The Psychology of Money | How Your Mindset Drives Your Finances
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- เผยแพร่เมื่อ 13 มิ.ย. 2024
- 00:00 Intro
00:50 Scarcity
01:54 Abundance
02:45 Fixed
03:54 Growth
04:40 Consumer
05:30 Saver
06:11 Debtor
07:55 Investor
08:52 Fearful
09:35 Empowered
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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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Thanks for watching, I appreciate you!
This video should be a mandatory pre-marital counseling lesson. I'll bet most arguments about money come down to conflicting money mindsets. For me, I'd say I've always had the investor mindset and to a lesser extent the abundance and growth mindsets in that order of emphasis.
Assuming there are no conditions on how to use the money, I would absolutely take the $1B, purchase 5 year treasuries (non-zero coupon) to lock in the rate at 4-5% and minimize principal risk, pay back principal when the treasuries mature, and net well over $250M (assuming reinvesting interest payments)
Absolutely would take the BIllion at 0%. Actually did that type of thing a long time ago with a 0% promotional offer for 10K at 0% for 6 months. Parked it in a CD and just paid off the free loan when it would have started charging interest. (Of course, the fine print on the Billion would also matter, like was it considered earning or a gift, etc. i.e the wonderful world of tax policy, but a simple 5% of 1 billion would be 50 million of new money to scratch by on....) I think that would be stress we could live with.
AT 0% interest? Honestly I can't even imagine a scenario where that wasn't a great idea. Split all of it across a bunch of high yield savings for ONE year, earn 40MM, pay it all back, and kick back forever.
Isn't the FDIC limit like $250k? What if one of your banks collapses? How many banks can you realistically split it across to be able to cover a collapse or two? Just a thought...
@@desiv1170 True. However, if the only work you're doing is signing up for 4000 different bank accounts in order to get 30-40MM, you're in pretty good shape. Also, you could put more than the $250K in the accounts and just risk it depnding on the yield. I'd also be willing to bet that most banks that get an infusion of that amount of cash are less likely to collapse.
Erin is awesome!
I would borrow that $1 Billion dollar in a heartbeat at 0% rate, because in this case, it is better to be RATIONAL than REASONABLE
of course on the 1 billion, i would invest what i would have earned in interest after 10 yrs at the start in an index fund for bigger gains without risk.
everybody has several of the mindsets you described. i had an abundance mindset early and while single as i knew i would be getting a larger salary after my training. then a scarcity mindset is a good thing to have especially as a solo provider and to live below your means with a saving, growth and investor mindset. finally an empowered mindset with a belief that i alone am responsible for good or bad of whatever my financial outcome will be and the confidence to make decisions to propel it in the proper direction.
Erin, I like the effort you put into that nice hairstyle for the thumbnail.
Even if you can only earn 1% on the billion, that's 10 million a year. Even taking out taxes of 50% to be conservative, and limiting the loan to one year that still leaves me with 5 million, and using the 4% rule would mean I could retire with a $200k annual income.
A truly informative video
Glad you liked it!
Today’s thumbnail is especially eye-catching. Nice work!
7:52 yup. Though I wouldn't park it in a savings account for the while time, I would invest it for potential greater rewards though that is riskier. It depends on various factors during that time.
Erin is right. She’s always right
Great video Erin ☺️☺️
Thank you!! 😊
Growth & Empowered
And YES! Half in going into a high yield savings and half in a CD without a second thought
Very good video. Somewhat apprehensive, but I would take the 0% loan.
For me, my biggest fear is poverty, so I tend to seek and take advantage of opportunities. We are the sum of our experiences, and so are our mindsets. I think money and finance are about the level of consciousness achieved through experiences, study, learning, vocation, and more.
$1B would have to go into treasuries. CDs and HYSAs would put the investments over the FDIC limits unless you spread it out over too many banks. Easier to manage buying treasuries.
I have and do flow thru all these mindsets
To quote J. Paul Getty; If you owe the bank £100 that's your problem. If you owe the bank £100 million, that's the bank's problem. I would definitely borrow the billion, even in a safe investment like Government Bonds it would set me up for life.
