1 00:00:00,100 --> 00:00:02,000 Welcome, everyone, thanks for joining today. 2 00:00:02,000 --> 00:00:05,400 On the Joseph Carlson show, we have a very special show. 3 00:00:05,700 --> 00:00:08,700 In fact, I don't say this often at all. 4 00:00:08,700 --> 00:00:11,600 I really don't, but I think this one is going to be a special 5 00:00:11,600 --> 00:00:13,000 show. And I think you might want to 6 00:00:13,000 --> 00:00:16,600 bookmark this video. In fact, out of the hundreds of 7 00:00:16,600 --> 00:00:20,300 videos I've done, this is probably one of the only ones 8 00:00:20,500 --> 00:00:22,600 that I think you should bookmark to eventually share with a 9 00:00:22,600 --> 00:00:25,600 friend or someone else. That is getting started on the 10 00:00:25,600 --> 00:00:28,700 Journey of Building Wealth or getting started on investing. 11 00:00:28,900 --> 00:00:31,500 I think it will be highly. E applicable either way. 12 00:00:31,800 --> 00:00:33,700 Now, the reason I say that is because what we're going to be 13 00:00:33,708 --> 00:00:38,300 doing in this video is doing a basic overview of wealth 14 00:00:38,300 --> 00:00:41,200 building principles. We do so many things on YouTube, 15 00:00:41,200 --> 00:00:44,100 where we get a little into the weeds, we talk about different 16 00:00:44,100 --> 00:00:45,900 news subjects and current events. 17 00:00:45,900 --> 00:00:49,000 We talk about different stocks and holdings in our portfolio. 18 00:00:49,100 --> 00:00:51,300 I've done multiple episodes deep. 19 00:00:51,300 --> 00:00:54,300 Dives on companies, like, apple analysis on them and their 20 00:00:54,300 --> 00:00:57,900 valuation or Microsoft. I've done entire episodes, 21 00:00:57,900 --> 00:01:01,300 dedicated to Disney Nike. Target Costco. 22 00:01:01,400 --> 00:01:04,400 I've overviewed all of these companies in depth and while I 23 00:01:04,408 --> 00:01:07,300 think it's good to do in-depth analysis on different companies 24 00:01:07,300 --> 00:01:10,000 that you're investing in and realize the portfolio that 25 00:01:10,000 --> 00:01:12,500 you're building. I also think it's good to take a 26 00:01:12,500 --> 00:01:15,300 step back and just go over some of the basics here. 27 00:01:15,500 --> 00:01:18,600 What I want to cover in this video, are some of the most 28 00:01:18,600 --> 00:01:21,500 basic foundational principles of wealth building. 29 00:01:21,500 --> 00:01:24,600 And I think this is both highly applicable to people that are 30 00:01:24,600 --> 00:01:27,400 far along in their investment journey and they're far along 31 00:01:27,400 --> 00:01:29,800 into Building Wealth, and people just getting started. 32 00:01:29,900 --> 00:01:33,300 And I think in any phase, it's really good to revisit this 33 00:01:33,300 --> 00:01:35,000 topic. So in this video, we're going to 34 00:01:35,008 --> 00:01:36,700 be looking at three different Graphics. 35 00:01:37,000 --> 00:01:41,800 These are flows cash flows, money flows and how they affect 36 00:01:41,800 --> 00:01:44,000 the different ways that people build wealth. 37 00:01:44,200 --> 00:01:46,900 And I firmly believe that this is the most accurate 38 00:01:46,900 --> 00:01:50,200 representation of how you build wealth on YouTube. 39 00:01:50,200 --> 00:01:52,800 I literally believe that. These three images, really 40 00:01:52,800 --> 00:01:55,100 boiled down. What's the difference between 41 00:01:55,100 --> 00:01:58,100 wealthy households? Poor households, and those that 42 00:01:58,100 --> 00:02:00,800 get kind of stuck in the in between, All right, Tory, this 43 00:02:00,800 --> 00:02:02,600 is it. So having said that, we have a 44 00:02:02,607 --> 00:02:05,100 lot of good stuff to jump into. So let's go ahead and start 45 00:02:05,100 --> 00:02:07,400 right off. First of all, my name is Joseph 46 00:02:07,400 --> 00:02:09,500 Carlson. I upload videos every single 47 00:02:09,500 --> 00:02:12,900 week of my portfolio. I give commentary on current 48 00:02:12,900 --> 00:02:16,300 events in my opinions, on various subjects as well as I do 49 00:02:16,300 --> 00:02:19,300 in-depth research on different companies that I'm buying into 50 00:02:19,600 --> 00:02:22,500 and I give my bull case in bear case for different Investments 51 00:02:22,500 --> 00:02:25,700 that people are talking about. Now, I've been doing this for 52 00:02:25,700 --> 00:02:28,100 quite a while. In fact, I uploaded my first 53 00:02:28,100 --> 00:02:30,300 video in February of 2009. Teen. 54 00:02:30,500 --> 00:02:35,200 It was a portfolio update that simply all it was at the time I 55 00:02:35,200 --> 00:02:38,500 had a 25 thousand dollar dividend growth portfolio and at 56 00:02:38,500 --> 00:02:42,000 that point in time and social media, it was incredibly rare to 57 00:02:42,000 --> 00:02:45,700 show your entire portfolio transparently week by week. 58 00:02:45,900 --> 00:02:49,600 In fact, I don't know of anyone doing that very thing and I 59 00:02:49,600 --> 00:02:51,200 thought, you know what? I bet. 60 00:02:51,200 --> 00:02:54,800 A lot of people would like to see real investing complete 61 00:02:54,800 --> 00:02:58,000 transparency. No gimmicks, no hiding behind 62 00:02:58,000 --> 00:03:00,100 different walls. I thought that bringing This 63 00:03:00,100 --> 00:03:03,200 level of transparency to General Finance would be a very positive 64 00:03:03,200 --> 00:03:05,000 thing. Well it turns out my assumptions 65 00:03:05,000 --> 00:03:07,700 on that was correct. A lot of people turned up to 66 00:03:07,700 --> 00:03:11,200 really value seeing someone's Financial Journey tracked every 67 00:03:11,200 --> 00:03:15,000 single week and so I kept doing it, I kept creating videos 68 00:03:15,000 --> 00:03:18,700 sharing my opinion and sharing how I view finance and investing 69 00:03:18,800 --> 00:03:20,300 in general. Now, the channel has grown 70 00:03:20,300 --> 00:03:23,200 significantly. We've reached a size of over 240 71 00:03:23,200 --> 00:03:27,300 thousand subscribers and along that process in all 230 videos, 72 00:03:27,500 --> 00:03:29,800 I've shown you, my portfolio transparently. 73 00:03:29,900 --> 00:03:33,100 A single time, both the portfolio, value the gains, and 74 00:03:33,100 --> 00:03:35,900 the money weighted return, which is the internal rate of return 75 00:03:36,300 --> 00:03:38,500 in that. You can see the breakdown of my 76 00:03:38,500 --> 00:03:41,800 market gains, which is capital appreciation, and the earn 77 00:03:41,800 --> 00:03:43,900 dividends. So, this is what I show and what 78 00:03:43,900 --> 00:03:47,100 you get to see week by week. And this makes a lot of fun for 79 00:03:47,100 --> 00:03:50,500 me because I get to go through my investment Journey not alone. 80 00:03:50,500 --> 00:03:52,900 I get a go through it with a lot of other people. 81 00:03:53,100 --> 00:03:55,800 So, I have a ton of support and a ton of help from both the 82 00:03:55,800 --> 00:03:58,900 community and the commenters here, as well as the many people 83 00:03:58,900 --> 00:04:00,600 on my Discord in. Patreon. 84 00:04:00,700 --> 00:04:04,000 I can firmly say that I'm both a better investor and investing is 85 00:04:04,000 --> 00:04:06,900 a lot more fun in general because of social media. 