David Bach: Early Retirement Expert: A House Vs Stocks, Here's The Truth!
嘉宾：David Bach
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§01Transcript — part 1
If you don't get in the game of home ownership and you rent in your 20s and you rent in your 30s You're gonna turn around in your 40s and having not built any network and in fact Homer's America are worth 40 times More than renters and I'm talking about ordinary Americans, but that doesn't mean that buying a home made them rich right? It actually does and I'm gonna go through that. I might not better off renting and investing in the stock market I want to bless this myth because I have spent the last 33 years of my life helping millions of people with Ordinary incomes become financially free including nine years as a financial advisor at Morgan Stanley And I got to see you first to help everyone who came into my office with an ordinary income built well And there's a formula to getting rich, but there's also a system that how you put your financial life on Autopilot and less than 10 minutes and it doesn't require Discipline budget and you don't have to make a lot of money to get started But unless your financial plan is automatic it will fail But more importantly, I believe the next 10 years will be the greatest opportunity to build well in our lifetime And yet seven out of 10 people right now are living paycheck to paycheck more than 50% of Americans don't have savings and most people
Don't know where the money goes and in fact when we ask people how much money would it take to totally change your life? They say $10,000 now how much money do you need to spend a day to blow $10,000 a year? $27.40 a day if you invested that a day for 40 years we'd have over four million $424,000 that would be life-changing But just before we get into all of the specifics and the strategies do you have any specific advice to people that are currently Strabbled with debt absolutely there's a very simple formula to getting out of debt called don't I tell you to Just give me 30 seconds of your time Two things I wanted to say the first thing is a huge thank you for listening and tuning into the show Week after week means the world to all of us and this really is a dream that we absolutely never had and couldn't have imagined getting to this place But secondly, it's a dream where we feel like we're only just getting started And if you enjoy what we do here Please join the 24% of people that listen to this podcast regularly and follow us on this app Here's a promise I'm gonna make to you. I'm gonna do everything in my power to make this show as good as I can Now and into the future. We're gonna deliver the guests that you want me to speak to and we're gonna continue to keep doing all of the things you love about the show
Thank you David what has your mission been for the last three decades? I have spent the last 30 years of my life helping ordinary people People the ordinary incomes become financially free And the last 20 years I spent helping people become automatic millionaires So I love to teach anyone at any income level minimum wage living paycheck to paycheck. You might be in debt. You might be struggling I've taught millions of people how they can improve their life financially That's where I've been dedicated to and I spent 33 years total in the financial service industry And is this conversation just for people that are in their 20s or is it applicable to everybody every age It's applicable to everybody every age because what every rage is you know, it's looks Even so many people are living paycheck to paycheck right now In this country what's happening right now is it 7 out of 10 people are being left behind financially 7 out of 10 people right now are living paycheck to paycheck When you go into looking at finances in America today Half of Americans can't get their hands on a thousand dollars in case emergency purposes And my biggest fear why I updated this book and why I decided to come back out one more time into another financial literacy campaign
Is I'm afraid people are being left behind I think what they are right now the next 10 years would be the greatest opportunity to build wealth in our lifetime That's the good news the bad news is a lot of people being left behind My goal today next hour is very simple I want to give you the system on how to become an automatic millionaire at any age level at any income level What I'm going to teach you is how to put your financial life on autopilot In less than 10 minutes Because when your financial life is automatic Your habits work automatically and an automatic financial life Doesn't require discipline doesn't require a budget And you don't have to make a lot of money to get started Why should people be taking advice from you on this subject matter? What's what have you done in those that three years?
I've been doing this my entire life right so if you go all the way back I started investing at the age of seven And how that happened is I had a grandmother amazing grandmother name was grandma rose At 30 she made a decision that changed the whole destiny of our family And the decision she made was she won't be pouring more and at 30 on a very cold day on her birthday She turned to my grandfather and she said we don't have any money We're living paycheck to paycheck and I don't want to retire here I want to go to California. I want to be where it's warm And my grandfather said well, what do you want to do about it?
And she's like we need to change what we're doing or nothing will change And so my grandmother started saving 50 cents a week out of her paycheck So 50 cents each because they were like middle-class people right didn't have a college education My grandfather worked in a plant my grandmother worked in retail But she started saving small amounts of money and over her lifetime she became an investor and she became a self-made millionaire My first book which you have sitting over here was a book called smart women finish rich It was the lessons that my grandmother taught me So at seven my grandmother took me to McDonald's and she taught me a lesson that would change my life She said David you're sitting here eating McDonald's and cheeseburgers and your french fries and your milkshake She said I'm gonna teach you today how to be rich for real you like to play monopoly Here's my lesson today. She said there's three types of people Those like you who are here eating right now you're what's called a consumer She said the people over there who have been working they're called employees And they've been working for minimum wage And that's a very hard way to live she's they make eight at the time they made 85 cents an hour
And she said the third type of person is the person who owns this place They're called an investor She said today. I'm gonna teach you how to buy stock in McDonald's So that when you come to McDonald's you'll make money from everybody who's here when your friends come to McDonald's You'll make money from them and you'll be an owner of McDonald's She took me down to a brokerage firm Help me buy my first share of stock in McDonald's That moment changed my life because what she made me realize is like everything that we do I'm seven years old everything that we do There's an opportunity to be an investor and own that so like at nine years old I'm at Disney. I'm like hey Mickey Mouse Are you public?
So I was like a not a normal kid in that way because I started investing at a young age But then I made a lot of mistakes then I went to college then I got myself in credit card debt Then I believed all the myths that young people often believe I believed I couldn't really invest a lot until I made a lot of money so my early 20s I was making money, but spending everything so I was went from making nothing to making $50,000 a year And I'm still broke. I'm like well, it's not enough money. So I went to $75,000 a year Still broke spending more then I got to a hundred thousand dollars a year in income a lot of money, right in my 20s Oh my god, I'm rich. No, I was still spending more than I was making at that point. I was a financial advisor And all that was my job. I was working at Morgan Stanley Helping people plan for retirement teaching retirement seminars And I met this ordinary couple that came into my office the age of 52 Jim and Sue McIntyre They had an ordinary job that year they had made a little over $53,000 Their average income over their lifetime was $40,000 and at 52 Jim Put out all statements on a table in front of me I sat there and added them up and they had a net worth of $1.8 million
And I sat back at a table just like this and said How did you do this? And they had just been in my class for four weeks like David We did a lot of what you talked about But we didn't have a budget because budgets don't work and they talked about why budgeting didn't work for them They said we put everything on autopilot. We saved money automatically for everything And that was the moment that changed my life. I realized that day As somebody who's living paycheck to paycheck with a high income These people had half the income that I did and they were able to retire at 52 I was in my mid 20s and I realized that if I didn't start saving and investing I didn't change nothing was going to change And I would never have the financial freedom that they had And so I went home that day And I changed everything in my life now. I had a lot about habits. So I had a lot of things that need to be changed You were the senior vice president at Morgan Stanley when you stepped down and you Soon after wrote this book called smart women finish rich. It begs the question. What are the differences that you saw Through your process of financial education that women face versus man I started I was in business my father and we had a lot of older clients
And I would sit in our meetings one after another with widows So in the first month of my career I sat in three meetings with three widows where the husband had dropped dead suddenly And my dad at the time was teaching these women how to read the broker statements How to write checks and how to know if they would have enough money And I thought This is crazy. I said to my dad for the third appointment dad. What he what what's going on here? He's like, what do you mean? I go well you're teaching these women when their husband has just died How to handle their finances and he said David Not all women are like your grandmother your grandmother was a rarity And I said dad, that's crazy. I'm gonna go out and teach a class for rent and money And when I started teaching class for money. Here's what I learned here The things that make women different than men comes to money Women first of all live longer than men Which means they need more money than men do the average age of widowhood in America when I wrote that book originally was 57 Steven Now it's 59 Okay, you do all these shows on longevity. It seems like everybody's living forever. They're not Okay, the average age of widowhood in America is 59 years old when you say widow
Had you mean the age in which a woman becomes a widow exactly? They're married and they lose their husband Okay, okay, so so women are often wiped out when that happens financially Second thing is that women are hurt more than men when it comes to divorce The Third thing that affects women is that they work fewer years I'm like these are just the statistical realities Women work fewer years than men because they have children So that's an average of somewhere between 7 to 11 years less and that's less money going into sole security Retirement accounts and it affects their earnings and often they earn less So what I have taught for third nearly 30 years now is as a woman I don't care what your situation is. I don't care if you're an entrepreneur I don't care if you're a state-owned mother. I don't care if you're married to the local bank president I don't care if you're married singled widow divorced as a woman You have to be in charge of your finances period drop them like End of discussion you can't delegate your financial well-being to anyone else you have to be in charge Now I will also tell you Steven that women make better investors than men They they make better investors than men because often women don't trade like men do
And they are they do more research before they invest and their performance is better They're way better at long-term investment than men are I heard some stats once upon a time that men are With the majority of the gambling addicts Well, I'm sure they're the majority of the gambling addicts and also when you look at trading because trading's become a very big thing But trading's always been a thing trading meaning trading like trading stocks buying and selling stocks Now it's buying and selling crypto currency Well, I can do it selling options all of these things are primarily men doing it And they don't make money because the bulk of people who trade lose money day in day out and you're out I teach a philosophy which is this your money and your investments should be boring Your life should be interesting your investments should be boring If someone's coming to a cocktail party talking about their investments And it's exciting something's wrong with it Why?