I would tabsolutely ake the money and depending on conditions at the time, put probably 75/25 in high yield saving act and invest the balance for increased opportunity. My dominant mindsets are saver and growth when I was younger and grew into investor & empowered. I have been doing that since I was 25 and am now retired for 13 years. I absolutely agree with your comment regarding the wealth of information now readily avaliable. When I was young I was always interested in financial matters and investing and have always been a life long learner. Great content as usual Erin, keep up the good work. All your effort and dedication is paying off and you are no doubt impacting lives. Have a great week. Larry, Central Valley, Ca.
7:50 I had a similar opportunity in college where I was told that I could borrow money and have no interest while I was in school. We did take some with the intent that it would be invested and then paid back before my college days were over. Sure enough the lender did not tell us about origination fees and during the time that the loan was being processed out refrigerator died. That money then bought a new frig. A life lesson, but thankfully it was the only school loan I had and was only $600. (That was big money to us as our mortgage PITI was about $163/month at the time.)
A great video. The majority of financial videos are on what to do, but I believe one will have to figure out where you sit on how you deal with money is also very important. If you have a fear full mind set, it would be very difficult to invest money in the equities verses some type of CD or annuity. On the other hand, you have a consumer mind set, your withdraw rates and initial nest egg would have to be larger.
BTW, I would take the money depending on the payment schedule back. If I had to pay it back in a lump sum after 5 years, sure I'll take it. If I had to pay a schedule monthly, I am not sure.
Yes
Yes!, I’ll borrow the Billion and invest it in a HYS.
Mostly an Investor Mindset
I wrongly guessed your topic was going to center on Morgan Housel book Titled “The Psychology of Money”
It’s worth a read for you if you have not already read it. Not sure how much time you have to read these days. Happy Belated Mother’s Day ETM.
PS, fantastic graphics!!!, love you in the screen while I can see the graphics!
I thought this video would be about the book "The Psychology Of Money" by Morgan Housel. It's a very good read about how people think and act on their finances.
great book. i read it a momth or 2 ago and then reread it a week or so later. there's a couple of ways to apply it to your portfolio and thinking. we know it is difficult to predict tail events and so should just look at a broad index but also points out that a successful portfolio can be pulled up by 1 or 2 outliers. if one was luckly enough to have had a tail event in your portfolio then for me there is no reason to divest myself of said security just because it was too successful.
@@Random-ld6wg Yes I agree it’s a great book, really opened my eyes. I haven’t quite finished it yet but it’s coming on holiday with me for a second reading.
I have an investor mindset while keeping my expenses low, meaning I "should" be wealthy in the future by using compound interest to my advantage despite only having a modest income in the very hcol city of San Diego.
Thirty comments in 45 minutes?
...you don't even NEED me to comment anymore. Since I don't have to come up with anything clever to type, I guess I'll just sit here and...watch the video. And hit the thumbs up. And learn about personal finance. In that order.
Still love that you commented ❤️
@@ErinTalksMoney This was a great one. Really useful for me. I'm in the late stages of smooth-shifting from scarcity to investor, and that shift comes with a sprinkling of "empowered." (I watched it twice, obviously.)
Your channel is a non-zero part of that transition for me, so as always - thank you.
New subscriber!
Great content as always and I would not take the 1b loan!
Welcome to the channel! I think you are the only one who shared my perspective on this one 😊
I would take a billion at up to 4% interest. Worst case you might break about even. Over 5-10 years you can easily come out way ahead. This is exactly what large companies do, they borrow at 6-8% and seek to return 20% or more on this capital.
Veruka Salt: I want it now!
Great video, I would borrow the $1 billion at 0%.
Thank you!! 🙏
I am 67 and retiring on 5/31/24
My retirement is set and we will have a good retirement, so I would not take the risk of borrowing $1 Billion.
If I was just out of college I might but not now.
Can you describe what those risks are?
I just want to save / invest and feel like I have no life
The famous saying goes:
“All work and Play makes Jack a Dull Boy”. How I feel in 2024
Yes to the $1 billion if I can pay it back early without consequences. I would keep it for a year or two, accruing interest in a bond, pay back the initial loan then play around investing or spending the interest. I wouldn't make as much but anything is better than nothing and I would feel more secure.
sure
Zero percent? Absolutely!
I would definitely take that loan any day of the week. I would park the money in a municipal bond for the tax savings even though it would earn less interest.
I would do the same as Graham.
At first the question seems scary or daunting. That is a lot of debt, but at 0% interest there are so many ways to make that money work for you. You mentioned High Yield Savings and CDs but there are so many other safe investment options. Living off the interest isn't just a dream...