86 00:04:07,000 --> 00:04:09,200 Now, having said that I've stated many times previously, 87 00:04:09,200 --> 00:04:12,600 that the purpose of this portfolio is to grow a stream of 88 00:04:12,600 --> 00:04:16,000 passive income. Passive income is completely 89 00:04:16,000 --> 00:04:19,000 different than active income. Active income is income. 90 00:04:19,000 --> 00:04:21,600 You have to clock in for you have to go to work. 91 00:04:21,600 --> 00:04:25,000 You have to respond to a job. You have a boss, lecturing you, 92 00:04:25,000 --> 00:04:28,000 on doing things. That's active income passive 93 00:04:28,000 --> 00:04:31,400 income, is a stream of income that You do nothing for it's 94 00:04:31,400 --> 00:04:34,300 completely passive, Warren Buffett famously said. 95 00:04:34,300 --> 00:04:37,300 If you do not find a way to earn money while you sleep, you will 96 00:04:37,300 --> 00:04:39,400 work until you die. That's a little bit Grim of a 97 00:04:39,407 --> 00:04:43,000 statement, but that's his way of saying, you need to find a way 98 00:04:43,000 --> 00:04:45,500 to gain passive income. Now, there's multiple ways of 99 00:04:45,500 --> 00:04:48,400 gaining passive income, dividends aren't the only way, 100 00:04:48,400 --> 00:04:51,800 but Dividends are certainly a great way to earn passive 101 00:04:51,800 --> 00:04:53,900 income. That's exactly what I did. 102 00:04:53,900 --> 00:04:57,100 Three years ago, I started building my portfolio and my 103 00:04:57,100 --> 00:04:59,400 first deposit was two thousand dollars. 104 00:04:59,900 --> 00:05:03,300 Actually sold a little bit of my portfolio early on to pay down 105 00:05:03,300 --> 00:05:06,900 debt, I owed on a car. So I've grown this portfolio 106 00:05:06,900 --> 00:05:10,900 from five, six, seven thousand dollars back in 2018, all the 107 00:05:10,900 --> 00:05:13,200 way up to the value. It's at right now and I want to 108 00:05:13,200 --> 00:05:16,100 help give context and explain how this happened with three 109 00:05:16,100 --> 00:05:19,300 different graphics and the first one that we're going to look at 110 00:05:19,400 --> 00:05:23,200 is the graphic showing the cash flows of poor households. 111 00:05:23,200 --> 00:05:25,800 Now, the first thing that I want to address is, nobody picks the 112 00:05:25,800 --> 00:05:29,700 circumstances, you grow up in that is just roll of the dice. 113 00:05:29,900 --> 00:05:32,100 Ice, some of us grow up in wealthy households. 114 00:05:32,400 --> 00:05:35,100 Most of us might grow up in Middle income households, right 115 00:05:35,100 --> 00:05:37,100 somewhere in between. And then some people 116 00:05:37,100 --> 00:05:40,100 unfortunately grew up in very poor households, very 117 00:05:40,100 --> 00:05:42,500 disadvantaged. You might have divorced parents, 118 00:05:42,500 --> 00:05:45,900 you might have only one parent, working a single job at minimum 119 00:05:45,900 --> 00:05:47,900 wage. You might be struggling to get 120 00:05:47,900 --> 00:05:50,700 by in your family. There's people that can identify 121 00:05:50,700 --> 00:05:53,500 with that. Now, everybody circumstances 122 00:05:53,500 --> 00:05:57,300 differ when they're growing up and that is something that you 123 00:05:57,300 --> 00:05:59,800 can't control the circumstances you grow up in. 124 00:05:59,900 --> 00:06:03,200 But the big lie here, the big thing that gets shared, that's 125 00:06:03,200 --> 00:06:04,900 extremely discouraging. Is that? 126 00:06:04,900 --> 00:06:07,000 Because you grew up in a poor household? 127 00:06:07,000 --> 00:06:09,700 You can't transition to a wealthy household. 128 00:06:09,800 --> 00:06:13,100 I think you can do it even if it's a more difficult task that 129 00:06:13,100 --> 00:06:15,300 has more hurdles. So, let's go ahead and break 130 00:06:15,300 --> 00:06:16,700 this down. If you were to look at the 131 00:06:16,707 --> 00:06:20,000 financial cash, flows of most people in poor households, this 132 00:06:20,000 --> 00:06:22,500 is what it would look like. You have right here off to the 133 00:06:22,500 --> 00:06:25,200 left. The earned income, this is not 134 00:06:25,200 --> 00:06:27,500 passive income. This is active income. 135 00:06:27,800 --> 00:06:29,700 Meaning, this is what you do. When you go. 136 00:06:29,800 --> 00:06:32,400 To your work. You try to earn income and the 137 00:06:32,400 --> 00:06:35,900 reason that you get income in most cases, if you're a poor 138 00:06:35,900 --> 00:06:38,500 household is to afford the expenses. 139 00:06:38,800 --> 00:06:43,300 Rent utilities cable Fuel and insurance entertainment and any 140 00:06:43,300 --> 00:06:46,900 unexpected expenses that's where the huge majority of your money 141 00:06:46,900 --> 00:06:50,800 goes and then if you have a dollar beyond that almost always 142 00:06:50,800 --> 00:06:53,800 it will go to liabilities liabilities are things that also 143 00:06:53,800 --> 00:06:56,100 just suck money right, out of your bank account, cars are one 144 00:06:56,100 --> 00:06:59,700 of the biggest liabilities that you could ever buy Dave Ramsey. 145 00:06:59,900 --> 00:07:01,700 Isn't correct on everything he says. 146 00:07:01,800 --> 00:07:04,200 But this is one thing that I certainly agree with him on 147 00:07:04,200 --> 00:07:06,800 cars, end up keeping a lot of people poor. 148 00:07:06,900 --> 00:07:09,300 There's households that are already struggling with income. 149 00:07:09,400 --> 00:07:13,200 They make 35,000 a year, 40,000 a year for a family, right? 150 00:07:13,200 --> 00:07:16,400 That's not really enough to have a comfortable living, but then 151 00:07:16,400 --> 00:07:19,600 those same families in many cases will by seventy thousand 152 00:07:19,600 --> 00:07:22,100 dollar trucks. It'll be more than their annual 153 00:07:22,100 --> 00:07:24,000 salary. I think it's actually crazy. 154 00:07:24,000 --> 00:07:27,400 The amount that people spend on a car, I've made hundreds of 155 00:07:27,400 --> 00:07:29,700 thousands of dollars in a single year. 156 00:07:29,800 --> 00:07:33,500 R and the most expensive car I've ever purchased is twenty 157 00:07:33,500 --> 00:07:36,000 seven thousand dollars. That's how I view vehicles. 158 00:07:36,200 --> 00:07:39,900 I view them as black holes for money and poor households. 159 00:07:39,900 --> 00:07:43,700 Unfortunately, in many cases by cars that are extremely 160 00:07:43,700 --> 00:07:46,300 expensive and of course they don't pay for them in cash. 161 00:07:46,400 --> 00:07:49,600 They either lease them or they take out a big loan on them and 162 00:07:49,600 --> 00:07:52,900 they pay monthly payments for sometimes up to seven years. 163 00:07:53,000 --> 00:07:54,400 Do you want to know where all that car? 164 00:07:54,400 --> 00:07:56,500 Money ends up. Let me go ahead and look at one 165 00:07:56,500 --> 00:07:59,000 of my Holdings here. It's called JP Morgan I've made. 166 00:07:59,900 --> 00:08:02,500 $100 on this holding. This is where all that interest 167 00:08:02,500 --> 00:08:04,400 on. These car loans is going right 168 00:08:04,400 --> 00:08:06,000 here. I have a dividend payment back 169 00:08:06,000 --> 00:08:09,800 in 2019 for two dollars and eighty six cents, not a lot of 170 00:08:09,808 --> 00:08:12,700 money, but I bought a little bit more of JP Morgan as time went 171 00:08:12,700 --> 00:08:15,600 on and I bought a lot of it during the dip in 2020. 