the largest quantitative easing in the history of time. And 2020 blew past that. It was like five, 10 times more, right?

It was significantly more. And so what happens is when you create more money, it reduces the value of your dollars. This is what inflation is. Inflation comes from the word inflate. So we print a lot of money to put it into the economy, right? New money, which creates inflation, correct? Right. And the value of a dollar goes down, causing the price of things to go up. So when 2020 happened, we started printing more money and injecting this into the stock market, into corporations, and into people in the form of stimulus checks and unemployment. So what did that do? Well, in 2020, we saw the fastest and most severe stock market crash in history. It exceeded the rate of the Great Depression.

Wow. And then what happened? The Fed opened up the money printer and boom, shot right back up. It was the fastest stock market growth in the history of time. Which if you think about that, we had the fastest stock market crash in the history of time. And then we had the fastest stock market recovery in the history of time. How is that possible? Well, we printed an insane amount of new money. And when that happened, we created something called unlimited quantitative easing, where they essentially just said that they would print and do whatever it takes to help recover markets. Well, when you start printing all of this money

without producing more products, because now remember the world is shut down, what happens? We have people who have money and nothing's being produced. So now if you have money and you can buy stuff, but nothing's being produced, what's going to happen? You start shopping and things get bought and all of a sudden companies can't keep producing the products that they had before. Now you start to create supply chain issues. So now they started creating supply chain issues. And then this caused the price of things to go up even more because now companies say, well, I don't have more mugs to sell. You only have a few. So I'm going to have to raise the price of these mugs. And now you start to go down this inflationary spiral because now that people need

more money to buy things, they go to their boss and they say, hey, look, I need more money. It's more expensive to survive. Then your boss pays you more money, hopefully. And then your company says, our costs have just gone up. People need more money. So what do we need to do? We need to charge more for our products. Now you charge more for your products, people need more money, it starts to create the spiral. So that was the issue that kind of led us to where we are now. And up until just a few months ago, inflation was supposedly transitory. It was supposedly this temporary thing that would just magically go away. But the interesting thing though, if we go into a little bit of data, I don't want to get too confusing, but the interesting thing though is there's really no clear answer as to how much money was created. We have ideas, but if you look at

this thing called M1, which is the amount of money out there, you can go to Google search Fed M1, they have a chart of it. And what you'll see is that in the beginning part of 2020, there was just under $4 trillion of money out there, M1. And then now today, there's over $20 trillion out there in M1. Of money, actual dollars. Now, let me say, the reason why I'm saying it this way is because when the pandemic hit, the Fed started creating more money but they also changed the definition of money m1 which is the definition of money out there as soon as it started opening up quantitative easing to change the definition of it why now there's no real

answer for this but my guess would be that if people knew exactly how much money was printed by the Fed, then people would be more of an uproar of what's going on because then they would see, holy cow, you're printing all this money, making businesses rich, making investors rich, making regular people poorer because inflation disproportionately hurts the financially uneducated and the financially poor because guess what? Now, your gas is more expensive, your groceries are more expensive, you're expensive, your rent is more expensive, but your wages aren't keeping up with it. Unless you had a 20% wage increase, your cost of living is probably outperforming your wages. So that's what's happening in terms of money. We had an insane amount of money printing being done.

And in addition to that, we also saw interest rates get cut. What are interest rates and how does that have anything to do with inflation? Well, the Federal Reserve Bank is the Federal Reserve Bank. However, they're not federal. It says so on their website. They're not a reserve because they don't keep any cash reserves. They're not a bank. You and I can any cash reserves. And they're not a bank. You and I can't go there to deposit money or do any banking. So the Federal Reserve Bank,

while it's not federal or reserve or a bank, they control our monetary supply. They control our money. There's two ways that they can do that. One is through interest rates and the other is through printing money. So through interest rates, they have the ability to raise and cut interest rates. When we are in a slowing economy, a recession, they cut interest rates to stimulate spending because our economy runs on spending. If I have $1,000 in my pocket and I go to Amazon and I spend this $1,000, well, Amazon has more money to hire more employees, invest in more infrastructure, do more things in the business.

But if I keep that money in my pocket, they're not making as much money and they can't keep growing. So our economy runs on spending. And when you cut interest rates, spending goes up. When mortgage rates drop to 2.5%, people want to go and buy a home. People want to go out and buy more cars.

People want to go out and spend money because it's not as expensive. And businesses do the same thing. Institutions are going to go out and borrow an insane amount of money because it's not as expensive. And businesses do the same thing. Institutions are going to go out and borrow an insane amount of money because it's cheap. If I can borrow money, $100 million at 3% a year, and I can grow my company at 5% a year, I'm going to do that all day long, right? And that's what institutions did. So more money gets injected into the economy when interest rates are down. So that's what happens typically when you're in a recession.

It creates more inflation, right, because you're adding more money to the economy. However, it helps to stimulate the economy. Now, when you're in a growing economy and you want to cool down the economy, want to cool down inflation, do the opposite. You start raising interest rates, making it more expensive to buy a home, making it more expensive to live. And then you also can, in this case, remove cash out of the economy. This is what the Fed is trying to do now. How do you remove it out of the economy? So the Fed is, well, interest rates and then their balance sheet. And I'll talk about interest rates first and then I'll go into the balance sheet. So the Fed right now is raising interest

rates because they want to slow down inflation. So when you raise interest rates, what happens? It's more expensive to buy a home now. So less people buy. Less people buy. Less cash enters our economy. Less institutions borrow money. Less corporations borrow money. So borrowing goes down. Less dollars enter our economy. The second side is the balance sheet. So this one's kind of interesting because you have to understand a little bit of how money works on the government side without going into politics so the government is not a for-profit entity they don't sell products for money right what they do is they get their money from tax dollars people like you and me right we pay taxes and then the government spends money so when the government spends less

