How to double your money so before I get into talking about different ways of
Investments and how they double and what doubles this and what rate of return all
For this other stuff, let me first talk to you about the biggest problem most people face when it comes to trying to double their money.
It is because they don’t have enough money that’s the problem here’s a stat for you
52 percent of Millennials ages 18 to 37 years old have less than $1,000 in savings and by the way, only 16 and a half percent of Millennials have over 20 thousand dollars in savings only 16 and a half.
So what’s the problem with saving we need more savings we need you to have more money in your pocket so why don’t people have more money in their pockets because of five different challenges income expense taxes investments identity?
Let’s start with the first two listen when you think about your income a lot of times people say Man I want to have a very high income well you may have a big expense problem because what’s left is what matters to you right the net that’s left this matters to you and then there are taxes but that’s a whole different discussion we’ll have it here in a minute.
So think about two examples example number one we have somebody that makes 250 per year’s a quarter million dollar annual income many will say but I wish I made a quarter million dollar income many make a quarter million dollar income but he spends 280 a year that This means he’s losing $30,000 per year you know how many people.
I know hundreds of people who overspend what they make example number two somebody makes eighty thousand dollars per year but only spends sixty thousand dollars per year they keep twenty thousand dollars per year the guy making eighty is saving more than a guy making a quarter million dollar your income so one has an income problem because this guy would love to make a quarter million the other guy has an expense from Discover which wishes you only spend sixty thousand dollars.
Per year you may say well I want to make more money.
How to expend Income:
Let’s talk about your income and expense problem first let’s start with income what do you do to increase your income if you have a job you don’t have something you do on the side but you know every single talk show at neither, you watch Netflix all this other stuff you’re wasting your time you don’t care about.
I have a lot of money and you’re just hoping to get Lucky if you got a job and you’re broke there’s no reason you should be coming home at night to watch TV you should be
selling something creating something learning your skill having a side house all working overtime getting another job on the side, you need to be selling something and the highest-paid money.
High-speed skills that you can learn about making more money as sales so that’s the income problem number two let’s talk about expenses the one thing about expenses that I’ll talk about I have a few points all start with the first one here you need to fire your consultants.
If you’re a business owner running a business and you’re paying somebody to do your website for you just today we fired somebody just today we fired somebody you may have somebody doing the website for you may have somebody doing something else.
For you designing a logo for you doing all this other stuff for you guess who they use to act like they’re the consultant where they go behind closed doors and they use a company called Fiverr.
I spend hundreds of thousands of dollars before I realize this consultant on the
Slide let’s develop a website for you the fiber they develop a website for you let
I do a logo for you for $4.99 they do it for you for 49 bucks or 99 bucks let me figure out a way how to you know clean up this contracting.
This verbiage that you have here there are people that editor let me do a voice over for you for $200 there are people that the voice-over is here for 20 bucks Lennox fiber go back and fire your consultant and start using five in a matter of fact one of the things we
Discuss with fivver of the first 100 people that go on fivver.
So fire your consultant and start using fiber what else can you do to minimize your expenses renegotiate all your contracts go through your monthly expenses on what you’re spending every month renegotiate your phone bill renegotiate your cable bill
renegotiate your cell phone bill renegotiate your you know internet bill renegotiate your everything we negotiate you drycleaners Reena go to your dry cleaners and say Man I’ve been a customer here for 10 years why do you rip me off give me a discount your man?
Renegotiate your tailor renegotiate every single thing I pull my Director of Finance aside I say who do we spend money on time to go renegotiate within the customer with them for five years how much money have we spent renegotiating time renegotiating time?
Renegotiating time renegotiating all your contract live below your means listen for a long time myself the reason.
Why a lot of people don’t have money and savings to be able to double that money
is because they overspend why do you go to Starbucks who cares about Starbucks
I even own Starbucks stock I should be telling you to go buy Starbucks but why
are you going to Starbucks why do five bucks go to Dunkin Donuts a buck is fifty bucks 75 go to 7-eleven 75 cents what is it 99 cents how much is a dollar 20 something right you go to 7-eleven Stop going to these in named places right?
Stop going to all these places you’re spending all this money on living below your means by the way I had a quarter million dollars in the bank and I was driving a Ford Focus I was bored nearly ten million dollars and I was renting a small place and I was worth 10 million nearly 10 million and nobody knew it.
I’m a renter everybody would say I can’t believe you’re a millionaire and you would live in a place like this and you would rent a Denver Post they wrote an article saying the CEO and entrepreneur believe that real estate isn’t the American dream I said it’s not because I was renting and everybody criticized me.
