Why Most Americans Will NEVER Be Millionaires (Don't Make This Mistake!)
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- เผยแพร่เมื่อ 6 ก.ย. 2021
- Why Most Americans Will NEVER Be Millionaires (Don't Make This Mistake!)
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Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.
Nobody knows anything
You need to create your own process, manage risk
and stick to the plan, through thick or thin
While also continuously learning from mistakes and improving.
I made a lot of mistakes in my 20s financially, but thankfully I made up for it in income. Im a solutions architect making 150k and I was obsessed with looking wealthy. I’d always take on debt and plan to pay it off easily with the next pay raise. (Terrible logic I fed myself)
Thanks to channels like this I am much smarter, and save about 30-40% of my income a year.
Financial peace of mind and security makes me feel better than any car or purchase ever could.
I was dumb when I was young.. typically cashed out my 401(k)s each time I changed jobs. In 2007 I started to stop doing that.. now my spouse and I have $2.9 million in investment accounts and $500k in home equity. Folks! Please please save!!!!
Almost $3 million in investments since 2007? What you guys doing for a living and are you hiring!?
@@dannypersaud387 we both maxed out our 401K and invested another $4-6 k per month. That, coupled with market gains brought us to where we are today.
It’s all good. Thankfully there are creative ways to make it to retirement
Wow that’s some saving! Good for you guys! 👍what do you guys do for a living?
@@MarkJones9093 wow that's a lot of savings... Great that you didn't fall into the habit of raising living standards, unless your income was just ridiculously high that you spent a lot and still had 10K/month left lol
I probably paid more than I needed for my work car, but i did have cash saved. I bought a 2011 Chevy Impala in 2012 with 34,000 miles on it for $20,000 cash. 9 years later I’m still driving the same 2011 Impala in 2021 and now has 170,000 miles on it. No major issues whatsoever. I plan on getting every last mile out of it. Meanwhile, a coworker I work with just purchased a brand new Jeep making $580 monthly payments. In my mind, that’s $580 that could be going towards retirement savings!! 🤦♂️🤔
I know every time someone tells me they bought a new car and then show it and it looks nice and all, I get jelouse but then remember, they are probably paying 500 to 800 monthly payments, that money I have and they dont have and feel better about it. I myist admit, I wish I had a nice car but won't fall for it, my camry is too reliable and paid off
For sure. And nowadays monthly car payments are likely closer to $800 per month than $500 per month. The average car loan term for a new car is almost 7 years. If instead they invested $500 per month at an average return of 8% in a Roth IRA for 7 years they would have about $56,000 of tax free money. Instead in 7 years they are going to have a car that has depreciated around 50%.
I'm in my 4th year of investing. I began at age 28. I feel I've been putting in money for a while and I completely understand why Brian says not to give up. Its a bit challenging when you want the money to grow quick, but patience is key.
I wish I would have started that young. Congrats and keep up the good work!
@@justakidfrombrooklyn1517 I'm in the 4th decade of my life. Started investing 3 yrs ago and I'm trying to give it a shot at becoming a millionaire.
How much money u got invested!
@@sandradelgadillo9430 to quote some rich dude "be fearful when others are greedy, and greedy when others are fearful." As soon as I heard about the mini crash in March 2020 I bought everything I could into voo. It's was only a few years worth if Ira, but it set me ahead. I dollar cost average different things every month, but I keep a bit at the side so I can be greedy. I'll be in my 4th decade soon. I took a long time off because I got burned by mutual funds. Now that I can read the market again and etfs exist I'm back at it. (Not endorsing voo, it's just an s&p index. But it grabbed me tons of value for my dollar.)
Thing is, I'm NOT a "nerd". I only WISH I could tell you this (Financial- Mutant stuff) all came naturally to me, but no. I'm not "proud" of my decades of Stupidity, BUT. I DID (eventually) catch- on, just in the nick of time, and MAN am I grateful. I still pinch myself that I'm retiring July 2022 with NO debt of any kind. TSP plus pension plus SS. No way! YES way.
This is what we all need to listen to everyday. No matter your education, circumstances or where on Earth you are living. We need more teachers like these guys in our public school systems .
I literally started investing in my retirement 3 yrs ago. I hope it's not too late.
As always, I am not a financial advisor and this is not financial advice.
I'd think it's NEVER too late to do this, especially if you have any company matching.
It is never late compared to the other choice: "never"
It's never too late. Be aggressive with savings, and it'll payoff
You not late.
You are too late! Where have you been for 40 years?
Always great guys. Thank you.
I feel like my wife and I, even though we are just starting to invest in our 40s, should be able to turn things around. We'll just have to be very aggressive. I know I can do it, I am just trying to make sure my wife can do it.
Americans could be millionaires if we were taught financial education in elementary thru secondary schools;education is the game changer 💵💵💵💵💵
True but you also have to be ready to listen. I heard plenty of times about compounding interest and all that when I was younger. But it wasn’t until I was 30+ years old with a family and all that before it actually clicked and I realized how dumb it was to not listen and start investing at 20.
But it should for sure be taught more, even if 20 year olds don’t listen so much.
Can't hurt but I think it would help less than you think. No amount of school can ever replace good parenting.
Great information! After the events of the past year, I needed something to get my feet back on the ground!
I maxed out the 401(k) and Roth IRA for the first time this year and dabbled in the mega backdoor. I’m literally planning on putting 100% of my February bonus into the Roth 410(k). I’m also targeting having 50% of the Roth IRA in January of 2023.
Don’t forget to leave a little room if your employer is marching anything you don’t want to squeeze that free money out.
I’d do the math on that before putting your bonus into the Roth 401k. Don’t forget you are more heavily taxed on bonuses. In my state, it makes more sense for me math wise to put my bonus into a traditional 401k due to the ~38% tax rate
@@cody5596 You're still taxed based on your tax brackets in the end. A bonus is considered supplemental income. Supplemental income is hit by an automatic 22% federal withholding, but that does not mean you owe that much. You'll get money back if you aren't in the higher tax brackets at the end of the year. Most of my income is commission which is considered supplemental income. I go tax exempt for a few months a year to cut the amount withheld. Otherwise I get a huge return after giving the Government an interest free loan.