172 00:08:15,900 --> 00:08:20,200 Once I increased my Holdings in it now I'm getting $150 from JP 173 00:08:20,200 --> 00:08:26,200 Morgan $150 $150 $133 is. I sold a little bit when it 174 00:08:26,200 --> 00:08:30,700 really peaked out at a high price and $133 My next dividend 175 00:08:30,700 --> 00:08:33,700 payment is going to be quite a bit more because I bought more 176 00:08:33,700 --> 00:08:37,000 of JPMorgan on a dip but either way, you see, these dividend 177 00:08:37,000 --> 00:08:40,700 payments coming in every single quarter, every three months, I'm 178 00:08:40,700 --> 00:08:42,500 getting paid hundreds of dollars. 179 00:08:42,799 --> 00:08:45,600 I'm not paying the bank money, they're paying me money. 180 00:08:45,700 --> 00:08:47,700 And part of the reason is, is because of all the interest, 181 00:08:47,700 --> 00:08:51,200 they get off of auto loans. Ally Bank is another company 182 00:08:51,200 --> 00:08:53,900 that makes a fortune based off of auto loans. 183 00:08:54,000 --> 00:08:56,400 Here's Ally Financial. We can actually look at the 184 00:08:56,408 --> 00:08:58,900 amount of dividends they're paying and where this money's 185 00:08:58,900 --> 00:09:01,700 coming from Scroll down and look at their dividends over time. 186 00:09:01,700 --> 00:09:05,300 You can see that this number is aggressively crawling Ally. 187 00:09:05,300 --> 00:09:08,300 Financial is the biggest Auto lender in the country they make 188 00:09:08,300 --> 00:09:11,300 virtually all of their money on lending out money to people, 189 00:09:11,300 --> 00:09:14,900 buying expensive vehicles and they return that to shareholders 190 00:09:14,900 --> 00:09:18,200 in the form of dividends these massive dividends that they pay 191 00:09:18,200 --> 00:09:20,300 every single quarter and they're aggressively. 192 00:09:20,300 --> 00:09:24,800 Raising every single quarter are in many cases being extracted 193 00:09:24,800 --> 00:09:27,900 from poor households that are buying more car than they can 194 00:09:27,900 --> 00:09:29,700 really afford realize the relationship. 195 00:09:29,800 --> 00:09:33,000 Relationship here, the poor households are giving their 196 00:09:33,000 --> 00:09:36,500 money to Rich investors, buying these Bank stocks. 197 00:09:36,800 --> 00:09:40,400 That's the relationship here. Now that might paint an ugly 198 00:09:40,400 --> 00:09:44,100 picture, you might look at that and blame capitalism but it's 199 00:09:44,100 --> 00:09:46,300 not a problem. If you understand the 200 00:09:46,308 --> 00:09:49,100 relationship here, if you actually know what's going on, 201 00:09:49,300 --> 00:09:52,100 it makes it so that you can transition from this side of 202 00:09:52,100 --> 00:09:54,400 things, to the other side of things, once you actually 203 00:09:54,400 --> 00:09:58,300 understand how money works in the US and in the world, it 204 00:09:58,300 --> 00:10:01,300 makes it so that you actually Your behavior because you better 205 00:10:01,300 --> 00:10:03,900 understand where your cash flows should go. 206 00:10:04,200 --> 00:10:07,600 I understand that liabilities are not good for generating 207 00:10:07,600 --> 00:10:08,800 wealth. In fact, they're the biggest 208 00:10:08,800 --> 00:10:11,200 thing that deters people from accumulating wealth. 209 00:10:11,200 --> 00:10:14,300 They put money from your pocket into the pockets of wealthy 210 00:10:14,300 --> 00:10:17,700 investors and just like we see the example of an expensive 211 00:10:17,700 --> 00:10:20,200 truck and the high interest payments, you have to pay on it. 212 00:10:20,400 --> 00:10:22,700 We also see the flip side of that where people are earning 213 00:10:22,700 --> 00:10:25,600 tons of money through dividends from stocks, like, JPMorgan 214 00:10:25,600 --> 00:10:28,200 Chase. And I'll also mention the 215 00:10:28,200 --> 00:10:30,900 dividends aren't the only way that That they're returning cash 216 00:10:30,900 --> 00:10:33,300 to the shareholder. See, you might only see this and 217 00:10:33,300 --> 00:10:36,000 say, all right. Well, he's getting $150 every 218 00:10:36,000 --> 00:10:37,700 quarter. That's pretty cool. 219 00:10:37,800 --> 00:10:39,700 But you got to remember JP Morgan. 220 00:10:39,700 --> 00:10:42,900 Doesn't just do dividends. They also do an incredible 221 00:10:42,900 --> 00:10:45,800 amount of share BuyBacks. They buy back billions, and 222 00:10:45,800 --> 00:10:49,100 billions of their stock, which has the effect of pushing up the 223 00:10:49,100 --> 00:10:52,100 stock price. This again, is another tool they 224 00:10:52,100 --> 00:10:54,900 use with all the cash. They're extracting from many 225 00:10:54,900 --> 00:10:57,000 people. Paying interest that makes 226 00:10:57,000 --> 00:11:00,500 investors wealthy. This is the reason why Only do I 227 00:11:00,500 --> 00:11:03,200 make money in dividends from JPMorgan but I'm also six 228 00:11:03,200 --> 00:11:06,900 thousand dollars in the green and capital appreciation on both 229 00:11:06,900 --> 00:11:08,400 sides. I'm making money with this 230 00:11:08,400 --> 00:11:09,900 company. If you look at the poor 231 00:11:09,900 --> 00:11:13,000 household cash flow. It is a very difficult one to 232 00:11:13,000 --> 00:11:14,900 break. I think this is by far the most 233 00:11:14,900 --> 00:11:17,300 difficult because unfortunately the people that are in poor 234 00:11:17,300 --> 00:11:20,400 households typically have a low earned income. 235 00:11:20,600 --> 00:11:24,100 They're not earning a lot of money to begin with and so most 236 00:11:24,100 --> 00:11:26,900 of that money has eaten up by basic expenses. 237 00:11:27,200 --> 00:11:29,600 So you don't have a lot of discretionary money to work. 238 00:11:29,700 --> 00:11:33,500 With and then in almost every case, beyond the expenses, 239 00:11:33,500 --> 00:11:37,400 beyond the basic, things to survive, the extra cash is added 240 00:11:37,500 --> 00:11:40,200 to liabilities in this type of situation. 241 00:11:40,400 --> 00:11:43,700 Like I said, it is the most difficult one to break out of, 242 00:11:43,900 --> 00:11:47,000 but I still think it can happen. The big thing that needs to 243 00:11:47,000 --> 00:11:50,800 happen is first of all, in any way, possible, trying to 244 00:11:50,800 --> 00:11:54,200 increase the earned income, whether that means going to a 245 00:11:54,200 --> 00:11:57,300 coding bootcamp, whether that means trying to get into a job 246 00:11:57,300 --> 00:12:00,800 or you have some upward potential, even Low-income jobs 247 00:12:00,800 --> 00:12:04,700 in many cases, have some type of upward potential for instance, 248 00:12:04,700 --> 00:12:07,700 almost everyone. That owns a Domino's franchise 249 00:12:07,900 --> 00:12:10,800 has worked at Domino's. Almost every one of them of the 250 00:12:10,800 --> 00:12:14,200 tens of thousands. So there are some opportunities 251 00:12:14,300 --> 00:12:17,700 always look for a job that has upward room for growth. 