The School of Greatness - The Finance Expert: Simple 6 Step WEALTH Formula ANYONE Can Use To Become a MILLIONAIRE! | Jaspreet Singh

Episode Date: February 23, 2024

Today, finance expert Jaspreet Singh dives into the world of financial responsibility, mindset shifts for wealth building, and the art of savvy investing. Lewis and Jaspreet unpack complex financial concepts using everyday language and relatable personal examples. From the importance of knowing the difference between active and passive investing to the power of digging deep into research before making financial moves, they keep it real and engaging. They explore the highs and lows of forging a different path and the importance of staying educated and aware.But it's not all serious talk! They also delve into practical tips for managing credit card debt, maximizing savings, and building a solid financial foundation.In this episode you will learnThe fundamental difference between active and passive investing and how each strategy can impact your financial future.Tips for managing credit card debt and leveraging credit card benefits to your advantage.The power of strategic savings and how to build a strong financial foundation for long-term success.Insights into the world of real estate investing, including the challenges, rewards, and potential future trends in interest and mortgage rates.The importance of mindset shifts for financial success and how cultivating a proactive attitude can transform your approach to wealth building.For more information go to www.lewishowes.com/1579For more Greatness text PODCAST to [phone]More INVESTING episodes we think you’ll love:Alex Hormozi: https://link.chtbl.com/1522-podJaspreet Singh: https://link.chtbl.com/1411-podRory Vaden: https://link.chtbl.com/1148-pod

Most of us, myself included, are never taught a thing about money. We're told, go to school, get a degree, get a job, and only figure it out. And then what happens for the majority of people is you end up broke, you end up struggling financially, and you can never figure out why. So the first thing is... 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 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. Welcome to this special masterclass. We brought some of the top experts in the world to help you unlock the power of your life through this specific theme today. It's going to be powerful, so let's go ahead and dive in. What is it that you want to achieve in your life financially? And then you have to go out and figure it out yourself because unfortunately school will never teach you this stuff. I saw my parents work their butt off every single day. If my dad got a Saturday and a Sunday off, it was considered a long weekend. And so I didn't get to spend a lot of time with my parents growing

up and they would always tell me that, you know, you have to go out and become successful. And I completely agreed because I wanted to give back to my parents. I wanted to help support them. And I figured, okay, if I want to become successful, I should follow the steps that were told to become successful. What are those steps? Go to school, get a good degree, get a good job. For me, in my case, it was become a doctor. And along that way, it was in college, I realized that something's wrong. Something's not adding up. And it actually happened. I was studying to get into medical school.

And as I was studying, I started reading other business books and financial books. And I remember this. I was in the library studying, and I went onto Google, and I searched the richest people in America. And you see people like Steve Jobs, Warren Buffett, Bill Gates, Mark Zuckerberg. And I was like, huh, none of these people are doctors. None of these people went down that traditional route of getting a degree, doing a good job. Am I missing something? Because I thought that if you go to school, get a good degree, you can make a lot of money. And if you work harder in school, get better grades, you'll make even more money.

So I thought it was just directly correlated, your grades, your income. And that's when I started questioning things. And I realized, oh, maybe this isn't right. And as you start to go down deeper and deeper down the rabbit hole, you start to realize, oh my God, everything that I've been told is a lie. And so that kind of pushed me into this whole painful, emotional journey of learning about money, learning about

entrepreneurship, learning about what does it mean to become wealthy and how do you actually do it? Right. So that was kind of the initial phase for me. And then I had to go out and actually start learning. Yeah. the initial phase for me and then I had to go out and actually start learning it. And the first real experience of that for me was I had this event planning company that I started in college. And the reason why I started it was because when I was in high school, I worked at Indian weddings. So I got to know a lot of the DJs. Right.

And when I was in high school, these DJs were like, hey man, you know a lot of people in high school. How about we host a teen party for your friends in high school? I was like, that's fine you know why not started this little teen party party business in high school and i go to college don't know what to expect because my parents didn't go to university here i think everybody goes to college to study hard and and become this big thing in college i get to college and everybody is partying yeah they're blowing their money that they don't have on alcohol. They're drinking.

I don't drink. I don't smoke. I'm not into that party scene, but I need something to do on Friday nights. So I was like, why don't I just take this teen party business that I had in high school, bring it to college?

And that's what I did. My freshman year, I was 17 years old. I started knocking on the door of every club, venue, bar, restaurant, asking if I could host a party here. Some would say, yeah, it's going to cost you $10,000. Some would say, yeah, it's going to cost you 20 grand. I don't have that money. But then one or two said, you can do it here. We're not going to charge you a penny. Just give us half of the cover charge, half of the money that you bring in. I said, okay, now I'm in business. So I started making a little bit of

money doing this and I had some cash saved up. And I'm starting to read these business books. And every business book said, wealthy people invest in real estate. I don't know what that means. I don't know any real estate investors. My parents aren't investors. And so I was like, okay, if wealthy people invest in real estate, maybe I should invest in real estate. And this was right after the 2008 crash. And I'm in Michigan, where real estate was extremely hard.

So I was like, all right, you know, I would like to invest in real estate. I'm studying for my medical college admission test. I start going to Google because I'm bored while I'm studying for this exam. I'm reading about the Forbes richest people. None of them are doctors. None of them are people that work the traditional path. And, you know, I have this idea to start investing in real estate. So I started looking at real estate in between my study sessions. And on August 22nd,

I took the medical college admission test, the MCAT. On August 23rd, I closed on my first real estate investment property. Wow. How old were you? I was 19. Holy cow. It was $8,000. What was the investment? It was the price of the condo. The condo was eight grand? Eight grand. How'd you get a condo for eight grand? This is right after the 2008 crash. Wow. You got it on foreclosure or what? It was on foreclosure. That same condo was selling for about 150 grand just a few years prior.

