Sahil Bloom: The “X Factor” for Financial Freedom and Why FIRE Won’t Make You Happy

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28:30So, you're about to make a trade based on a friend's text. But which you do you listen to? Is it, we could buy a house in Tulum? Get optioning those options. We could lose everything. Or let's do a little research. Get your head in the trade and make the investment decision that's right for you. Learn more at finra.org slash trade smart.

29:02When did making plans get this complicated? It's time to streamline with WhatsApp. The secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. All right. Welcome back to the show. We're joined by Sahil. And just on that point, what was the quality of life difference in terms of hours for that income? Because that's the big trade you made here, right?

29:43It's something about the quality of life. Life was all about maximizing money. Surely the theoretical potential for the carried interest was much higher than what you were doing here. But tell us about the happiness factor in the other areas of your life and how that transformed. No job will ever pay you enough to be far away from people you love. That's the best way that I can put it. I was suddenly in this world where I was surrounded by people I loved. That number 15 times before my parents were dead turned into hundreds. I mean, I saw my parents several times a month. I continue to see them several times a month.

30:20The most important thing was when my life came into alignment, when my stress levels dropped, and when I felt a level of clarity and calm in my life, my wife got pregnant. And after two years of struggling to conceive, we got that incredible news. And so many things in life just started to fall into place. You know, I had the freedom to focus on my health again. You know, I wasn't working the 80 plus hours a week, I was kind of, you know, leaning into things that I really found energy in. So I was like, writing is my favorite thing in the world, I was getting to write a lot. You know, I was getting to work with founders of these companies directly, I was investing in some of those companies.

30:58personally, I was really working on things where I felt like I was kind of the captain of my own ship, which just felt really good. And it was the first time in my life and I had had no plans to do that. There was not an entrepreneurial bone in my body. And getting to lean into that, I just found I, every single day, was waking up with real energy for the things that I was getting to do. And my life started to improve all around it. Was it just you or did you have employees at that time? Early on, it was just me. And to this day, it's just me that writes and creates all the content, because that's my favorite thing.

31:34That's what I want to do. I want to spend time writing. Now I have a team at the holding company level of my structure, which we can talk about. I have a team and there's people that are working on things that I'm not great at, like dealing with all of the optimization around ads and funnels and segmenting and video editing and all of the other things that I have no competency around. Um, but early on it was, it was just me. Yeah. I'd love to hear about how your company evolved and what the structure is today and what's next. Yeah. So today, um, I, I have everything structured in what I would refer to as a holding company.

32:11Can you introduce it as well? Like what the holding company does, like what is the mission, the purpose of the whole enterprise here? Yeah. So the holding company that, um, that I have is, uh, it's called, uh, uh, S bloom media holdings. And the entire idea is for me to be able to leverage the different things that I'm sharing out in the world, all of the media properties that I'm involved in, whether it's the book or newsletter or any of the social media platforms, to both reach people and create ripples through the content, and then also to accelerate companies that I own either through significant minority ownership stakes in cash flowing larger companies or through my venture fund where I invest in early stage technology companies.

32:56So today, the holding company sort of sits as like a halo on top of a bunch of companies that sit below it. At the actual holding company level, that's where I have my book, my newsletter, any other monetizing media assets that sort of sit up there. The newsletter today reaches 800 ,000 or so people. Two times a week still is how much I send it. you know, newsletter sponsorships now are kind of order of magnitude$10 ,000 per send. So you can think about how it scaled from the$500 when I sent the first one on through where it is today. Same two newsletters that you send every single week. But as I said, when I first realized it, the scalability of these things is incredible as you reach more and more people.

33:39Below that, there are a handful of significant minority owned cash flowing companies. So I mentioned earlier that sort of consulting operation that I set up to help people with building out their content engines. That is now a company that has a CEO and a team that is running it. And I own a chunk of that. There's a newsletter growth operation business. There's a talent business where we place talent into growing companies. There's a web design and development business. There's a handful of others that all sort of exist underneath and are owned anywhere from 10 through 50%. They all have CEOs, they all have operators, they have teams that are running them on a day to day basis.