252 00:12:17,700 --> 00:12:20,800 If you're working in a job that has no room for growth anywhere, 253 00:12:21,000 --> 00:12:23,100 you're never going to make more money, you're never going to 254 00:12:23,100 --> 00:12:25,700 grow your income. And you're not already at a very 255 00:12:25,700 --> 00:12:29,100 high income with that job. It's not worth it, you should 256 00:12:29,100 --> 00:12:31,200 move job. Jobs even taking a little bit 257 00:12:31,208 --> 00:12:34,000 less current income if it has an upward trajectory. 258 00:12:34,000 --> 00:12:37,800 When you're working especially early on in your career, you 259 00:12:37,800 --> 00:12:41,300 always want to work at a job that has some kind of upward 260 00:12:41,300 --> 00:12:44,100 potential. Never stay complacent with your 261 00:12:44,100 --> 00:12:45,800 job. If you're doing that and you're 262 00:12:45,800 --> 00:12:49,000 already on a track to have some type of upward potential and you 263 00:12:49,000 --> 00:12:51,800 also want to earn extra income, you can look for other type of 264 00:12:51,808 --> 00:12:53,900 side gigs. I know lots of people that do 265 00:12:53,900 --> 00:12:57,000 doordash, they do ubereats, you know, there's lots of different 266 00:12:57,000 --> 00:12:59,400 things in the gig economy that you can earn. 267 00:12:59,800 --> 00:13:01,500 Extra cash. But once you've tried to 268 00:13:01,500 --> 00:13:05,400 increase your cash flow at all as much as possible, that won't 269 00:13:05,400 --> 00:13:07,900 solve this issue. Because if you increase cash 270 00:13:07,900 --> 00:13:10,900 flow, and then you let that cash flow, go to liabilities, you 271 00:13:10,900 --> 00:13:13,200 haven't done anything, you haven't accomplished anything 272 00:13:13,200 --> 00:13:17,000 there, the earned income needs to increase and it needs to be 273 00:13:17,000 --> 00:13:21,000 redirected towards assets. That is how you break out of 274 00:13:21,000 --> 00:13:23,700 this cycle. You have to start directing 275 00:13:23,700 --> 00:13:27,300 earned income to assets. If you have a lower income and 276 00:13:27,300 --> 00:13:30,700 you don't have a stock portfolio then, Fifty thousand dollars in 277 00:13:30,700 --> 00:13:33,100 that scenario is going to look insurmountable. 278 00:13:33,100 --> 00:13:36,600 It'll look like, you can never achieve this type of portfolio 279 00:13:36,800 --> 00:13:39,300 but that's not the attitude that you should have. 280 00:13:39,400 --> 00:13:43,200 If you start investing in any capacity, you'll eventually get 281 00:13:43,200 --> 00:13:46,000 to this point. I can almost guarantee that with 282 00:13:46,000 --> 00:13:49,800 enough time, you will get to this point and far surpass it. 283 00:13:49,900 --> 00:13:52,900 Remember that I started my portfolio with a 100 dollar 284 00:13:52,900 --> 00:13:56,300 deposit back in 2017. Then I started to put in more 285 00:13:56,300 --> 00:13:58,600 money as I got more excited about investing. 286 00:13:58,600 --> 00:14:00,800 I remember the feeling when I First getting these dividend 287 00:14:00,800 --> 00:14:05,200 payments, 69 cents from Visa. That was one of the first 288 00:14:05,200 --> 00:14:10,700 dividend payments 69 cents. Then I got 64 cents, 30 cents, 289 00:14:10,800 --> 00:14:14,900 35 cents. I got one cent 36 Cents and so 290 00:14:14,900 --> 00:14:18,700 on I was getting pennies but it struck me. 291 00:14:18,900 --> 00:14:22,300 This was something special. I was getting paid money, 292 00:14:22,400 --> 00:14:26,500 passively real money, real cash that I could use for whatever I 293 00:14:26,500 --> 00:14:28,400 want. That was passive. 294 00:14:28,400 --> 00:14:31,800 And even though the actual Values were were minuscule. 295 00:14:31,800 --> 00:14:34,900 These are tiny values. It was the principle that struck 296 00:14:34,900 --> 00:14:37,000 me. I realized that this is real. 297 00:14:37,200 --> 00:14:41,300 These companies are powerful economic machines that will 298 00:14:41,300 --> 00:14:44,400 return money to you over and over and over again. 299 00:14:44,900 --> 00:14:48,700 And all you have to do is take this same principle and do it 300 00:14:48,700 --> 00:14:51,200 more and more. You have to find ways to deposit 301 00:14:51,200 --> 00:14:54,600 money into your portfolio and buy these assets. 302 00:14:54,600 --> 00:14:57,400 And luckily now almost every brokerage has some form of 303 00:14:57,400 --> 00:15:02,100 fractional shares meaning that even if you have $50 a month, 50 304 00:15:02,100 --> 00:15:05,400 bucks a month to spare. You could start a portfolio. 305 00:15:05,700 --> 00:15:08,600 So there's not really any excuses anymore. 306 00:15:08,700 --> 00:15:12,000 If you have any earned income whatsoever, you can put a little 307 00:15:12,000 --> 00:15:15,100 bit of that into assets and whether or not that's $50 a 308 00:15:15,100 --> 00:15:17,700 month that you earn from doing doordash whether or not it's a 309 00:15:17,700 --> 00:15:21,200 hundred dollars a week. But at any degree I recommend 310 00:15:21,200 --> 00:15:25,000 getting started starting to build up assets at any degree 311 00:15:25,200 --> 00:15:28,300 because establishing that pattern and that behavior early 312 00:15:28,300 --> 00:15:31,400 on of continually Depositing money into assets. 313 00:15:31,600 --> 00:15:33,900 I think, is vital to be able to break this Loop. 314 00:15:33,900 --> 00:15:37,300 If I kept my first job in never grew my earned income, I would 315 00:15:37,300 --> 00:15:39,900 likely still be in the poor household loop. 316 00:15:39,900 --> 00:15:43,500 I would have a very difficult time breaking this cycle because 317 00:15:43,500 --> 00:15:46,600 my earned income was very low. At the time I had an earned 318 00:15:46,600 --> 00:15:50,100 income of $12 an hour and my first job was working as a 319 00:15:50,108 --> 00:15:53,600 customer support agent where I answered phone calls and emails 320 00:15:53,900 --> 00:15:56,700 was not a glamorous job, it didn't come with good benefits 321 00:15:57,100 --> 00:15:59,500 and the twelve dollars an hour I think was okay, pal. 322 00:15:59,700 --> 00:16:02,400 A time. I remember getting a 50-cent 323 00:16:02,400 --> 00:16:05,900 raise to 1250 and being very excited about that. 324 00:16:06,100 --> 00:16:09,100 In my mind, I thought that pays for my lunch every day, that was 325 00:16:09,100 --> 00:16:11,800 my first job out of high school about 12 years ago. 326 00:16:11,800 --> 00:16:13,800 Now, I've been able to dramatically increase my earned 327 00:16:13,800 --> 00:16:17,500 income over time through a lot of maneuvering, from job, to job 328 00:16:17,500 --> 00:16:18,900 and learning different skill sets. 329 00:16:19,200 --> 00:16:22,300 The big skill set that I learned the most valuable one was how to 330 00:16:22,300 --> 00:16:26,000 code learning to code is an extremely valuable skill set in 331 00:16:26,000 --> 00:16:28,600 the future and I think it will continue to be for at least the 332 00:16:28,608 --> 00:16:30,800 next 30 Years. So, if you're considering a way 333 00:16:30,800 --> 00:16:33,700 to dramatically increase your income and you like, working on, 334 00:16:33,700 --> 00:16:37,000 computers learning to code, is certainly something you can do 335 00:16:37,100 --> 00:16:41,100 and all the information to do it is available for free online. 