Come on. Yeah. And so I came in. It was actually listed on sale for 8,400. I made an offer for 4,000. They came down to $7,000 and I was still trying to push them lower, but then they said they had another offer on the table. I didn't want to lose it. So I said, I'll give you eight grand, right? So I bought it for eight grand, put in a few thousand dollars

worth of work and at least for $600 a month. And now all of a sudden my mind was blown because I kind of had this idea of what entrepreneurship was. I had never heard that term until I came to college, but I was running this event planning company. And I'm starting to learn about this thing called entrepreneurship. And now I have this condo that's generating me this like almost passive income. I say almost because I was making a lot of mistakes in the beginning. But now I'm like, wow, this investing thing is very unique because I never learned this in school. My teachers never taught me this, but why am I working learned this in school. My teachers never taught me this. But why am I working so hard in school? I mean, I want to become a doctor so I can

ultimately make money. Now I start having this, you know, I talked about an emotional dilemma. Why am I becoming a doctor? Okay, I want to make my parents happy. Check. I want to be successful. Check. Do I really want to be a doctor? Maybe. And now I'm starting to question my actual beliefs. Because if I become a doctor, how do you make money? You treat people. I kind of have this entrepreneurial mind. I want to become successful. How do you make more money? You treat more people. So it's like, this kind of runs into a dilemma because if I'm trying to maximize my income as a doctor, I got to maximize how many patients I see. Maybe that means I don't get to give the best value to each individual patient.

But as a human, I want to provide the most value possible. So I started to kind of face this dilemma where maybe I'm becoming a doctor for the wrong reasons. And then I run this idea by my parents. I don't want to be a doctor. And they're like? Absolutely not. My dad was angry. My mom was furious. It took my mom about a year and a half to believe that her son was not going to be a doctor. Oh, man. And I had, I mean, when I say it was tough, like, my parents would tell all their friends,

Joseph is not going to become a doctor. Oh, wow. You're not becoming one. I'm not going to become one. Now I'm getting calls from my family in India. I'm getting calls from my family across what are you doing you're disgraced to your family exactly exactly i hear that again and again and again but i was like this is not for me and i started to realize that there's more to this thing so now i'm starting to go down this financial education journey and the more I learned, the more I realized I was lied to. Like, we're taught to go to school, to get a degree, to get a job, so we can then get a job and climb the corporate ladder.

Well, wealthy people don't do that. Wealthy people are not working to climb the corporate ladder. They're working to own the corporate ladder. I didn't even realize that you could do that. Now, you can climb the corporate ladder and work to own the corporate ladder at the same time, but it's a different mindset, right? Most of us are taught to get that degree so we can do one thing, climb the corporate ladder, earn a bigger salary. But if you only rely on your salary, you're just one step away from being broke. Because if you lose your job, something happens to you, you can't work or your company goes down, you lost your salary, and now you have no income coming in. And now you're scrambling for a job maybe you have some savings to help take care of you or if you haven't been saving and you just spend on on things all the

time and you have no savings then you're really screwed yeah you're going into credit card debt right and now you're trying to figure out how do you make things work and by then it's too late this is where you got to be proactive and now i'm just like this is crazy why was I never taught this I was never taught about wealth I was never taught about investing I was never taught about this sort of financial education but why aren't we taught this and that's when I realized it's very profitable to keep people financially uneducated it's profitable to keep people poor interesting Interesting. What would you say is the main system that keeps people poor then? It goes down to so many different things. The banks profit when you're financially uneducated

because they'll keep you saving money in the bank. They'll keep you in consumer debt. If the banks lived by their own advice, which is save money, the banks would be losing money. When you go and deposit $1,000 in the bank, that cash that you deposited is a liability for the bank. An asset is something that puts money in your pocket. A liability is something that takes money away from your pocket. So when the bank has your cash, it's a liability for them. They want to get rid of it as fast as possible. And the way they do that is by lending it out because it's an investment for the bank. They don't want to hold on to cash, but they want you to save your money. You want you to give them cash. Right. And just leave it there.

Leave it there. And what's happening to your cash while it's there is losing value to inflation each and every day. Every day that you keep your cash in the bank, you're becoming poorer each and every day. Now, it's funny. I made a video on this in 2016. It was my first video to go viral. It was called, You're Guaranteed to Go Broke If You Do This. And I was talking about inflation at 2% to 3%. If you keep your cash in the bank, you're going broke every single day. Now, here we are. 8.5%. 8.5%. And now people are starting to realize, wow, this inflation is a real problem. And so now when you keep your cash in the bank, the bank is paying you 0.01%, maybe 0.5% if you're lucky.

And they're turning around lending it for 5%, 6%. And so the bank does not want to keep that cash and savings because it's a liability for them. They want to keep you spending money on their credit card because now they'll get to earn 18 to 25% in interest every time you spend a dollar. Governments want you to be financially uneducated because when you're financially uneducated, guess what? You are an employee and you're a consumer. Who pays the highest taxes? Employees and consumers. Everybody knows that rich people don't pay taxes. It makes people angry, but a lot of times we don't understand why. Right. And we get angry at the wrong things and the wrong reasons.

Yeah. But the more you make as a business owner, until you're like uber rich, I feel like you're spending a lot of taxes. You are. And you know what? And there's a lot of things that you can do. Right. Legally to pay less money in taxes. And there's different ways that you can invest your money to pay less money in taxes. So I'll give you a couple of examples.

Let me start with this. Tax avoidance and tax evading are two similar words with two very different outcomes. This is one of the first things that you learn in law school. Tax evading is illegal. You go to jail. Yes. Tax avoiding is legal. And then you get hated for doing that. But this is the way it works. But you're playing within the rules of the system. And if you learn the IRS code, it's a rule book. And the people who understand the rule book are the people who have the money to hire

the good accountants and the good attorneys. But you're not an accountant. But have you studied the law? I have studied a lot of tax law. Really? Yeah. And so what happens is wealthy people will understand how this works, play within that system, and pay little to no money in taxes.

What are three things that people who are making half a million and above should be doing to avoid taxes better? So let's start with, let me assume that you have either some sort of your own income, you're a side hustler, or you are a business owner. Yes. So if you make half a million dollars, let's assume that's profit. You are taxed on income. So if you take out a salary, that's going to be taxed.

Now the question is, what is a tax deduction? Or the better question is, how can you make something a tax deduction? Because anything can be a tax deduction if you know how to make it a deduction. So that's the question that you have to ask yourself. Because if you don't have an income, you don't have any tax. So this is what wealthy people are doing. So I'll give you an example of it being done. Then I'll show you how people can do it on a potentially smaller scale.

Elon Musk, he's probably the biggest example of this. He never got paid a salary running and owning Tesla. He got paid in stock options. So these stock options- Was this even before it was public? This is, I think it was around the time that it was public or maybe a little bit before. But he's been getting stock options for a long time. Sure.

