Rich people. Some want them taxed to death. Others worship them.
Me? I just learn from them. I don’t seek to be some show-off driving a Ferrari down Hollywood Boulevard or sipping margaritas at a private villa in Spain for $5000 a night.
Nope. My goal is to make enough money to exit the money game. I’ve spent most of my career working in finance. I’m obsessed with the topic and write about it every week. And I’m about to write a book on money.
Finance isn’t taught in school.
The rich people in power would prefer you didn’t know how they make loads of cash and live the good life. Let me spill their secrets.
Inflation is daylight robbery
Inflation just means prices go up.
Supply and demand are what change the prices of goods and services. But what most don’t know is the money supply of a country affects inflation too.
Countries create new money out of thin air and add it to the money supply. They use smart labels like quantitative easing to make it sound complex, although what I just described is exactly what it is.
When there’s more money sloshing around, that costs $0 to create, it artificially messes with the supply and demand metrics. This is why prices have risen sky-high over the last 3 years.
To combat the bat virus, every country on the planet created new money from nothing to pay the bill.
All that extra money has made people feel richer than they are. The result is more spending and stupid high prices paid for things like a JPG of an NFT rock for millions of dollars.
Inflation makes whatever money you’re sitting on worth less. That’s silent theft and you’ll never get rich if you don’t learn to combat inflation the way the rich do. Keep reading to learn.
You’ve been lied to about compound interest
I did a google search on compound interest.
You know what came up? Savings accounts with banks. The lie we’ve been told is to save. You don’t want to save, no, you want to invest.
Savers are losers because you’re giving your money up to a bank so they can use the dollars as their investment fund. You get a tiny slither of the upside while inflation erodes most of the gains on a savings account.
What you want is to earn compound interest from assets such as dividend stocks, investment properties, money you might lend startups, etc.
A popular path for compound interest right now is staking Ethereum. You buy the asset of ETH and use it to help secure the network. In return for your ETH you get paid a form of interest.
Ditch banks and earn compound interest from real assets.
Own this, reject this
Consumer debt is popular.
It’s why services like AfterPay are offered everywhere. Nobody has any money. We’re all drowning in debt. But we’re not in debt because we invested in real estate or started a business. No.
Consumer debt is what’s driven the massive debt bubble. Consumer debt is used to buy luxury items, fancy clothes, boats, and cars. All these items are used to show the other primates status.
“I’m better than you.”
That’s the quiet message of luxury purchases. If you challenge this way of life — like I do — people call you a hippie, off-grid weirdo. The thing is when you don’t give a damn about what people think of you, the need to take on debt to impress others becomes ridiculous.
Status burns all your spare cash that could be used to own assets.
Real assets appreciate in value over time — S&P 500, tech stocks, gold/silver, Ethereum/Bitcoin, and real estate.
While some would say debt is evil, rich people know it can be good.
Consumer debt is bad but debt used to acquire assets, like real estate, is good. Debt is leverage. It allows you to borrow money at today’s price so you can take advantage of the price increase of an asset in the future.
Of course, you need to know what assets you’re buying and do research to ensure long term they will go up. Historical data can be helpful. A basic understanding of economics or tech trends can help too.
Salaries keep you just above broke
You’ll rarely meet a rich salary worker.
Salaries are designed to give most of the profit from your work to a corporation. There’s no point getting angry. This is just how capitalism works. As you’ve probably seen, salaries rarely go up.
No employer is dying to give employees more money. Salaries over the last 30 years have barely risen and they haven’t kept up with record high inflation. So a salary from ten years ago buys a lot fewer groceries and a decrepit shack in Sh*tsville suburbia if you’re lucky.
If you want a pay rise at work, you have to jump through hoops like a circus monkey (by design). Even then you’ll probably have to agree to work even more hours to get the measly 5% increase.
My wife got a pay rise recently. It was 10%. 8% Aussie inflation plus a nice tax rise swallowed all of it up. She was distraught.