336 00:16:41,200 --> 00:16:44,400 All you have to have is a laptop and internet connection, and an 337 00:16:44,400 --> 00:16:46,800 incredible drive to learn how to code. 338 00:16:46,900 --> 00:16:48,700 Those are the three necessary ingredients. 339 00:16:48,900 --> 00:16:52,300 But once I learned how to code, my income started to go up. 340 00:16:52,300 --> 00:16:54,500 Then I started the YouTube channel and did both of those at 341 00:16:54,500 --> 00:16:56,300 the same time. And the income has since 342 00:16:56,300 --> 00:16:59,200 increased, this is how you move from this phase to the next 343 00:16:59,200 --> 00:17:01,800 phase. You try to find any way possible 344 00:17:01,800 --> 00:17:04,900 to increase your earned income. Now, we're on to the next phase, 345 00:17:04,900 --> 00:17:07,099 the quote-unquote rich households. 346 00:17:07,400 --> 00:17:10,200 You might notice that rich is within those quotation marks 347 00:17:10,599 --> 00:17:12,800 because they're rich, but they're not wealthy. 348 00:17:13,000 --> 00:17:16,700 And in many cases people in this phase of life or in this 349 00:17:16,700 --> 00:17:20,900 category of cash flow are no better than the poor households. 350 00:17:21,099 --> 00:17:24,000 They are not in much better of a financial situation. 351 00:17:24,300 --> 00:17:27,099 Let me go ahead and explain why. First of all they have a higher 352 00:17:27,099 --> 00:17:28,900 earned income. So you might be saying Joseph 353 00:17:28,900 --> 00:17:30,600 how are they know better? Better if they have a higher 354 00:17:30,600 --> 00:17:32,900 earned income. Well again let me explain why 355 00:17:33,200 --> 00:17:35,900 even though they're earning more money, so they might have gotten 356 00:17:35,900 --> 00:17:38,100 a raise or they might have switched jobs or let's say they 357 00:17:38,100 --> 00:17:40,800 learned how to code and now they're making a hundred 358 00:17:40,800 --> 00:17:43,100 thousand dollars a year. They're no longer making 40,000 359 00:17:43,100 --> 00:17:48,800 a year now, you're making 85 100 120 thousand dollars a year and 360 00:17:48,800 --> 00:17:51,700 you feel good about yourself. You're raking in all kinds of 361 00:17:51,700 --> 00:17:55,900 money, that money though. Unfortunately is doing what most 362 00:17:55,900 --> 00:17:58,600 people do. It's being spent in a very 363 00:17:58,600 --> 00:18:00,800 stupid way. We'll never grow wealth. 364 00:18:01,000 --> 00:18:03,800 The majority of people in this category that are high income 365 00:18:03,800 --> 00:18:06,600 earners have some of their money, go to expenses, they have 366 00:18:06,600 --> 00:18:09,000 a home, they have maintenance, they have utilities and Fuel and 367 00:18:09,000 --> 00:18:12,400 insurance, and entertainment and some unexpected expenses. 368 00:18:12,700 --> 00:18:14,900 Those are the basic expenses to live. 369 00:18:15,200 --> 00:18:17,800 Will they make a lot of money? So the expense is really don't 370 00:18:17,800 --> 00:18:21,300 eat away at the majority of their budget, but just like the 371 00:18:21,300 --> 00:18:25,100 poor households, whenever they get extra cash, which they now 372 00:18:25,100 --> 00:18:29,300 have they maintain that same mentality of having a poor 373 00:18:29,300 --> 00:18:31,600 house. Household all the extra income 374 00:18:31,900 --> 00:18:36,300 instead of going to assets, is funneled into liabilities and 375 00:18:36,300 --> 00:18:40,000 the liabilities grow exponentially instead of just 376 00:18:40,000 --> 00:18:43,400 having a basic home or a small place that they live at with a 377 00:18:43,400 --> 00:18:46,700 mortgage and a cheap car to be able to get them from their work 378 00:18:46,700 --> 00:18:49,800 and back, they buy a huge expensive home, they buy an 379 00:18:49,800 --> 00:18:53,600 extra home, they buy multiple Vehicles, they're buying the new 380 00:18:53,600 --> 00:18:56,000 Tesla's, they're talking about their new models of all the 381 00:18:56,000 --> 00:18:58,000 different Tesla's. They're getting the highest 382 00:18:58,000 --> 00:18:59,500 models that are the most expensive. 383 00:18:59,700 --> 00:19:01,600 And they're showing them off on social media. 384 00:19:01,700 --> 00:19:05,800 This is what Rich households do they show off all of their toys? 385 00:19:06,000 --> 00:19:09,400 They have boats, they have RVs, they have lots of stuff. 386 00:19:09,400 --> 00:19:12,400 Unfortunately, these are all in the liability categories. 387 00:19:12,400 --> 00:19:15,700 Every single one of these things depreciates overtime Autos, are 388 00:19:15,700 --> 00:19:18,000 very expensive. As you can see, just from the 389 00:19:18,000 --> 00:19:19,900 price of them. If you're buying an 390 00:19:19,900 --> 00:19:23,600 old-fashioned vehicle, not one of the newer electric vehicles. 391 00:19:23,600 --> 00:19:27,200 Then those cars depreciate, very quickly and seven years, they 392 00:19:27,200 --> 00:19:29,100 just lose their value like crazy. 393 00:19:29,600 --> 00:19:31,700 When he was one of the only unique years where they went up 394 00:19:31,700 --> 00:19:34,700 in value outside of that, anomaly cars are incredibly 395 00:19:34,700 --> 00:19:38,600 expensive to lease and to maintain and in terms of Evie's 396 00:19:38,600 --> 00:19:42,900 being so much cheaper than ice Vehicles, that's not really true 397 00:19:43,000 --> 00:19:45,900 people that are buying Tesla's are paying a lot for them. 398 00:19:46,000 --> 00:19:49,300 And to buy the full self driving feature is like an extra twelve 399 00:19:49,300 --> 00:19:52,300 thousand dollars cars. Again, I believe are the biggest 400 00:19:52,300 --> 00:19:55,100 culprit and eating away at your wealth but they're not. 401 00:19:55,100 --> 00:19:58,700 The only thing there's other liabilities people buy other 402 00:19:58,700 --> 00:20:00,200 things that go down. Value. 403 00:20:00,300 --> 00:20:03,600 They have one time, use people spend a fortune on them and 404 00:20:03,600 --> 00:20:06,200 unfortunately, they create zero wealth this way. 405 00:20:06,300 --> 00:20:08,600 So you may have made the assumption that it's the poor 406 00:20:08,600 --> 00:20:11,000 households that are funding all the dividends and all the 407 00:20:11,000 --> 00:20:14,100 BuyBacks of all these different companies that end up, making 408 00:20:14,100 --> 00:20:18,200 investors very wealthy and that is true to some extent or 409 00:20:18,200 --> 00:20:21,600 household, certainly do that but it's far more the case with Rich 410 00:20:21,600 --> 00:20:24,900 households because as you can see from the cash flows here, 411 00:20:25,100 --> 00:20:29,500 Rich households have the exact same cash flows except they're 412 00:20:29,600 --> 00:20:32,300 King with far more money. So they're basically using the 413 00:20:32,300 --> 00:20:35,200 exact same blueprint as poor households, but now, they have 414 00:20:35,200 --> 00:20:38,100 an upgrade and pay their money's not working for them. 415 00:20:38,100 --> 00:20:41,300 It's working against them. And unfortunately, with all the 416 00:20:41,300 --> 00:20:44,400 liabilities that they're paying for all of that stuff. 