But the stock options that he gets or originally got were at $6 a share. So when the stock went up to $1,000 a share and he was given millions of these stock options. Now, he has on paper a lot of money, but that money isn't in his bank account. a lot of money, but that money isn't in his bank account. So what he does is instead of selling it and having an income, he goes to the bank and says, hey, I have these stock options, which are worth billions of dollars. How about you give me a loan at three, four, five percent interest? No bank is going to say no to that because the value of this is so much, the billions of dollars. I mean, you can make the number smaller, but no bank is going to say no. He takes that loan, pays three to four to 5% interest on it. And if his company grows, his stock value grows by 6%, he just made a profit on that. He didn't

have to take any money out, never took an income, doesn't pay any taxes, and is able to now spend his money, live free, buy whatever he wants, live rich, and not pay a penny in tax. So he didn't have to sell any of the stock because if he sold it, he'd pay an income tax wherever you sell it. Instead, you get a loan out from the bank and you don't have to pay tax on that loan. When you go and get a mortgage to buy a home, it's debt. It's not taxable. It's not income. If you go and refinance your home, it's not income. It's cash that you have in your pocket, but it's not income. You're taxed on income. So now your job now as a business owner is strategically, how do you not have an income? Now you might say, well, I need money to spend. Sure, of course you do. But how can you now

strategically use your income to pay for your lifestyle? Now, again, it's gotta be within the rules. So talk to a tax advisor. But right now, after the pandemic, one of the things that the presidential administration wants to do is encourage people to eat out, eat at restaurants,

because restaurants were hit so hard by the pandemic. So what did they do? They created a 100% deduction on food through 2022. so if you go out to eat with your team it's a 100 deduction right off it's a write-off i'm here in san diego well we're in la right now but i'm here on a two-month business trip to san diego with my business partner i have to rent a car i actually got a ford mustang because i always wanted a ford mustang when i was a kid that was like my dream. So I got one here with a convertible. Nice.

And, you know, we have to go to business meetings. We have to go out and explore San Diego, do these things. My business partner is my wife. We're staying in an Airbnb in beautiful San Diego. Guess what? These things are tax deductions against my business. I'm here working. When you're an entrepreneur, everything is work.

Now the question is, how do you spend your money in a way that is going to give you a tax write-off? But you have to be smart here because you don't want to just blow $500,000 so you don't have to pay 150 grand in taxes, right? Like my accountant called me up last year and said, Jaspreet, you need to go out and buy a G-Wagon. I said, what? I don't want to buy a G-Wagon. Why? He said, you know, there's this tax deduction going on saying if you go out and buy a heavy car, it's still going on right now. If you go out and buy a heavy car, you can deduct up to 100% of that value of that vehicle right now. Really? And because you're an influencer, you can potentially claim that as an influencer, you need a G-Wagon to help you support your lifestyle. The tax code allows this. And I was like, well, I don't want to go out and spend 150 grand for a car that I don't

necessarily need just so I can save, let's just say 50 grand on those taxes. So you have to be smart here and know what's right for you and not just spend your money to spend a dollar to save 25 cents. So you just need to know the right strategies that can work for you. And these things change over time, which is why the best thing that you can do is go out and hire a tax accountant, a tax advisor, somebody that isn't just going to file your taxes, but someone that's going to help guide you and say, all right, here are some things that you could potentially spend your money on. Here are where there are more benefits coming this year, next year, things that you want to do. And so there's going to be times where it's going to be more beneficial for you to spend money. There's

going to be times where it's going to be more beneficial for you to take in money. And it's all a game. And this is what wealthy people understand. It's all a game. And a lot of people hate that, oh, this person's not paying taxes, that person's not paying taxes. But at the end of the day, what you have to remember is somebody else wrote the tax code. All that people are doing is they're trying to learn, okay, this is what the tax code is. What do I do? And then you kind of get into the other philosophical questions. Who's going to do better with $100,000?

The government or me? If I have $100,000 in my pocket, I can go hire an employee or two. The government is going to spend that money wherever they spend it. And pennies will end up actually going to help people. I'm all for helping people. I think that's very important. As soon as we hit a million subscribers on YouTube, what we did was I took my team, we went out to a teacher store and essentially I asked them, hey, can we buy everything in your store? Wow. Because during the pandemic, people weren't going to class in person. And so a lot of these businesses were hurt. I said, can I buy everything? And she said, well, we need some of this stuff for our teachers. I said, what can we buy? So then we went out and bought a big chunk of the store. Mr. B-style.

Mr. B-style. It was a fun video i took the team out kind of a celebration we bought a big chunk took it out to a school in detroit gave it to them for free and then i asked the principal there's a friend of mine i said how many teachers do you have okay and i gave every one of his teachers a 500 check to help them help support their students giving is important but you know it goes back to the tax question of who does a better job with their money, right? Entrepreneurs who are working to create more jobs, who are working to produce more value, or the government, which may not be so good with their money. Absolutely. Yeah. So you started doing the real estate thing early. Are you still a massive

investor in real estate? Or what's your approach on it now? Yeah. So this is an interesting question that you asked, especially right after the tax question. So real estate is one of the best tax games for investors. That's one of the reasons why wealthy people love investing in real estate, because not only can you get cash flow, but you also get tax benefits. I started investing in real estate when I was 19 on accident. I went through a lot of pain. I remember when I told my dad first, hey, dad, I want to go investing in real estate when I was 19 on accident. I went through a lot of pain. I remember when I told my dad first, hey, dad, I want to go invest in real estate. He was like, you're stupid.

Go study. Go become a doctor. So I started investing in real estate then. And I continued to buy homes. And I remember, because remember, this is right after the 2008 crash. I was buying homes for like 30 grand in good areas. I remember home prices went up to $50,000. And I was like, that's a lot of money

for a home. I didn't know anything else, right? That's all I saw. And so to me, I was like, that's expensive. But I continued buying. And I still am buying, but not as much as I was before, because now I've been working on a couple other businesses. And so what I'm realizing is, okay, when I invest my money in real estate, my goal is to get a 7% cash on cash return on my money. Meaning for every dollar I invest, I want to get 7 cents back in cash flow, positive cash flow every year. If I invest 100 grand, I want $7,000 of profit every single year. Well, I'm an entrepreneur, right? So I'm working on a couple of different companies, one of which is Market Briefs.