than what they bring in no problem their. Their tax dollars cover it, and then they have a surplus in case one year they overspend. But that's not what happens here. We spend more money than what we bring in. So that's why we have this national debt of $30 trillion, this national deficit. And so how do you cover that? Well, if you spend more money than what you bring in, you can do a few things. You can raise taxes, which is going to make people angry if your taxes go up. And so you can't always do that. Second is you can go out and you can borrow money. You can go and raise debt. So that's what the government does. They go borrow money from countries like China and Japan. But there's going to be a limit to how much money you can borrow. So if you can't

borrow enough money from different countries, then what's left? Well, then you can issue something called a treasury bond, which is where now anybody, people like you and me, anybody listening to this can go and lend money to the United States government. But if the government is running a big deficit, meaning let's just say they need to raise $4 trillion, where are they going to get this money? Well, if they can't get that money from regular people,

then they're going to call up the Fed and they're going to say, hey, Fed, we want to issue $3 trillion of treasury bonds. No one's going to buy it. Can you help us out? Now, remember, the Fed doesn't have cash piles sitting there. So what do they do? They print $3 trillion, give it to the government. This money is created out of thin air. Now, the government has print $3 trillion, give it to the government. This money

is created out of thin air. Now the government has this $3 trillion. Inflation just happened. And then the government is able to now spend this money without any sort of taxation. However, you still pay the price. The most expensive kind of money that there is, is free money. Because now when the government gets this money for free out of thin air, everybody pays the price. And the person who pays the price disproportionately are the poor and the financially uneducated because now you have to pay for inflation your wages don't stretch as far your savings don't go as far and now your cost of living is significantly higher so you're becoming poorer each and every day inflation Inflation hurts the poor.

And the reason I'm not even talking about the middle class is because inflation is the reason why the middle class is getting wiped out. It's turning into more poor. It's turning more either poor or the wealthy. Because if you understand what's going on here, you're going to change the way that you use your money. And it creates this divide. So more and more inflation creates a bigger wealth gap.

And that's what we're seeing happen now. Some people during the pandemic became insanely wealthy. You know, they talk about how the richest Americans had gained billions and billions of dollars worth of wealth. Well, the poorest Americans saw no change. And so when the cost of living has gone up so significantly and you don't understand this, you're being screwed over by the system and you don't even see it happen. So that's the issue with inflation. And if it becomes a real big problem, well, then you can run into some sort of currency crisis or you can run into an issue where the government can default on their debt. And this is an issue that's actually happening right now, not in the United States, but Sri Lanka.

They just defaulted on their debt, the country. Really? What does that mean? We have so much debt. We have spent so much money. We have no way to make the payments. We're going to default. And now the currency goes into collapse. Inflation goes through the roof. The economy goes to down. It's a big problem. And it creates a lot of civil unrest. So that is the worst case scenario because now you're worried not only about the economy, but you're worried about the currency. And you're worried about being able to find food. Food becomes a scarcity. And right now, because of the inflation issue, not just in the United States, but around the world, the World Bank said that about a dozen countries are on the verge of a potential debt default

because of all of the inflation that's going on. So it's a real issue. And most of us have no idea it's happening. That's why it's known as the hidden tax, the silent tax. Everybody pays the price. And if you don't know you're paying the price, you're the one that's probably paying the biggest price. So this is where it's so important to get educated on that. So what would be the thing if there was the biggest opportunity to create wealth right now? What industry or sector would that be? Is that in this, you know, stocks? I feel like nothing is stable.

Like if you're going to put money in something, you could make a lot or you could lose it all within a month. Is it the stocks? Is it the crypto all within a month is it the stocks is that the crypto nft space is the housing is it you know investing in yourself in another way what would you say we should be investing in absolutely so the first so the answer is going to be looking for where the opportunity happens okay so 2008 yes that was real estate That was the biggest real estate opportunity in our lifetimes. In 2020, it was stocks and crypto. In 2020, the stock market from its bottom to the end of 2020 grew by 60%. The crypto market grew by almost 600%.

And so it's fine. But if you didn't get out, you've kind of gone back to... Of course. But this is where, you know, again again the psychology of your investing is so important but the thing that you want to pay attention to now is it's it's you want to see where things are going yes that way you can make the right moves remember history doesn't repeat itself but it rhymes yeah right so you want to look at the same data points and same factors and see what's happening so if you can make a prediction of what do you think is going to happen over the next few years based on history, what's rhyming right now?

What's rhyming for you? So it's going to depend on one thing. It's going to depend on what the Fed does next. Because right now, and I'll explain and I'll give you a defined answer in just a minute, but I like to give you my reasoning first. Yeah, give me the context. So right now the fed is working to fight inflation and how it's like eight nine percent yeah they're raising interest rates and they're gonna start selling off their balance sheet so the fed balance sheet is around nine trillion dollars

crazy and so starting in june they're gonna start selling off these assets while raising interest rates and the fed says that they're willing to fight inflation because the economy is so strong and robust. And because the economy is so strong, it can withstand any sort of interest rate hikes. So what is the Fed doing? In essence, they're pulling money out of the economy. And now they're hoping that the economy will continue to stay strong. So by raising interest rates, what's happening? Housing is becoming significantly more expensive. Housing or rent? Like buying a home or renting?

Both of them. Rent costs have gone up by 20%. Buying a home has gone up by even more. And I'll tell you why. Because when people talk about home prices, what do they talk about? They say, oh, well, home prices are up 20% from a year ago. But your housing cost is significantly more than 20% because if one year ago you wanted to buy a home for half a million dollars, you could get a mortgage for two and a half percent, 30 year fixed.

Two and a half percent mortgage? Oh, wow. For interest rate. Interest rate, yeah. 30 year fixed. You put 20% down, right? So $100,000 down, you could borrow $400,000 down. Yeah. You could borrow $400,000 at 2.5%. It would cost you something between $1,600 and $1,700 a month. It's not bad. Today, that home is not $500,000. It's $600,000.