Because sexy is how you go broke when it comes to money Boring is beautiful when it becomes when it's about you well So even driving over here my son was just like dad why don't you trading Tesla stock? I'm like you know why I'm not trading Tesla stock because you can't make money trading You got a fair of when to buy when to sell I want my kids investing in index funds. I have my clients investing in index funds Boring is beautiful when it comes to money Before we get into the real specifics and the tactical strategies and We think about a bunch of the sort of things you said about debt and credit cards and saving and getting out of debt And how to become wealthy in an automatic millionaire is there anything We should discuss as it relates to the broader context of what's going on in the world Whether it's wealth inequality whether it's the amount of people that are living paycheck to paycheck What I'm trying to get a picture on what the the state of financial wealth looks like in the western world Yeah, well, so let's talk you know when people talk about economies here's here's the economy that matters in my opinion Your economy meaning the person is listening the economy that you're in control of is yours
You're not in control over what's going to happen with interest rates What's going to happen with geopolitical things what's going to happen with AI the only economy that you can control is yours Now here's the question Are you working most cases the answers yes The average person will work 90,000 hours over their lifetime So if you are a dual income household you're going to work somewhere between 90 to 200,000 hours the two of you Over your lifetime You're going to actually make millions of dollars over your lifetime The question is with your own economy. Are you going to keep any of the money?
And the sad thing for many people is that they're not I say most people have what I call a no plan plan money comes in Money goes out and they say well, I don't know where the money all went and I go That's called a no plan plan a person who's an automatic millionaire the moment money comes in they have a plan For exactly where it's going to go and that starts with paying themselves first automatically A lot of people listen to this if I go back if I go back just over 10 years in my life I would have been sat listening to this conversation in 7,000 pounds of debt and I would have thought god like becoming a millionaire. That's a that's a million miles away No pun intended. I want to come a millionaire. I'm going to have to earn so much more money and at the time I was working in call centers It really just felt so far away and I say you know people struggling to feed their children let alone become a millionaire It is it far away for the average person It's far away if you don't know the strategy. There's a strategy to getting out of debt There's a strategy building well. There's a system How much of it is just earning more money because when I have these conversations on my show I think the surprisingly untouched territory is we don't teach people how to become more valuable
So that they can earn more money a lot of it's about like index phones or savings whatever But how much of it is just like I need to get high-evalued skills in the market We know for a fact that making more money doesn't make you rich So so people can go as I told you earlier like from a hundred thousand dollars thinking go from 50,000 to 100,000 And still be broke. They can go from 100,000 to 200,000 a year and still be broke They can go from 200,000 to 300,000 and still be broke In the US when you take households that make a hundred and fifty thousand dollars a year one out of three of them are still broke When you peel back the curtain and you ask why is that well, we know things cost more But we also know there's massive lifestyle creep right you get you get around other people who are making more money And then you spend more money and the reality is these phones are designed to get you to spend everything Right today with the algorithms there's better technology today And there's ever been to get you to spend more money And nobody wants to spend money once they want you spend money for a lifetime right to lifetime to have a customer So if there's a battle for our income And everyone wants a piece of it starts with a government like you go to work and you go to work at nine
And you actually work from nine o'clock to twelve for taxes Now this is an important lesson actually the government doesn't ask you to budget To pay taxes They take your taxes from you automatically They take Social Security from you automatically they take the money from you automatically because they know You won't have anything to give if they don't take it from you Then people work from twelve to about three o'clock for housing And food and then from three o'clock to five o'clock for all the rest are all the rest of things The people who build wealth in America and really all over the world they do something different They keep the first hour day of their income What do you mean by that?
So what that means is whatever you earn You can be what making minimum wage you can be making twenty dollars an hour thirty dollars an hour forty dollars an hour Whatever you earn the first hour day of your income has to go to you You're the first person to get paid and you mean you have to save it invest it you have to invest it So how do you invest the first hour of your day Without paying taxes the answer is you pay yourself first using a 401k plan So if you have a job with a retirement account 401k plan you sign up and you use that plan Now I can't just stop right there right because it because it sounds so simple like okay. I use my plan No, you have to know the formula to using your plan to be rich We know after 40 years now exactly what you need to do if you want to be a millionaire I can tell you how to become a millionaire starting your 20s so that you're done by the time you're in your mid 50s You save a little one hour day of your income is 12 and a half percent of your gross revenue I went on online today to look at what's the latest statistics with 401k millionaires The new stats had just came out from fidelity There are 654,000 people in fidelity 401k plans that are now millionaires
What is a 401k? Okay, because you know, we've got a lot of global listeners. Yeah, yeah There's different types of 401k in every Country so in the US a 401k plan is a retirement account It is a retirement account that the company has set up Right, and it allows you to put money away tax deductible they call it pre-tax In most countries you have a deductible retirement account But it depends on the country too right like in Canada It's a different type of plan than it is in Australia than it is in Italy than it is here in the UK Almost every country though has some form of retirement account and has the ability to put money away automatically Here's the problem I'll use the US specifically because it's where I do most of my work in the US Those who have a 401k plan The ones that are millionaires what they did here's the formula the exact formula they saved 14% of their gross income And their employer had a small match on top of that And then how they invested the money is key because it's not enough to just put money in these 401k plans You have to be invested for growth and growth means stocks Right, so you'd have to have and and the actual specific allocation in these 401k millionaires
I just talked about was about 70% stock and 30% bonds Okay, now what are people doing that aren't achieving this? Well the average American saving maybe three or four percent maybe five percent If they have a 401k plan people who don't have 401k plans in many cases aren't even doing this They can they can open up an IRA account But in most cases they're not doing that so the whole secret is Not budgeting Not using discipline having the money move right from your paycheck Paycheck it's deposited automatically And then it moves the date hits your bank account automatically first for retirement Then later we'll talk about building a security account building a dream account The key is that the money moves automatically So in the United States now there's by the way 24 million millionaires now So we've seen an increase of 8 million millionaires to 24 millionaires in the US in just 20 years How did they do that?
There's two primary escalators to wealth that is stocks and real estate And if you're not in stocks and you're not in real estate you are being left behind When you say real estate does that mean having a mortgage and have owning a hat home It's owning a home or owning reads Reats reads real estate equity investment trust. So that's another way to buy real estate without actually having to own the home But you don't get the same level of returns. I mean this is um this is one of the hot topics of conversation We've had on this show several times is many of my guests that are sort of financial advisors Say that owning a home is a bad investment I think from what I understood from the research and from reading your books that you feel differently About that. Yeah, I mean, I couldn't feel more different when we look at where is wealth created in the United States And also abroad It's in two places. It's in home equity and it's in the stock market So when you look at housing And you take someone who owns a home and we'll talk about I know it's hard to buy homes right now But when you look at people who own a home versus people who rent Home or is America fall this for one second home or is America worth 40 times
More than renters So the average homeowner in America today is worth over four hundred thousand dollars But this doesn't establish causation. I that doesn't mean that buying a home make made them rich, right? It actually does and I'm gonna go through that here. So the average renters worth ten thousand dollars Right, so why why does buying a home build wealth and how much wealth the United States is now in home equity Wall Street troll just ran an article on this came out two days ago There's 34 trillion dollars now in home equity in America This number has gone up 90% since before COVID The other money is in retirement accounts, which is 60 70% in stocks There's 45 trillion dollars now in retirement accounts So those two things alone equal 80 trillion dollars, right like when you want to go like Where the bread crumbs? Where's wealth being created?
It's right in front of us now the problem that we have in the United States But also look we're here in London right now problem we have in so many cities is that real estate keeps going Higher and higher and higher and people's incomes are not keeping pace with the cost of buying a home So when someone comes on a show like this and says look you don't have to buy a home It's cost more to have a house and rent you know, I watched one of the shows I won't say who it was it doesn't matter. They all say the same thing don't buy a house You'll be trapped you'll have to pay you have to pay real estate taxes and you'll have to pay insurance and things break They go through all these expenses and it makes it sound like oh yeah if I rent it'll be cheaper So who do you think pays these expenses when you rent?