Erin, I'm curious what your source was for this list of mindsets. I'm not challenging it. I just wondered if there is a book on this topic for further reading that i should pick up.
The mindsets you list aren't mutually exclusive, either. There is an intersectionality aspect to them.
Good point. And the interesections are important. They balance our actions to prevent them going too far one way.
Problem with a billion dollars is that it would be hard to park it in a CD and keep it FDIC insured. You would need I think 4000 CDs from different companies to stay FDIC insured. Maybe a combination of CDs and short term treasuries. It would be a little stressful but I would do that. Maybe only for a year though. Longer term I would probably hire someone to build a CD and treasury portfolio to manage.
Time, I think time is the issue in this question. Would I take it, yes. But what would I do with it. Time? Without knowing when it has to be paid back, I have no idea what I would do with it. Otherwise why would I invest? I am assuming that my money will grow over “time”. Short term, sure GIC.
I’m all in on the $1bil for 0%
Yes I would borrow it. Let it grow for those 5 years and pay it in full and move on with my newly rich life
Us treasury bonds and Florida homestead make the question a nobrainer
LOL. I wouldn't sleep just like you! 😅
Disney reference is gutsy
I would absolutely borrow that $1M for 3 or 5 years at 0%. Easy peasy to generate a return on it--and any return would be worth it.
I'm really conservative, but I would absolutely borrow that 1 billion dollars at zero percent.
I would borrow it, too. 4 HYSA percent would be $40 million a year. It's probably a little less with the repayment and management. Let's say over 5 years you make a conservative $80 million. Great deal ❤
I'm a saver mindset guy for sure. And yes - I'll take the billion for zero percent interest!!
Unless there are delayed payment terms on the $1B, that is not a good idea. With a 10 year loan (120 monthly terms) you owe $8.3M per month which is $100M over a year. You would only get about $51M in interest (5% HYSA) in a single year minus taxes. So you would have to pay out significantly more than you would earn within 12 months. Which means, unless you have a spare $50M already, you are going to miss payments while the money is growing.
Yes, to the $1 billion loan at 0% for ten years. No hesitation on my part.
Interest on $1 billion? Yes please 🎉
😂😂
I agree with your husband I invest it😊
The borrowing of $1 Billion dollars at a 0% rate is an interesting scenario. In the Bible, there is the scenario of the Three Talents, whereby 3 individuals were provided money over which to manage. It's about stewardship. The best stewards were rewarded with additional money to manage while the poor steward (who buried the money he was given), was rebuked and had that money taken away from him. Stewardship is important. Those who exercise Stewardship are rewarded while those who do not are rebuked.
I’d take that billion dollars and invest it in many areas: Real Estate for sure and other investments and businesses. I’d love that opportunity 🙏🏼
I would borrow the billion @ 0% interest in a heartbeat. I would park in T-bills and bonds, and other fixed assets. Right now, I have some of my money, but not a billion, invested this way.
When are the payments due for the 1 billion dollars at zero percent because if it comes up fast it would be at its most difficult vs farther away when the interest could accumulate easily.
Following the question of when it was due, the other question is how much is due per payment
I'm really RICH spiritually. Nothing is more important then having a relationship with the Most High Jehovah God.... Bc having it now amd forever allows a person to be able to have peace of mind and a real inner peace and real inner Joy!! 😊😊😊
You can’t even prove that god exists 😂 you have a relationship with an imaginary friend 😂😂and that’s all you have.
in retirement can i take my rmd from my 401k and put it into a a roth? Roth says earned income, is the rmd considered earned income.
No. Must be earned income. But you can look into doing “Roth conversions.”
c'mon, buy a 10 year T-bond, pocket those coupons, and maybe score a big cap gain if rates fall...
🥇🥇🥇🥇
Hell….YES…. Give me the money. At 5% that’s $50 million a year. I pay half in taxes that’s still $25 million. I would put it in T-bills. if the US government goes in the toilet, money is the least of our worries.
of course id do the 1B at 0%. can see how some might feel it a risk to do so, but risk all depends on what you do with it. risk also goes both ways. for example: Ally regular savings has an 4.11% return right now. so by NOT taking the deal you are risking a current gain of $41,100,00 .... in just the first year! talk about a risk!
I’ll take the money on condition I’ll have to payback over 10 to 20 year period. Or payback a lump sum in 10 years. Additionally, there’s no penalty for early payment of the entire amount.