If you max out 401k pretax, and max roth ira, then you should check and see if employer allows in plan conversions. If so contribute to 401k after tax and immediately convert to roth within the plan.
I'm a stay at home dad and we manage to put away about 25-30% of my wife's income gross. We plan on doing one nice vacation a year too and we are not eating beans and rice either. It's do-able, but you don't get a new TV every other year either. Nor do you get a new car every 2-3 years.
What she does for a living?
New cars and TVs are overrated man. My wife and I make a very good living and I’ve had my previously used car 8 years now with no plans of selling it. We can afford to get another but I just don’t see the point. Save as much as you can and enjoy your life through experiences!
So a quarter of your income goes to housing, a quarter goes to retirement, and a quarter (for me anyway) goes to taxes. So everything else has to fit in the last quarter?
When they say 25% of your gross income goes to housing-- that's worst case. I would strongly suggest against going above that.
The quarter to retirement is aspirational, you should strive to get there.
For taxes, there's a marginal tax rate, and an effective tax rate... to have an effective tax rate of 25% in my state, my income needs to be 120k.
So that's 30k a year, net, or 2500 a month, for groceries, utilities, insurance, and having fun.... assuming you're sticking to 25% gross for everything else.
They are speaking to high earners. I built wealth by buying rentals and letting tenants pay for them.
I remember watching The Wealthy Barber on PBS back almost 30 years ago. It was very useful to learn about early on. I stopped contributing much to my 401K around age 46 and don't contribute anything now, at age 51. When I was 50 I was fortunate to go over $1M.
45 and wife is 41, 1.3M in retirement and still contribute max 401 and ira
My wife and I (47/54) went over $1m back in July. Took us 29 years. Still saving strong. There’s not one answer, but it’s a lifestyle. I started my journey by listening to “The Dolans” on Sunday afternoons. I just discovered this show in the last 6 months … and what they teach here is valuable and straight good financial advice.
Why did you stop contributing?
Does your work not match? If it does you're leaving a lot of money on the table. 1 million is not really enough to retire on with inflation at 5% and projected (by the fed) to stay there indefinitely. Nor are prices coming down according to them either.
@@crazycdn8327 the Fed are not projecting indefinite inflation at all - they are saying the exact opposite in fact - calling it "transitory".
Now I am not saying a level of inflation won't stick around - but you are misquoting the Fed here.
The way I (at least try to) deal with pay raises. Half the raise goes to me to spend, the other half to increase investments. I'm looking forward to being allowed to spend an extra $300 a year
Was just modeling this in excel. The changes a move like this makes, save 25-50% of each raise, is really impactful.
It's kind of hard to do this when inflation is 5.5% and rising, plus insurance rate hikes.
My bias is that people should consider disability insurance over instead of whole life insurance. Not everyone can qualify, and the premiums may not fit with your budget, but a policy I purchased in 1982 when finishing up residency was a true game-changer when I became too ill to work in my field in the year 2000. Some include an amount for training if you cannot go back to your scheduled profession. It could take a household in dire Financial Straits after an accident 21 where you could keep food on the table the children closed and salt some away for your family's retirement.
Even if you're just putting cash into your HSA and plan to use that for expenses immediately, there is still a tax benefit to the HSA without investing it. Usually if you want to write off medical expenses on your taxes your expenses have to exceed 7.5% of your AGI for that year, but contributing to an HSA and then using the HSA for the expenses allows you to capture the tax write-off without meeting that threshold.
It can be done and it should be done.
My husband and I will retire early from our jobs with a very nice net worth.
Keep investing for your future.
Start maxing out retirement accounts after your mortgage is paid off.
Don't let life style creep short change your retirement future.
What age did u pay your house off? When I stick to my plan Of paying my house off at age 43-44 and then use that money to aggressively invest In addition to what I’m already investing to retire by 51 (20 year mark for my job). I’ll be able to draw my pension and then use other investments (401k, 457, Roth IRA, etc) to supplement. My goal is to retire a millionaire and I’m speaking it into existence…it’s happening
@@syrentertainment135 we paid our mortgage off at 47. We have built a nice nest egg over our 30 years of marriage. This will allow us to retire in our 50's. We have a couple years left to work and build our cash reserves bucket.
I realized I save & invest about 40% of my gross income ...which is slightly over 50% of my after tax income...
How are you able to do that?
@@razojacqueline I'm married so we live off of one income, and save and invest mine. We also live below our means and keep our expenses low. Meaning, if either of us stopped working or lost our job, we could meet all of our expenses and still save & invest.
I am very furtunate to have a similar situation as Missy but Im definitey doing 25 percent in a 457 as well as building a roth. My goal is to be done grinding by 60!
Thank you!
This is awesome!!!
Someone needs to hear this important message of mine I realized lately In this 21st Century,Almost 45% of people in the world have been Mislead and discouraged from taking step that could have changed their life in general ( from worst to better) and gained them 101% of financial Stability.
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Such a great segment on communication between spouses with different financial ideas! Beautifully done.
I am trying to live off my 30% of my income, it is doable. I just have to make the discipline to say no to something cuz I just know I want to be freedom so badly
Compound interest over time is the most powerful tool when it comes to investing. But make sure to do your own research, and pick high quality stocks/etfs.
Great video! Where can I buy Brians koozie?
Such a great explanation for the average person!
I’ve been looking at my screen this whole time thinking about where to put my money for better returns. The stock market or real estate.
There are basic differences when it comes to investing in real estate or stocks, but how well you do with either depends a lot on expertise. That’s why I got a solid broker backing my trades.
@@faux982 Never looked at it from that point. Makes sense now. I’m looking to start up but come across a lot of garbage out there. Have you any reliable leads to invest?
@@Freddyyyy266 Just as I stated, I got to put the extra money I’ve saved overtime into something lucrative. Coming across a genuine pro trader has proven to be more than an advantage for me. I’ve continued reinvesting ever since. I’ll leave you a means to reach him if you need help.
