Financial Advisors Correct The Internet

I hear it's time for some tough love cuz the internet needs to be set straight. And but I am so excited about this. But I don't understand, if something is on the internet, it has to be right. True, right? — Let's see what we have today. — If you want to get rich, don't buy the

S& P. — What? — Buy a Ferrari. Let me explain. Every time a supercar drives by, there is a cranky buy-and-hold investor saying, "If they only took that money and put it in the S& P 500 for 10 years, it would be worth millions. " This investor, while he thinks he sounds smart, is using the internet's most favorite piece of fake data, the 12% annualized return in the S& P 500. The problem with this, and even if we cherry-picked, the real return is more like 7%. And that is backward-looking into an environment that looks nothing like the one we're in right now. Right now, multiples are trading around 21X. At high multiples, the forward return is more like 2 to 3% in real terms. That's 0% or even negative. That means that the biggest myth of getting rich from buy-and-hold is officially dead. And you might as well just buy a Ferrari because the 458 Speciale returned 14% last year alone, according to Hagerty. In this scenario, at least you'd have something cool to brag about. All right, I have to admit something. Am I really telling you to buy a Ferrari and assuming that the Ferrari price will appreciate into infinity? Of course not. But what I am telling you is if you expect to get rich from lazy buy-and-hold investing in an environment with high multiples and enormous chaos in the market, you are going to be sorely disappointed. You will never have Ferrari money. And I dare you, go ask the guy in the Ferrari how he got rich. I can assure you he's not going to say buy-and-hold investing. Were you trying to read the fine print? — to read. I couldn't wait to say I can't wait to say you some whole life insurance or I've got a strategy system. I was waiting for what? The solution that he had in place for it. — First of all, let's the Ferrari, which he then came back and said, "No, I'm not really telling you to buy a Ferrari. " Of course not. The Ferraris are never, even if they appreciated the 14%, the transaction cost of going through the broker houses and other things to process or sell that type of vehicle is astronomical. So, we can go ahead and cut off the 14%. He assumed, if you buy in whenever he recorded this, he said that the I guess the forward-looking price-to-earnings ratio was like 21. — Sure. Things don't stay that way. It is that just like at the day we're recording this, the market has now had a 10% shift down. Yep. And if you're always buying, you're buying in throughout the process. We showed that there was actually a 25-year period during the Great Depression that the market was down during that entire time. But if you were buying every month, your annualized rate of return would still be close to 11%. — Set it and forget it. Yes, this is the path. But believe me, if you go do research on where are the millionaires and how are they making their money? We ask our millionaire clients how they did it. It is through slow, steady to build wealth through things like the S& P 500. — Even if you want to take he said, "Oh, don't use 12%, use 7%," which I think is a low. — A 7% annualized rate of return over an entire lifetime, over an entire working cycle, is going to build a lot of wealth if you can just stay consistent, put your money to work. He's just flat-out

wrong. — You are not successful when you have a high FICO score. — All it means is you gave the bank a whole bunch of interest. — I haven't given the bank a bunch of interest. — That's all a FICO score says. I have an 800 FICO score. And when someone tells me that, I always say, "I'm so sorry. " It's like saying I have high blood pressure and bragging about it. — No, thank you. Your FICO score is not a measure of financial wealth or health. It's a measure of how much you've been Oh, come on, Dave. Look, I consider Dave a friend. Now, he doesn't I don't think he would say that I'm his friend, but I consider him a friend of mine. And I like a lot of what Dave does, but this is one of the ones that drives me the most nuts cuz I just think he could not be more wrong about that. Assuming that you have a high credit score, assume that you've exhibited the fact that you can use credit responsibly, does not suggest that you've thrown away tons of in interest. That it's the I love debt score. It just shows that you were a reasonable and responsible financial decision-maker. We're successful. We have high credit scores. We've not given tons of interest to any bank. — I think Dave just flew too close to the sun. I mean, if you think about earlier in his career, he ate debt like a Cookie Monster. And then, you know, all of a sudden realized, "Oh my gosh, this makes my belly hurt and I have bad things happen to me. " So, then he was like, "Oh no, because I was the Cookie Monster of debt, I nobody should have debt. " — It would be a false thing to say that rich people or wealthy people don't use debt, don't have FICO scores that are high because by the way, you use this now for your utilities, your insurance. There's all kind of things that go into having a good FICO score. It just All it means is that you're just good with money and responsible with it. Dave wants you to go kind of treat debt like it's lurking around the corner going to attack you every street corner, and that's just not the reality of the world or life that we live in.