20% more. And your mortgage rate is not 2.5%. It would be 5.5%. So what does that mean? If you put 20% down, you're not putting down $100,000. You're putting down $120,000. And you're not financing 400,000, you're financing $480,000.

So you have to borrow more dollars and then you're borrowing the dollars at a higher interest rate. So you're not borrowing a 2.5%, you're borrowing a 5.5%. So now your mortgage on that same house, the exact same house, assuming no upgrades, has gone from $1,600 a month to $2,400, $2,500, $2,600 a month.

So your housing cost is significantly higher. So now with interest rates going up, what's happening? People are saying, oh my God, homes are significantly more expensive. Mortgage applications are starting to go down. In the stock market, what's happening? Well, businesses are having higher costs to operate. the stock market was happening. Well, businesses are having higher costs to operate because now if you were one of the companies that were relying on debt and your stock price in order to operate, because when you're in a low interest rate environment, you don't really need to make

money because investors will keep throwing money at you because they can just keep borrowing money super cheap. And so if you were one of those companies that were not profitable, you might have just said, well, I'm worth $40 billion. I don't need to make a profit because I could just borrow money. I can just get an investor to invest money into me. But now people are looking at you and saying, I can't borrow that same money at the same rates as I could before. So I need a better return. And you're not making a profit. So I'd rather invest my money somewhere safer. So a lot of companies are seeing their valuations drop drop meaning stock prices are dropping as interest rates go up same in the cryptocurrency market there's a saying that when the tide goes out you see you swimming naked what happens well there's

a lot of free money out there there was and so people can just keep swimming in the free money throw it into anything and just hope that they'll make money on it because there's a lot of dumb money out there yeah but when that money starts to go away that's when you see who was swimming naked that's when you see the scams you start to see the bad investments and you start to get exposed because now people want to put their money somewhere safe and somewhere smarter so people are leaving the risky investments and moving to the smarter places so now back to your question where do you go where do you put your money and the reason why it depends on the fed is because it depends on what the fed does next if they continue fighting inflation and they say we're going to do whatever it takes to bring inflation down that means we're going to pull money out of the economy we're going

to jack up interest rates even if that means that we're going to go into a recession even if that means we cause a housing market crash even if that means we cause a stock market crash we're going to keep doing it if they do that well then you're going to have a big buying opportunity in pretty much any asset class, assuming you find a good investment there, a strong fundamental investment. But there's also the chance that the Fed doesn't do that. There's a chance that the Fed says, we're starting to raise interest rates now, and this is what they're doing right now. And then six months go by and they say, these higher interest rates are really hurting the economy now. The economy isn't

as strong as we thought. And then they start cutting interest rates. Now what are you doing? You're in a high inflationary environment. And now you're creating more inflation in order to fight the economy. Because the Fed can either fight inflation or they can fight the economy. They can only do one or the other and in all the previous crashes that I talked about we were never worried about inflation we were worried about an economic slowdown in 2008 we were worried about an economic slowdown 2001 economic slowdown even in 2020 the worry was not inflation the worry was deflation right the Fed says we can't have deflation we don't want people to

have their savings worth more. We need to create more inflation. And now we have an inflation problem. And so if the economy goes down, what do you do? You create more inflation to save the economy. However, that creates more inflation. Our economic slowdown today is being caused by inflation. You cannot fix an inflationary recession through more inflation. What's that going to do? It's going to make the inflation problem worse. Yeah, it'll probably boost the economy in the short term, but it will crash the stock market and the real estate market, not downwards, but upwards. Interesting. And that's a very interesting concept to think about,

because when you think about a market crash, what are you thinking? Stock prices go down, real estate prices go down. But if you're worried about high crash, what are you thinking? Stock prices go down, real estate prices go down. But if you're worried about high inflation, and then you start creating more inflation, what's going to happen? People are going to take the dollars and they're going to want to get out of cash. Because they're going to say, if our inflation rate goes even higher, our cash is going to lose value even quicker. We want to own any asset, stocks, want to own real estate, maybe cryptocurrencies, some smart ones.

You're going to see more cryptocurrencies potentially go under. We've already seen some go under. So you're going to want to make fundamental investments, but you could see just a lot of money flow into these assets, kind of like what we saw happen in 2020. We were in a recession, but the stock market was going upwards. Why? The money printer let it all in. So that's where you want to pay attention to what's happening there. How high do you think the interest rates could get to? What's the potential range, you think? So let's talk about history. In 1970, it was the last time we saw inflation this high, or in the late 1970s, closer to 1980. And in that time, we were facing double-digit inflation.

And in order to fight that inflation, the Federal Reserve then said, either we can fight the slowing economy or we can fight the inflation. Similar issue. It was called stagflation. Stagflation is a very weird economic concept where you have a slowing economy and you also have rising costs. So it's like the worst case scenario. And so during that time, they said, okay, we have a slowing economy and we have high inflation. We're going to say, ignore the economy. We're going to bring down inflation because that will save our dollar. It will save the currency. And so what did they do? They jacked up interest rates and mortgage

rates were almost 20%. What? When was the last time it was over 10? You remember? In the 90s to early 2000s, around that time. Really? 90s probably. Yeah. It was the last time it was over 10. So if it went over 10 now, what do you think would happen? If the Fed continues to jack up interest rates to bring it over 10%, home prices will have to go down. I mean- Because people won't be buying. You can't afford the home at the same interest rate today. And that would also significantly hurt businesses. Because the businesses that are relying on debt, they're going to see a big pain, a big crunch. And so that's where the Fed is facing a big dilemma. They're hoping that inflation will go down but

the question is how they're hoping that it's still just supply chain they're hoping that it's still just russia they're hoping that it's still just other issues but the one issue they never talk about is the money printing and the stimulus and that's the concern it's we if we really want to get serious about fighting inflation we might have to get more aggressive and if we get more aggressive on inflation it's going to hurt the economy. Even a previous Federal Reserve chairman said that we need to crash the markets because we need to get serious on inflation because we don't want to deal – a currency crisis would be even worse than just dealing with a recession.