@@Freddyyyy266 Leviclemans (a)
Gmai
Lcom...Is he taking commissions for trades? Yes, I’m I still making money in the process? Hell yes!
Also a newbie in the stock market and looking to start up. I left him a message.
Agreed with everyone else in the comments: by far my favorite show - keep up the excellent work!
All it would take for most Americans to be on the path to being a millionaire would be to knock off the cigarettes, alcohol, door dash, and new cars.
you forgot starbucks lol
@@Sonic_Boomer_ I can’t ask for that. Starbucks is far more addicting than those other things. It won’t happen. 😂
Shit the Starbucks must be why I'm 20k short. Dammit. PSL forever!
Lol yes. I say this to my wife all the time. Met a couple that spends almost $1,000/month on just cigarettes
Addictions = Poverty
Menit 4 tentang kamu harus punya cukup emergency fund karena sewaktu-waktu pasti ketemu masalah keuangan
16:29 - Sometimes timing does help though, because I started contributing to the ROTH in 2019, and now 3 years in and 46% of the account value is growth.
There was a moment in 2020 it was at -30% though, that was tough time, but I slogged through and adjusted to put more money in in spite of it.
I must be a super nerd. I am thinking it would be awesome to hang out with guys like these.
We are financial mutants.
Same lol
Currently doing 12.5% savings, 12.5% investments(roth Ira) and 25% to pay off debt, can’t wait to change it officially to 25%/25% savings and investments
I'm very similar! Except I live abroad so I can dedicate like 90% to paying off debt, saving and (eventually) investing!!
@@abbyabroad lets go! I don’t have much debt so I figured I’d stay on the saving/investing side and get that money to work for me!
It will be harder to be a millionaire now because everything around us is getting expensive while our income is stagnant. In other words, the rate of increasing living expenses is faster than the rate of income increase.
This December will be 5 years since my last “cost of living” raise…
Companies only care about shareholders.
our income is stagnant.
Please speak for yourself.
@@DavidEVogel Well good for you :) Congrats! Most of us, our income are still stagnant. Thanks for your comment.
So Anne Marie, what can you do to increase your income? I know plenty of people who have learned new skills to make themselves more valuable even in midlife and have greatly boosted their income.
My mom didn't get a college degree until 50, and then enjoyed a professional job for 15 years. An aunt raised 12 kids and got a nursing degree along the way and had a great well-paying career. Many immigrant friends have arrived as adults with nothing and become successful or even wealthy. If you're stuck with stagnant wages, look in the mirror to see where the solution to that situation resides.
This is a fantastic video. I want to share this to my son in 6 years when he gets his first job!
I watched an episode from a channel that has a more cynical view of the strategy of long term wealth building using compounding growth on investment in companies - notably, how probable is it that the US/world economy experiences unending growth for the next 40 years?
That’s why you diversify into faster GDP growth economies. Eastern Europe, Asian and Latin America can help future proof your investments.
@@philistineau well the context of the video was investing in business in general, globally. It was very cynical, taking the stance that everything easy has already been invented and incremental inventions wouldn’t have the payoff like previous inventions did, and that it would cost more and more to develop these incremental inventions with less and less impact to growth. Makes me wonder how that content creator gets through life being so cynical and pessimistic.
@@eedre4864 I have a suspicion there were people who thought like that when the steam train was first invented!
Yeah humans innovate; that’s essential to our species. We’ve been doing it for millennia & doubt it will stop. It’s actually gotten easier since the products can be virtual.
@@eedre4864 If this were the case, things like Moore's Law wouldn't exist. We are constantly making improvements and increasing our growth. Even with the introduction of technological advancements, internet, etc. Things keep growing!
Its refreshing to see positive comments about being able to succeed rather than the "woke" crowd saying there is nothing you can do and the elites are putting you down
I appreciate the discussion about leasing cars and the latitude they provide for financial mutants to indulge in leasing. My wife drove the same SUV for 17 years while we invested in some rental property, and now the cash flow from one of the rentals pays for a lease car.
I purchased a car last year in cash. Sold the car this week for nearly the same amount. I enjoyed it but didn't like the speed of it. So now I'm looking at a nicer car-will pay in cash.
I understand what money guy is saying that housing shouldn't be over 25% of your income. But he is speaking about turn key.
My first property at 19 Years old was probably 40% of my income. But it quickly dropped to 20% due to a househack. It had an mother in law home in the back. (We moved into the mother in law home) The main house was occupied at time of purchase. It was a tired landlord charging Below market rent. In a few months, we increased rent and out ratio for housing was around 15% for the payments.
I was a stay at home mom at 19. I spent my days cleaning and painting. We were young and broke but my mom put us on a great path. I chose real estate because I can take the kids. No daycare cost and the kids only have a few spots of paint on them. At the time, I didn't understand my value because i didn't get paid. Painters, daycare, house cleaning, property management, gardening, cooking, laundry, etc. I got skilled enough to rip up floors and replace toilets.
Well as I bumble along the investment journey ,a couple years ago my portfolio just bumped over the 1 million, now just like most down the 10-12%. At 63 I have a few years to bounce back.
when i got a 10k pay raise i instantly went out and put all 10k a year into an ira. I was happy at what i made and lived just fine so i didnt want to get comfortable on having extra money so i made i like i never got it
Sorry for dumb question. How were you able to contribute that amount?
@@deanbutler3994 it was 10k minus what I pay in taxes so little less then 10k and put in different places
@@skigod9 the max you can contribute a year to an IRA is $6k...
@@superblump87 10k was pre tax i only put in post tax amount
@@superblump87 which is roughly 7k. I'm married so my wife puts the rest in "her" ira which we don't max because we max her 401k that her work matches i believe up to 6% in total we put around 31k a year into total retirement out of the 140k we gross. Once the house is paid off that will go up by 21k a year plus any raises in income. We live comfortably now and I would love to spend this money now on fun stuff but we don't need to. I'd rather be happy and content now then do the same when I'm older.