— This is your reminder that saving $5 a day is $1,825 a year. Canceling your $20 Netflix subscription, well, that saves you 220 bucks a year. And skipping your weekly takeout, that saves you $2,000 a year. Then, if you invest that $4,045 each year at 8% average annual return, then in 45 years, you'll have over $1. 85 — Okay. million dollars. But the real pro move is investing in you. If you take that $4,045 and you learn a new skill, business buying, then you figure out how to do creative financing. You buy a business that makes $100,000 a year in profit. — are real. — it for 200K. I know you don't have the money to do that, but you only put down 10 to 20%, which means you're able to buy it for 10 to 20K down, and you just replaced a six-figure job to do it. Then, you grow it to 200K in profit, and you were able to then sell it for 400 to 600K because the more money you make, the higher the price. So, yes, save, but also invest smarter. — Look, she's not wrong, but she could have also said this, "Hey, look, I can tell you how to win hundreds of millions of How to have dollars. All I got to do, you just pick the right lottery numbers. Uh you go buy the ticket before the numbers are pulled, and then once you have the right ticket with the right numbers on it, boom, you're worth hundreds of millions of dollars. " What she just said is like, "Yeah, go buy a business that has $100,000 of profit. " One, it's got to be a very profitable business. And two, someone has to be willing to sell it. And then you have to be the one that was able to source it, to find that business, and you got to be able to buy it. Then operate keep it. Then you got to be able to scale it and double it. It's just not quite that. It does work that way, but it's not that easy to find. — And by the way, if you're going to be buying businesses for $100,000, $200,000, these are not big businesses. These are some of those businesses you see on social media that you should — It wasn't top-line revenue, just profit. So, then that's even another thing, right? If it's a $100,000 profit on a $10 million revenue business, it's a razor-thin margin. So, you have to think through that as well. — Yeah, so I just I I don't think that this is the easiest thing. I think there's always a kernel of truth in these things, but this is not going to be how you build your first million dollars. I'm just being honest with you. I think that that's why we there's a better way to do money, the financial order of operations. If you will do this and then start thinking about between step seven and eight that you want to get into entrepreneurship, I'm all for it. But let's make sure we're funding the Roth IRA. Let's make sure we have emergency reserves before we start swinging for the fences. It's kind of like if you look at the hierarchy of investing, entrepreneurship would not be the first — That's right. — stone I would turn over. Um I was loving what she was saying because she was spot-on. And I was like, "Yeah, yeah, yeah. No. Oh, no, no. Okay, this is this went a little sideways. " You need to completely

rethink your personal financial strategies in your 20s. I know so many people who are like trying to hop careers to gain salary. They're going to get an MBA to boost their salary. You should not be doing this. You should be focusing all of your assets and time and money to get on as many game shows as you can to win money. We all watched Deal or No Deal, Family Feud, Survivor growing up. None of us actually go and do it. I called my friend yesterday. Very successful guy. I was like, "Have you tried going on Deal or No Deal? " And he was like, "No. " And I was like, "What are you doing? What are you doing with your time? You could instead of having a million-dollar-a-year revenue business, you could just make a million dollars in one night by selecting the right suitcase. Definitely tongue in cheek. I don't see the lie. — He isn't wrong. There was There was a documentary that's fascinating. You have to go find it on The Price Is Right. — Mhm. And there was this very eccentric person that had noticed that The Price Is Right was getting lazy with the They were using the same things over and over. So, he started tracking a spreadsheet of all the sponsored products that they were having. He got to the point where he could do showcase showdowns and get within like 100 bucks, which means you get two of them. That is far from passive income to sit around and figure out if there's an inefficiency in the game show circuit. Um I would tell you if you're looking for an arbitrage situation, it's understanding the value of your time when you're young. So, if you can invest early and often, that's the way you're going to easily build wealth. — 50 grand. What would I do with 50 grand?

I would um probably use 50 grand to go buy a business. What kind of business? Um some existing business that's probably been around 5 to 7 years or longer. Give me an example of one. — Um I probably wouldn't even use the 50. I would use the 50 in a bank account to show the guy that I'm legit. Mhm. And then to figure out a deal where he actually gives me money to take over the business. He gives me the keys, and I get the income. So, I'd find some business's net profit of 50 grand a month. I'd use the 50 in an account just to make me look like something. 50 grand a month with $50,000 down payment. — Net profit, $600,000. Show up here and see what we say, Grant. — I'd be like, "Your business is doing 50 grand a month. I'm going to Let's say he's making 50 grand a month, has been for years. You keep the first — I think that Grant He sells systems to do that, and that's why it He's very effective at it and has made himself just completely filthy rich off of selling what could be to people who want to think that they could be a part of this. If you're looking for your first thing, if you have your first $50,000, financial order of operations cuz it's going to help you out with that emergency reserves. on that Roth IRA. It's going to help you out with your employer 401k. Let's get you to your first financial foundation before we're doing the crazy stuff at the top of the investing pyramid. Love it.