And so that's where it's what is going to happen and are we really that bad? And the last thing I want to mention on that is the money printing that we saw happen in 2020, it has just come out that it also led to the biggest financial fraud of America ever. Really? Why? Because people abused the system. Oh, yeah. They lied about things. They got free money they shouldn't have gotten.

It was the biggest financial fraud in our history. And the reason why, from all angles, but if you look at the PPP, which was the loan to businesses, that if you have employees, you have rent, if you have business costs and you're shut down, you can get essentially a free loan from the government. And you don't even got to worry about paying it back. It's crazy, right? And if you are taken out, I think it was less than $2 million. You don't even have to explain what you use the money for. You, right? And if you are taking out, I think it was less than $2 million, you don't even have to explain

what you use the money for. You have no justification. You can just borrow the money. So what happened? Well, some businesses use their money for good. And some people said, well, I don't have a business, but I wonder if I can look up a registry of businesses

and say, oh, these are some businesses and just start applying under these business names and say that I need the money. Wow. Billions and billions and billions of dollars were stolen. the money go lambos they went into nice cars and went into nice homes and it's just coming out now and so we saw tens of billions of dollars go to just complete waste even in the unemployment program now they're starting to realize that some people who were getting unemployment uh didn't justifiably get the money

or shouldn't have gotten the money. And so they were sitting at home playing video games when they should have been working or could have been working. And maybe they were doing something that they shouldn't have. There was no incentive for them to work because they were making just as much, almost, or more.

Or even they were working and still getting the unemployment because they were doing something illegal. And so it created all this fraud and so it's like we had all the stimulus without really any regulation without looking into what we're doing with it and it created the biggest financial fraud and now who's paying the price the average person regular people are paying the price to inflation and if you're just now letting go what inflation is you're really probably getting pinched by it. And it sucks because we're never taught about this.

When are we ever taught about inflation? When are we taught how to fight inflation? It's so unfortunate. Unless you're in like an economics class in college or something, maybe. Well, look, I tried to get into business school when I was in college. I needed to take econ one and econ two.

I almost failed econ one, so I couldn't get into business school. So I don't even know if the economics classes teach this. I know. I'm curious. Okay. Let's say it goes above 10% interest rates at some point this year. What would be your next three moves?

Like if you see it creeping closer there, what would you be investing in or taking your money out of? Or what would be your next three moves? Like if you see it creeping closer there, what would you be investing in or taking your money out of or what would be your next three moves? Sure. So I think the more liquid and more active investments would be your liquid investments, things like stocks, things like cryptocurrency. So again, if you look at 2008, when the stock market crashed, started going down, If you look at 2008, when the stock market crashed, started going down, it bottomed out in 2009. And then it started going up. So the 2008 crash happened, started in 2007, and it bottomed in 2009, and then it goes up. And by 2012, the stock market had fully recovered.

But in 2012, that was when the housing market bottomed. So the housing market bottomed three years after the stock market crashed. Wow. And why? Well, the stock market has a lot of panic. It has a lot of emotions. And you can oversell very quickly because it's all emotions, right? When you see the headlines on the news talking about what's happening in the markets, people get scared.

Sell today, right now. And then you see assets go down. Then you go, oh my God, my asset's down 30%. I want to sell my stocks. And then it keeps going down. And so it's a very emotional driven and it can happen essentially in the blink of an eye because you can buy and sell stocks in a second. The housing market doesn't work like that. The housing market has a much longer lag time because they can take easily 30 to 90 days to buy and sell a home. And so you just understand that the housing market moves

significantly slower. And so if interest rates, say, went up to 10%, I have a strong hunch that the stock market would get hurt bad. And I think there would be a lot of opportunity there. In the stock market. In the stock market. To invest then in the stock market, yeah. Yes. And that's if you believe in the American economy. I do. If you think the American economy is going to be strong in 10 years, 20 years, then there's opportunity there for you. And so what that would mean for me is looking for strong companies that are not going into bankruptcy that I can find opportunity to purchase. And if you're not interested in investing in individual companies, if you're not willing to

spend the time doing that, because I think the majority of people should not be investing in individual companies because they're not willing to put in the time, effort, research and have the psychology to do that. And you can just look into an ETF that gives you exposure to the general stock market, the S&P 500, which is the biggest 500 companies on the stock market. And now you're just investing in a piece of America and you're able to buy it at a discounted price.

So that's what I would say there. And then if you're talking about cryptocurrency, you have to first, I'm not here to tell you believe in crypto or don't believe in crypto. That's not what I'm here to do. If you believe in crypto, I do. I invest in crypto. If you believe in the technology, you have to be willing to weather the storm.

And you have to be willing to understand that price makes a big, changes the sentiment of crypto. Because when prices of crypto go down, people think crypto is fake. It doesn't matter. When prices of crypto go up, people think, oh, it's the future. And so if you really want to be an investor, you have to be able to cut through that emotion

and cut through the noise and understand, okay, I like the blockchain. I like the technology. I'm not investing in the meme stuff. I'm investing in something that has actual value that can actually create change. And then that can be an investment for you. But now, in terms of timing, I want to make sure I mention this because a big mistake that happens, and this happened in a big part in 2020, is you can't time the market.

Nobody knows when the bottom is. And it doesn't make sense trying to time the bottom. When the 2020 crash happened, I was making videos on YouTube. And one of the things that I was saying when the market was just collapsing, I said, look, here's what I'm doing. I'm buying on the way down. I buy in phases. I don't know when the bottom is, so I'm just going to keep buying.