You do the landlord passes the cost of these expenses on to the renter Ultimately why do they do this because people who buy real estate buy it for an investment They buy it for an investment. They're not they're not subsidizing these costs So it's a hard thing to hear and especially when you're young like I have a son who's 22 is in Chicago He's gonna move to New York City It'll be extremely hard for him to buy a place in New York when he starts working right away Just will be probably won't for two or three years Lot of young people when they moved to a major city they can't afford to buy right away When I came out of college like you I was in credit card debt I had $12,000 in credit card debt I remember opening up my bills and having the room spin And thinking I'm never going down to credit card debt. How am I going to buy a house But I did and in fact I didn't buy a home when I was young by myself I bought a home with a best friend. So how did I get my first house first house we bought was a quarter of a million dollars We put 10% down and my best friend and I Andrew we split that down payment So we each put 12,500 dollars down. This is how we scraped it together House was a complete fixer upper
And we didn't have enough money to make the mortgage payments so we rented out bedrooms And we had friends rent bedrooms and that helped us cover our mortgage We scraped it together and that's what a lot of people do when you're young But if you don't get in the game of home ownership and you rent in your 20s and you rent in your 30s You're going to turn around in your 40s and having not been built any net worth When I wrote the automatic millionaire 20 years ago Two things have happened since then The stock market has gone up in 20 years 600% Okay, so if you had a $100,000 just that is gone to $600,000 If you bought a house the house has gone up 400% So when you read this book with all these there's a whole chapter of updated success stories There are a lot of ordinary people that started saving 5, 10, 15, 20 dollars a day bought a starter house and today they're millionaires so Am I not better off renting and investing in the stock market versus buying a house Because obviously when I when I buy a house I'm paying a premium on the house so that I can get a mortgage I want to bless this myth because what happens is people come on they go the stock look I can tell you right now the stock market over the last 20 years is average over 10% annually
People go the returns are better in the stock market than the real estate Yeah, but that's not apples to apple comparison why When you buy a piece of real estate when you buy a home People don't typically pay cash for their first house They put down 20% and they borrow the other 80% So you take like an example of a take a $200,000 home $200,000 home you put 40 grand in home goes from $200,000 to $400,000 In 10 years, this has happened to so many people in the last five years since covid There are markets all over the US where housing prices have gone up 100 to 200% So person buys a $200,000 home. They borrowed 80% It's doubled. So they've made 200,000 in profit They didn't put in 200,000 they put in 40 So they got a five times return on their down payment They go to sell their house They don't pay taxes on the game Because when you own a home at least in the United States you own a home for over two years if you're single You get $250,000 in tax regains If you're married you get over a half a million dollars in tax regains You get tax deductions on the mortgages so What happens is people come here and they go you know what you shouldn't be you shouldn't be tied down You need to be flexible when you're young
You don't want to have the responsibility And you should take the extra money and you should put it in a mutual fund And you know what happens in the real world Stephen people don't do that They rent an apartment that's nesters and what they can afford And they spend all their money and then they turn around in their mid-30s And they have no equity because they haven't bought anything And they also haven't saved money It is an absolute fricking myth That people take this extra money that they could have used to buy a house And they're going to put it in the stock market. They don't do that And that's why also by the way Corporate America got into the game of buying up real estate all over America Houses and building apartments to rent to an entire generation hoping These people never buy This like 10 days ago Trump came out and basically said he wants the institutions out of buying up all the homes in America Why does he want to do that because he because he recognizes How serious of a problem it is to have a generation of Americans who are renters I'm telling you when you look at average Americans average I'm talking about ordinary Americans when you look at where their wealth is
It's in home equity and it's in the stock market and this is the last thing I'll say Generational wealth is created For better or worse through home equity So when you look at what you know you asked the question about causation If a family doesn't buy a home The likelihood the next generation can buy a home is very low Because it's when the someone dies The money that is in the house that home equity is often what transfer transfers to the next generation helps the next generation by house I was looking at some stats here because I want to what I want I wish I could sit Sit down all of the gas that I've been on my show that have had a difference of And I've said that buying a house is bad. It could be a really interesting conversation right it would be a really interesting conversation What I've done as an alternative to that approach is I've pulled up what they've said And I'm going to give you some of the things they've said just so you can rebuttal them and have your say on them One of the things that they often say is that long-term real inflation adjusted home price appreciation in the US is about 1% annually And one of my guests cited Robert Schiller as the evidence of that
After maintenance And which usually equals 1 to 2% and property taxes which equals about 1% insurance and transaction costs the net real returns approach Roughly zero on average So when you say housing is a great investment are you referencing the gross appreciation which is the the total appreciation or the net returns after taxes maintenance insurance and selling costs So when you dig into these kind of numbers like this What they are is their numbers, but they're not real world right so like when you when you talk to someone who owns a home today and they've owned it for 20 years And you ask them How much of your net worth is now in the equity in your house Over 50% of their net worth is in their house You will see people on your YouTube channel that literally if you read the comments I'm sure you do where people say it's not true There was a I read comment yesterday on your YouTube page all I know is I bought a house and it's gone up in value three and a half times And the rent when I bought the house was $1,200 and they're rent today to buy that if I had that house If I was renting it would be $4,000 So the thing is you have to understand Is that rents always go up Steven like I live in New York City for 18 years
When I moved in New York City in 2001 A really nice apartment A nice apartment was like $6,000 a month When I left New York that same apartment was $25,000 a month Follow the insanity of that math now that apartment went from being $2,000,000 apartment to a $5,000,000 apartment So I could have been renting it but in my case I owned it And it went up in value $3,000,000 So I have friends who have been renting in New York for 20 years They have built no net worth I have no vested interest in this conversation Meaning I don't sell real estate I'm not a real estate agent I'm not selling real estate I've just seen in the real world how people have built wealth The the the mac and tires in this book the automatic millionaire When they came into my office and they were worth $1.8 million And he was 52 and able to retire Having earned an average of $40,000 a year All their money wasn't in the stock market They had bought a home in San Leandro, California What he what they called a middle-class neighborhood Their home at the time was worth about $300,000 They had paid their mortgage off And they had bought one more house on their street They rented the first house They bought a second house on their street
They paid that mortgage off And so they owned two homes, Frank Claire One house they got income from One house they lived in with no debt And then they had saved money in their 401k plan So if I was a young person Or like the young person I'm a aged and older person Who took my down payment that I was going to pay into the house If let's say it was See my down payment was $20,000 And I put that into the S&P 500 instead Over the long run Won't that grow larger Than the total home equity potentially Here's why the index fund theory doesn't work You can't live inside an index fund You can't live inside a mutual fund You have to live somewhere as long as you're alive Here's what people should do Take a look at what you're paying in rent Now ask yourself a question If I am paying 5,000 a month in rent Which lots of people are right Do you know people paying 5,000 a month in rent?
Yes Okay, so they're paying 60,000 a year Let's take that number So over 10 years there's going to spend $600,000 in rent Yeah If the rent doesn't go up Yeah In 20 years they're going to spend 1.2 million in rent If the rent doesn't go up In 30 years they will have spent $2 million in rent if the rent doesn't go up But the rent does go up So the question you just have to ask yourself Is am I going to take all this money that I'm spending on rent And never build anything And if you really believe that renting is better than owning Then you should still consider the idea of buying something Than that somebody else rents Because I promise you Somebody's getting rich in the transaction If you're the renter You're not the one who's getting rich in the transaction of renting It is a great short term solution renting It is not a great term long term wealth building solution The other thing that people often talk about And you cited earlier is the mobility that renting gives you Yeah Your son was here a second ago He's 16 years old Soon he'll be at the age where he's got his own place And he's thinking about different career opportunities And when I got AIs this big thing So he might want to go to San Francisco
Then he might want to go live in Florence and wherever else If he's bought a place There is an interesting sort of psychological But also financial component to the fact that It makes it harder for you to move with the opportunity of life And if we are If what people say about the future of work is true That we're going to have many more careers In our lives than we did in the past One might assume that we're also going to be more mobile And so Is there an argument to say that Buying a house might hurt my professional opportunities My ability to pursue professional opportunities The answer is possibly Right But here's the thing about rent Rent's Interestingly enough In major obligation Right usually when you go and you do a lease You lock yourself into a one year lease Sometimes you lock yourself into a two year lease When you buy something And this is assuming that you have the money to buy something Steven Look up Because you've got all the data your fingertips Look what the average length of time it takes to sell a home in the United States Just just Google that right now Because what I will tell you is in certain markets You can put your home on the market and you can sell it in less than 90 days
Now some markets you can sell your home in less than 30 days In many cases You actually have more flexibility when you own something than when you rent And that's if you want to sell it It says the average time from listing to sale Is about 47 to 62 days From listing to closing in 2025 Including 16 days on the market And 30 to 45 days to close That's called less than two months Even in hot markets The process from putting a house on the market To legally selling it can take 1.5 to 3 months Meaning home equity Isn't a quickly accessible investment Yeah, but do you think that's pretty quick 90 days No it is I mean it takes you that much time to get out of the lease Exactly So here you've got a piece of property that you can turn around Sell in less than 90 days Now this is the US You can't do that like for this I live in Italy That could be very hard to do that in Italy But in the US you've got something that's in a good market It's liquid The other thing is You can rent it Right You're actually not trapped If you start to build equity in your home And you pay your mortgage down slightly Next thing you know you're able to rent that property And you can still move Today people are taking their homes
And they're air being being them What I really want for people Is the chance to be financially free There's also an age at which it doesn't matter if you own You know once you start to get older And you've built financial security You're getting your 50s or 60s or 70s And you just want to travel And you don't want to own anything That's a different stage of life So the question just becomes The money that you make I go back to the 90,000 hour comment When you work 90,000 hours over your lifetime What's your plan to keep some of this money You have to have a pay yourself first plan That has to be your number one priority Is that when you earn money The first person who you're going to pay is you If you say you know what I watch Stephen and I saw David And I've seen a bunch of other people on his show And I'm not going to buy a house Okay Then You have to pay yourself first more Now I go around the world For the last 30 years Starting with Oprah with the automatic millionaire I launched this book on Oprah And I talked about You have to save one hour day of your income And people will get on these social media boards And be like I can't save 10% of my income I can't live off 90% of my income