In Australia, employer contributions to Superannuation is 9.5% of your gross wage/salary. They’re looking to put it up to 12.5%. Hopefully in 40 years that makes a difference to people and we won’t need to have as many people on pensions because they’ll have a decent retirement fund.
That’s amazing! It’s only 3% in NZ
It depends on your social/family background and network of support system, to begin with. You cannot easily build wealth working a minimum job earning minimum wage, as you you know. It is not alway about "personal responsibility," but you have having access to education, health care, etc.. Many still dont have reliable broadband in the the US let along financial literacy!
There are a lot of factors at play but people will always be responsible for the decisions they make.
Social background? Network and support system? Please explain. Most millionaires would say it is up to you and if you want it.
@@averyrobbins68 I wish if that were that easy.
@@JB-nw1ej That’s why you have 20% chance tone a millionaire if you were born rich and a 6-7% chance if your just average. The decisions people make are very much dependent on life circumstances and experiences. If you were never taught how to do something it’s very unlikely you will even know you can do that something.
@@hleeyang3825 I think you make my point.
When I was young I didn't make enough money to meet the initial deposit required to start an IRA at Vanguard, or even at bank, where the initial deposit was only 1K. I was sleeping on a box spring on the floor with several roommates. A very good friend gave me the 1K for the initial bank IRA deposit, and then I was able to add little by little, until I had enough in it to move it to Vanguard. I completed my education over 8 years got a "real" job, and was able to start funding more and more. Along the way I payed my friend back. Years later, in my late 30s, I was able to fully fund my 401k, my 457, and a Roth IRA (over 40% of my income). I'm now retired and doing well--but it all started because of a friends helping me out along the way.
Biggest problem I have currently is which assets to buy, the S&P500, lots of analysts suggesting a correction soon so do I just stick pile cash for the short term?
What about return on premium insurance? I think it’s new, but I really like mine, so basically a zero% saving account that pays out if I die, or returns the premium after 20 years if I don’t.
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly.
investors should exercise caution with their exposure and exercise caution when considering new investments, particularly during periods of inflation. It is advisable to seek guidance from a professional or trusted advisor in order to navigate this recession and achieve potential high yields.
@@ritalorrigan This is superb! Information, as a noob it gets quite difficult to handle all of this and staying informed is a major cause, how do you go about this are you a pro investor?
Through closely monitoring the performance of my portfolio, I have witnessed a remarkable growth of $486k in the last six month. This experience has shed light on why experienced traders are able to generate substantial returns even in lesser-known markets. It is safe to say that this bold decision has been one of the most impactful choices I have made recently….
The adviser I'm in touch with is Dawn Maureen Humphrey She works with Merrill, Pierce, Smith incorporated and interviewed on CNBC Television. You can use something else, for me her strategy works hence my result. She provides entry and exit point for the securities I focus on.
Love the guys, love their philosophy and all that. Hugely disappointed to know that they work on a percentage basis and not a fee only as they advertise. Huge let down for sure
I felt the same way when I first started watching their channel a few months ago. I checked out their advisory site and was heart broken. Would be more than happy to pay a premium rate for their time, but another percentage fee on to of my existing 401k and ira fees is painful.
@@terrykarras5598 exactly. I was mentally
Prepared to pay a premium fee and quite honestly they are worth it but to pay a point, point 25 is bit far fetched. Thanks but no thanks
This comment is a misrepresentation. They say they are "fee only advisors" and that is absolutely TRUE. You are correct that the fee is calculated as a percentage of assets under management (AUM), which is fairly typical. But that does not mean they aren't "fee only" and somehow misleading you.
A "fee only" advisor just means they get all of their compensation directly from clients paying them fees. It does not mean the fee is a flat rate. The main alternative is a "fee based" advisor, who typically also charges clients fees (often also AUM based) but then can also earn money other ways, typically by making commissions on selling you something like insurance, annuities, mutual funds, and other financial instruments. This can create a conflict of interest in some cases (eg selling you some crappy financial product that gives them a fat commission but is not in your best interest), which is why common advice is to stick to fee-only advisors.
I'm sure you can find people who will give you a financial consult and maybe some level of wealth management for a flat fee, and there is nothing wrong with that if it fits your needs, but that is different than having a wealth management firm manage your financial life on an ongoing basis. In the latter scenario, they will charge a percentage of your assets as their fee and in return give you a broad range of services. This compensates them for the higher stakes and complications associated with larger portfolios, as well as directly incentivizes them to grow your wealth for you because they get a small cut of everything. It also gives you as the client some real clout as your portfolio grows. You become harder and harder for them to replace. You become worth much more to them than an average new client off the street.
A guy charging flat rate on the other hand is more incentivized to get you out of his office as fast as possible so he can charge that flat rate to the next guy. And your $5m financial ecosystem you spent the last 40 years building is worth no more to them than a 25 year old with $100k. If anything, the youngster is worth more to them as a client.
Just my opinion, but any info or services you're likely to get in a flat rate kind of scenario are readily available for free or near-free and you're better off DIY-ing it unless you really just don't have it in you to manage your own finances. This podcast is their version of flat fee financial management and their fee is $0. When you reach critical mass (say, $1m) you can still DIY but the stakes are high and the complications and implications are many. Mistakes and missed opportunities can be 5 and 6 figure problems. Paying someone $10k a year per $1m can make a lot of sense for a lot of people. You are not getting professional portfolio management for a flat fee of $1,000 bucks though.
Edit: A final point/summation about the problems with a flat fee type of structure, your advisor can really only grow by adding more clients in that scenario (or selling you some product) and they are heavily incentivized to do so. And that probably means less time and attention placed on you as an existing client. A percentage based advisor can grow by making their existing client base more wealthy every year. Assuming you have a good advisor, that means more time and attention dedicated to you as their existing client. More clients means more hassle. They're better off delivering solid results to existing ones. Percentage based fees creates a potential win-win scenario for the client and advisor.