I do my research now to find the good companies and the investments that I want to own. So I'd spend my time when times are good to find the good investments. I already know what I want. Now, all I'm looking for is a good price. I'm looking for a good entry point. When the price goes down, hey, it's on sale. I'm going to buy. If it goes down further, I'm going to buy even more. So every

time it goes down 10% to 15%, I buy and I buy more aggressively as it goes lower. And when I was making those videos, I got a lot. I got flooded with comments of people saying, why would you buy now? The market is collapsing. It's going to go way further. Wait for it to drop. And I kept saying, why would you buy now? The market is collapsing. It's going to go way further. Wait for it to drop. And I kept saying, look, I can't predict the future. I don't know when the bottom is. I'm not trying to time the bottom. I don't know how long we're going to be at the bottom. What happened? The Fed opened up the money printer, the X factor, I like to call it, and it shot back up. So if you were trying to time the bottom, what happened? You missed the opportunity to buy because then it starts going up and you say, no, it high i don't want to buy and then it keeps going higher and higher and higher you just missed it yeah so instead of trying to perfectly time the market either do a dollar cost

average system where every week you just buy a little bit of your investments that you like whether the market's up or down doesn't matter passive consistent automatic you let it do its thing or if you want to be more active and you want to look and research the companies and the investments that you want, make your list and just look for a good buying opportunity and buy on the way down. Is it, in your opinion, would you buy a home when interest rates is over 10%? Or you feel like even though you're getting a massive discount, you're paying more every month, would you consider that or you just wait until interest rates go down? So I look at home buying very differently than the majority of people.

I look at buying a home the way I buy a shirt. For me, a home is not an asset, it's a liability. So what does that mean? I wanna buy a home because I wanna create memories. I wanna buy an investment property or an investment because I wanna make money. So if you're buying a home because you think, oh, I want to get rich because of my home, I think you're looking at it the wrong way. Because you should be looking at your home as I want to make memories here, I want to live here, and I want to grow my family here, and I want to

spend time here. If that's the reason why you want to buy a home, what you should be paying attention to is not what's going on in the markets, not what's going on with interest rates, but instead what you should do is say, can I afford it? And what does that mean? Can I afford the down payment? Can I afford the monthly payment? Can I afford the property tax? The fix-ups. The move-in costs. And then you move in, like I'd be the furniture, the upgrades, all that. So if you can afford it, then you buy. If you can't afford it, if you're stretching yourself too thin, it, then you buy. If you can't afford it, if you're stretching yourself too thin, you don't buy. Because what happens to so many people is you get sucked into trying to time the market. But again,

if interest rates drop and you own a home, you can refinance. And so remember, it's understanding- So it's almost good to buy it when interest rates are high, if you can get the house on discount. And then if in a year or two that the interest rates drop in half, you can refinance. Just make sure you can afford it. That's the biggest thing. You have to be able to afford it because if you are stretching yourself too thin, going paycheck to paycheck to live in a home,

you're hurting yourself because now what you're doing, you don't have the ability to invest in other places. You cannot invest your money. Do you think people will be able to actually buy a home in five to seven years? It depends on what the Fed does. If the Fed cuts interest rates when we go into a recession, so our economy slows down, the Fed starts cutting interest rates, mortgage rates go back down,

you're going to see a bigger flood of cash into the housing market, and that will create a bigger wealth gap, and it will make it significantly more difficult for the regular person to buy a home. Home ownership will become a real American nightmare because it will be so difficult for the regular person. We will turn into essentially a renter nation where homes are owned not even by regular investors. Corporations. Corporations. They've been buying up. I was reading that. Blackstone's been buying up a ton of homes, right? Yeah, BlackRock's buying like- BlackRock or Blackstone? Yeah, they're buying one out of every four homes in certain neighborhoods that's crazy yeah and and so they they're which means they believe people aren't gonna be able to afford them and they're gonna have to rent from them yes and so it's it's uh it's a crazy

times to understand that which is why again I look at the home like a liability. Can you afford it? Yes, then buy. If not, then don't stretch yourself too thin. I used to be a real estate salesperson. And the reason why this is so important is because when I was a salesperson, you know, what they say is, you know, you want to tell people this is their biggest investment of their life. So buy a home that you love.

Now, again, real estate agents are not bad people. Banks are not, bankers agents are not bad people. Bankers are not necessarily bad people. However, you have to understand the messaging. If I tell you this is the biggest investment of your life, what are you going to say? I want something bigger. I'm willing to stretch a little bit thinner. I'm willing to go a little bit further because I want that home. And so what does that do? Well, it makes the banker richer. It makes the real estate agent a bigger commission check and they walk away now you have to deal with it if you can afford it great but if you start to struggle with it you're the one that has to deal with the problem by yourself and so

what happens for so many people is your home is a money pit until you sell it and then you have to hope that you sell it for a profit because it's no guarantee right we don't know where home prices are gonna be in five years or ten years I can't predict that I don't know where home prices are going to be in five years or 10 years. I can't predict that. I don't know what the Fed is going to do. And so the main thing that you have to understand, if you're thinking about buying a home, is ignore the markets. Ignore what's going on in the world. Can you afford it today? And please do me a favor, okay?

I very rarely try to tell people what to do because I feel like, you know, I try to, I want you to be educated so you can make smart decisions for yourself. But the one time that I really tried to give people, you can make smart decisions for yourself. But the one time that I really tried to give people, like I say don't do this, is when it comes to adjustable rate mortgages. Because they've been making a huge comeback now. Because now the interest rates are 5.5%. People say I missed out on the opportunity to get a low mortgage. And now I have been seeing a huge growth of adjustable rate mortgages.