It's not possible I have to spend all of it Right Well then that person Who's renting And not buying a house Which is four savings Is clearly never going to save So the other thing about buying a house Is it does require Four savings because when you use Have a mortgage payment Part of that mortgage payment is paying down your debt And I teach you how to use a bi-weekly mortgage payment plan So you take a 30-year mortgage And you pay it off five years earlier And doing that can save you Depends on size at home Can save you 50, 200,000 dollars Just the interest payments You talk about having a savings mindset What is a savings mindset And how does one go about saving If they are one of those people that says Listen, I'm barely getting buys it is David Yeah How the hell am I going to save money When I'm actually Increasingly getting into more debt right now So the first thing is you have to find your money Right so what I find Steve is when I talk to people Most people don't know where their money goes Literally they don't know They're like how much money do you spend a month Well I'm not really sure Which money do you spend a year Well I'm not really sure You need to be sure So you should be doing something to track where your money goes
Now you can be sophisticated you can use an app So it will track where your money goes You can also take out a pad of paper And I give people a seven day financial challenge For seven days just bring a little pad of paper with you And write down every single day where your money goes Now why do I want people to do that Because most people today are spending money unconsciously I go back to these phones The fact that I don't even have to carry a wall anymore Right it's just click click click and pay for things We've lost touch with spending money So when people start to see what they're really spending It's a wake-up call The biggest thing I've been sharing lately Is what does it take to blow $10,000 a year per day in terms of spending How much money do you need to spend a day to blow $10,000 Now show us the product Here Now we happen to have these or we have pounds today Right so So I'm holding Steve and right now I'm holding what is known as a brick So I don't know if your staff told you how much I'm holding here You know what what you guess I'm holding It looks like maybe $5,000 Okay, so this is a life-changing amount of money Steve and this this is $10,000 right And was it take to blow $10,000 in a year per day
How much money have to spend per day to go through $10,000 I'll make it easy for you The answer is $27.40 a day $27.40 a day adds up Equalling $10,000 over the year Now before we go through where do you where do you spend this money And how do you waste $27.40 a day The question becomes if you didn't waste $27.40 a day And you were able to get yourself to invest $10,000 a year What could this be worth over time And the answer is in 40 years If this was in the S&P 500 fund which you quoted earlier And you earned 10% annually with reinvested dividends That stack there would grow to $4,000,000 Over $4,000,000 $400,000 If you invested $27.40 a day Pass me this big brick Yeah So if I save Half of this a day Then in did you say 40 years In 40 years So let me give you the math on a couple different ways of doing this Okay, so what would happen if you invested Roughly half of this a day The number I use is $27.40 on today It's the magic number That equals $10,000 a year If you invested that a day for 40 years You'd have over $4,000,000 $424,000 If I invest $27 a day In 40 years I'll have $4,000,000 Over $4,000,000 Let's go through the Yabbats now Because people are going to hear this Some people are going to go wait what
And then we'll talk about where you find $27.40 a day Yeah, but $4,000,000 Won't be worth a lot of money in 40 years With inflation it won't be worth that much Won't have the same purchasing power My answer would be It's worth a whole lot more than zero Right If you're not saving any money If you can't save $27.40 a day You won't have $4,000,000 Yeah, but with taxes, you know, it won't grow that much Well, it could if it was in a retirement account You wouldn't be paying taxes on the money Yeah, but it's not possible to earn 10% on my money Well, the stock market for over 100 years has averaged over 10% annually With reinvested dividends Yeah, but the stock market's risky and complicated Well, no, it's not If you bought an index fund It's actually not that risky and complicated Yeah, but I don't know. I don't know how to get started Well, you could start really easily You could open up a brokerage account You could go to a Charles Schwab Fidelity I mean, I'm literally going to go through them all Vanguard Robin Hood Coinbase Acorns And in less than 10 minutes You could open up an account And be saving pick a dollar amount $5 a day $10 a day $27 a day And that could change your life
Now, why is $10,000 Steve Is such an important dollar amount? Here's what I can tell you Having done this for 30 years This dollar amount right here First of all, this is One in two Americans don't have $1,000 in a bank account right now So this is 10 times what one out of two Americans have But more importantly, $10,000 when we do surveys And we ask people how much money would it take to totally change your life The answer is not a million dollars The answer is not a hundred thousand dollars The answer is actually 10,000 And the question is why is it 10,000 And the reason is that's about what the average person has in credit card debt And they feel like they're drowning like you talked about earlier And they know that that could pay off their credit card debt Or They have a job they don't like And they New that if they had $10,000 In a savings account They quit that job and they'd be free They'd have to go find another job We'll start a business, we'll start a business Or God forbid they're an abusive relationship and they can't leave But if they had $10,000, they'd leave So You know, a lot of people go David just make this all too simple And it's true I do because when it's simple people take action on it
So for years I have taught this concept called the latte factor A lot of people love me for it Now I have a lot of people hate me for it And I have taught that, you know, we waste small amounts of money on a little thing I had your staff bring me a nice coffee When I started teaching a latte factor I would talk about the idea that we waste Five bucks a day on coffee And then if you don't believe you can start saving investing At least say $5 a day Make your coffee at home And people would say, but I don't want to give up my coffee Okay, well then figure out another way to save $5 a day This nice coffee, I don't know what cost you're in London In New York City That coffee right there is $9.50 Plus a tip It's over 11 bucks I know because I was just in New York So Today we had a bunch of props here And I said, well, let's try to show like what is $27.40 Like when I go to my hotel later when I leave here A cocktail is going to be 30 bucks Right, I was just in New York City I had a cocktail my hotel is $31.50 Lying, $50 eating out You go on and have lunch today It's going to be $25 And people say, well, I have to eat And I go, I know you do But you could also ground bag your lunch It's what my grandmother did
Now her friend's teased her But my grandmother was able to retire to California And her friends all got stuck in Milwaukee, Wisconsin Where it was cold Because they couldn't afford to retire the way she did How many people could Actually save $27 a day Because if I go back again just over 10 years of my life And there's no chance I could have saved $27 in a day There's just no, there's just no There's no way If you go back to what age If I go back to between Like 18, 19 Years old Roughly that period of my life Yeah There was no way I could have saved $27 a day Here's really the question Do you have friends And do you think you have people who work with you Who are making more than $50,000 a year And they're not saving $27 a day They're not even saving $10 a day This is true I actually did a bit of research On this And it says approximately 40 to 50 million families If we just take the United States where I think That's what 330 million people roughly Approximately 40 to 50 million families in the US Can realistically save $27 a day This represents roughly the top 30 to 35% of households For everyone else The bottom 65 to 70% Saving that amount would require Either extreme poverty level budgeting
Or is a mathematical impossibility Over 40 million people They think can afford to save $27 and 50 cents a day Yes Is based on income and expenditure data From 2025 to 26 Approximately 40 to 50 million families in the US Can realistically save $27 a day So for those 40 to 50 million people in the United States That would be life-changing Now are there people who can't afford to save that? Absolutely In the United States I was just in Arizona I just in a keynote speech I asked the audience This is when the government was shut down I said How many people do you think in America Are taking and receiving Snap checks What's that?
Thank you Because by the way most Americans don't even know what a snap check is That's a check that the government gives to people for food And the dollar amounts a little over $6 a day So smart people in a room By the way, I didn't know the answer is this a week prior either The answer is about 41 and a half million Americans Get a snap check When I told the room that the room gasped I said so when you wonder when you hear that the government was shut down For six weeks That was three pay cycles Well the average American doesn't have two weeks of expenses set aside I mean, I don't think everybody fully graphs the problem right now Four out of 10 Americans can't get their hands on a thousand dollars in case of emergency purposes If you actually dig into the federal reserve data It's 37% Americans can't get their hands on four hundred dollars in case of emergency purposes So there's a whole section of America that's truly struggling like But there's a whole lot of America That is still struggling. They're living page to page check But their money's being taken from them all the time Because they don't have a plan for it For that bottom 60% of Americans that my research says wouldn't be able to save $27 a day
The data reveals a discretionary income cliff once you drop below the top 40% of earners the money available after builds vanishes rapidly The top 20% which I think $96,000 per household are in a surplus the middle 20% Have a 15,000 dollars surplus which the $27 a day Take 66% from but the bottom 40% often have a roughly $2,000 surplus So it's impossible for them to get to the $10,000 for that bottom 40% What's the advice for them start with something Okay, it's like we took this 50 and we said cut it in half 25 I would say can you save a dollar a day? I have actually talked about this idea Really simple could you save $10 a day for 100 days?
So like if you're listening to me and you happen to really be struggling right now My question would be could you save $10 a day for 100 days? Why? Because it would get you to your first $1000 and you'd now have more than 50% of Americans you don't have savings And I can't tell you how many people have come back after 100 days and said okay, I did it. It wasn't easy For some people saving $10 a day could be really really hard But You're you're into fitness you saw my son who just came in here Fitness is built through daily action, right? It's built through daily action daily eating well going to the gym Doing certain things on a regular basis Savings the same thing There's a company called acorns. I invested acorns back in 2015 acorns came up with an app That helps you roll your change up. So if I go to Starbucks and I spend $9 and 50 cents on a coffee You can round it up where the 50 cents To 10 bucks is put into investments just rounding up your change And people have saved tens of thousands of dollars over the last 10 years by just rounding up their change Every time I've tried to improve something in my life like my businesses my health my relationships I've noticed that the biggest shifts have come from being better informed
And when it comes to our health most of us know very very little So when our team was approached about partnering with function health It felt very much aligned their team has developed a way of giving you a full 360 degree view of your health Many of the things that are going on in your body in the form of different tests You do one blood draw and it gives you access to over 160 lab results hormones heart health inflammation stress toxins the whole picture I use it and serve many of my team members. You sign up and you schedule tests And once you're done you get a little report like the one I have here I can see my in-range results my out-of-range results And there's a little AI function too. So if I have any questions about my out-of-range results I can just go in there and ask it any question I want and these tests are backed by doctors and thousands of hours of research It's $365 for a yearly membership go to functionhealth.com slash D-O-A-C And use the code D-O-A-C-25 for $25 off your membership I had a friend of mine contact me and I spoke to one of the previous financial advisors and Educators that I'd spoken to on the show about him He told me he was in deep financial debt probably earns about 50,000 pounds or dollars a year
But has got himself into real debt I imagine a lot of my listeners are Somewhat in debt whether it's credit card debts or loans or others. Do you have any specific advice to people that are currently straddled with debt? Absolutely because it's one of the most important things you need to know how to get out of debt is like quicksand like you know You talked earlier about how you were in debt and what that felt like When I came out of college and I had $12,000 in credit card debt It felt like the greatest weight on my shoulders Like I was carrying like a 50 pound backpack and how did I get out debt and how do you get out debt?