@@dohczeppelin37 thanks for explaining how the "fee based" model works. Anytime if the fee basis is a percentage of my AUM, then I have a problem with it(subjectively). If i DIY built a 1M portfolio of solid and sound passive ETFs already in the market and i have some cash to deploy , I can see them charging me a point for the cash they can help me deploy into the market but i can never wrap head around charging me 10K for the 1M that is already deployed and working for me and meeting my goals. How can they justify 10K charge for doing nothing? opportunity cost and all that sounds great in theory but if there is nothing to do, there should be nothing to charge plain and simple. My opinion is that the whole fee model is flawed and fee should be by case by case basis based on client's current status of his/her AAP than a BLANKET and generic percentage.
@@srikanthk5769 j
Just turned 18 and I got a job late 17 and I saved 250 a month is that ok at my age
Keep doing it and save at much as you could, you could be millionaire when you are at your mid 30 or 40.
The way the US Gov is going.. Wont be too long before we are all millionaires! Inflation style baby!
Wow what an original idea.
Re: HSAs...can you use them for medical tourism/medical costs incurred while living abroad?
It's probably because the average America is quite unintelligent, some might even say dumb.
Lol might? 🤣
I think the statistics of US debt, sadly, confirm his statement.
Can’t disagree with you - I would say 9 out of about every 10 people I bump into are pretty much morons! And people wonder why I’m a loner…….😂
John Allen - well, uneducated is different from unintelligent but being unwilling to learn is bad. Here is a quote from Isaac Asimov
_*There is a cult if ignorance in the United States, and there always has been. This strain of anti-intellectualism has been a constant thread winding its way trough our polittical and cuiltural life, nutred by the false notion that democracy means that "my ignorance is just as good as your knowledge." *_
@@robertgraybeard3750 In my opinion willful ignorance is akin to actual mental retardation, so I couldn't agree more with your statement, sir. I mean for god's sake, we have flat-earthers in a time when information is more easily accessible than ever. If that isn't telling I don't know what is. Smh
HSA can be used for non medical expenses at age 65 with no penalty, but you owe tax like a traditional 401k.
Yes, max it out if you can.
Looks like Bo has been putting in extra hours at the gym.
I'm in a really weird situation I spend anywhere from $650-800 a month on gas usually on the higher end of that and if I took a loan on a Tesla Model 3 while I would have the loan my cash flow would be the same if I put 10k on it or if I put down 20k on the long range version and that's on a 48 month or 4 year loan and after it's paid off it would save me a lot of money after that. I would try to pay it off as quickly as possible on top of my inviting I do but I need to save for a house down payment on a house and the renovations for it as quickly as possible and if I saved for that stuff faster than I would pay off the car then I would pay off the car after that before buying the house. If I got the regular version me buying that car would come to a 15% rate of return if I brought the car. What do you guys think? Edit hear below.
Hey guys thought this would be easier for you to all understand what I mean.
Mustang - $750/mo in gas
$165/mo for insurance Includes Storage insurance on my Buwick
$915/mo total
Tesla - $650/mo for the loan
$120/mo in electricity
$165/mo for insurance May be slightly more than that that's the one piece I haven't got yet.
$935/mo total
Combined, mostly driving the Tesla
$100/mo in gas
$120/mo in electricity
$330/mo for insurance Would most likely be less than that may have it on storage insurance most of the time and have full coverage on the special days Id drive Mustang.
$551/mo total
Or I may have PLPD when I use the Mustang if I had both.
I would definitely not get a 4 year loan on a vehicle. A Tesla is an expensive toy. If you're going to go the Tesla route you really need to be paying it off in a year or so. Not doing so is literally throwing money away. You need to think about total value, not monthly cash flow. If you can pay that Tesla off in a year then go for it, if not I recommend against it.
What would the increase in cost be to your monthly utility bill? Will you sit outside for 30minutes to charge it for cheap?
It seems like you want a Tesla and that you are trying to rationalize yourself into buying it.
Get a prius, move closer to work, or find work closer to home.
@@xJayhawkFANx Yeah I know what you mean. I could probably pay it off in about a year maybe slightly more if I really wanted to but I wouldn't want to because the interest rate would be so low. Also when I said monthly cash flow I meant like I spend $650-800 on gas usually on the higher end of that and if I took a loan on a Tesla accounting for interest and the whole payment and everything and accounting for me paying for enteric the out of pocket cost each month would be around the same as a what I would be spending on gas alone on my current car. Which is a 2011 V6 Mustang and I get I could drive a Prius for Jimmy John's and my other driving but I actually want to enjoy my driving and not get board of my driving like I would in a Prius or something like that so I could buy that and save a lot more money without spending that kind of money but if I would otherwise drive my Mustang around which I otherwise would the math works out that while I have the loan my cost would be the same and after it's paid off it would save me a lot of money out of pocket each month if that makes any sense. Like if I saved for like a year and a half to pay cash for it That's around $13,500 I would have spent on gas on the car that I would have not spent if I took the loan on the Tesla to have it sooner and the out of pocket would be the same and it would have that many months less of being paid off. I would pay it off early but I need to save up a total of 75k on top of my eminency fund so 50k of that would be a down payment on a house and 25k of that would be to fix up the house and I'm being concretive so there would most likely be extra money left from that 25k after that most likely that I could put towards investing more or whatever. Am I making any sense or am I like confusing you hear or do you understand what I'm saying and still disagree with me which if you are that is fine of course. Hey I changed my original message put something at the bottom that may explain it better.