417 00:20:44,400 --> 00:20:47,800 Again, makes investors incredibly wealthy people in 418 00:20:47,800 --> 00:20:50,000 Rich households, buy huge homes and they do lots of home 419 00:20:50,000 --> 00:20:51,600 projects will take a look at this. 420 00:20:51,600 --> 00:20:54,800 I own a company called Home Depot, that takes advantage of 421 00:20:54,800 --> 00:20:57,600 all the rich households that love to do their home projects 422 00:20:58,000 --> 00:21:01,100 and that company returns that To me in the form of dividends. 423 00:21:01,300 --> 00:21:03,900 I get paid a quarterly dividend from Home Depot, that's 424 00:21:03,900 --> 00:21:05,800 continually growing without me actually. 425 00:21:05,800 --> 00:21:08,500 Contributing any more money. Do you know a rich people tend 426 00:21:08,500 --> 00:21:10,700 to shop. They love this place called 427 00:21:10,700 --> 00:21:12,500 Costco. You may have heard of it. 428 00:21:12,700 --> 00:21:15,600 The average home income for someone that shops at Costco, is 429 00:21:15,600 --> 00:21:18,900 above 100,000 a year. It has a very wealthy Shopper 430 00:21:18,900 --> 00:21:20,900 base Costco. Also happens to be one of my 431 00:21:20,900 --> 00:21:23,600 biggest Holdings that contain only pays me dividends and 432 00:21:23,600 --> 00:21:25,800 occasionally these huge special dividends. 433 00:21:25,800 --> 00:21:28,100 You can also see that I've made some money and capital 434 00:21:28,100 --> 00:21:30,900 appreciation on this. P'nay nearly ten thousand 435 00:21:30,900 --> 00:21:32,700 dollars just on this holding alone. 436 00:21:32,700 --> 00:21:35,000 Rich households aren't really rich at all. 437 00:21:35,200 --> 00:21:38,100 What they do is they fund wealthy investors? 438 00:21:38,200 --> 00:21:39,700 That's what happens with their money. 439 00:21:39,900 --> 00:21:42,200 And since they have a higher income level since they're 440 00:21:42,200 --> 00:21:45,400 making over 100,000 a year, they're just funding wealthy 441 00:21:45,400 --> 00:21:48,100 investors at a much higher Pace than poor households. 442 00:21:48,400 --> 00:21:50,900 But in reality, their cash flows match. 443 00:21:51,000 --> 00:21:53,700 They're doing the exact same thing that poor households do. 444 00:21:53,800 --> 00:21:57,000 They're stuck in the exact same Loop and if they continue this 445 00:21:57,000 --> 00:21:59,100 way, they will never be able to retire. 446 00:21:59,300 --> 00:22:04,200 They Always 100% be reliant on earned income and they'll always 447 00:22:04,200 --> 00:22:07,000 be Shackled to their High earned income. 448 00:22:07,000 --> 00:22:10,700 That's an extremely stressful situation to be in always being 449 00:22:10,700 --> 00:22:14,100 forced to earn a ton of money to pay for all your liabilities and 450 00:22:14,100 --> 00:22:17,200 expenses and my opinion. I'd rather just earn less money 451 00:22:17,400 --> 00:22:19,800 and own less stuff. So obviously we don't want to be 452 00:22:19,800 --> 00:22:23,800 in the poor household category and we also don't want to be in 453 00:22:23,800 --> 00:22:27,000 the quote-unquote rich household category and that's a little bit 454 00:22:27,000 --> 00:22:30,100 of a contrarian thing to say because this is opposed to be 455 00:22:30,100 --> 00:22:34,000 the category that you envy that you're supposed to want to be in 456 00:22:34,300 --> 00:22:37,300 and it's really not this is not the category you want to be in 457 00:22:37,300 --> 00:22:40,100 this next category of the wealthy households. 458 00:22:40,300 --> 00:22:43,500 I think is the single best illustration of the fundamental 459 00:22:43,500 --> 00:22:46,800 shift that needs to take place in your cash flows the way that 460 00:22:46,800 --> 00:22:51,100 your money flows in order for you to generate and grow and 461 00:22:51,100 --> 00:22:54,800 sustain wealth. This is truly wealthy households 462 00:22:55,100 --> 00:22:57,900 on first appearance. These people might not even look 463 00:22:57,900 --> 00:23:01,400 wealthy but in reality, They have way more wealth than the 464 00:23:01,400 --> 00:23:03,700 rich households. Look at the way that their cash 465 00:23:03,700 --> 00:23:05,600 flows work. First of all, they do earn an 466 00:23:05,600 --> 00:23:09,900 income but notice the line going from earned income to expenses 467 00:23:10,000 --> 00:23:12,700 is very small. There's only one dollar symbol 468 00:23:12,700 --> 00:23:15,900 here suggesting that they keep their expenses. 469 00:23:16,000 --> 00:23:19,700 Minimal people that are truly wealthy, they keep their 470 00:23:19,700 --> 00:23:23,300 expenses minimal, they don't like paying for homes, they 471 00:23:23,300 --> 00:23:24,600 don't like paying for maintenance. 472 00:23:24,900 --> 00:23:28,500 They don't like expensive things because they understand the 473 00:23:28,500 --> 00:23:30,900 relationship of finance. And the biggest single 474 00:23:30,900 --> 00:23:34,200 distinguishment here is that people that are wealthy truly 475 00:23:34,200 --> 00:23:36,600 wealthy. Do not put their extra earned 476 00:23:36,600 --> 00:23:40,000 income into liabilities. They don't like buying new cars. 477 00:23:40,200 --> 00:23:43,300 They use old used cars. They don't like buying second 478 00:23:43,300 --> 00:23:46,500 homes and vacation homes and three different, high-end trucks 479 00:23:46,500 --> 00:23:49,700 and Tesla's and that type of things because they understand 480 00:23:49,700 --> 00:23:52,000 money, they understand the relationship here, they know 481 00:23:52,000 --> 00:23:55,100 that the extra homes go to fund wealthy investors for JPMorgan, 482 00:23:55,100 --> 00:23:57,300 they know that the three auto loans for the big trucks and 483 00:23:57,308 --> 00:24:00,300 Tesla go to fund Ally Bank. You know, that spending all 484 00:24:00,300 --> 00:24:04,100 their money at Costco or Amazon is return to shareholders of 485 00:24:04,100 --> 00:24:07,200 Costco and Amazon and the forms of dividends or capital 486 00:24:07,200 --> 00:24:09,100 appreciation. They know that when they do 487 00:24:09,100 --> 00:24:12,700 extensive remodelings of their home or yard projects, its 488 00:24:12,700 --> 00:24:15,100 return to shareholders in the form of dividends from Home, 489 00:24:15,100 --> 00:24:18,000 Depot and Lowe's wealthy. People understand this 490 00:24:18,000 --> 00:24:20,600 relationship. So they do not pour their earned 491 00:24:20,600 --> 00:24:24,500 income into liabilities. Rather the earned income by and 492 00:24:24,500 --> 00:24:28,900 large flows into assets assets are things that gain value over 493 00:24:28,900 --> 00:24:32,700 time And they have a tendency to pay current income, the two best 494 00:24:32,700 --> 00:24:36,200 asset categories by far, our real estate in stocks. 495 00:24:36,400 --> 00:24:38,500 Those are the two biggest ones. Real estate. 496 00:24:38,500 --> 00:24:41,500 Everyone knows has a tendency to make people wealthier over long 497 00:24:41,500 --> 00:24:44,000 periods of time. If you own rental properties, 498 00:24:44,200 --> 00:24:46,600 you have so many benefits. You have the benefits of 499 00:24:46,600 --> 00:24:48,400 depreciation, which helps attacks'. 500 00:24:48,700 --> 00:24:51,100 You have the benefits of them. Being real assets, that work as 501 00:24:51,100 --> 00:24:53,500 an inflation hedge. You have the benefits of capital 502 00:24:53,500 --> 00:24:56,000 appreciation. Meaning they go up in value over 503 00:24:56,000 --> 00:24:59,300 time and you have the benefits of current income. 