Live below your means rent everything you can for a long time rent everything you can use technology to minimize payroll if you’re running a company have your employees pay higher so don’t try to hire way too many employees and have fewer employees pay
higher you’ll keep on royalty you don’t have to constantly go through new employees new employees pay higher and then obviously, fire your consultants.
How to Prevent Unwanted Taxes:
Taxes you know sometimes I mean think about this quarter-million dollar income guy or girl if he or she lives in New York or LA versus Texas this person’s paying an additional nine to thirteen percent most likely thirteen percent just for living in New York and
for living in California so watch if it’s ten percent on a quarter million that’s an additional twenty-five.
Thousand dollars that went to the state that you wouldn’t be paying if you’re living in the state of Texas or Nevada I think Tennessee is one of them Florida there are five or six states that don’t pay any state taxes in so by the way taxes is another issue you may be heaven.
So you need to sit down and figure out Long-term planning on what kind of money you want to make and have you position yourself in the right place I was in Florida last week I was in Miami and I was in Orlando and I said this the state of Florida’s governor must be the worst recruiter in the world because.
If I was the governor of Florida I would have more Fortune 500 headquarters there
than any other state including Texas although Texas is tied with New York right now I think they’re competing for a number-one spot I’d have everybody there weather is amazing and you can pay no taxes in the state of Florida taxes is another issue that you may be facing.
Your Investments Your guarantor of Your Wealth:
Now investment so now let’s talk about investments here different types of investments on the bottom I put four different boxes are all investments fall under these four different boxes okay you have high risk low return you have low risk low return this is like your money market account your savings.
Your cash you have a low-risk high return you have high-risk high return which you wouldn’t mind being here you don’t want to take a lot of risks but you have a lot out of you want to have a lot of high returns right?
High-risk return could be Penny stocks and then the bigger the company of the stock could be lower here right for instance let’s just say low-risk Walmart may be a lower risk and I don’t know how to hide the return is going they may be here high-risk.
Low return there are a lot of investments that you go out and buy company saying Man you know a fight this company takes off it could do this but there’s not a high return on it what’s your money to be here so again how to double your money.
Rule of 72:
This is the rule you’ve got to be thinking about Rolla 72 and rule of 104 basic math rule of 72 is how long it takes for your money to double okay so what happens is whatever interest you get per year you’re divided by 72 meaning if I’m going to get 72 percent.
Every year on my money that means it’s going to take one year for my money to
double.
If I make a 36 percent return on my money it’ll take my money two years to double if I make twenty-four percent in three years 18 percent in four years twelve percent in six years nine percent in eight years six percent in twelve years the same math applies on the 105 except this is how long it takes for your money to triple so you would take if I get fifty percent which means it will take my money two years to the triple same thing you divide the 105 by the interest you’re getting on how long would take your money to double or triple.
So now you may say well Pat I would love to have 72 percent is there something like that out there I will up them to nine percent is there something like that out there the
the decision you have to make is you got to answer two things what’s your risk tolerance and what’s your time horizon?
Let’s talk a little bit about going back to this on the investment side a few things you have to keep in mind about investments people send me emails and they’ll say do you think I need to invest in Uber do you think I need to invest in Snapchat you know do you think I need to invest in Facebook do you think I need to invest in this stock what do you think about this ticker and they’ll send it to me all the time all.
The time and they just want me to go through the tickers and I’m not doing that I’m a series 7 broker series 6 31:26 Life and health securities all this other stuff but I’m not doing that on all of them I am more concerned about Are you getting the right
is it then trying to pick the next stock?
My goal is to make you think right if you think like you learn how to double your
money if you can learn how to think right you’ll double your money, not one stock and not one single real estate investment or certain property how to think right.
So let’s talk about the thoughts number one specialized specialize let me explain
What I mean by specializing I met an art dealer, who knows everything about art
out there let me tell you ever and I’m talking like three-million-dollar art and two-million-dollar art and six-million-dollar art and $600,000 art she knew everything about it you know how much you know about stocks this much guess what her specialty is art.
I know people who specialize in real estate commercial real estate they know everything about commercial real estate you know how much they know about residential this much because their specialty is commercial real estate specialty is art.
Yes, you want to know a little bit about everything to is dangerous so you know the language but go out there and specialize in one thing specialize on one thing next don’t buy emotionally let me explain what I mean by don’t buy emotion I hear a lot of people say invest in what you buy really if I invest on what I buy admitting to slurpy you know you’re invested in what you buy that’s like a kid I go invest into ice cream but you can’t invest in what you buy.