Because now banks will say, don't pay 5.5% on a home, pay 3.7% today, and it's a 5-1 arm. Meaning, after five years, it's going to readjust. And then your mortgage payments will readjust. And if it goes higher, don't worry, you can just refinance out. And it is so risky because we don't know where interest rates are going to be. If they go up and they go up significantly, and now you're like, oh my God, let's just say mortgage rates are 10%. I don't want to pay three times more for my mortgage from $800 a month to $2,400 a month. I can't afford that. So let me refinance. Well, if you do that and home prices have dropped and you can't refinance because the bank says well you don't have enough equity in the home I'm not gonna refinance you and then you

can't sell because you're underwater well now you're in a tough situation so pay a little bit more get that fixed rate mortgage because if mortgage rates do drop refinance right and lock it in because you know other countries in the world don't always even have the option to do a 30-year fixed right we do but uh an arm an adjustable rate mortgage is significantly more risky the only time that i would say an arm is okay is if you are like 100 confident that you're going to be able to pay off the home during that initial teaser rate uh because if you cannot then you are taking on a huge gamble off the home during that initial teaser rate. Because if you cannot, then you are taking on a huge gamble with the home that you live in, with your family's livelihood.

You know, it's one thing if you do it with an investment, but with the home that you live in, avoid that extra risk and just lock in the rate, please. Right. I'm curious. Here's a question we got from people on youtube if someone has between a thousand and ten thousand dollars today to invest they can spend on whatever they want yeah and they had to turn it into a hundred thousand within three years oh okay what steps would they should they take and obviously this is a you know not a guarantee but if you're like you have to turn this 1,000 into a hundred thousand or ten thousand to a hundred thousand what would you invest in right now and how would you manage it over the next couple of years so I'm gonna give you kind of a longer answer that maybe

you're hoping for on this one give it to me I'm gonna start by telling you what you should not do okay because the first time I remember I've had a thousand dollars extra I'm a bank. I was in high school. And what I did with that is I took the $1,000 and I went out and I bought a watch. No, don't do that. Yeah. And this watch was very studded up. It was all crystals. And I was like, ooh, it's a nice watch. Clean.

So what happened with that watch? Well, I made that watch company richer. I made the jewelry store owner richer. And now the $1,000 watch is worth maybe 50 bucks. It was just a show. So my value of my investment dropped like a rock. But now these companies made money, which now they could take that and invest in more products, more inventory, more marketing, more whatever. So the first thing is you got to understand that you want to put it in something that's going to help make you more money. So I'll give you my personal experience, because I saw the biggest returns by

investing in me, but that will be more of an active investment. And then you have the opportunity for a passive investment, which is why it's a longer answer than what you were probably hoping for, but I'll try to get to all the answers there. So I feel like everybody who, especially if you're had the entrepreneurial mindset, you go through these phases where you first go through this like, I'm a hustler, side hustler phase. And then maybe you become like a solopreneur. And then you become an entrepreneur. And then you become a small business owner.

And then you kind of go to that business owner route. So you kind of go through these phases because initially when I first started as a side hustler, I don't know what entrepreneurship was. I was just trying to make some money. Trying to make some cash on the side. Exactly, you're just starting off. For me, I started off in the event planning space.

So I was in college, I started hosting teen parties for other kids in college, and I didn't really have any money to spend, I was 17 years old when I started, so I was making very not attractive deals to me, but it was the only way I could get started, because what I did was I would go to venues to host a party and I wanted a venue

that wouldn't charge me any money up front. And in exchange, they would say, just give us 50% of every dollar that you earn. So if I made $1,000 in revenue from cover charge, right, $10 to come in, I give the venue, the club, whatever, $500. And then I didn't have money for a DJ. So I said, look, DJ, I need someone to play music.

Let's work out a deal. They took 50% of what I was left with. So I would give them, you know, I'm left with $500. They would take $250. Now, luckily, the business was able to grow where, you know, we were making on the low end a couple grand a night. And then what was I able to do? I was able to negotiate better deals.

And then I was able to start investing my money into marketing so I started taking some money and I remember the first thing that we did was I started investing money into flyers it was a hundred dollars at the time to print 5,000 small flyers and so I got creative and I was like look before the event we need to distribute all 5,000 flyers. We cannot have them in our possession anymore. And I can't do this myself. So I need salespeople essentially, but I don't want to pay for salespeople. Street team interns, college students. Yeah. So what do you do? I'll give you VIP entry into the party, which doesn't cost me a penny. And I will give you a shout out at the party. Doesn't cost me anything. Makes you feel cool. Makes you feel exclusive. You get to walk past the line.

You have this lanyard that says you're this, you know, VIP, whatever. And so now, I have people at some of the biggest colleges in my area passing out flyers

trying to get everybody to come because now you want to be one of those people. So, you know, I got these free salespeople that are trying to promote it. Smart. You have to be creative.

And that now starts to multiply the money. And that's when I realized that I'm just a side hustler i will never be able to build a business on this i don't want to build a business like this because it was a very dirty industry which is why i got out of it i did not like the scene so i left that and started kind of going down more the entrepreneurship route not going more into innovation so i started a sock. So now I'm starting to invest money, my own dollars into the sock company. That way now I can build a product,

build inventory, build a website, build advertising, build marketing. And now we're able to grow this much faster because now I have some skills that I learned from my mistakes because I screwed up a lot. My first event was a complete flop. I had some very bad failures. I had lost money on some occasions.

It was, you know, when you deal with club owners, you're dealing with very interesting people and you learn very quickly, right? I'm a 17-year-old going up to some of these club owners trying to figure out the game and they're taking advantage of you.

And it's also dangerous. I remember one time I went to a club to talk to the manager because we had a party the next week and I said where's the manager he said oh we got stabbed last night oh man and so you know you learn very quickly to protect yourself to protect your own interests I mean it's you you're literally I mean there was a lot of physical stuff that happened I mean I got an all was the bouncer a lot of it so I you know you learn to protect yourself physically

learn to protect yourself my name mentally you learn to protect yourself financially so I had to learn very quickly and so now I take things I You learn to protect yourself physically, learn to protect yourself mentally, learn to protect yourself financially. So I had to learn very quickly. And so now I take things I learned. I'm in a much safer, much smoother, much cleaner industry, the sock industry. But I start to learn and I start to apply some of the same marketing. How can I be creative in the marketing? How can I get people to learn?