@@bishamuesmus301 That's some great questions you go there the insurance is the only thing I haven't figured out yet, I need to soon though. I know it would go up some but not very much considering I already drive a V6 2011 Mustang I get it I could get a Prius for a lot cheaper and save a lot of money but I otherwise would dive my Mustang to actually enjoy my driving I do which a lot is also for Jimmy John's. But like in terms of eltiercy that would be like $120 a month I would be spending on eltericy for the car. and even if I took a loan on one and didn't drive my Mustang like account for the entire payment the interest and the enteric and everything my monthly cash flow would be the same as it is now if that makes any sense. I would charge it at home every night and in-between my shifts on days I go home in-between my shifts sense I have like some shifts of working like 11-1 sometimes and then working 4-close and stuff like that a good amount of the time as well. And like with the gas savings I would get after that 4 years that gas savings alone with my driving would have paid for the car and even if the car was worth $0 at that point I wouldn't have lost any money in the end if that makes sense either and after the 4 years knowing my spending and savings and investing habits I would invest all of that savings at that point I would pay it off much quicker than that but I would rather save that money for a down payment on a house and money to fix it up which in total would come 75k as quickly as possible for that stuff on top of my eminency fund. Am I making any sense or am I like confusing you hear or do you understand what I'm saying and still disagree with me which if you are that is fine of course I would love to hear your opinion on what I said. Like if I took a year and a half for example to save for it in cash that's around $13500 I would have otherwise spend on gas in that time which the cash flow would be the same and some of that would go to eltericy and stuff but some to interest as well and most of it to princable on the car loan. Hey I changed my original message put something at the bottom that may explain it better.
I dont need to watch an almost 1.5 hour show to know why most Americans will never be Millionaires.
With average incomes what they are most people would have to save hard and be lucky for 20-25 years to be millionaires once they die.
I started at 20 bucks a month when I was 21 now I'm up to $620 a month and will probably increase soon.
Yo dead as* Brian and Bo, ya'll my dudes until the day I go, i swear I think I'm a financial ninja. because of ya'll too!1!
How do you calculated if you have a pension plan from work into the 20-25% of gross income?
Being a millionaire is great but it's not everything. Today, I went to lunch with a friend. He asked me if I'm charging my son for the house I gave him. I said no. Then I told him I don't charge my daughter for her house either. He said What!!!!
I could be retired but that's boring. But I've taken time off work to be a stay at home mom. So, I guess it was still working. I've had mornings that I've dropped my youngest off at elementary school, dropped my son off at high school, got my oldest daughter off to shorter college (her husband was in Iraq), all while caring for my new grandson. So, I loved staying home.
Staying home after my son has moved on with his fiance, my daughter is with her husband and 2 sons, and my teenager is either working or with her boyfriend....isn't a good life. So, I gave away some of my wealth and went back to work..
I'm 51 and work in fiber optics. The friend I had lunch with is 56 and works for Delta and retired from American. It's weird that we don't want to retire. He is better at creating w2 income but I'm better at creating passive income.
My friend said, he will have to pay taxes on his pension from American. He is single no dependents and makes 6 figures at Delta. The govt is taxing him like crazy.
Rich American bought loopholes from our politicians. Giving away wealth tax free was one of the loopholes. I'm not paying taxes on rent I'm not receiving. My kids aren't struggling to make money to pay rent or a mortgage.
It would be nice to see money guy do a video on how much a person would have to earn plus pay taxes on earnings, then cost of buying a home (closing cost, interest payments, mortgage insurance, time renting to save for a down payment etc And cost of the house). My family tried to teach me generational wealth!!
Millionaire is relative. Imagine being a millionaire while the average price of a house in San Francisco is 1 million. I dont think that will make me feel rich. I'm currently doing really well with my career and i don't plan on stopping until I get to multi-millionaire status. Reach for the 🌟!
I don't understand the "61% of Americans have less than $1000 in savings" stat. Googling Median Savings Account Balance shows a bankrate article where the median savings account balance is $5300. Where's the discrepancy?
Median does not equal mean (average).
@Sean Donica Where is the word average in my comment? Median is the exact middle person. If the exact middle person has $5k in the bank, how can 61% of people have less than that?
Regarding permanent life insurance -- it has important uses for estate planning. This is less relevant in the United States, where estate taxes only begin at $11 million. Here in Canada, estate taxes start at the first $1, so permanent life insurance is ESSENTIAL to allow your heirs to pay for a non-liquid inheritance (like real estate or a small business).
Some people just don't want to be millionaires or rich don't want the trouble.
Hey all! I'm currently trying to save a down payment for my first house. I currently have 10% of my income going to my 403b and another 6.5% going to my pension. Should I reduce my 403b contributions so that I can save for my down payment as quickly as possible?
My only regret was not investing more in my early working years to the extent of doing a side hustle to in order to max out traditional/Roth IRAs and still cover expenses/save without going into debt. In my opinion, pulling back on IRA contributions will have much larger downstream impacts on your wealth than the gains you will get for saving cash.
I was on the live stream but got sidetracked with work today. I am having difficulty calculating my net worth because I own a small interest in two businesses that generate about 3 million in gross revenue per year and are growing about 7% per year. The net revenue is probably 15% of the gross. How do I factor these two businesses into my net worth? What is the appropriate discount rate to use if I use a DCF model?
Generally for a discount rate you would utilize the average rate of return for a specific investment class or if you are a business you would utilize your internal weighted average cost of capital to discount the earnings. Once you have figured that out it is pretty straight forward as you would utilize excel for that.
Having said that to complete a DCF you require the actual cash flows of the business not the net income of the business. You can value a company based on normalized earnings (earnings less one time payments such as lawsuits, bonuses, unexpected gains/losses, etc) but you then need the industry standard multiplier and you would then create a range above and below that so that you can see best and worst case scenarios.
@@bishamuesmus301 thank you.
I did this, using cash flow with 7% growth rate and a discount rate using 4% discount rate. DCF value of both businesses in today’s dollars, 27 million, my interest represents about 3.0 million.
@@michaelswami that’s awesome! You in the US I would assume?
@@bishamuesmus301 I am. And thanks for the kind words. It was a 15 year struggle to build those businesses and in 2009-10 we had trouble keeping the doors open. Fortunately my business partner is a genius and we stayed the course.
I think being a millionaire should not include primary residence. Imagine if someone has a paid for million dollar house but nothing else saved. He can’t even begin to retire. At least let’s give a net worth both with and without their primary residence.
I wish I qualified for an HSA
That has nothing to do with why most Americans aren’t millionaires. Most Americans aren’t millionaires because they never make enough, early enough to save after paying for the bare necessities of life.
You ever notice no one on TH-cam ever wants to talk about that!!!
What is HSA?