I would borrow and park it in several HighYield Savings accounts and CDs. 4% of a billion is 40M in 1 yr. I could just let it sit for even 2 to 3 years and pay it all back and will have over $100M from interest be set for life
You give me a billion dollars, you'll never find me or me repaying that loan ever again 😅
😂😂😂
Very interesting video. I'm a mix of growth, saver, abundance and empowered. Also as a Christian I have another mindset that supercedes all of these. I believe God will always provide for my needs as I seek to follow and obey. This gives me peace and rest that no amount of saving, investing or financial security can provide.
Hard yes - If I held 1000000000 in a high yield interest rate @ 5% could result in 10 million dollars.
I would definitely take the $1 million loan at 0% interest. People are willing to take out half of that out on a home at 7% interest. Why not double it, get it at 0% interest, and invest it in say high-yield savings account or even real estate?
I would borrow the $1B. :D
Hard no as it is the same reason I wouldn’t want to win a lottery- that much money is a burden I don’t want.
yes I would borrow a million @ 0 percent interest.
I would take the money and spead it over 4,000 banks to ensure the billion is covered by the FDIC.
You wouldn’t have to spend the billion. You can just take out the 5% interest and pay back the principal with the same money you borrowed
Erin, did you trip over the curling iron cord and whack your head? That's $2.6B over 20 years @ 5%!
😂😂😂
i hate debt... but i would 100% take the 1,000,000,000 dollar loan for 0% ...if u get a 4% bond for 10 years, .... .thats 40 million a year , dont touch the principle and pay it back after 10 years
0% guaranteed for 5 years, with no risk of the interest rate changing or the debt being recalled? And no debt payment until it matures? Then heck yes. Even if I park it into a 1% low yield savings account with simple interest for 1 year I'd be set for life.
I'm curious why it's a hard no for you. What do you envision being the risks? Why would this debt stress you out?
Hard yes…. In a heartbeat. You and Dave can guilt yourself to death but I’ll be smart and never work again. If something happens where Hysa and treasury defaults I won’t be worrying about someone trying to collect that mil or bil
I’d never borrow the money
Ofc I would borrow that billion lol I could make 5 million in one year off that then pay back the loan.
Duh. Yes! you could buy an annuity with all the risk on the insurance company with 5 years guaranteed. Just a little knowledge leads to an absolute yes...
I would take the $1M loan at 0% and do exactly what your husband said he'd do. I would only do this knowing I'm a disciplined user of money and won't be tempted to spend even a portion of it. At the end I would return the $1M and pocket the interest earned.
1,000,000 for 10 years at 0%. Why not.
Just make sure it is in a FDIC bank and draw interest.
Very informative but the billions $ thing was pretty silly. If you said million that would be more realistic
I cannot understand the mindset of someone who wouldn't take the billion dollar loan in your hypothetical. Mathematically, it's pure upside.
That being said, I'm mature enough to understand people are different than me and I'm not the smartest person ever. Maybe they are right.
borrow only $1bn? No way, but if it were $100bn, yup.🤣
Saying no to a 0% interest for a 1 billion dollar loan is one of the dumbest things I've ever heard. If you made the hypothetical 5% interest in a HYSA, then after 5 years of it just sitting in the bank, you would have earned over 276 million in interest. Return the 1 billion after 5 years, and you just made yourself the easiest quarter billion dollars for doing no work. Essentially, you've functioned as a standard savings account for whoever loaned you the money at 2014 interest rates.
I would take that loan and do exactly what your husband would do.
I’m in your husband’s camp. Borrow at 0% and Park it in a no/low risk high interest account.
I'd divorce you if you didn't take a $1M loan at 0%
😂😂
1 billion dollars for zero interest for 5 years? I will take it and put in high yield savings for sure.
Hi Erin, Your content is fantastic! I'd love to assist you in enhancing your videos with premium editing and captivating thumbnails that can attract more viewers. Let's discuss how we can work together to grow your channel.
I really question Dave Ramsey's study because there was an experiment done to prove exactly how hard it is to get over the hump... I mean coffeezilla had a video outlining it:
th-cam.com/video/3B9AnLnleoE/w-d-xo.htmlfeature=shared
People need to take in the full view on what is more likely achievable than just viewing the positive. I'd only ever give the benefit of the people born into wealth if they are actively trying to solve the issue with inequality which most don't unfortunately.