34:21My set of responsibilities is strategy. So I help from kind of a board level strategic oversight, and then also driving business to those companies. So if people are coming to me looking for insights on newsletter growth, or how to do any of these other things, I actually have companies that can help people with those exact things. So kind of lead generation. Those are all high ticket services companies for the most part, and are all cash flow generating. So they pay out dividends every month or every quarter on the basis of the cash flows they're generating. And then the final thing that's a piece of my holding company is a venture fund called SRB Ventures,$10 million fund that I raised in 2022.

35:04I had done a bunch of startup investing personally over the years, just out of my own capital. I had the networks from the Stanford days, and I'd continued to build on that. And so I ended up raising that fund from a bunch of investors and have been investing out of that since 2022. You just said a lot of things. How many hours a week are you working? Well, you're catching me right now in a very crazy time because I'm in the midst of launching this book. So I'm probably working right now just as much as I worked as an analyst in my private equity days. Fortunately, I'm working on something that I really love doing and that I feel a real purpose and mission around, which means that it feels quite easy to do that.

35:41But in normal times, probably somewhere between 40 and 60 hours a week, depending on what it is. But I really think there's a difference between time and energy. And working 60 hours a week on things you hate is significantly more challenging than working 60 hours a week on things that really provide energy to you. And I get so much energy from seeing how the ideas that I share can positively impact people. I'm sure the same way you guys do. Being able to hear from your listeners how they've changed their life on the back of something that they've heard from you. I can't imagine a better use of my life than getting to do things like that.

36:22It feels incredible that I'm so grateful for the fact that I get to do stuff like that. And so I do work a lot, but it's because I really like what I do. That really matters. You said working 60 hours at a job you hate is infinitely worse than working 60 hours at a job you love. I'll give you working 40 hours at a job you hate is infinitely worse than working 80 hours at a job that you love. Because when, what is that cheesy phrase? When you love what you do, you'll never work a day in your life. Yes, but, or yes, and it's also true. I have had jobs that I really did not even want to get up in the morning.

36:58Every time the alarm went off, you're like, oh, five more minutes, please. And this job, I just pop out of bed and I'm ready to go. I'm so excited to get to work because I get to talk about real estate and money all the time. This is like a dream job. You have two frameworks that I want to dive into here. One around these kind of pillars of financial wealth and then one around these levels of financial wealth. Can you introduce us to those and tell us about those and tell us about what's in the book as well? So the pillars of financial wealth, within each section of this book, within each type of wealth, I sort of lay out what I view as the three pillars of that type of wealth.

37:35Within financial wealth, those three pillars are quite simple. Income generation is one that is kind of your cash inflows that you are generating from primary employment, secondary employment, side hustles, whatever it might be. It is expense management, the actual cash outflows from spending money on things, experiences, taxes, any cash outflows that you have. And then the third is long-term investment. It is taking the gap between the cash inflows and the cash outflows and investing it into long-term compounders, things that are going to compound over the long term in your financial life. That sort of simple model of growing your income, managing your expenses, and investing that gap is how every single person in the world that has made a lot of money has done it.

38:21There's different variations on how it happens. It might come from a windfall event. It might come from just steady rises in income. It might come from side hustles, whatever. But basically, that's what it is. You're generating a gap. You're investing that gap into things that are going to compound over the long term. And so complicating it beyond that ends up becoming a dangerous thing. You actually don't need to. You just need to think about how am I going to do those three things well? How am I going to grow my income? Basically, that comes down to building skills and then leveraging those skills.

38:51How am I going to manage my expenses such that they grow slower than my assets, than my income is growing rather? And then how am I going to simply and basic invest my gap in something that is going to stack and compound for the long term. What then are these levels of wealth that you describe here? And also, I have a question of, do you feel like there's a specific time and place to apply each of those pillars? Like, is there a time in life when it is way more important to apply frugality than income or investing? How do you think about applying the focus in those areas? And then how does that translate to these levels of wealth.

39:30I think that the basic principle that is true is that you can only manage your expenses so much, but you can grow your income infinitely effectively. And so overly focusing on saving the$2 here, the$3 here is actually energy that you should probably focus on growing your income. Similarly, overly focusing on trying to generate an incremental percent return in your investments is energy that you could spend on focusing on how to make twice as much income. I think about this all the time when I go and mentor young people. You get someone that has$100 ,000 of investable assets and an$100 ,000 income level.