Financial advisor — I've seen this. Putting your money in an index fund. I've seen this. I even told a client about this. I think the content team put this in there thinking we'd be like, "I wonder what the guys will do cuz they know we love index funds. " The reality is, if this is all your financial advisor is doing, they're not really financial advising. I mean, cuz where is the looking at your emergency reserves, your taxes, your retirement plan, your estate plan, your insurance, and risk management? All these things come into play. And by the way, the closer you get to retirement, the more complicated it all gets. Um I wish it was a matter of just putting people into an asset allocation and then go No mess, no fuss. Send me the money. It doesn't work that way. — Yeah, it's not That's not the way that real financials operate. Although, there are a number of financial advisors There are even a number of fund companies that actually do that. They say, "Hey, I'm going to repackage this S& P 500 index fund, but I'm going to call it something else. I'm going to put growth on it. I'll put some other name on it, and I'm going to charge you for that service. " When realistically, all you're actually getting is S& P. So you ought to be aware of what you're buying, what you're spending on it, and what you are actually getting to make sure you are getting your money's worth. — Do you realize what a position of power it is to create one of the largest financial platforms, openly tell everybody, "Hey, do what I do with my money and go invest in index funds just like we do," and still have a phenomenally growing financial planning firm where people aren't locked in? By the way, every one of our clients can vote with their feet and leave tomorrow if they wanted to, but yet they keep showing back up, and we keep growing at these double-digit rates. You have to ask yourself, there must be something to that for people to just willingly give their money and stay when they're already majority of them are multiple seven-figure people. I love it when people think that all financial planners do is put you in an index fund and then count their money. That obviously doesn't pass the sniff test.

— Financial services is threatened by sports bettors cuz we're not getting young people to do IRAs, mutual funds. They're doing sports betting. 55% of all stocks ever on the S& P 500 has lost money since inception. That's why I don't think it's gambling. It's strategy. But you got to know the game. Just like if anybody hopped in the stock market, they don't have to trade options day one. They don't know how to short stock. Like they'll get hurt. And so with the responsible gaming, putting 5% of your paycheck into that and setting discipline, it's no different than stock, than crypto, than real estate. Yeah, it actually is. It's exactly different than stocks, crypto, or real estate. — Financial services is threatened When you sports bet, you're betting on an outcome. You're not investing on a future. It's not the same thing. How many times have you seen someone Brian walk into a casino and say, "You know, I'm going to work. I understand how this works. I understand how to beat the system. do it. " It's gambling. It's not investing. Gambling, sports betting, you're the fish. You're the mark. If you don't believe that because maybe you found out, "Hey, you know what? I can count cards. " You realize casinos, if they realize you have figured out how to count cards, they restrict your ability to do that in their casino cuz they want to have the upper hand. They want to keep you the fish. This is complete BS. If you don't realize that you're the product or the fish of the situation that's waiting to get hooked and pulled in, then you are on the wrong side of this. You're not the house, so act accordingly. I never invest in stocks. I don't trust the

stock market. You can I'm not saying don't do it. I just don't trust them. Yeah. So I like real estate because I'm the investor. I don't need to trust anybody else. Well, it's it Look, we love real estate. We have real estate, too, but it's just not where you start. — Kiyosaki also, I mean, he wants you to have 100 rental properties. — Yeah. I mean, this is a full-time position. If you're looking for the purest form of passive investing where you actually get to enjoy your retirement and, you know, count on money showing up in the account, — it's not going to be in a portfolio of doing active real estate. I can As us owning multiple commercial properties, it is far from passive cuz you have toilets that overload, you have back doors that all of a sudden start don't start locking and the you know, your tenants freaking out about that. You get all kind of calls at all hours. I appreciate what he's saying, but if you're trying to figure out how do people build wealth in the easiest fashion and when they don't know anything about how money works, it's index investing. It's following the financial order of operations. This is the way. We have an entire business built off of wealth management for highly successful people, and the more majority of the lion's share of them have said they built their first seven figures not through real estate or all these other things. It's through being consistent and disciplined with their investing. — Yeah, I just don't understand how he said I don't trust the stock market. I don't trust the I don't understand that because there's so many stories, so many case studies of people that consistently save and invest in low-cost index funds over a career, over a life cycle, over a specific period of time, and end up in a much better position. I'm not suggesting that's not true of real estate also, and that's why I don't think it's neither or. You can do both, but this idea that oh, I'm not going to do traditional stock investing or traditional market investing because I don't trust anybody. Instead, I'm going to go do real estate investing where I have to trust the appraiser, bank, I have to trust the tenants, I have to trust the service provider. It doesn't make any sense. It's still the same exact thing. It does not, again, for me pass the sniff test. — Look, there is a better way to do money. And one of the things I feel like we got on the mountain top and like there's so much noise and haze down below us of all these people telling you the way to build wealth. We tell you it's very simple. There's a better way to do money with the financial order of operations that if you will do this to build your financial foundation, you'll still be able to sprinkle in all the Kiyosaki, all the Grant Cardones, all the other things in there later, the cherries on top of your Sunday, but just do it at the right time, right place, and respect the value of your most important resource, especially when you're young, and that is your time and your discipline. I'm your host, Brian, joined by Mr. Bo. Money Guy team. Out.