And you can't learn this in a textbook. You just have to try, be willing to fail. And so same thing there. Now I kind of go into the entrepreneurship route and now I'm starting to learn and I start to sell. And then I realized my passion isn't in socks. I like the socks. I like the business idea, but my passion isn't there. My passion is more on the financial side. So now I was also doing minority mindset as a hobby. Minority mindset starts to grow. And then I start to build things like market briefs, which is our financial newsletter. So now I'm building market briefs and now I'm doing minority mindset as a hobby. Minority mindset starts to grow. And then I start to build things like market briefs, which is our financial newsletter.

So now I'm building market briefs and now I'm turning more into like from the entrepreneur to the small business side. Because in market briefs, I am not the only worker, right? On the Minority Mindset channel, it's my face, it's me talking. And it's, you know,

we have video editors and all that, but it's mainly me. If I'm not working in minority mindset, we're not making any more content and it's not growing which is okay right it's not for me like as my business for me it's my way of helping to pursue my passion and my mission to help spread this sort of financial education the things that I was never taught yeah but my business now market briefs we have a whole team right we have people that read that lead

the creative side that write the news that every day we have the business development team we have the business development team. We have the operations people. So we have a full team that are doing it. And if I were to not go into work tomorrow or if something were to happen to me, the business would continue without me. Right, right. And so it's a matter of flipping that money into the next thing to the next and being willing to invest the time, the education. So for me, it took me a solid

decade. So I don't have a better, you know, three years, I couldn't figure out how to do it. You know, it took me a long time to figure it out. Maybe you could do it now. Now it's a thousand to a hundred thousand. I could do it significantly faster than a year. I think one of the things is that I'm hearing you say is, you know, invest that thousand into a skill, invest it into a skill. You will get the best return. And put it into, you know, that could be, okay, I'm going to buy a camera. And for the next two years, master becoming great at using the camera, whether it be video or photography, and then start working with clients and making some side income and using that money to reinvest in more equipment. Exactly. Using that money to maybe have someone else help me to scale my side business

and then have that cash to invest in other things as well. And then develop new skills and new skill and new skill. And it takes that mindset though and the willingness to take risk because I would also caution that because you have to be willing to just try. When I started Minority Mindset, I didn't have a camera. I didn't have any fancy equipment. I started recording videos off my phone. And I was like, I because you have to be willing to just try. When I started Minority Mindset, I didn't have a camera.

I didn't have any fancy equipment. I started recording videos off my phone. And I was like, you know, I'm not going to invest so much money into this when I'm trying to, you know, it's a hobby for me. See where it goes. See where it goes. But I did take an acting class. I was in law school. So I was in law school part-time.

I was working on my business full-time. And then I took an acting class in the evenings, night school, because I was like, I've never talked in front of a camera before. I'm not even a good public speaker. I don't know how to present myself. I don't even know how to hit the on button on a camera. How am I supposed to do this? So I took an acting class because I was like, well, I'm willing to learn. I'm willing to try. So you have to be willing to get uncomfortable and you have to be willing to take that risk. And this is going to, I don't know if this is going to offend people or I'm going to say a bad word, but the reason why I think I've been able to become successful is because I'm stupid.

My whole life, I've been told. Me and you both, man. I've been told, just because you're stupid, just because you're stupid, why would you want to do that? And you know what? That's the reason why I am where I am today is because I'm stupid. Because I'm willing to, I never looked at the risk. And you call it stupidity. But for me, I just saw the opportunity as I know I want to achieve something bigger because I saw how hard

my parents had. I saw how hard my grandparents had. My grandparents were refugees. They lost their homes. They lost everything. They had to fight for their lives. And so I saw the things that my family had to go through. My grandparents raised me. They lived with me. So I lived with my grandparents and my parents. So I i heard their stories talked about the struggles and that was where i started to get my basis of financial education because my grandfather would tell me and he actually repeated this to me a couple weeks ago when i was on the phone with him and he was like you know the the biggest and worst disease is poorness because he he said, I grew up and I saw extreme poverty. So my family's from a state in India

called Punjab. And in 1947, our home, the state of Punjab was severed by the government. And if you were a Sikh, a member of the religion that I am, and you're on the west side of Punjab,

you had to migrate east, otherwise you were going to be killed. So my grandparents were on the west side. And you literally had to be killed. So my grandparents were on the west side and you literally had to like run. Like my grandfather, all he had was a clothes on his back and a sword in his hand. And as they were coming across, they got attacked by a mob.

And you saw his uncle get his head chopped open right in front of him. No way. They had a fight. And so he put his uncle on a horse and that was the end. Holy cow. He got to the new side of India now and he's there. he put his uncle on a horse, and that was the end. Holy cow.

He got to the new side of India now, and he's there. He lost his shoes on the way. He has no home, no money, no anything. And so he says, I saw extreme poorness. And when you're in that level of poorness, forget helping other people. You can't even feed yourself. How can you feed your family? If you can't feed your family, you can't feed your family you can't feed another hungry person and so that's what he talks about what he you know

and that's what my initial like the importance of because again like they didn't know investing they didn't know financial education what he knew was survival survival and what he would tell me work hard follow the system and become successful and that's why i wanted to become successful because i saw that now i didn't know the right way to do it at the time, but that's what we're all taught, right? We're all taught to go to school, get good grades, get a good job. But there's so much more to it that we're never taught.