And so now I'm in this position where, what do I do with this cash? I can take this money, put it in real estate, get a 7%, 8% return on my money, or I can put it in market briefs, which would be a bigger tax deduction. Because now, if I spend money in advertising, I spend money in marketing, I hire more employees,

we have a smaller profit, but then I can grow the company significantly faster than 7% a year. So what I've been doing now is investing more of my money into market briefs because it's something that I'm super passionate about. I love real estate. I love revitalizing homes and buildings and really helping to build neighborhoods through that. But marketPrives had such a different value in the sense that we're making financial news accessible because I didn't grow up learning about money. And CNBC looked cool, but I never understood anything that was happening there.

They have all these confusing terms that are going on. So it's a way to make financial education and what's going on with money more accessible to people because I'm realizing how important that is to me because the more and more I talk to people, the more that people listen to what I say, the more I hear, oh my God, I wish I would have learned this when I was younger. Like, yeah, I know, me too. And so it's like, it's important for me to help get that message out there because it's so needed. It's not very complex complex but I created this wealth formula which breaks it down into a very simple almost mathematical thing where it's you take

your income you subtract your expenses and that equals your investments plus your savings income plus income minus expenses equals your investments plus your savings. So if you want to become wealthy, it ultimately comes down to having more investments. Your savings are not there to make you wealthy. They're there to protect you against an emergency. Your investments are what make you wealthy. So if you want to become wealthy sooner or if you want to become a wealthier. You need more investments.

You need more investments. How do you do that? Well, if it's your income minus your expenses, it's basic math. Either increase your income, decrease your expenses, or do both. Right.

So that's the ultimate formula. So now if we talk about, let's break it down step by step on how do you actually do it. Six steps. And this is, no matter what age you are, these are the six steps that you want to follow.

Before you get into the six steps, what is the mindset that someone needs to think about step number one is about the mindset so step number one is you need to have the right mindset okay so this is why i call myself the minority mindset and you know the brand minority mindset because it's all about thinking differently than the majority of people because if you follow what the majority of people do in 80 to 90 percent of situations you're probably doing something wrong. And you'll be in debt and you'll be paying off debts and loans for the rest of your life. The majority of people are broke.

The majority of people are living paycheck to paycheck. The majority of people are drowning in debt. The majority of people have zero to no investments. The majority of people are unhappy. The majority of people are miserable. And the majority of people do not like their jobs. This is not me exaggerating. the majority of people are miserable and the majority of people do not like their jobs this is not me exaggerating these are all statistical numbers where more than 50 percent of people feel

this way and so if now you keep doing what everybody else does you're going to end up like everybody else and so this is where now you want to think a little bit different and try to find what's right for you and try to get educated yourself because when it comes to the mindset the first thing you have to understand is that it is possible. Because if you're sitting there saying, it's not possible for someone like me, somebody who has my background, my parents, my whatever, I can't become successful,

I 100% guarantee that you will not be able to become successful. You cannot change your outcome without changing your mindset. Oh, that's big. And in the previous interview we had, we talked about mindset versus tool set, where most of the times we assume that the reason why we can't become successful is because we lack the tool set.

When in reality, for 90% of people, it's lacking the right mindset. Because when you have the right mindset, you'll discover that the tool set is right around you. So it's first believing that you can do it. Because once you know and believe that you can do it, that belief is going to then impact your decisions. Because now you can say, you know what? Yeah, maybe I can become successful. What are you going to do? You're going to go into YouTube, watch videos. How do I become successful? They start watching videos. Maybe you start

binging videos. And now you start to realize, oh, okay, I can start to do this. I can change this about my life. I need to change the way I think. I need to change my actions. I need to do more things in my day. I need to stop watching so much Netflix. I need to do this. Then maybe you start reading books.

And now you start reading business books. Because I have read a lot of business books. And there's so much wealth in a $20 business book. Just go on to Audible. Look at some of the top business books and just start reading them. And you will learn so much wealth in a $20 business book. Just go on to Audible, look at some of the top business books, and just start reading them. And you will learn so much. Now you start reading them. Maybe you start doing a little bit.

Maybe you don't succeed too much, but you start taking some action. And you start to learn even more because your experiences are some of the best teachers in the world. Even if you make mistakes. I have learned from my mistakes. I didn't have a mentor. I didn't have guidance. I didn't have investment family members. I didn't have people telling. I didn't have guidance. I didn't have investment family members. I didn't have people telling me how entrepreneurship works.

I screwed up a ton, just like you. We made a ton of mistakes and that's how we learned. And then maybe you go and take a class. Now you're like, okay, I want to learn how to do this. I'm trying to build this business. I'm doing something wrong. I'm trying to get a better job or I'm trying to get a raise. I keep doing something wrong.

You've read books. Now maybe you find a class. You invest some money in this class and now you have more education. Now you try more. And now you start to see over time, oh my God, 12 months ago, I had no idea. I didn't even believe that I can do it. Now that I believe that I can do it, I started watching YouTube videos. I started reading books. I started taking classes. I started taking action. And then you keep doing it. Maybe you hire a coach. Maybe you hire a consultant. I mean, the list goes on and on and on of what you can do. But it all first starts with the mindset, because if you tell yourself you can't, your mind shuts down, and you're never going to find an

opportunity, you're never going to look for the opportunity. So that's where the mindset is the most important thing. And if you don't have the right mindset, this is where the first thing you want to do is start learning how to build self-esteem how do i build my confidence how do i believe in myself and there's i don't have a ton of videos on this i know you have a ton of videos on this watch lewis's stuff right so start there then we go a little bit deeper now for focusing on finances but mindset is number one mindset is number one the second now, once you build the right mindset, is you want to create your financial base. And the best way to understand this is just to think, if you wanted to build a house, what do you do first?