Health savings account :)
You can have an HSA independent of your work. You just need a high deductible health plan.
How much is Brian Preston's net worth?!!! 🤓
He should share his personal strategies!!! 😁
Do you include 529s in the networth statement?
Most 40 50 and 60 year olds are not millionaires. Every financial show assumes this. I think you guys should address this issue and provide advice.
They would have very small channel lives if they talked about why most 40, 50 and 60 years olds are not millionaires. Many channels say people need skills but then they say you need to find a high income skill. WTF those high income skills are not easy jobs people can just walk into normally!!!!
Bo getting buff?
Why don’t you make entire video of F.O.O . And explain complete plan .. it’s kind of confusing
331m American+ Me im a New American 👍
Yayy! Congrats!!!
I thought it was more like 13% of Americans are millionaires.
Americans aren't mentally and emotionally there. The psychology behind all this requires courage, foresight, confidence and self-esteem. I think a lot of Americans could be better coached to wealth through therapy than trying to follow any financial order of operations.
It takes personal responsibility.
It takes sacrifice
@@NicE-jq3wv Exactly! It takes fortitude to live frugally while everyone around you goes to Starbucks, out to lunch, gets their nails done, buys trendy clothes and jewelry, takes vacations, and buys new cars.
@@genxx2724 that takes more than sacrifice, it takes self esteem. If you internally shit on yourself for not having more, or feel your less than for not being able to partake in the same things as other people sacrificing things could feel a lot bigger than it is. I think we often dont realize that not everyone has the self esteem, nor are they confident that their sacrifice will even amount to anything bc they dont think highly of themselves.
@@AS-kf1ol Bingo! People with high self-esteem don’t need to show off or wear designer clothes. They’re smart enough to realize show-offs might have high debt and no investments for retirement.
Leasing is ALWAYS bad
My $1,500 2000 Maxima (1996-2002 similar) might be the best car I own. It just works all the time. I've driven it 45,000 so far. A broken automatic transmission can ruin your finances, I never buy cars that have them.
I love your stuff and I find it very helpful. However, you take an hour or more to give me about ten minutes of content.
They talk about topics in depth. I don't see an issue with their discussions.. there's plenty of other TH-camrs who make 5-10 minute videos if their style isn't for you.
It is tough listening to this show sometimes when your not making that 200k income .
That high level finance is really geared towards high income .
Not to me. Once you’re at $200k you cant do the Roth IRA anymore. Most of this advice applies to people who aren’t close to $200k.
Get on a budget and start working through the FOO. That applies no matter your income.
We make about $100k household. We’re at the maxing out IRA step. I literally just started a couple months ago so we did $500 2 months ago and $650 this month. But the show is great motivation to get me to go put that contribution in each month.
The strategy is largely the same regardless of income, but yes the less you make the simpler it is. So there is less to talk about in terms of content and a lot of personal finance advice won't apply. The government "nerfs" a lot of personal finance for lower income people. Your effective tax rate is very low or even zero (or negative). Social security and Medicare will cover a huge amount of your retirement expenses. IRA and 401K limits are set so lower income people can basically put as much of their income in them as they want. Low income people also can get an enormous government match on their retirement contributions that basically guarantees ridiculous annual returns.
As your incomes grows, the government assistance starts to disappear pretty abruptly and it is replaced by a hefty tax bill to support said assistance for lower income people. Suddenly the rules of the game are starting to be stacked against you instead of in your favor so you really have to get in the weeds with strategy. Otherwise taxation alone can make wealth building very difficult.
The government doesn't want higher income people to build wealth. They want them working and paying a lot of taxes and spending the rest on consumption (and therefore more taxes) until they die.
@@dohczeppelin37 I don't think that's a fair assessment. Because of the marginal nature of our tax system, a person making $85,000 has the exact same investing opportunities that someone making $40,000 has, plus the additional $45,000 at the higher tax bracket. Likewise someone making $163,000 has the exact same investment opportunities as someone making $40,000 dollars, plus the additional $45,000 at the higher tax bracket, plus the additional $78,000 at the even higher tax bracket. It makes absolutely no sense to say investing is easy for the person making $40,000, and difficult for the person making $163,000.
Now yes, there are one or two tax breaks for low income people, but that's not so much "nerfing" low income retirement saving so much as simply making it possible. The Retirement Savings Contribution Credit (which is what I assume you are referring to) hard caps at just under $20,000 of adjusted gross income, yielding a $1,000 credit. Ever tried saving for retirement on $20,000 a year? It's not impossible, but you'll be living in poverty your entire life. And social security? Under current conditions, the social security trust is projected to run out in 2032. That's not me saying it won't exist after that, but it certainly won't exist in it's current state come my retirement time.
@@Alan-jk1yi I didn't say investing is easier per se. Personal finance as a general category is just much simpler for low income though, at least in terms of strategy. This is mainly because you don't really need to worry about taxes and because a large percentage of your retirement needs will be covered by the government. Low income people obviously have their own batch of problems, but they don't require much advanced personal finance strategy. Living on less than they make is the hard part.
As for the Retirement Savings Contribution Credit, you get a 50% credit on up to $2k in retirement contributons if you're single and have an AGI of $19,750. Standard deduction is $12,550, so your actual income could be up to $32,300 though. There is also a 20% match bracket and a 10% match bracket with the latter going up to $33k AGI ($45k gross income). And if you're married, those income limits all double.
This is just one program, obviously $1k-$2k a year alone doesn't solve all of your problems, but over a working lifetime this alone can add a few hundred thousand to a retirement portfolio, which is an enormous amount for someone who will have the majority of their income replaced by SS anyways. And this is in addition to many other tax benefits and government benefits afforded to low income people.
A 6 figure income is nice but the government is happy to relieve you of 50% or more of it if you let them. And you are a mile above any kind of social safety net so you are mostly left to your own devices. This combines to change the stakes of personal finance dramatically. A lot of strategy is required or else the financial statements of a higher income person can look alarmingly similar to those of a low income person.