I won't give you the very simple formula to getting out of debt Dolde dolde stands for done on Last payment if you said to me, David. I've got five credit cards. I'd say, okay, Steven Tarrick's paper just like this and I'd start listing your credit cards. I go one two three four five and I'd list them all these Master card And I'd list them and then I want to know How much do you owe so I put the dollar amount down And what I would do is I put the dollar amount down on paper and I'd list it small To large Then I want to know the interest rate Now what people say is oh you should take the highest interest rate and pay it off first But I wouldn't tell you that Steven I'd tell you you take the smallest credit card. I don't care what the interest rate is The smallest amount smallest amounts maybe this card right here's five hundred dollars and this card down here is three thousand I'd have you make minimum payments on every card Automatically This is really important the automatic part. Have you go on I'd literally go in your house and open up the I'd open up your iPad And I'd have you make minimum payments online automatically so that every card's paid on time Then I'd say Steven how much extra money do you have because I want you to put it all towards the smallest card
We're gonna get that small card paid off as fast as possible We're gonna add all the extra money to that small card minimum payments on everything Once that card's paid off We're gonna go like this you don't have to close the account because we don't want to lower your credit score But we're gonna put that card over here and never use it Now we're gonna go the next small next small card Some people call this a snowball approach The reason I teach this system is it reduces the amount of credit cards you have as fast as possible And you see yourself make progress It's really important to see yourself make progress when you're doing anything financially Then I would attack the interest rates because the interest rates aren't always permanent You can negotiate your rates lower You can move credit cards to another card with a low interest rate Have to be very careful though when you do that because they're waiting for you to make a slip up and make a late payment And when they do they'll jack the credit card interest rates back up again You can also call up your credit card companies if you're really struggling And tell them I'm struggling and I like to know if you have a program in place where I can
Stop the interest rate and pay these cards off And more accessible like it is basically what the nonprofit credit card counseling organizations do But the credit card companies often have programs too for this They'll tell you to stop using the card they'll actually make it so you can't use the card anymore But they'll stop the interest rate So that approach has helped so many people get a credit card debt Now I just want to say something super important because I've gone through this When you go through the work of getting out of credit card debt It's a huge victory Don't go out and celebrate On the credit cards Because I got myself out of credit card debt in college junior year And then it went on a cell gradian and got myself back into credit card debt And people do this all the time usually people get themselves in a hole at least twice sometimes three times Don't go back in a hole again I didn't carry credit cards for 30 years only carried in debit card And I had to pay it over a month Should these people who are in the bottom sort of 60% be thinking at all about How to make more money how to increase their income Absolutely, and what are the like the easiest ways to do that With that you'd recommend just from your own experience of being in the professional world and
So my experience and I know that you look you wrote this great book Tire of a CEO, right? Anybody that read your book you're this great book What's the best way to grow your income if you have a job? It's to be good at what you do Wait, you can have a job at minimum wage Let's pretend you work at McDonald's And you have a job working minimum wage McDonald's The owner of McDonald's the guy who owns that franchise is the guy that owns that franchise Desperately needs could employees Who becomes a manager that makes for money the person who works really well Now a lot of people I don't I don't know if I want to work McDonald's I'm just giving it as an example Anywhere you work how you grow your income is you are the best at what you do You show up early you have a game plan at work You work late you do what you say you're going to do You don't wait to be told what to do right like I've been an entrepreneur all my lifetime The hardest thing about being an entrepreneur is what Yeah, everything It's everything and most people are entrepreneurs go well, it's you know That sounds hard to have good people unless you're a good leader People are so thirsty to have jobs with purpose and meaning
And most people are actually looking for leadership So if you can be really good at what you do You will make more money. There's no limit to wealth in the world, right? Like we've never seen so much wealth being created in our entire lives as right now If I were young enough to go we should learn AI Yeah, you know what probably you definitely should learn how to use AI because if you don't learn how to use AI You're going to have really limited skills from going to into certain jobs You know what else people are going to go out and do learn how to be a plumber Learn how to be electrician Learn how to put up garage doors I have got friends I kind of I was just recently on a podcast with a guy who's made a billion dollars putting in garage doors And he took me through his warehouse and showed me their garage door models And I was like you know, I've got a friend who makes gyms that go in garages. I just connected them He's got a huge business making gyms for garages There's just no limit to the amount of opportunities out there You have to though get out of a stuck mind frame I mean you had tell me robins here. If there's anybody who can help you get out of the stuck mind frame It's that guy right, but you can't
You can't have they zig-zag uses to call it stinking thinking you have to have The ability to look into the future and believe that your future can be as exciting today or better I put up a post yesterday. I said um I would rather be an optimist And be wrong than a pessimist and be right And you show me somebody who wants to make more money Going to roll an optimist and figure out how to go make more money Do you think a lot of this is a mindset at at the core of it?
Obviously there are real socio economic factors and there's people living certain situations And if I think back to you know where I was born in Botswana There's just less opportunity and sometimes you have repressive governments and other factors that will objectively keep you stuck, but all other things being equal How much of the game is mindset? It always comes down to a decision And we started by talking about my grandmother If my grandmother hadn't made a decision at the 30 That she didn't want to be poor. She was tired of living paycheck to paycheck She hadn't decided that she would go out and teach herself about money and take 50 cents of her paycheck and 50 cents from my grandfather's paycheck and start investing I wouldn't be here today She made a decision that had a ripple effect through our family She built financial security for herself with that one decision She taught my father how to invest and he was a financial advisor for over 45 years My sister's a financial advisor. I was a financial advisor. I spent the last 30 years teaching people about money One woman's decision had this ripple effect So one thing I say to people who are listening especially to the moms Sometimes you got to make a decision that's not just for you
You're actually making this decision for your family And you can come up with a list of reasons why this stuff won't work Somebody who's watching this show or listening was right now They're already interested in this That's why they're here Now they're here for a couple of reasons either either hurting financially And they know they need to fix something Start where you are Fix what needs to be fixed Some people are like you know, I think I'm doing pretty well, but I'm not sure if I'm doing everything well You know, I've opened up my Roth IRA or I've opened up my 401k plan Putting some money away, but I don't know if I'm putting enough money away Then you can improve what you're doing Some people like I'm renting I think I would like to buy a house someday All right, make that a goal. I teach three buckets when it comes to money three baskets Pay yourself first for retirement We haven't even talked about emergency yet putting inside putting inside money for emergency purposes Have to talk about that you got to you got to get more money put inside for emergency purposes And then building a dream account you need to put money away for your dreams Those three accounts should be automated
And on that point of having three accounts you called it a future account and emergency account and a dream account How much of your earnings should you be putting into each of those accounts on a monthly basis? All right, so keep it super simple I recommend one hour day again to this earlier. It's 12 and a half percent of your gross income When you say one hour a day, you mean one hour of the time you wet a day Yeah, so whatever you make an hour. Yeah It's if you're sick if you're working a 40 hour work week 12 and a half percent of your gross income Goes off the top and do a retirement account Now, let me just say something up for the job butters and like I can't go from zero to 12 percent Then start at one percent If you're not saving right now and you're listening to us and all you do when you leave this podcast is make one decision And that decision is I'm going to save one percent of my income And you start that this month your life will change Your life will change because you start the process of making a difference. It's just like the first day you go to the gym Now I will tell you if you save one percent of your income you won't notice it And if you did that every month for a year at the end of the year
You would have saved 12 percent and you will be saving four times what the average American saves And you will be in a rock star shape Then the second hour this is where people's minds blow up but the second hour So the first hour goes for the future the second hour goes for safety and for dreams So 30 minutes of your income roughly 5% Should go into an emergency account And another 5% goes into a dream account now that dream account could be for buying a house Could be saving money for college Could be the occasion you want to take at the end of the year could be getting married Could be the engagement ring But you're putting money away for your dreams because when you put money away for your dreams That's how they become real And you know the book is called the automatic millionaire. This is a book that sold over two million copies And on its own Why did you use the word automatic unless your financial plan is automatic It will fail How do I know this?