504 00:24:59,500 --> 00:25:03,100 As you collect rent from them. So real estate and rental 505 00:25:03,100 --> 00:25:05,400 properties. Have an incredible amount of 506 00:25:05,400 --> 00:25:08,500 benefits all packed into one investment and they have a 507 00:25:08,508 --> 00:25:11,600 tendency to make people very, very wealthy. 508 00:25:11,900 --> 00:25:14,400 You probably haven't met too many people that have been doing 509 00:25:14,400 --> 00:25:17,800 real estate investing for a long period of time that haven't made 510 00:25:17,800 --> 00:25:21,900 a lot of money doing it. The other category is stocks and 511 00:25:21,900 --> 00:25:26,500 stocks is another way of saying Equity ownership, having 512 00:25:26,500 --> 00:25:29,300 ownership in a company everybody. 513 00:25:29,500 --> 00:25:32,800 That becomes extremely wealthy either has done it hipoly 514 00:25:32,800 --> 00:25:35,500 through real estate or through owning a business. 515 00:25:35,500 --> 00:25:38,000 You look at people like Bill Gates with Microsoft, Mark 516 00:25:38,000 --> 00:25:42,500 Zuckerberg with Facebook Jeff Bezos with Amazon and so on and 517 00:25:42,500 --> 00:25:45,000 so forth. The way that people grow wealth 518 00:25:45,000 --> 00:25:49,100 is by having a steak, an ownership in a company and 519 00:25:49,100 --> 00:25:52,600 stocks are just a name, a term to be able to describe the 520 00:25:52,600 --> 00:25:55,700 public being able to buy ownership and Company's stocks. 521 00:25:55,700 --> 00:25:57,900 Like real estate are both assets. 522 00:25:57,900 --> 00:26:01,100 They both generate wealth. Over time, but they do it in a 523 00:26:01,108 --> 00:26:03,800 very different way. For instance, real estate is 524 00:26:03,800 --> 00:26:07,000 typically concentrated. You spend a lot of money on one 525 00:26:07,000 --> 00:26:09,500 single place. Well, stocks can be incredibly 526 00:26:09,500 --> 00:26:12,500 Diversified. You can buy a variety of steaks 527 00:26:12,500 --> 00:26:15,400 in different companies so that if anything happens to one of 528 00:26:15,400 --> 00:26:18,700 them it doesn't damage. Your overall portfolio stocks 529 00:26:18,700 --> 00:26:21,700 are also incredibly liquid meaning that you can buy and 530 00:26:21,700 --> 00:26:25,200 sell them every single day, five days a week where real estate 531 00:26:25,200 --> 00:26:28,300 really isn't as liquid you can't buy and sell it every single day 532 00:26:28,300 --> 00:26:30,600 every hour. So stocks have different 533 00:26:30,600 --> 00:26:32,400 benefits and different downsides. 534 00:26:32,600 --> 00:26:35,800 But overall they're both assets and they both play an important 535 00:26:35,800 --> 00:26:40,300 role and many stocks like rental properties pay you current 536 00:26:40,300 --> 00:26:42,400 income that's in the form of dividends. 537 00:26:42,500 --> 00:26:44,600 That income is incredibly important. 538 00:26:44,600 --> 00:26:48,300 I refer to that income as passive income, unlike your 539 00:26:48,300 --> 00:26:50,800 active income that you have to work for in clock in for 540 00:26:50,900 --> 00:26:54,000 passive, income means that you make it while you sleep and even 541 00:26:54,000 --> 00:26:56,700 though you might have to work a little bit to manage a rental 542 00:26:56,700 --> 00:26:59,300 property in the form of a dividend portfolio. 543 00:26:59,500 --> 00:27:00,800 You really don't have to work at all. 544 00:27:00,900 --> 00:27:02,200 You really don't have to do anything. 545 00:27:02,300 --> 00:27:05,200 You buy a steak and a good dividend paying company and you 546 00:27:05,200 --> 00:27:08,500 just hold it. That is true passive income and 547 00:27:08,500 --> 00:27:11,000 it's completely real. So far, I've earned almost 548 00:27:11,000 --> 00:27:14,300 13,000 dollars in this passive income just over the course of 549 00:27:14,308 --> 00:27:17,600 the past three years and that amount is accelerating every 550 00:27:17,600 --> 00:27:18,700 single year. It goes up. 551 00:27:18,700 --> 00:27:20,100 And up. The biggest distinction that 552 00:27:20,100 --> 00:27:23,600 wealthy households do is they don't spend any of their active 553 00:27:23,600 --> 00:27:26,900 income on liabilities. They avoid this entirely, they 554 00:27:26,900 --> 00:27:30,100 funnel all of their earned income into a Assets, whether 555 00:27:30,100 --> 00:27:33,100 that's buying rental properties or dividend paying stocks or 556 00:27:33,100 --> 00:27:35,700 stocks that are doing aggressive BuyBacks and have a high return 557 00:27:35,700 --> 00:27:39,200 on invested Capital, whatever the case may be the things they 558 00:27:39,200 --> 00:27:43,000 buy differ for every wealthy household, but in aggregate, 559 00:27:43,000 --> 00:27:46,100 they all have this in common. They're all funneling, all of 560 00:27:46,100 --> 00:27:49,300 their discretionary income into assets, those assets, pay 561 00:27:49,300 --> 00:27:52,600 passive income and the forms of rent and dividends and that 562 00:27:52,600 --> 00:27:56,000 passive income gets funneled right back into assets. 563 00:27:56,300 --> 00:27:59,300 And that is where you get a dramatic compounding effect. 564 00:27:59,600 --> 00:28:03,100 When you have this compounding effect of the assets, generating 565 00:28:03,100 --> 00:28:06,200 passive income and then that passive income being reinvested 566 00:28:06,200 --> 00:28:09,400 back into buying more assets, that is a snowball that gets 567 00:28:09,400 --> 00:28:12,100 formed and then you have an additional stream of income 568 00:28:12,200 --> 00:28:14,300 funding. These assets, which works as an 569 00:28:14,300 --> 00:28:16,600 extra Catalyst, that's your earned income. 570 00:28:16,900 --> 00:28:20,400 So now you have dual streams of income fund in your assets. 571 00:28:20,700 --> 00:28:23,600 And that's really where you get this snowball working over and 572 00:28:23,600 --> 00:28:25,400 over again. The cycle goes assets. 573 00:28:25,400 --> 00:28:27,900 Generating passive, income passive income, buying more 574 00:28:27,900 --> 00:28:30,700 assets earned income. You're working for buying more 575 00:28:30,700 --> 00:28:33,700 assets, which helps generate more passive income, so on and 576 00:28:33,700 --> 00:28:36,400 so forth. Eventually this cycle leads to a 577 00:28:36,408 --> 00:28:39,200 lot of wealth. That is the end outcome every 578 00:28:39,200 --> 00:28:41,700 single time when it happens or how it happens. 579 00:28:41,700 --> 00:28:45,100 Can vary from investor to investor, it differs because 580 00:28:45,100 --> 00:28:47,400 earned incomes are different and investment decisions are 581 00:28:47,400 --> 00:28:49,400 different. But if you have any earned 582 00:28:49,400 --> 00:28:52,400 income that you can put into Investments and you make wise 583 00:28:52,400 --> 00:28:56,000 investment decisions and you get attractive returns, this will 584 00:28:56,000 --> 00:28:59,100 eventually happen for every single person. 