I love Skittles no it’s not about investing in what you buy this is not an emotional game this is logical game investments are not an emotional game you got to decide logically you work your butt off did you just hear the stats I gave you 52 percent of Millennials have less than $1,000 in savings you know how hard you got to work to make a quarter
million dollars and make your millions or have $100,000 of you know investable cash do you want to just throw it away no you don’t want to do that so the point is don’t buy emotionally or biologically your research to find out does it makes sense does it not make sense why should why should I not do your part logically.
Identity:
Last one identity we were in Orlando Scott came up and David good guy David came up to me and said they let me ask you a question he said so you talk identity a lot how
Do I improve my identity and what I do with an identity all this I said listen your identity pulls your income if your identity is half a million dollars.
Identity It’s mathematically impossible to be below half a million dollars for a very long time some of you guys are saying Pat what the hell do you mean by that will you work for $20,000 here you won’t will you Why will you work for $40,000 here $60,000 here $100,000 $200,000 you know million dollars you’ve said yes to one of them whatever they’re paying you right now do you know why because that’s your identity that is your identity you may not like to hear that but it’s your identity it’s impossible.
For half a million dollars your identity to be accepted in $60,000 your salary is impossible unless the potential is a 2, 3, 4, 5 million-dollar income because they got to go more than that so if you have $5,000 in savings that may be a lot of money to you and you have an identity issue if you have $28,000 and savings that may be a lot of money to you if you have 48 thousand dollars in savings that may be a lot of money to
you because you have an identity issue you’ve got to fix this identity and how you think about what you think you deserve and all of a sudden.
INVEST IN MULTIPLE OPTION OF MARKET:
So let’s go through the options you have stocks you know there are different types of stocks that you can own you can own a stock of a small camp it’s a smaller company that’s going up mid-cap large cap you know you can buy stocks and companies that I’ve been on for a long time.
They’re very established and can buy stocks and newer companies can buy stocks like technologies by the way Warren Buffett’s philosophy isn’t to diversify but Warren Buffett’s investments were very concentrated on industries it wasn’t about spreading you too much he specialized in industry and he concentrated on owning companies in that industry is a very big fan of insurance by the way Warren Buffett.
So he concentrated on writing stocks are the same the exact way he first started studying what industry wants to concentrate on then started picking your stock and slowly but surely started watching them one by one by if that’s the route you want to go bonds are another one bonds are your returns on bonds are going to be lower than we’re going to be higher on us if you’re getting junk bonds which junk bonds are risky companies.
Companies that have been coming to you for a long because the bond is an IOU I come to you because I’m a company I say we’re trying to raise fifty million dollars and the way we get it is by giving you bonds you give me a hundred thousand dollars and every year I give you six percent on that bond which is one hundred thousand out of six percent six thousand dollars to you and then ten years later the bond matures five years later bond
matures and it gets $100,000 back at a higher or lower eighty thousand or 120 thousand depending on where you’re at but that’s bond you’re not going to get the highest return on bonds depending on what age you are and your risk tolerance bonds are great investments if your boomer hire again you’re looking for a lower return for more guarantees.
Conclusion:
The article emphasizes the importance of financial discipline, strategic investment, and identity in wealth accumulation. It discusses various obstacles like low savings, high expenses, and taxes, which prevent people from growing their wealth effectively. To overcome these, it suggests increasing income through side hustles, minimizing unnecessary expenses, and smartly investing by understanding the “Rule of 72” to calculate potential returns. The article also highlights the significance of building an identity that aligns with one’s financial goals, advocating for specialized knowledge, logical decision-making, and avoiding emotional investments.
FAQs
- What are the biggest obstacles to multiplying one’s money?
- Major obstacles include low savings, high expenses, taxes, and a lack of financial discipline. The article suggests that overspending and low income are often at the root of these issues.
- How can I increase my income to save more?
- You can increase income by starting a side hustle, learning high-paying skills, or taking on additional work. Avoid time-consuming activities that don’t contribute to financial growth, such as excessive TV watching.
- What is the “Rule of 72” in investing?
- The “Rule of 72” is a formula to estimate how long it takes for an investment to double. By dividing 72 by the annual rate of return, you get the number of years needed for your money to double.
- Why is identity important in financial success?
- Identity shapes financial expectations and goals. A strong financial identity aligns with higher earnings and savings, while a limited identity may lead to underperformance and accepting lower income.
- What is the importance of specialization in investments?
- Specialization helps in making informed investment decisions. Understanding a particular market or industry allows for logical and less emotional investment choices, reducing risk and increasing potential returns.