Because I spent nine years as a financial advisor at Morgan Stanley and I got to see first hand Everyone who came into my office with an ordinary income who built wealth They did it by saving automatically Every single time a client came into my office and they said I'm going to bring you a check Every month myself I never had a client save for more than six months They stopped When once you make the decision to automate your financial life It works in the background Now here's the thing Everybody else is already doing this to you You go sign you go to go to a gym to go work out They don't ask you to bring them money every month They automatically bill you You get a phone bill They automatically bill you Today in many cases when you rent they automatically pull the money out of your account The banks automatically take money from you for your mortgage When you pay taxes they're all automated Everyone takes money from you automatically Everything that you sign up for on your phone is a subscription service netflix Go through your credit card today open up your phone look at all your subscriptions All those businesses are taking money from you automatically Why that's the only way they can be in business
They know if they don't get money from you automatically You won't keep using them Most people who start off with a free subscription It'll take them three to six months to turn off something that they don't use I'm here getting people to automate the financial life for themselves Is there simple ways apps tools websites we can use To go through all of our subscriptions and turn them all off Yes There are so let me tell you the easiest way for this is really actually Free publicity for Apple okay Because so many people have Apple phones Number one only do your subscriptions inside of Apple In an ideal world don't pay anybody directly do it all through Apple Why?
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Because if you go to the bottom of your phone you don't know how to do this and you put subscriptions Up will pop everything that you've signed up for and you can go click click click and turn them all off Another thing I will tell you is that when you sign up for anything Let's say it's a one you because everything else a one-year trial subscription Or a one month trial subscription The moment you sign up for it Shut it off Because what happens is if you sign up for anything and think of any subscription you can imagine companies hate me for this The moment you shut it off when the time comes for it to renew They will offer you a better deal to renew Okay, so I've opened up my iPhone. I've gone to the settings I've clicked on my name in the settings and then I've clicked on the button subscriptions I have One two three four five six seven eight nine ten eleven Of which Three of them I would keep So all these other ones have just been running in the background and it's because I used them at one time Yep, and it signed me up to some kind of free trial and I just totally forgot to cancel it So I got oh my god some of them are massive. Okay, so so as you do this what you're doing right now is a real life
Example so if someone's listening to us watching this they're married. They've got kids or they're single by themselves This one exercise My guess is there are many many people listening that could find 50 a hundred two hundred dollars a month They could shut off and redirect that money to saving and investing and that could change your life Other of the wraps you can use and go to to figure out how to cancel or leave your subscriptions So there there are and most these apps you have to pay for right so like you can go to So then that then you're right back in the pain for now probably the two popular most popular apps are monarch And why and maybe you can also use your credit cards The credit comes are doing a better job of showing it on your statements And again, I go back to the apple example because apple makes it the easiest to shut these off Maybe some of you will be spending a hundred dollars a month So I did a hundred dollars a month and it says if you invest if you sort of cancel those subscriptions and invest a hundred dollars per month For 40 years and annual rate of return of about 10 percent Which is roughly what you get if you just put it into some of the big tech index funds at the moment
The total money you'll have in 40 years Is six hundred and thirty two thousand dollars Which is a staggeringly life-changing amount of money It's staggering and let me just give some very specific investment For people to consider right and they still need to do their own due diligence and read Perspectives and yesors risk and ball and stock market But the first one I would talk about and look at these are all listed in my book Because I just want to give it because people like what's an index fund? What do I buy Look at the Vanguard total stock market fund. The symbol is VTI Okay, this is actually the largest index fund in the world There's trillions of dollars now in this fund. I talked about it in the book I looked up the annual the annual returns of VTI the last 10 years have been 14 percent 14 percent annually This fund has 3,500 stocks You know all the biggest US stocks So you don't have to figure out what stock to buy you buy this fund You buy an exchange rate of mutual fund you have access to 3,500 great American companies I'll give you another stock index fund. I love and everybody can buy this on their phone right now Probably literally you can go to Vanguard Schwab Fidelity this funds. This is an ETF. So it's available everywhere to stock
And if you want to figure out how to do this and you're listening right now What I do is use chat to be to your Gemini and put in the stock the the fund that Has been said and ask it how do I invest in this in the country that I'm in what apt do I need to use what website do I need to use again This is not investment advice. Well, I guess kind of sounds like it is but well, but it's also like so like we Someone says okay, but I'm not I'm in Wherever I am. I'm in the UK. What's an index fund in the UK that covers the UK?
I'll give you the global version of VTI So because I own these funds so I so the global version of VTI is a symbol which is all I'm gonna give you another Vanguard fund When you say you own these funds for clarity, you mean you've invested in them Yeah, I've got money in these mutual funds So this other fund because I have I want money my my personal money that's in the stock market I am one third global investments and I'm two thirds US investments So I have a lot of global index funds this global index fund is symbol is VEA Because this is the Vanguard global index fund without US stocks symbol again is VEA That fund last year and it won't always be like this because global investments have underperformed the US for a long period time That fund last year was up 35% Last year global investments significantly outperformed the US investments And the US investment market was up on average of 17% So the US markets were up 17% or higher and global investments were up 30% or higher Now there will be a point in time Steven without his shadow of it out that we will see a market pullback And when that day comes you have to stay the course and keep investing automatically monthly And then I give you a tech fund because everybody wants to know
What should I invest in that is you know should I invest in AI tech fund And my answer would be is you don't need an AI tech fund You need the best tech fund that's existed in my lifetime And that's the NASDAQ 100 ETF and the symbol for that is QQQ So go and look you know go into whatever you're using and go look up QQQ Read about the top 100 stocks in the NASDAQ And there are turns for QQQ I mean actually in top of my mind right now I can I think it's over 20% But look up what is the QQQ total return been for the last 10 years I can tell you since I put money in QQQ it's gone up 10 fold Now the market's been unbelievable and there will be pullbacks And that is also why I should say this even because we haven't even addressed this I don't run around telling people to put all their mind and stock market I also don't think that young people Should be putting all their mind and stock market I think one of the greatest myths out there is that when you're young you should take a lot of risk Let me say that one more time because it's super important so make sure it sits Everyone says when you're young You should take risk The problem with that advice is that today people in their 20s and their 30s are taking a lot of risk
They're not just putting money in index funds They're putting money in meme coins They're putting money in meme stocks They're putting money in NFTs They're on social media and TikTok watching people day trade They're trying to get into options What they're really trying to do is get rich quick All I can tell you is the older guy in the room here People who try to get rich quick stay broke forever And the problem with taking too much risk with your money when you're young is if you keep If you do everything right like let's just say you're the you shut off all your subscriptions And you're saving $200 a month But you put that $200 a month into a junk investment And you turn around in 10 years and you have nothing to show for it You'll stop investing Looking at the QQQ data So this is the Mastak 100 So this invests in the top 100 companies in America The Nasdaq's market change The returns over the last 10 years from 2016 to 2026 The annualized returns have been roughly 19 percent The total return of that period has been roughly 480 percent So $10,000 investment 10 years ago Would now be worth approximately $60,000 today if you've done nothing Never added to it Over the last 20 years
The annualized returns the return every year has been 15 percent With a total return over that period of 1,500 percent And against if you've added $10,000 to it 20 years ago and done nothing You would have roughly $170,000 today So here's the beauty of what you just did You checked my my you checked my advice You looked at the data and now you know what has deepened done in the past Right Let me give you a super boring fund I'm not sponsored by Vanguard I'm just giving generic vanilla stuff here Look at the Vanguard balanced fund So right Vanguard balanced fund And the Vanguard balanced fund is 60 percent stocks and 40 percent bonds That by the way is the most Typical asset allocation the difference between stocks and bonds In the world The average retiree has a portfolio that's about 60 percent stock and 40 percent bonds You look up the valinger balanced fund and what you're going to find is that fund his average to over 8 percent annually since inception It is as boring an investment as they come So if someone says well, I don't want to be 100 percent stocks I just want to be I want to be more conservative, but I want some stock exposure The Vanguard balanced funds a great example
I list all these funds in the automatic millionaire One of the kind of funds I talk about the most is what's called a target dated mutual fund I don't know if you guys have a foreign K plan. We have something similar Okay, so in the US if you have a foreign K plan what you're going to find when you open up your foreign K plan Is you have what are called target dated mutual funds? This is a one stop mutual fund solution To your investing all the way until you retire And it will be divided among stocks and bonds and it will be what's called rebalanced automatically as you get closer to retirement So I'll go from being more stocks when you're young less stocks as you get older There are trillions of dollars now in these target dated mutual funds when I wrote the automatic mill or 20 years ago It just came start This automatic solution to investing has changed the game of investing for millions of Americans That's why there's 24 million millionaires and that's why there's now 45 trillion dollars in retirement accounts We have a brain budget the way to think about it is we have a limited amount of energy that we can spend every single day I'm saying find ways to simplify your life and one way I've conserved my body budget is via our sponsor factor who are a meal delivery service
They are especially great because they make fresh meals and they cater to so many different diets Hyprotein, keto, vegan, vegetarian, low card, gluten-free, paleo diets, you name it every meal Is designed by a dietitian made by chefs and delivered right to me Fresh and never frozen So if you're ready to streamline your food intake Visit factameals.com slash diary 50 off And use my code diary 50 off to get 50% off your first factor box plus free breakfast for one year And this offers only valid for new factor customers with code and qualifying auto review subscription purchase Over the years people have reached out asking me for mentorship But the challenge I've always faced is that my calendar doesn't permit me to help every single person that reaches out So when I know I can't personally help I try to push people towards tools that I think can And that's why I wanted to tell you a little bit about resource that I think would be great for those of you who are founders of small and medium-sized businesses It's a content series that our long-time show sponsor Vodafone has created It's called Vodafonebusiness.connected You'll find it on YouTube This series delivers the knowledge that founders today need to grow their company in the digital age
There you'll learn about personal branding, cybersecurity, scaling e-commerce companies And through conversations with many founders who I've invested in and work closely with The opaque picture of building a business will become clear Some of those founders I've invested in in the series include Christiana Brenton from FlightStory Marissa poster from PerfectEd Leo Harrison from chapter 2 And Georgia Gibson who I've partnered with to build Steven.com And these are just a few of the great names involved Such Vodafonebusiness.connected to learn more The other book that you wrote which sold incredibly incredibly well Is this book about smart couples finish rich That's the title Smart couples finish rich Nine steps to creating a rich future for you and your partner As it relates to how rich or wealthy you become The person you choose and the way that you can figure that relationship How consequential is that?