But that's where my initial, like I need to become successful, I need to work hard, was from that learning, that basic kind of need. I'm curious. This is something I don't think many people talk about or I don't hear people talk about, the emotional side around money

and the fear and emotions that are tied to money when you say, okay, here's a couple thousand dollars that I have in my bank account. I'm going to invest some of this. And then you see it in the stock market crash or go down, or you lose half of it in a week. How does someone manage the emotions in the visceral response to when their money goes up

and also goes down in an investment? So you have to know your strategy, and you have to be willing to stick to the strategy and trust your strategy. So that means when times are good, you need to spend your time learning, get educated, and believe your strategy. Because if you just start switching your strategy in the middle of times, you are going to be the

one paying the price. The stock market is a place that transfers money from the patient to the impatient. And so if you are impatient because you're like, oh, things are going wrong temporarily and you sell, what happens? Someone else can pick up your investment at a discounted price. So that's the first thing that you have to understand. You have to understand the strategy and be willing to stick with it and make sure that it's been time tested. And again, history doesn't repeat itself, but it rhymes. And you can see the success of certain strategies through previous downward cycles. Downward cycles happen. It's a fact. I mean, every eight to 12 years, we see some sort of economic slowdown. We see some sort of market crash. This's a fact. I mean, every eight to 12 years, we see some sort of economic slowdown. We see some sort of market crash. This is nothing new. This is why for successful investors,

they love recessions. They love market crashes because it gives them an opportunity to come and buy. It's like Black Friday, right, for investors. So the first thing you have to understand is that. And then that will help you kind of just close your eyes. Remember, these are just day-to-day swings. You only lose money if you sell or if your investment goes bankrupt. So you want to make sure it's not going bankrupt and then understand that. But then on the flip side, you know, you talk about the actual emotions. I'll tell you, it was difficult, you know, because I had very high expectations on me to go out and become a professional.

I became an attorney because essentially the conversation was, if you do not become a doctor, then you're going to lose all pride in the family. So at least become an attorney. It was difficult. Second best. Yeah, exactly. And if you're not that, you're a failure. Yeah, exactly. So, you know, it was tough. And, you know, for me, I was like, okay, well, I can go to law school part-time, which means I can work on my business full-time. However, So I was like, okay, well, I can go to law school part-time, which means I can work on my business full-time.

However, I wasn't the best student in law school. And the reason was because I was devoting a lot of my time and energy into the business. Now, I did good in law school. I actually did really well on the bar exam. I enjoyed learning. I love learning. But I knew that in the back of my mind, oh, my God, if I graduate law school and things don't work,

I don't know how I'm going to work as an attorney. I'm going to be like the bottom of the barrel like i don't know what i'm going to do because i i i don't like know the traditional how to work as an attorney i'm sure i could figure it out but i don't know what i would do and so i remember i was sitting there and i was like oh my god like when i'm done with law school like it's over like i was already making decent money so i was fortunate there but i like, what if this is just like just temporary? What if things go down and I don't have any like security? And that's it. And I would have so much anxiety. I couldn't sleep at night.

I would wake up in the middle of the night multiple times and I would be shaking. And I was like, what if not only am I going to like financially not be able to take care of myself, how am I going to take care of my parents? How am I going to take care of my family? How am I going to, what am I going to tell people? What am I going to financially not be able to take care of myself, how am I going to take care of my parents? How am I going to take care of my family? How am I going to, what am I going to tell people? What am I going to do? And just the amount of questions, it is hard. And the faith in you, being willing to take that risk tolerance is hard.

And I was fortunate that I have tough skin. And I think the reason why is because my whole life I was bullied. I look different. I wear a turban. I have a beard. When I was in elementary school, I was picked on because of it. Then we went through 9-11 when I was, you know, young. Oh, man. How old are you at 9-11? I was maybe 10 years old. So right around 10. And is the tradition, you know, is the youth dress in this way as well?

Or is it more once you're of a certain age? So I wore a smaller turban. Okay. And, you know, it's still very identifiable. Right. I was picked on before that. How old were you then? 9, 11?

Around 10. So what was that like for you? So I went to a school with all white people. And so people just, they were not accustomed to other religions and cultures races and everything yeah and so hey when 9-11 happened everything just went I mean it was really bad where I was like picked on bullied I was punched I was having my stuff thrown on account I was spit on Wow there was times I had my turban ripped off and it was it was pretty badly yeah I mean it

was pretty at 10 at 10 I mean it was it was pretty bad. Really? Yeah, I mean, it was pretty. At 10? At 10, I mean, it was 10, 11, 12, it went on for years. I mean, for years, because not 11, it was five, 10 years of this energy. Yeah, it was a lot. And, you know, it was just one of those things where I would come home, and again, it was my grandparents.

My grandfather, he was a very tough person, right? He went through a lot, and he ended up joining the army. He was a very like, he was like, you gotta stand up for yourself. Yeah, yeah. And I was like, oh, I was a really tough person, right? He went through a lot and he ended up joining the army. He was a very like, he was like, you gotta stand up for yourself. And I was like, oh, I was a really timid young kid. I was like, I don't know. And then my grandma was this loving person who said, no, it's okay, give me a kiss and hug.

Say no, you never wanna fight. Just teach them about them. So I had like these two kind of polar opposites. And I think that was great because that helped me see both sides and become more of like understanding different opinions but you know when you go through that and you realize that you know I'm not accepted or you feel that way when you want to become an entrepreneur you don't get accepted and it translates differently where now it's like oh I don't like your business idea you're

dumb for doing that you must be stupid for doing it who's gonna start a sock business you were supposed to become a doctor that was the same that I heard so many times oh you know people will call my parents and say oh so you're something supposed to be a doctor now he's selling socks and it was like yeah you gotta have some tough skin man to be able to hear that keep going and so I was fortunate to be able to go through that and let that

make me stronger but now it's like it is what it is you know I'm going to keep doing me and it's like you know it goes back to the

hey I'm stupid and it is I'm going to keep doing because I believe in it people don't see what I see but I'm going to go for it my man thank you so much for being here

I appreciate you thank you for having me it was a great time as always thank you so much for listening I hope you enjoyed today's episode and it inspired you on your journey towards greatness. Make sure to check out the show notes in the description for a full rundown of today's show with all the important links. And also make sure to share this with a friend and subscribe over on Apple Podcasts as well. I really love hearing feedback

from you guys. So share a review over on Apple and let me know what part of this episode resonated with you the most. And if no one's told you lately, I want to remind you that you are loved, you are worthy, and you matter. And now it's time to go out there and do something great.