“That’s what a salary buys you honey: misery.”
That doesn’t mean you never earn a salary. No. Use and abuse a salary to learn. Then quit the salary later in life to earn the real dollars.
Build a side hustle and don’t tell your boss
One bank deposit each month from the same customer is risky.
Like, you wouldn’t start a coffee shop with just a single customer, would you? Of course not. You want multiple customers so you’re not dependent on one. A job works the same way. An employer is one customer.
You want to get other people to pay you outside of a job via a side hustle. The problem I see with people in my private community who do this is they tell their boss.
Like what the hell, dude?
Don’t tell, just do. Build your side hustle after hours. Do it under an anonymous name if you have to. Just don’t voluntarily say “Hey boss, I got a side hustle related to my job. Would you like to force me to shut it down?”
Depending on what you do for a living, you may want to cheat on your job with a side hustle. It’s what I did. I used work hours to build my own thing then said “smell ya later.”
They didn’t take care of me, so I didn’t take care of them. Don’t be afraid to take care of yourself with a side hustle.
Tech stocks will rip over the long term
We saw it recently with America’s Nvidia tech stock.
It went up 35% in one day. Why? They build chips for AI. AI has gone mainstream so they’re making a fortune. As tech takes over everything, those who are invested in tech stocks or the Nasdaq will do well.
I’ve made 20% on the Nasdaq just this year. And 7–8 tech stocks are responsible for most of this year’s gains in the S&P 500. If those companies were removed the S&P would only be up 1%.
The goal is to own exponential age tech stocks in fields like AI, electric cars, and other obvious trends that are gaining mass adoption. Even owning Apple stock has been an excellent investment for many people.
Use tax to your advantage
Tax is YOUR investment fund.
Tax gets taken out of salaries first. When you earn money through a business or LLC, all the money is paid to you. Then you have some flexibility about when and how much tax to pay.
Tax dollars can be invested in assets, then sold later to pay tax bills. Learn the tax system and legally take advantage of it. It’s why one-person businesses have become such a big trend.
Expenses must be less than income
Many of you will scream “this is obvious!”
Yet most of America has no emergency fund. One small health problem and they’re out on the street. I don’t say that to be funny — it’s sad. It’s a direct result of financial education not being part of mainstream society.
The formula is simple: whatever your income is, expenses need to be a lot less. If they’re not then the hard decision of cutting costs is the only way.
When I lost everything a few years back I couldn’t pay bills. I had to sell my car and all my personal belongings until things got under control. Every bill I told myself was a necessity was mostly a lie.
I didn’t need an iPhone on a high cellphone plan. I didn’t need to pay to watch movies every time I got home from work. And I didn’t need new clothes every few months.
So I learned to live with less.
It’s been one of the best accidents of my entire life. I can live on beans and rice and not feel poor or get upset. I can wear the same old jacket most days and not feel like I need a new one.
Once expenses are under control the next obvious step is to make more money.
Add multiple online income streams
The internet is a license to print money.
There are now no excuses. You can access the same apps and ways of making money as the next person. It comes down to whether you will complain and blame, or learn the rules of the online game.
No one can force you. But if you open your mind to the idea it can forever change your financial situation.
Pay yourself first???
This cliche advice came from Rich Dad Poor Dad.
I use the tip a little differently. Every time I get paid I have direct debits that put money automatically into investments. I then spend whatever is left over to pay bills and fund my lifestyle.
With this setup there’s no way I don’t invest in assets and my family’s future. It’s a non-negotiable. I worked out what home loan I could afford based on this pay-myself-investment-plan not being disrupted. If I stopped the auto-debits, I could have bought a better house.
But then I’d be stealing from myself.
This mindset is the opposite of how a lot of people manage their money. Use these tactics to become one of the rich people. Then take all that money and use it to help others. That’s how riches turn into wealth.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.