It's everything Really? It can be everything Why? You're married? I'm married Yeah So why can it be everything? Because here's what happens in the real world, Steven Often we marry our financial opposite So I always joke like I used to do a lot of seminars for couples And I'd say there's two types of people that are born in the world One person comes out literally with a calculator And they're born to track where all the money goes And they love to budget And they're super excited about investing That's one kind of person The other kind of person Loves to shop, loves to spend money Almost inevitably those two people hook up Now sometimes two people who like to spend money, marry That's a disaster Because they end up broke So now what do you do about the couple that's got the financial opposites That's what led to smart couples financial rich Because If you are married to your financial opposite You will fight about money all the time And fights about money are what lead to divorce They're the number one cause of divorce The real key in what I've been teaching now for over two decades Is the way you get couples on the same page when it comes to money Is you start with your values So you look at what do you really value most together as a couple
You put the money aside for a second You go through your values, what's most important to you What do you really care about? You talk about your values And then you build a financial plan around what's really most important to you You say that there's six worst money mistakes that couples make And the first of those is not deciding who is responsible for what Yeah So often in a relationship One person pays the bills Okay Who's managing the money Now I used to say in every household there should be at least one person This paying the bills and the other person's managing the money meaning that they're in charge of investments That you still get together and go through it As I've gotten old or I've really realized how important this is Because I go back to the fact that the average age is 59 average age of widowhood is 59 I'm 59 now I've had three best friends already passed away All men And they passed away before they were 57 So all these statistics that I talk about I'm seeing them come true And I will tell especially the women hear me loud Hear me on this loud and clear But this is important for the men too The question you need this is hard to hear the question you have to ask yourself
Is if your partner died today What would you need to know about the finances And the answer is everything now what does that mean everything that means you would need to know where is the money Do you have money in an old 401k plan does he have money in IRA account does he have money to bank account What are the passwords to get into the accounts Where's the will You know six out of 10 people listening to us today don't have a will You have to have a will at any age at any age if you especially if you're in a relationship you have to have a will if you have kids you have to have a will Is their life insurance?
So many people today who have children don't have life insurance and they don't have assets You should at least get a million to two million dollar term policy super inexpensive Protect your family you have to run The drill right like that we got on a plane we flew here today The first thing they do want to plan before you take off is they talk to you about what to do in case emergency purposes The mask going to come down you can put it on your face Okay, you get on a cruise boat the first thing you do is talk about what you're going to do if the cruise boat's got a problem You're going to go get in these emergency boats You need to run the fire drill for your family on finances I almost died like it's now been four years ago. I my wife found me face down passed out I was brought to the hospital in Florence Um, I was in a coma for four days. I was in the hospital for 17 I had meningitis when I came out of Just like a movie. I'm laying down. I mean, I'm laying down in the hospital Doctors looking over me doctor says Do you know what your name is?
I said David It's very good. You know your last name is I said it's Bach Says do you know where you are? I go. Yeah, I'm in Milan. I just had an ankle surgery because I had had an ankle surgery two weeks prior Tweets before that And he says no, no, you're you're in Santa Morin novella. You're in the ICU I were treating you right now for meningitis, but now that you've opened up your eyes You're going to be oh you're going to be okay. You're safe now And then they brought my wife in they said you know what her name is I and I made a joke. I said this for Becca. She's like who?
I go honey. I can still be a smart as an hospital It's a lesha and she starts screaming and yelling and she's like oh my god. Yeah. Oh my god. He's okay But Stephen the truth was I wasn't okay because when you get meningitis you get brain swelling So I couldn't remember things. I couldn't remember my passwords to To the bank account. I didn't know the passwords to my phone number to my phone One of the things I did when I came out of the hospital Because I always manage the money as I said to my wife We're gonna hire a financial advisor And you have to be involved. What's going on?
We actually had yesterday our annual account review Because I tell couples you got to have any annual account review either together And if you have a financial advisor at a minimum with your financial advisor and I didn't want to cancel the appointment because I was either you guys inviting me to come here I'm like I'm keeping the appointment. We'll fly you to fluid this morning and so Again having worked you know Morgan selling for nine years and been a financial advisor. I've seen too many couples not do this including Sadly, Steven my dad just recently passed away and my dad was in the money management businesses whole life So he managed the money and my mom Was not involved and when my dad passed away we had a Just like my book step in and help my mom with everything now. She's lucky. She's got two kids in the business But as she did my mom was just a ripe waiting Example of somebody who could be taken advantage of so the time to learn about money is before there's a problem If you took smart couples finish rush honestly Steven That you it's designed to be a He wrote map for two people together where you can sit down and go through this book chapter by chapter together starting with
Just organizing your financial information putting everything into file folders it starts the conversation And then talking about your values then talking about your dreams Then going into well, what what do you want to share? You know, you have a very I don't know all your stuff. I followed you for years as I told you. I'm a fan of yours I've got your book. I've watched your podcast. I've listened to you now for years As your business is expanding your life has gained more complicated God forbid something happens to you tomorrow. Yeah, it'd be a fucking nightmare. And she's your fiance Yeah, she wouldn't even know where to start And I don't know if she would know who to call so It's a worthwhile conversation like I just had this guy in the show. I don't know maybe we really need like You know involve you, but I was just looking at some of the data here And it says that in terms of income ignorance according to a 2021 study by fidelity investments nearly 40% of couples Could not even identify how much their partner earned It says in terms of financial infidelity surveys from bank rate and credit cards.com consistently find that up to 40% of adults share That they have kept financial secrets which is hiding cash hiding bank statements and hiding debts that they have from their romantic partner
So that's almost half and you pointed at this earlier on which is the CFO dynamic in many households One spouse acts as the chief financial officer and research indicates that roughly 50% of couples Have a non-managing spouse who has little to no idea how much money the family have total they don't know where it is and they don't know the passwords It can sound scary It can sound intimidating and yet I can tell you every day people who actually kind of do this basic stuff that we've talked about Once you start to do it, you feel a lot better You feel better instantly you don't you don't have to go from having no savings to having a million dollars to feel better If you just start automatically saving some money paying yourself first The moment you make that decision you'll feel better You go and you turn off some subscription fees like you just looked at the moment you do that you'll feel better It's literally like a financial muscle you start to build this financial muscle when you start to take action It is action that changes your life. I always could say I wrote all these books if a person buys a book reads it and doesn't do anything Then I was a form of entertainment If you listen to a podcast on money and you don't do something then we were again a form of entertainment
My purpose for doing this podcast today while I got on a plane and flew out here immediately to do this with you Was I want to try to change somebody's life today I've always taken the approach like I want to change your person's life one person at a time and Sometimes the things I share are hard to hear but I also know they wake people up You had this great great quote to this book. I was showing this today to my son I'm holding for those of you who can't see me. I'm holding Steven's book a diary the CEO Which is also sold a million copies and this is your quote on page 233 I wonder if you remember your quotes because sometimes you forget him right If you want long-term success in business relationships and life You have to get better at accepting uncomfortable truths as fast as possible When you refuse to accept an uncomfortable truth you are choosing to accept an uncomfortable future The one thing that wasn't in this quote was money And everything we're talking about is I'm like you're gonna work 90,000 hours over your lifetime If you don't pay yourself first and you have nothing to show for it The uncomfortable truth is you will be broke. We haven't talked about um global issues and covering issues and debt
Why do you have to take care of yourself financially right now more than ever before Because the future is about to radically change And I will talk out of both sides of my mouth for a second number one. I believe the next 10 years Hands down will be the greatest opportunity to build wealth in our lifetime AI is create going to create so much wealth That We've ever seen anything like it like when you look at the returns and stock market from last year their result of AI What's happening is AI is making companies more profitable and more productive than they've ever been The downside is people are losing their jobs Right you've had people on the show including Tony Robbins talking about this and there are gonna be a lot more of those job losses So some people are gonna get much wealthier and then a whole lot of other people are gonna have a challenge But there's another problem we we're not talking enough about and that is the safety nets of governments All these safety nets that were created in the US so security Medicare Medicaid Unemployment you can go through every single country All of these things are called entitlement programs Which is a fancy word for saying The government made a promise to you
And a whole lot of people are dependent on that promise And there's not enough money to pay for those promises So like in the US you take Social Security The average Social Security check right now is $1900 Not a lot of money but about 60 million Americans Depend on that amount of money In the US Social Security this is government data not me you can do all this stuff online The government is telling us that in 2033 that's around the corner This Social Security is gonna be underfunded and they're gonna have to cut the benefits now what they're talking about is kind of benefits by 20% You have a lot of Americans that that's gonna be a real problem for Every country's got this issue because people are living longer Governments have more debt than they've ever had I am here to tell you It's a cliche term but no one's coming to save you It's you're gonna have to save yourself And you're gonna have to take your personal financial well-being More seriously now than ever before And if you do you will be in great shape If you don't you will be dependent on a system that is buckling One of the things in your I think it's the sixth point of the six things that couples get wrong is waiting too long to pay off the mortgage