@@Alan-jk1yi And as for SS and Medicare, reform will happen in order to make them viable into the future. Based on what's happened so far what's more likely though, the millions of low income people who need it to survive get their benefits slashed or taxes increases? Or those middle and high income people who "don't need it anyways" and "don't pay their fair share" get their benefits slashed or their taxes increased in order to preserve the program (or even expand it) for low income people?
My guess is the latter. All the more reason that the higher your income, the more seriously you have to take personal finance. The higher your income the better off you are, I'm not denying that, but it certainly makes you a target so you have to get really good at "playing defense" in order to keep very much of it.
Why Most Americans Will NEVER Be Millionaires
Americans spend more than they make. Is this the correct answer?
That is a really big part but income plays a role too. When was the last time you meet someone who runs a single income earner household making less than 40K that had a brokerage account or savings or checking account worth 500K to 1 million? Almost without exception the ones who end up with those huge accounts will be from duel earner households. My point is that income matters as well!!! Your quote: (Why Most Americans Will NEVER Be Millionaires
Americans spend more than the make. Is this the correct answer?)
@@donaldlyons17 There is a considerable difference between logic and behavior. Logic tells you that a family income of $100000/year will have a larger investment portfolio than a single person with an income of $50000. Logical but not true.
If you are single with an income of $50000/year and invest $417/month consistently you will retire with more than $1/2 million.
@@donaldlyons17 I am half of a dual income household. Before kids it's the way to go, pile as much into your accounts as you can while you're young, but after kids I'm not so sure. The cost of childcare is an obvious one that makes dual income impractical for many. But there are other, much less obvious costs that offset a lot of the benefit of dual income, like owning 2 cars instead of 1 for example. And of course the classic problem of lifestyle creep.
Maintaining the household is also high on that list of hidden costs. When you both work full time, you give in to a lot of expensive conveniences that make life easier. Take out and prepared food can turn into a budget killer but making meals from scratch all of the time is damn near impossible if you're both working 40+ and have kids. Paying contractors for house maintenance instead of DIY is another. And who has time to repair things like clothing and toys? So you buy new. You just end up so strapped for time that you eat one convenience cost after another just to keep your head above water. If you both have high income, it can still work in your favor. But for a lot of regular folks, a stay at home parent can still make a lot of financial sense in my opinion. The stay at home parent becomes your "defense," driving down your cost of living instead of boosting income (offense) by working. It can make for a much better family life too to have a parent at home.
I wish I understood the HSA years ago. I have it in my to do list for open season.
Maybe that is a question you should ask "Chy-na." DJT
I'm surprised to hear Brian's 18year old daughters 529 only has $50,000 to $60,000. I would have assumed there would be at least $120,000 in her 529?
The 529 comes after your retirement accounts in the FOO. The idea is that you can always reduce your retirement contributions later when it comes time to pay tuition, but not the other way around because of compounding. Also, your retirement assets are excluded from FAFSA, while your 529 balance is expected to be used on tuition.
Yeah but I’m pretty sure I’ve heard them say they like to control what the balance will be so I’m willing to bet $50,000-60,000 is by design
He said he funded at the level specifically to get the state income tax benefits. The other money he has saved for her is in a custodial brokerage account.
Following Brian's example a high net worth individual should have a goal of $50,000 to $60,000 in a 529 for an 18 year old child. It still seems like a low amount in a 529 for someone with a high net worth.
@@robertryan3490 Students in TN get their first 2 years at a community college for free. 50-60k is plenty for the last 2 years.
39% have more than 1k, 8% are millionaires, which means 1/5 on Americans with at least 1k are millionaires
Good stuff but same content.
What really surprises me is those folks making 6 figures and are living paycheck to paycheck. You have to be down bad by then.
Ah man it was good till you discouraged insurance. Perm products don’t cost 25x more 25 year old term 260 a year perm cost 950 plus minimum 500 in cash accumulation. You borrow from 401k as well plus penalty if you need it early. You don’t need to buy a lot over time it increases because you self insured in time. Most Americans will not have enough set aside to self insure by the time term expires then that term is 20x the cost.
: )
finally got my act together at 34... now maxing out 401k for both me & spouse and have extra 1K/month in investment acct for liquidity... with 8% rate of return, We're gonna be a millionaire in ~8 yrs from now. Let's see how things go
Bookmark for 56:06 for my pension buddies.
A great guide to being middle class - not really what I’d tell someone who wants to be a real millionaire.
What’s a “real” millionaire? Most millionaires made their million in their late 50s early 60s. I think the goal of this show is to get the average American who doesn’t want to do too much extra work to that millionaire status and have a safe, healthy retirement.
@@weswalks8449 listen to these guys and you will never be poor… and you will never be rich. Just saying.
@@romulus1300 I can kinda agree with that. All this does is secure everyone with a healthy and very comfortable/luxurious retirement; most would consider that rich. but no, this won’t get you swimming in millions by 35 if that’s what you mean, I agree. That takes a lot more work
@@weswalks8449 it also takes a lot more risk appetite. Saving money is great - but inflation eats away at it. If you’re not doing 8% returns annually - you are losing money as far as I see it.
These guys are focusing more on retirement accounts. I don't want the money to be locked in a retirement account. I want to enjoy the millions as I please and when I'm young
I’d say the only way to do that is to have a very high risk tolerance and start a scaleable business at a young age, which most people aren’t built to do. This show is for the average person wanting to be a millionaire in a safe way; an ambitious entrepreneur can accelerate this but not without a significantly higher chance of failure.
I am with you on that one. Figuring out how to scale my income (or purchasing power) is always the best idea but for many that is next to impossible. Your quote: (These guys are focusing more on retirement accounts. I don't want the money to be locked in a retirement account. I want to enjoy the millions as I please and when I'm young)
@@weswalks8449 If he just makes bookoos of money he could just set it in a normal investment account. Most people don't primarily do that because there are a lot of benefits to retirement accounts and most people don't get enough money until they near retirement for it to be particularly pertinent, but if he makes like 250k a year or some nonsense like that it could be worth giving up the retirement benefits to have access to it whenever he felt like he have enough money.