Well, you've got to build a foundation. If you want a bigger, bigger house, if you want to build a bigger house, you want to dig a deeper foundation. You want to build a tall building, you need an even deeper foundation. So you have to start by building a financial base. And what that means financially is first, you want to save $2,000 at the very least. You want to put aside some cash for savings as fast as possible. Because right now, it's something like 40% to 70% of Americans don't have,

well, 40% of Americans don't have $1,000 to put aside and something close to 70% of Americans don't even have $400 put aside to protect them against an emergency. So most Americans don't have $1,000 to put aside. Get a $2,000 base. So have a two grand as fast as possible. And then you need to cut the financial bleeding. That means your high interest debts your credit card debts your hard money loans your zero percent apr loans which are now charged you 20 to 25

these need to be paid off as fast as possible because these are loans that are skinning you alive financially so i mean it seems like credit cards are one of the biggest things that hold people back. Look, credit cards are a tool. They are a tool. If you're not educated with them, you could get stuck. If you have this tool without the education, it will burn you. I only spend with a credit card. I spend a lot of money with a credit card because I know how to use a tool. And now because I know how to use my credit card, what happens?

Well, I don't spend more than I would otherwise because I use my credit card just as a medium of exchange. I'm going to spend this money anyways. Might as well use my credit card. My credit card gives me perks. It gives me cash back. It gives me fraud protection. It gives me free insurance. It gives me hotel upgrades.

It gives me all these things just because I use my credit card instead of paying with cash. And so now, again, it's the financial education because now some people will say oh my god these credit card companies are scams well the reason why they're looked at as scams is because we don't have the right education on how to use them right it's a tool without the education on how to use it and this is where now you have to build that financial education and many times you're gonna have to go out and do it yourself because your credit card company is not incentivized to give you the financial education because they're going to make less money right it's profitable to keep people poor it's profitable to keep people financially uneducated because now if you just keep spending money in your credit

card because you have no idea what you're doing now your credit card company is going to get rich the average household in america6,200 with the credit card debt. So if you have credit card debt in America, you probably have an average of $6,200. Now, let's talk about that. And what's the interest on that? Well, that's at 15% to 25%, 28%. And that's going up. Every month you're paying that. You're paying it every month. So it's not $6,000 a month. It's really over years. if you never fully pay it off, you're just paying more and more and more.

And the interest rate on your credit card isn't fixed rate. It's variable interest rate. So as the Federal Reserve Bank raises interest rates, the interest rate on your credit card also goes up. So if you are 21 years old right now and you invested $6,200, which is the average household credit card debt right now, if you invest $6,200 right now and you got a 20% return on your money and you did that for the next 45, 46 years, you were going to retire with $20 million. $20 million. And you never invest another penny again. Say it one more time. If you invest $ invest 6200 today and you never invest another penny again and 21 at 21 and you get a 20 return on your money you're going to retire with 20 million

wow now you're going to say just believe what in the world am i going to get 20 return on my money year after year you're right but your credit card companies do it every single day wow they're charging you and so when you have that sort of credit card debt that's you making your credit card company richer now you know whether or not you think it's a scam look let's move past and understand what's going on that way now you can use it to your advantage because I get tens of thousands of dollars worth of cash back every year from my credit card company because I use it as a tool and I understand how to use it and this is where look if you don't use a credit

card doesn't matter right but just don't if you have credit card debt you have to pay that off because that is skinning you alive right now understand the financial education aspect so that's the first thing you want to do is create your financial base mm-hmm so you got to save some cash then you got to pay that credit card debt off cut the financial bleeding cut the financial bleeding what's the strategy if you got three credit cards what? What's the strategy to get rid of that debt? So Dave Ramsey is going to tell you to do something called the snowball method. Smallest first?

Smallest first to the biggest. Because you're building momentum, right? A financial advisor may tell you the opposite. Do the debt avalanche, which is now pay the highest interest rate first and then go down because now you're going to pay off the most interest first. So it costs you the most money in the long term. The reason why Dave Ramsey recommends the snowball method is because psychologically, when you get those small wins of paying something off, you feel like you're winning and you can pay it off faster. A advisor is going to look at the math and say, hey, look, these numbers are telling me that pay

off the higher interest rate first because it's going to save you the most money in the long term. Which one's right? Again, I'm not going to say which one do what's best for you because I know if I was in a situation I'm not I like the idea of paying down the heavy interest rate first because that's how my brain works I don't need the small wins like that I can work for the long term I think you know the entrepreneurial mindset where you know I know how my mind works so I understand myself and this is just honestly being open and honest with yourself if you can't stay true with it then do the snowball yes it does not matter screw paying it off a few months early just get it away and pay it off as fast as possible cut out cut the financial bleeding and have a

two thousand dollar base that's step two okay that's step two now the next thing you want to do is what i call lead your money so this is where you want to create a financial system and start investing your money because your savings will never make you wealthy you cannot save your way to wealth you have to invest your money your savings won't make you wealthy because of what we've talked about in previous interviews inflation you're losing money in the savings if inflation is higher than the interest rate you're getting at the bank then your savings are effectively making you poorer each and every day because your savings are losing value to inflation now does this mean you should not save any money no it means you need to save your money strategically so you want to save your money for three reasons and three reasons only. Save your money for an emergency. Save your money for a big purchase. If you want to buy a car,

you want to buy a house, you want to buy a nice watch, whatever you want to buy, you need cash in order to do that. And then three, save your money for an investment. If you're not saving your money for one of these three reasons, you're saving your money the wrong way and it is making you poorer by saving that money. So now we focus on the first aspect of saving your money for an emergency. How much do you save? This is now, again, going to depend on your risk tolerance. You want to save somewhere between three to 12 months worth of your expenses.

And the amount of money you save is going to depend on where you are in life and how much risk you're willing to take on if you're like hey dude i'm i'm 25 years old i don't have any financial responsibilities i don't need that much savings fine save a few months worth of savings and that's it invest more aggressively if you're like hey i have a family i have kids i have a spouse i i don't want to take on all this risk then save six months nine months a year's worth of savings because now it will give you that peace of mind that you have some extra cash put aside so it's going to depend on your risk tolerance and what you want but this in this lead your money step this is where you want to understand that there's more to putting your money aside than just saving your money you also want to be putting your money to work and the best way to do this is to create a system

be putting your money to work. And the best way to do this is to create a system where no matter how much money you're making, you are going to proportionately continually invest and save based on your income. So what does that mean? Well, one of the simplest things you can do is follow something like my 75-15-10 plan, which means for every dollar that you earn 75 cents is the maximum that you can spend 15 cents is the minimum that you invest and 10 cents is the minimum that you save and this never changes with your income the only thing that you would ever change is after you hit that savings goal for your emergency savings you don't keep saving your money for the emergency because you built that whatever once you want you put that towards your money for the emergency because you built that whatever months you want, you put that towards your investments.