40:10And they're spending all of this time and energy worrying about how to generate 10 % returns versus 8 % returns on the$100 ,000 rather than how to turn the$100 ,000 of income into$200 ,000. And if you just think about the pure math on that, it's like the$100 ,000 to$200 ,000 is a 100 % return on what you're making in a year. The extra 2%, it's$2 ,000, right? It's 2 % that you're going to generate on this asset base. On top of that, you're probably not going to outperform the market over a long period of time. And acknowledging that and just appreciating that you can just ride market returns to an extraordinary wealth bucket, you will focus more on the income generation, on the skill building and on the ability to leverage those skills in different unique ways.

40:56For that reason, I think that really focusing on building those skills and on figuring out different ways to leverage those skills across your primary employment and then with different side hustles that might earn you some side income is probably the most strategic path for most people to achieve financial independence. It is very hard to cut your way to financial independence. I also do wonder, though, that the person with$100 ,000 or even more extreme than$10 ,000 in assets that's super focused on edging up that extra return, something about that mindset, though, leads those folks to end up earning more money or saving more money because they think about from an investment perspective.

41:35So I completely agree with the framework around there. And I remember being that person obsessing over my$10 ,000 in the Chinese fruit juice company that did not go super well, trying to get excess yield. But that I think that the fact that I was so interested and passionate about investing also just like made me want to earn more and save more so that I could invest. That is a very good point. You know, under the like Charlie Munger piece of wisdom that success follows interests. And the fact that you were that interested in something and you were willing to lean in it and learn about it actually probably uncovered new and interesting ways to make money down the line as well.

42:09Yeah. I mean, come on. How did I lose money, though? It was trading below net asset value. I saw that way too many times in private equity, by the way, where we would try to outsmart a bad market. I would say the single thing that I focus on now as an investor, in my venture investments or my companies or anything else that I'm doing, is the macro conditions of a market. Because you cannot fight a bad market. You can have a great team and a great thesis for a company, but if the market is sort of like declining or flat, it's so hard to win and make more and more money and grow your earnings. But you can be an okay company with an okay thesis, an okay team in a great market, and you can capture your share of the market and just do quite well over the long term and grow earnings.

42:56And so I just focus more and more now on investing in great markets. So let's play that out for a second here. I know this is a tangent that the year's opened a whole can of worms here. And we're trying to dissect the really, really high-level macro themes right now before we get into the smaller markets, which I think you're meaning this market is growing and this is a good venture capital investment because consumer interest is growing here. But when we were thinking about this, Dave Meyer, the host of the BiggerPockets Real Estate Podcast, and I were thinking about this. We were talking about how if we zoom out in 2024 and look at like what happened in the financial markets at the highest level, stock market increased 24 percent and is now trading at close to an all time high price to earnings ratio.

43:39Gold grew 30, went up 30 percent. Bitcoin's up 115 percent. The 10 year treasury yield went up about 18 percent year over year and real estate went nowhere. You know, like like the prices went down or rents went flat. And that led me to think about reallocating my portfolio, which I did, from the index fund. I sold a big chunk of my index fund portfolio and putting it into real estate. I don't think that's what you mean when you think about markets growing or there. But I'd love a reaction to that thought process and then a definition of how you think about markets and investments in venture companies per the$10 million fund that you referenced earlier.

44:18Yeah, I find that when I try to like outsmart things or think too strategically about these things, I'm like, I sort of like to know where I'm an idiot on stuff. And I know that I'm an idiot on thinking about like perfect, you know, how to rebalance my portfolio and how to spend time on that stuff. And so I just don't. I'm like, I just know that if I try to do those things, I'm not going to do well with it. I just assume I'm not going to. And so I literally just dollar cost average into index funds. And I'm happy to ride whatever ups and downs they have because I know I'm going to hold these for the next 30 or 40 years.

