Have you ever had a conversation like this? I'm trying to get ahead financially,
I'd love to be able to buy a house, is there any advice you can give me? [Music]
It's simple you just need to work harder! Work harder, that's it?
Yes you just need to work harder! I think there might be a little bit more to it
than that. 40 years ago average house prices were around 2 to 3 times average income, now house
prices are around 7 to 9 times average income. All that doesn't matter, all
that matters is that work harder! However the Boomer, was only half wrong. To
generate wealth and financial independence you need to work hard, as well as have the
perseverance to push through the difficult times. We live in very different economic conditions
to those of the 1980s, so in addition to working harder, we need to work smarter!
I'm going to give to you my 4 life principles for generating Wealth and Financial Security which
can be implemented into your life immediately! The Silent Flex.
How often do you see people posting on social media going to
the best clubs, flying in the most expensive planes and wearing the latest luxury Brands.
Alpha Gen Z and Gen Y will become the biggest buyers of luxury goods by 2030.
Now if that's
the lifestyle you want that is totally fine, what is not fine is funding that lifestyle
through your salary and wages, because if you do, you'll be working forever, and who wants that?
Instead why not allocate a portion of your income to invest and start building
assets that pay you passive income. I like stocks because you don't need a ton of
money to get started and I've made videos on how to set up an investment account which
I'll leave in the description down below. A simple way to invest is buying what's called
an ETF or an 'exchange traded fund'. If you're a little bit unsure about which individual companies
that you'd like to buy, then instead, to get some diversification you can buy a single stock in
an ETF which tracks for example, the top 500 companies in the US. This is called the S&P 500.
And there are lots of ETFs to choose from. Now I'm not providing a recommendation to buy any
of these but for example there are ETFs that track tech stocks, or lithium stocks, or there
are even ETFs that track the largest companies in both the Australian and US markets.
The way you can possibly make money from ETFs is if they increase in value, or they
pay you a dividend.
So as you continue to grow your asset base and improve your financial
position you can possibly use these dividends to fund your lifestyle, working smarter!
Now no invest is a sure thing, they all carry a level of risk. Having said that the S&P
500 has generally returned between 8% and 10% per year. Some years higher, some years lower. As an
example if you have invested $50,000 in the S&P 500 in the year 1987 reinvested any dividends
you received, then 20 years later in 2006 this investment would be worth over $400,000.
Now no one is going to be able to see you growing your asset base which is
why I call this, The Silent Flex! Be Careful With Debt.
Debt is essentially borrowing money from what you will earn in the
future to pay for something today.
You could think of it as borrowing from yourself
in the future. Debt can be short term, like buy now pay later or credit cards or more
longer term like personal loans or mortgages. You need to be careful about using debt to fund
your lifestyle because if you are borrowing money from yourself in the future, to pay for
something today that's not going to produce you any more money, then you're going to get trapped
in this vicious cycle that goes round and round and doesn't advance you at all financially.
The interest rates on credit cards can be as high as 20%, that's nuts! You'll be hard
pressed to find any investment that returns you 20%.
Therefore one strategy could be to pay
down all your credit card debt first because then you're at least saving yourself 20%.
Generally speaking the only way to not pay interest on your credit card
is by paying the balance in full each month when you get the statement.
Instead using debt to buy assets that can produce you additional income can be a
way to generate wealth. However everyone's financial circumstances are different so seek
the advice of a professional before doing. I am from the future, and I have come
here to loan you money! But first, what will you use it for?
Ahhh, investing! Forever A Student.
I want you to think of something you really good at, it could be a
sport, a hobby, gaming or you might even be really good at your job.
Now my guess is that you
didn't get really good at this activity overnight, it likely would have taken you months or even
years to hone your skills and perfect your craft. The wealth game is no different, managing money
is a learned skill unfortunately not taught very well in our schools and you can get better at
this through continual learning and practice. To learn how to invest, I read every book I
could get my hands on, as well as listening to podcasts on the train or while I exercised.
Here is one book I would recommend to beginner investors.
In this book Robert Kiyosaki talks
about the importance of using passive income to fund your lifestyle, instead of your earned
income such as salary and wages to fund your lifestyle. Another book I would recommend for
beginner investors is, Buffetology! In this book it gives you a very basic principle on
how to analyse companies and calculate things such as your return on your investment.
School is never out, be a continual student and learn as much as you can
about the world of finance and money. Next you got to stay hungry and use your time
wisely! Now I was young once and I enjoyed partying, but as I've gotten older I realised
that a day spent feeling ill, is a wasted day. If you are not yet in a position to leave your
9 to 5 job, then start developing side hustles that will build up your skill set and pay
you passive income. In addition to my job and investing I sell products online as
well as make content in the evenings. If you have an idea or a dream
and you do nothing about it, and then you stack up all that nothing
together you get absolutely nothing! But if you start making small steps towards
your goal you will learn new skills along the way.
It's going to be hard, you're going
to have failures, but if you stay hungry and learn from these failures you'll be in a
far better position than if you did nothing. I'm on the mission to grow my YouTube channel,
so if you want to come on that Journey with me, make sure you punch that subscribe
button and if you want to continue to level up your Finance IQ make
sure you click on this next video!.