And now, whether you're making 40 grand, 400 grand, 4 million, 40 million, you just keep following the same thing and you're living below your means and now you're constantly

putting monies aside for your investments. Now again, we talked about this before. This investment money can either be passively invested, all of it, or you can put this money aside all of it, or you can put

this money aside to be invested. So you can put this money into a bank account. You're looking for a rental property. You're looking for a business to buy. You're looking for a cheap stock to buy. This now depends on your investment goals, right? Where do you want to be invested? How do you want to invest your money? And this is that financial education now of, what do you want to do? And your personal goals. If you don't want to be involved with your money, you don't want to be, hey, day-to-day investing or paying attention to the markets, you hate that idea, just passively invest it. Right. You've become wealthy with your investment money. Your savings are there to protect you against an emergency. Your spending money is what allows you to live your life and have the nice things.

And so now we'll get into now how do you live more, live better today by earning more money in a bit. But this is where now the passive investing is the most accessible way for somebody to start investing. And then somebody is going to say, what do I invest in? Because we're talking about where you can invest in the stock market. There are funds like there's index funds, ETFs, mutual funds. They all work similarly with some nuanced differences that allow you to invest into a basket of stocks, a group of companies. So for example, I like ETFs just because they're very convenient. So you invest in that ticker symbol. ETFs stand for? Exchange traded funds. So for example, if you wanted to invest in the stock

market, the general stock market, there's a fund, an ETF called VTI. Now I'm not telling you what to invest in, just giving you some examples. VTI is a total stock market ETF. If you invest in that one ticker symbol, you're getting exposure to the United States stock market. You're getting diversified. Getting diversified in the stock market, not across different asset classes, but within the stock market. You could then pick, oh, I want to invest in, let's say, the S&P 500, which is the 500 largest companies in the stock market. SPY, there's an ETF that gives you exposure to that. Let's say you want to invest in the Dow Jones. That is the most commonly discussed fund. It is a group of 30 companies in the stock market, big, large companies.

DIA is an ETF that gives you exposure to that. You can invest in three stocks, which would be hundreds of stocks throughout those three investments. ETFs, yep. Those three ETFs will give you exposure to hundreds, not thousands. And all you need to do is invest in those three things and set it and forget it, essentially. And now you can just set it automatic. Remember, automatic.

So the key here now is you invest when the market's up and down. You don't change it. So when you see the market crash happen, you don't stop. You keep investing. The only thing that you would change is potentially buy more. Because when you see these types of market pullbacks, most people are selling and they're running away because they're panicking and getting scared that my investment is going down. That's when you want to be coming

and buying aggressively because now investments are going on sale. And so this is where it's, again, that mindset shift of understanding what is it that you want to be investing in

and how long are you investing for? If you're investing for the long term, who cares what's happening in the next two months or next two years? You're investing for the next 20 years. I call it a decade of sacrifice. If you want to become wealthy, and seriously, wealthy, not like, oh, I have a little bit of money.

No, you want to become wealthy. You got to put in what I call that decade of sacrifice where you're working to spend less and earn more. That way, you have more money to invest. And most people are not willing to go through that sacrifice because that means I can't have that Gucci belt today so I can have more investments today. I can't show off my stock portfolio or my real estate portfolio the way that I can my Gucci belt. And most people would rather have the show, would rather have the look than the actual thing that will make you wealthy. And that goes back to the mindset, the thing you talk so much about. Your mindset has to be focused on saying, you know what, I want to become wealthy. And that's hard because now, for one, mindset has to be focused on saying you know what i want to become wealthy and that's hard because now for one you have to be convinced yourself and now you might have a spouse

you might have kids and that means you all have to be on the same page financially right because this is a money is a team game it's in the house if you think you know i'm gonna go and try to build my wealth myself and then your husband or your wife is going out and spending all this money they're going to be pulling you back. So you got to be on board where I'm mentally on the same page. My spouse is on the same page. My kids are on the same page. We're going to build wealth.

And we're going to build something that we've never seen before. And that's that first mindset where now I believe I can do it. I'm going to do it. Now you start putting in that sacrifice. So we started by the passive investing. Next is active investing. And I also should mention that you can do passive and active investing. I do both. What's the example for you? So I invest my money in five places. I invest my money into businesses, which are my own businesses

and startups that I invest in. Invest my money into physical real estate. Invest my money into stocks. Invest some of my money into cryptocurrency, a little bit more of a speculative play. And then I invest a small piece of my portfolio, about 2% of my overall investment portfolio into physical gold. So my gold, my cryptocurrency, and some of my stock market investments are passive. Meaning this happens for my stock market every week, for crypto every day, for gold every month. It's the automatic, passive, and consistent. I don't touch it. It is automatically pulled out of my checking account and it is invested. Interesting. And your bank, you can set up parameters in your bank to automatically do this. Yes. Two specific places you want to invest. Exactly. That's nice.

Technology has made investing so much more accessible. Do all these banks do this or what are the top few that you see that? Many banks will allow you to move money from one bank account to the other. These investment accounts, you're going to have to work with a particular brokerage. There's tons of brokerages out there that do this. You can find whatever you like for,

let's just say you want to invest in the stock market. There's a bunch of brokerages out there that will allow you now to invest your money into the stock market through this passive type of system. You just have to find what's right for you. And this could depend on what country you're in and just what interface you like the best. And it's become very accessible. It is so much simpler now than 10 years ago, let alone 50 years ago. So we are very blessed to be able to do this now. On the active side, this is where now I invest into my own businesses. I invest into real estate.