What do you mean by that? I actually had a friend contact me um and ask this they said Steven I've got some cash that that's been given to me. I think through an inheritance Should I pay off my mortgage or should I go invest in the stock market in the S&P 500 or something else? Yeah I didn't know what to say because I'm not financially So if you call me up and you said David what should I do? I go Steven. What's the rate on your mortgage Then you'd say well, David. I got a mortgage five years ago and it's two and a half percent I'd say okay. Well, that's a really low rate Steven. You know what You can put the money in a money market get account right now and make more than that So maybe you don't need rush to pay it off as fast as possible But if you've got a mortgage that's six or seven or eight percent It's a no-brainer The biggest thing I can tell you about paying down your mortgage early is actually really simple Here's ways to do it If you make one extra payment a year on a mortgage You'll take a 30-year mortgage and you'll pay it off depends on the rate five six seven-year center So you can go online you can run a calculator. Today you don't even need calculus Just run the question you put in your mortgage. You tell Gemini
Here's the size of my mortgage. Here's my mortgage payment If I make an extra payment a year how many how many years faster will I pay it off and how much will I save And you'll see the number When people see the number in black and white. I've got to do that. Now here's the key make that payment automatic Easiest way you make your payment automatic is either make one extra payment at the end of the year or Take your mortgage payment and increase it by 10 percent So if your mortgage payment is a thousand dollars Make an $1,100 a month mortgage payment and tell the bank you want to add that to the principal When people do that they need to make sure though that money is actually paying down the principal Another way to do that is to buy a weekly mortgage payment plan Where you take your mortgage you split in half you pay half every two weeks That'll also pay your mortgage off early Pre-nuptial agreements. I'm engaged. Yep Should I be getting a prenup So I would tell anyone who's getting married Number one if your incomes are not the same you should have pre-nupt Number two if you both have good incomes you should get a prenup Number three if you're in your 30s you should get a prenup
You would never go into a business without a contract Marriage is the ultimate contract. It's just is now. Is it romantic to do a pre-nuptial agreement? No Does one person in the relationship typically not like that doing a prenup? Yes, I know a lot of women today who want pre-nups and the husbands don't want them It's whoever's making the money But I will say this about pre-nups You need a lawyer she needs a lawyer You cannot go and do a prenup right before you get married when people do that those pre-nups get thrown out the window Because they will claim and say and have an argument for I was under Extremely undue influence to sign this agreement before The wedding and those agreements get thrown out even if there's disclaimer language and both of you need attorneys And pre-nuptial agreements can often be like a negotiation And you can learn a lot about your partner that you just not always pretty and I'm not saying you But one can learn a lot about their partner that's not always pretty when you do a pre-nuptial agreement And once the pre-nuptial agreement is done if it's a reasonable pre-nuptial agreement It goes in a file it doesn't get looked out again And it won't matter unless today comes that you need to pull it out
And that's for our first time marriage Okay, you're a second time marriage or a third time marriage and you've got kids And custody issues and Support for your first wife. Yeah, definitely need a printout What is the most important thing we should have talked about that we didn't talk about? Hmm, Steven. We've talked a lot about money today But money's just a tool So we actually haven't got to talk a lot about is Using money just to free yourself to live your best life And you don't have to have money to live your best life Again, money is just a tool So what's most important life?
I'm gonna say things that people know health Yeah, I started following you because of all the shows you didn't help Love People hold on to love way too much gratitude Being consistently grateful for the life you have friendship Loving your friends fully And the last thing is fun You know, I think people go through life on that some point they stop designing their life My grandmother used to say you got to dream it design it and do it And she's like and you kind of run out of time So what I would say to anybody is like This is you've got this one beautiful moment in time where you're here What do you want And start working on that today You listen to the episode with Tony Robbins You've referenced him several times in this conversation You're somewhere to ask me who is the greatest mentor and greatest influence in my life besides my grandmother and my father It's Tony Robbins So I went to Tony Robbins some years in the early 90s back in the day when he had an infomercial without yoga sets And I went to a program that he taught in Hawaii He had this big hotel called the white Kaloah And he did it he did an exercise So it's like I remember like this is yesterday He said to this room we were in there were I don't know a thousand of us in this room
He said how many of you have a dream that you're not working on And we all we all had dreams so he got us into a peak state and he had his work on our dreams And then he asked the question How many of you think you're going to be alive in 10 years Everyone's like yeah, we were live in 10 years. He's like great. So I got a question for you Are you going to be alive in 10 years Having worked on your dream Hopefully gotten it right done all the things I've taught you to do You know model the masters got yourself in peak state learned the pattern recognition Have you gotten 10 years older having gone through dreams and maybe got it Or did you just get 10 years over 10 years older and you let your dream die You let your dream die and the roots just let that sit And then he had his go-off in groups of 10 And share our individual dream so we'd all written it down on paper So I shared that my dream and this young kid Financial advisor I'm a guy I shared my dream was to write a book called smart women finish rich and teach a million women to be smart with money So they could protect themselves teach their kids and help their family My heart's pounding Steve and I'm sharing this idea with 10 strangers and then we go back in the room
And he's like how that go you guys all ready and gets us back in a peak state 10 minutes later woman comes taps me on the shoulder and she says I just heard about your dream My name's Vicki I've worked on Tony's last two books If you want to do your book you're going to need a book proposal You've done books you know this she's like I can help you write a book I hired her I start working on that book proposal later I would go after the same age of the Tony as Jam Miller she become my agent he'd write a cover letter I get a book deal and I start working to help millions of people It's started at the Tony Robbins seminar And I go back to my grandmother the right dream it design it and do it He gave me the life skills to do that and I will tell you something about Tony because you know You see Tony on all these shows and people go it's Tony the real deal I see even if I was with you and I sent Tony a text And Tony has a lot of friends like this Tony gets right back to me Tony's the real deal I just went to Germany and took my older son Jaku's 22 To see him do UPW in September Could bring tears my Because I wanted Jack to have the experience without me there so he was You know blessed Tony sitting in the front row
I came in on day three when he was in the peak state And I came in and I watched him You know, I was basically his age and I thought you know, you know, I went in and I gave him a hug And I'm like you just don't even know this is just This experience that you're saying what you're learning today if you use this stuff It will change your life That's the power of Tony and people go you know Whatever it is your podcast your events Tony's events My books We're just catalyst God God gave you a seed and a dream And when we're the catalyst for like look cook do this Listen to that voice Whoever your God is that soul that you hear yourself saying I have a dream if I only had 10 years left to live I would really Hate to die with that dream inside me That's the dream you go work on And since then you've Done exactly that you've educated hundreds of millions of people through your books through podcast seminars newsletters And thousands of media appearances on how to do exactly that how to get financially free pursue their dreams get hold of their money So that they can live the life that is um Destined for them and that is an incredible thing And you've sold almost 10 million copies of your books worldwide. I'm sure you're gonna hit that number at some point soon
And uh, I guess you'll never get to see the impact that that's had on so many people's lives And how you've therefore changed the trajectory of their financial future in their kids and their kids and their kids like your grandmother did for you and your family I highly recommend everybody go and listen to that episode. I'm actually gonna link it below So if you haven't listened to the episode with Tony Robbins That's a great next thing to do if you're still listening now But David, I wanted to thank you so much for coming and uh you present a really interesting different perspective on the subject of money Which is is hard to find its rare um, but it's very very very important and hopeful it'll be consequential for many We have a closing tradition as you know um where we ask the next guest the question left by the last and the question left for you is Interesting if you had all the money you needed to have to support yourself and your family zero financial worries What job profession would you be doing or rather What would you spend your time on?
That's so real that this is the question you're giving me That that was asked before I got here like that's like that's a god moment too like that's meant to be This is by the way, I'm not making this up so so Because that's me I have enough I have all the money that I need I have my health right now. I have my time and this year what I'm going to what I want to go do my dream for the year I want to have an endless ski season So at the end of the year ask me did I ski somewhere every month this year?
I leave you today. I go back to Florence for 24 hours in a turn and I'm gonna Reverbie Switzerland with friends. I'm gonna try to ski somewhere every day every month this year With friends and with family all around the world for fun I did this as my last dream to help one More generation be smarter money. This is my final book these may be my final podcast And what you've done is you've updated Your smash hit best selling book that's this sold millions and millions and millions of copies that you wrote 20 years ago to make it relevant to the Current financial situation in world that we live in and my goal with this was a lot of my readers now in their 50s and the 60s But they've got young kids like I do and I wanted this to be a book they can put in their hands I'm gonna link the book below fantastic reader you've written several incredible books So it's I'm gonna link all of them below in the description for anyone that wants to grab a copy of them The automatic millionaire a powerful one step plan to live and finish rich Baby, thank you, Stephen. Thank you. It's been great I'm gonna show you how to get clear what you really want figure out what's been stopping you put the plan in place and
He chew the most important thing that's made me successful And I think people fully realize the significance of how many of the most influential people on planet earth You have worked with and continue to work with what is the pattern that you noticed in those people? So I found four things with them and the first thing is