585 00:28:59,500 --> 00:29:02,700 Will eventually happen. And once the assets grow to a 586 00:29:02,700 --> 00:29:06,200 large enough size, you start actually surpassing your earned 587 00:29:06,200 --> 00:29:09,100 income with your passive income. You might notice that in this 588 00:29:09,100 --> 00:29:13,000 illustration, the passive income has three dollar symbols and 589 00:29:13,000 --> 00:29:16,600 their active income has two dollar symbols, that is typical 590 00:29:16,600 --> 00:29:19,500 in a really wealthy household. You might ask them, where do you 591 00:29:19,500 --> 00:29:21,300 get your money from? Where does it come from? 592 00:29:21,300 --> 00:29:23,200 They're going to say, I have a lot of money that comes in 593 00:29:23,200 --> 00:29:24,400 through this business. I own. 594 00:29:24,400 --> 00:29:26,500 I have a lot of employees. They're going to say, I have a 595 00:29:26,500 --> 00:29:28,900 big portfolio of dividend-paying assets. 596 00:29:29,200 --> 00:29:31,900 The I pay me out every single month and every quarter they're 597 00:29:31,900 --> 00:29:34,200 going to say I have a lot of real estate properties that I 598 00:29:34,200 --> 00:29:37,700 collect rent from once they get to this point of being truly 599 00:29:37,700 --> 00:29:40,100 wealthy. And having so much assets, that 600 00:29:40,100 --> 00:29:42,800 it generates an enormous amount of passive income, they no 601 00:29:42,800 --> 00:29:45,900 longer have to answer. I get the majority of my money 602 00:29:45,900 --> 00:29:48,000 from my nine-to-five. So when I look through these 603 00:29:48,000 --> 00:29:51,000 three different cash flows, I really think this is the best 604 00:29:51,000 --> 00:29:53,800 illustration. That separates poor households 605 00:29:54,000 --> 00:29:57,100 from quote unquote Rich households from the truly 606 00:29:57,100 --> 00:30:01,200 wealthy households, the true wealthy Still enjoys not having 607 00:30:01,200 --> 00:30:04,000 to work every single day for the money that they spend. 608 00:30:04,000 --> 00:30:06,100 This is the biggest thing that separates it. 609 00:30:06,100 --> 00:30:09,000 And I really think that the more we understand the fundamentals 610 00:30:09,000 --> 00:30:12,800 of how this works, the better shot, we have of moving from the 611 00:30:12,800 --> 00:30:16,200 poor and the rich households into the wealthy household, 612 00:30:16,200 --> 00:30:18,500 everyone has different situations and circumstances. 613 00:30:18,500 --> 00:30:21,200 Some people are more advantage in this scenario. 614 00:30:21,200 --> 00:30:23,800 Some people are more disadvantaged, but I truly 615 00:30:23,800 --> 00:30:27,500 believe that most of us have a very good shot of transitioning 616 00:30:27,500 --> 00:30:29,700 to this wealthy household. Cory. 617 00:30:29,900 --> 00:30:32,900 We have a huge support system here with YouTube and social 618 00:30:32,900 --> 00:30:34,800 media. There's lots of people willing 619 00:30:34,800 --> 00:30:38,500 to support and help other people understand this and be able to 620 00:30:38,500 --> 00:30:41,200 make this transition. Whether it comes with earning 621 00:30:41,200 --> 00:30:43,600 higher amounts at your job, finding different ways to earn 622 00:30:43,600 --> 00:30:46,800 money, lowering your liabilities and transitioning, your cash 623 00:30:46,800 --> 00:30:49,000 flows from liabilities to assets. 624 00:30:49,100 --> 00:30:51,600 There's people that can help with every phase of it. 625 00:30:51,600 --> 00:30:54,400 So on my channel on my videos, week by week. 626 00:30:54,700 --> 00:30:58,000 You see me building my portfolio and depositing income. 627 00:30:58,200 --> 00:31:01,200 I also do In depth analysis. On the companies that I'm 628 00:31:01,200 --> 00:31:04,800 buying, I'm trying to get very attractive Returns on my capital 629 00:31:04,900 --> 00:31:07,500 and make my money work as hard for me as possible. 630 00:31:07,800 --> 00:31:11,000 So I do extensive research on every single investment that I'm 631 00:31:11,000 --> 00:31:13,500 investing in. I've done multiple videos on 632 00:31:13,500 --> 00:31:16,400 Apple and Microsoft and done in-depth analysis, so that I 633 00:31:16,400 --> 00:31:18,500 make sure I understand these companies. 634 00:31:18,700 --> 00:31:21,400 And I share that information publicly for free. 635 00:31:21,500 --> 00:31:25,300 I've also done in depth analysis on all of these companies entire 636 00:31:25,300 --> 00:31:29,200 videos on Costco and Disney and Home Depot and understanding 637 00:31:29,200 --> 00:31:31,500 their our business model and how they generate wealth. 638 00:31:31,500 --> 00:31:33,900 And while all that information is good, I think it's important 639 00:31:33,900 --> 00:31:37,700 from time to time to step back and realize the most important 640 00:31:37,700 --> 00:31:40,000 thing going on here. The most important thing I'm 641 00:31:40,000 --> 00:31:44,400 doing by far is my cash flows. I'm putting my money in my 642 00:31:44,400 --> 00:31:47,100 portfolios. I'm choosing to buy productive 643 00:31:47,100 --> 00:31:50,200 assets instead of tacking on liability. 644 00:31:50,200 --> 00:31:52,900 After liability, I'm not buying Tesla's. 645 00:31:53,000 --> 00:31:54,900 I'm not buying seventy thousand dollar trucks. 646 00:31:55,000 --> 00:31:57,900 Like I said the most expensive vehicle I've ever bought is 647 00:31:57,900 --> 00:32:00,600 twenty seven thousand dollars. The reason why is because I'm 648 00:32:00,600 --> 00:32:03,700 laser focused on moving into that wealthy category. 649 00:32:03,900 --> 00:32:06,600 That is my goal. I want to get to the point where 650 00:32:06,600 --> 00:32:09,800 this passive income pays for my lifestyle where I earn enough 651 00:32:09,800 --> 00:32:12,100 money and dividends and I have a big enough portfolio. 652 00:32:12,400 --> 00:32:15,200 That that's what I'm reliant on to be able to go on enjoy the 653 00:32:15,200 --> 00:32:17,300 things I want to do. Because in my opinion, the 654 00:32:17,300 --> 00:32:20,200 people in the rich household category are not rich at all. 655 00:32:20,500 --> 00:32:23,600 Being reliant on your active income, is not a fun situation 656 00:32:23,600 --> 00:32:27,200 to be in and truly rich people. The ones in the wealthy category 657 00:32:27,400 --> 00:32:29,900 are the ones that have it made. They're the Ones that have 658 00:32:29,900 --> 00:32:32,600 freedom, they have autonomy, they can do whatever they want 659 00:32:32,600 --> 00:32:34,800 with their time. They wake up and decide what 660 00:32:34,800 --> 00:32:37,500 they want to do during the day, and that's the goal of where I 661 00:32:37,500 --> 00:32:39,400 want to be. So that's my thoughts for today 662 00:32:39,400 --> 00:32:41,800 and I hope you don't mind me. Not sharing news on current 663 00:32:41,800 --> 00:32:44,700 events or anything like that. I wanted to revisit these basic 664 00:32:44,700 --> 00:32:47,400 wealth building principles because I really think that this 665 00:32:47,400 --> 00:32:50,100 has the most impact and can change people's lives. 666 00:32:50,100 --> 00:32:53,300 The most out of everything that we basically talked about here. 667 00:32:53,300 --> 00:32:55,600 So that's my thoughts. I hope you enjoy it and I'll see 668 00:32:55,600 --> 00:32:56,200 you in the next one.