And then I also invest in some stocks. Do you do real estate funds or do you do your own individual real estate buildings yourself? I have done some real estate funds, but that is the smallest piece. Most of it, probably 99 point some percent of it, is actual physical real estate that i'm going on and buying myself and so now it's when we talk about active investing what does this mean first this means now that you are going out finding investment opportunities to invest in and then you're putting your money in and uh now this is where the research is important so like for example

the business i invest in my own businesses. I also invest in some startups. Startup investing is very risky. Nine out of 10 startups will statistically fail. So I know that when I invest my money in these startups, a big chunk of this money, I will probably never see again. But my goal is now that a small piece of these startups that I invest in will go big

and then that will make up for the other losses. With real estate, my goal is completely different. With real estate, my goal is cash flow. I call it cash flow because cash flow funds the guac flow. And what that means is now when I own a cash flow producing asset, I'm getting money coming into my account now every month with my real estate that I don't have to actively work to earn because I have a property management company in place. I have a system in place. So it's not like I have to go to work to earn this money. I buy the properties. I have the systems where we renovate the properties with the contractors. We do the right inspections. Then I give the keys to the property manager. My job is done. Now every month I'm getting cash

deposited into my bank account. Every month and every quarter i get financial reports going over what's going on with my properties so it's hands off i still review the properties like i review the financials i review what the property manager is doing but i'm not going to work to earn this cash now i should also say it took me a ton of work and a ton of time and a ton of headache and a ton of mistakes to learn how to do it the right way. Because I didn't grow up with real estate investors in my family. I had to go out and just kind of do it and figure it out. And it was very stressful. A lot of people on the internet

make real estate investing seem like this holy grail, go buy some real estate and you're gonna be swimming in the dough. But here's the thing, when you buy real estate on your own, it's almost like a full-time job managing the property, managing if you're doing the Airbnb or short-term rentals, it's like you're gonna constantly clean and adjust and promote it and market it

and deal with the Airbnb stuff, or you need to find someone to pay to manage it. But ultimately, at the end of the day, you gotta deal with the taxes of it, you gotta deal with the expenses of it, you gotta deal with the fixing of it, you gotta deal with the regulations around it, whatever it might be.

So how do you invest where it doesn't become a time suck and an extra job in that real estate, but it's actually cashflow that is more passive? Is that even possible with real estate? For me, I can only speak from my experiences because for me, it was a huge time suck. It was like a full-time job. It was more than a full-time job I couldn't sleep at night because of how

many issues I dealt with but so why be in real estate today if it caused you so much pain previously well see I you you go in with a vision right like entrepreneurs you have to be a little bit crazy you don't know how something's gonna work out but you're you're putting in countless hours. You're not sleeping at night. You're sacrificing vacations. You're not talking to your family. You're doing a bunch of crazy things because you think this thing is going to work. That's how it was for real estate. I'm known for being like that stupid person. And I've always been that thing. And for me, it's like, I believe something so much that I'm willing to make a lot of sacrifices and

keep doing something. And for me, when I invested in real estate, I was 19 when I started, when I bought my first property. And I did it kind of all by myself because I told my dad I wanted to invest in real estate. And I grew up in a very traditional Indian house. My parents were immigrants. My state in India called Punjab. So my parents came to this country with very little insight. Yeah, exactly. You got the Bhangra moves down. That's our dance. We were just talking about Bhangra before this. It's a traditional dance. But my parents came here with very little. And, you know, they wanted me to be a doctor. And it was very, like, strict that you have to become a doctor. Nothing else is the option. So anything that wasn't medical related was, like, a big no-no. So becoming a lawyer, you were a failure.

I was, yeah, that was a huge compromise for me to become an attorney with my parents. But this is before I even became an attorney where I said I want to invest in real estate. My dad was like, and I was actually studying for the medical college admission test when I had the idea to start investing in real estate. And I had some cash saved up because I was working on an event planning company at the time when I was in college. My parents didn't know about that. So I was making a little bit of money and I was like, I want to invest in real estate. My dad's like, you're stupid. Go study, go become a doctor and then worry about all this other stuff that you're doing. So I was like, all right,

I'm just going to do it without telling you. So how much was your first deal? It was a small condo that I bought. The condo, about three or four years prior to me purchasing it, sold for about $150,000. It went through foreclosure. The banks had it listed for $8,400. How? Man, you got the jackpot of that thing, it sounds like. I made an offer for $4,000. Oh, my gosh.

I didn't know what I was doing, right? So I'm like, well. Did you get it? Well, I put an offer for $4,000. They said, we'll give it to you for 7,000. And I said, no, I don't know what I offered. Something else. Maybe let's say five grand.

Yeah. And then another person came in to potentially buy the property. And so the bank says, we have another offer on the table. Give us your highest and best offer. Now, to put this in perspective, I didn't know this was a good deal. Because I'm 19. I knew nothing about money. Five grand is a lot of money at 19.

It's like all your money. Yeah. So I know nothing about investing. I didn't know what passive investing was. I had only read books about investing. So I'm reading some books and now I'm just going out doing it because I know nobody in real estate. I didn't even know you could invest in real estate.

So I'm like, okay, well, somebody's making an offer. I kind of like this deal because I'd looked at a few other properties. So I was like, well, how about I make an offer for eight grand? We'll see where they go. And the bank took my offer. The other person offered less than what I did. Wow.

So I bought it for eight grand. I put in a few thousand dollars worth of work. And then I listed it for $600 a month. And the profit on that was between $250 to $300 a month, depending on the month, which now sounds great, right? This is the beauty of real estate. The downfall is it was a big pain because I didn't know what I was doing. I hired a, I don't want to say scam property manager because I haven't been able to validate that, but I don't know if they were licensed. The tenant moved in. We didn't have a lease the tenant was absolutely crazy they had my phone number so now i'm going to class like i remember i was coming

out of my chemistry classes or my physics classes and i had these voicemails these multi-minute long voicemails of the tenants talking about how the world is ending they're like this property is going to go up in flames so i was like what's going on i get an electrician out there we go to the property and this is like after multiple issues that happened. I went with an envelope of cash. I probably had like $50 of cash in this envelope that I gave to them because I felt bad for the tenant. Electrician's looking at the property. They're like, yeah, your light bulb fused.

We can just replace that. That's it. That was it. There was an instance where they were cutting cucumbers on the countertop. They missed the cucumber. They scratched the countertop. She calls me crying that she needs a brand new countertop. They missed the cucumber. They scratched the countertop. She calls me crying that she needs a brand new countertop. Oh my gosh.

I gave it to them. Oh. Because I didn't, I don't know what's going on. So like I dealt with a lot of issues. And that was just the first one. I mean, like the first, I would say three were my learning curve where I was like a full-time, like I'm on the phone talking to people trying to find contractors I'm trying to find the right attorneys I got screwed over by attorneys

I got I mean I made every mistake possible why'd you keep doing real estate after the first three failed yeah see this is where the the stupid comes in out of me well I read books and people talk about how investors own thousands of real estate units. I was like, how can somebody deal with thousands of tenants like this? It's not possible. There has to be a system. I just had to figure out how to crack that code. How do I break this system?

And that was my journey was learning it. And it was very painful, very expensive, and very stressful because the third deal literally depleted my bank account. I was talking to my wife about this the other day where that third deal was so stressful because I made every mistake possible. I talk about this on YouTube. It's my worst real estate deal ever. I bought the deal because my contractor told me it was a good deal. He told me that, hey, we can fix it up for not a lot of money. And because it's such a good deal, you're going to be able to make a lot of money on it. So he's like, don't even worry about getting an inspection on the property. Just go and buy it.

So that's what I did. I trusted him, right? Bought the property, gave him the money. He ran away. I didn't know that he wanted the money because he was running into financial problems. away. I didn't know that he wanted the money because he was running into financial problems. Then this property, it turns out, had a lot of defects behind the scenes, which I didn't know. We had the city come out and look at the property and it was the repairs cost way more than what the actual property cost. And so now I was really in trouble because I wanted to get this property

rented out. My bank account, that property account literally went negative. And I had an overdraft fee on this account, which I had no money to pay at the time for that property because I was putting all my cash into this. And like I was saying before, I was in the event planning party business, which was a cash business. So I had like literally a bag of cash in my room. So I went to my last resort was I pulled the cash out of my bag and I gave it to the contractor I was like dude we got to get this done I need to get this I need to get some income out of this property because I couldn't sell it right I couldn't get a certificate of occupancy I couldn't rent it out and so it was like I was so stuck I

was fortunate that I had that cash but I mean it was a tough situation that was my real life tuition like that was where i learned like i say that one deal taught me years worth of real estate in one property because i learned so many things wow that i should not do but then from there you know i was able to stabilize i made some more money with other ventures that i was doing because i was making money for one reason to buy real estate like that's all i was doing and losing it in the real estate in real estate but i was learning. And losing it in the real estate. Losing it in real estate. But I was learning, right? That was my learning process. So I guess I can't, I wouldn't change it because I learned a lot from it. Very stressful. When I say I lost sleep, I lost a lot of sleep at that time. So when you're going to buy a property now, what is the approach that you take so that it maximizes your return, saves you time and energy,

and minimizes stress? What is the approach if you're like, okay, am I buying single unit properties? Am I buying apartment buildings? Am I buying duplexes, fourplexes? Am I working with another investor and buying a bigger deal? What is that thought process into buying a deal? First off, and then how do you set it up so it doesn't take you a lot of time to manage it?

Sure. So I would say the first thing is I need to know what my return is going to be and generally my general rule of thumb is i need a seven percent cash on cash return annually annually and what that means is for every dollar that i invest i want to see seven cents of cash flow uh that's money that's hitting my bank account after expenses uh that has nothing to do with appreciation so i want to look at those financials i want the seven percent cash on cash return money that's hitting my bank account after expenses that has nothing to do with appreciation. So I want to look at those financials. I want the 7% cash on cash return. Then I got to look at where am I investing? So I like to invest in areas that are growing, that have more up and coming-ness to it. So this is now, I want to see populations at least stable,

if not rising. Do a quick Google search of any city and Google will tell you what's happening with the population. It's made it so easy. Wow, what are the top three cities that are rising that are also not over, I guess, overpriced right now? What are those top three cities? Let's see in 24 months where that actually is because we're going through this correction

in real estate right now. So let's see where interest rates go because that's going to influence housing prices and real estate prices in general. But keep an eye on interest rates. The general thing is as interest rates go up, property prices will go down. So let's rediscuss that. What do you think is going to happen in the next 12 months with interest rates? Well, the Federal Reserve Bank says that they're going to raise interest rates. And if they keep doing that, they're going to push this economy into a lot of pain. Because it came down a little bit, right?

Recently? So mortgage rates and interest rates are two different things. So interest rates set by the Federal Reserve Bank are called the federal funds rates. This is the interest rate that one bank pays another when they lend each other money overnight. So think of it like the wholesale price, right? When you go to buy this mug from Amazon, Amazon's buying it from the manufacturer. They're buying it cheaper.

Then they sell it to you at a marked up price called the retail price. So banks have this wholesale price called the federal funds rate. Then they jack it up and sell it to you as the mortgage rate. So federal funds rates the fed rate can influence where mortgage rates are going so interest rates can be different than mortgage

rates right they are different than mortgage rates what's the current kind of interest rate at the time of this interview uh for mortgage rates for the interest rate versus mortgage rate so the federal fund right now is right around five percent just under five percent the federal funds rate mortgage rates are hovering around the mid just under 5%, the federal funds rate. Mortgage rates are hovering around the mid 6% for a 30-year fixed rate mortgage. Now, the question is, where are we going to go from here? The Federal Reserve Bank has a mission to fight inflation. That is a big deal. It is a super serious problem. And we've discussed this in other interviews. I'm not going to go too deep into what is inflation inflation why that's happening we have an inflation problem and that is a serious problem because if we don't solve the inflation problem then we risk a serious currency crisis we

risk potential hyperinflation we risk our our dollar losing the reserve currency status so it is a serious issue to bring inflation down because, yeah, a recession is bad. A currency crisis is even worse. That's why the Federal Reserve Bank is working to increase interest rates because that brings down inflation. They're looking to increase them. Increase interest rates. And what about the mortgage rates? So that pushes mortgage rates higher. Higher. So now rising interest rates have a consequence, and that consequence is a slowing economy because when you raise interest rates, it makes borrowing money more expensive.

And less people want to buy. Less people borrow money. Less people buy. And now if you remember what we said just a few minutes ago in our economic system, spending is good for the economy. Higher interest rates, less spending, bad for the economy. Our economic system wants people to spend money. In fact, they want you to

be in debt and spend money because if you're in debt and you're spending money, they're making money. They're making more money. 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 episode with all the important links. And if you want weekly exclusive bonus episodes with me personally, as well as ad free listening, then make sure to subscribe to our greatness plus channel exclusively on Apple podcasts, share this with a friend on social media and leave us a review on Apple podcasts as well. Let me know what you enjoyed about this episode in that review. I really love

hearing feedback from you and it helps us figure out how we can support and serve you moving forward. And I want to remind you, if no one has told you lately that you are loved, you are worthy, and you matter. And now it's time to go out there and do something great.