44:57It's just going to continue to build. I'm going to borrow money against it probably in the future. And I hope I never have to sell it and pay taxes on any of it. And so I think that when I think about allocating into different asset classes, I think about net new dollars versus reallocating things I've already invested. Every time I make an investment, my operating thesis in my mind is I'm never going to sell this. Am I happy making this investment if I'm never going to sell this investment? Usually when the answer is no, I'm better off not making it because I am not comfortable in the long-term thesis and what this is.

45:33And so that is a very old school, probably somewhat of a Buffett-Mungerism mindset around it. But that's what works for me from a headspace standpoint. mainly just because I want to take all that headspace that it would consume for me to think about those things and put it into assets that I know I have control over, like the ones that I own and things that I'm actually involved in the operations of. So that's what works for me as I think about that. When I talk about investing in good markets, I'm really referring to... In my private equity days, I'll give you an example. Um, there was a company, uh, that we were looking at in the, uh, e-commerce space.

46:13They were selling sort of like home decor products, e-commerce. Um, that was, it was like an okay business. You know, the actual operations of it were kind of okay. Team was okay. But the market was growing at 20 plus percent per year, you know, in, in a broader like GDP growth of a 2%, 3 % GDP growth environment, the market was growing at 20, 30 % because more and more of home decor was shifting to online purchase from traditionally being a totally in store thing, like buying rugs. It was the first time in history that people were buying rugs online and getting them shipped to their house. And so all of a sudden, this market was booming.

46:49And that, as a thesis, would have been a great place to invest money at the time, because it didn't really matter if the business wasn't extraordinary or exceptional. What really mattered was they could be okay and ride this rising tide that was happening for the next three to five years. And like that company, as an example, I think grew earnings from 17 or so million when we looked at it to like 70 million over the course of, you know, three to five year time span. If you had put a little bit of leverage on that when you bought it, you probably would have, you know, made 10 times the money that you put into it.

47:21Awesome. So those returns would floor you. I can't, I can't, I couldn't resist on, on a terrible pun for your home decor and carpet business here. Sorry. That was quite good. It was good enough that I completely missed it. We'll keep moving here. Last question before we adjourn here. Can you tell us about the five types of wealth, the five types and five levels of wealth here, the framework that you have? Introduce us to that and tell us a little bit about the book as well. Yeah. So two separate things here. In the financial wealth section, I have this idea that there are five levels of financial wealth building on from level one, which is just your baseline needs being met, food and shelter on through level five, which I consider to be the level where the assets that you hold are producing significantly more income and cash flow than what your monthly expenses are.

48:11So like true financial independence, all needs are met, you can do whatever you want. And your pathway through those levels is really what you're talking about when you're talking about your journey, you're kind of focused one level at a time, it's kind of like a video game. It's kind of a fun way to think about that journey that gives you these incremental steps that you're working towards. The five types of wealth is sort of the macro theme and the title of the entire book. And the whole idea is that the way that we've measured our lives is broken, or at least incomplete, because it has historically and culturally just been focused on money.

48:44It is the only way, the only type of wealth that we've ever considered. And unfortunately, unfortunately, while money isn't nothing, it can't be the only thing. I saw that in my own life. Money had become the only thing that I focused on at the expense of all of these other areas. And there are these other types of wealth that contribute to living a great, happy, healthy, fulfilling, wealthy life. And so the five types of wealth that the book considers are time wealth, that is the freedom to choose how you spend your time, who you spend it with, where you spend it, an awareness of time as your most precious asset.

49:20Social wealth is the idea of your relationships, the people you are surrounded by. Mental wealth, that's all about your purpose, your growth, your ability to create space to wrestle with some of the bigger unanswerable questions of life. Physical wealth, which is all about your health and vitality. Health is wealth. And then financial wealth, which we've talked about at length on this podcast. And specifically with financial wealth. It's the idea of really understanding what your definition of enough looks like, what that life actually looks like to you. Because in the absence of that knowledge, in the absence of the understanding of enough, you just chase whatever more the world is telling you that you need.

49:59That is the journey of BiggerPocketsMoney in a nutshell, is to figure out what that enough level is, get there, and then begin that journey of figuring out what's life beyond work in a general sense or beyond the need to work to fund that. So love it. And can you tell us about what the book is called when it comes out and where people can find it? Yeah, the book is called The Five Types of Wealth. You can find it anywhere books are sold. I'm always a big fan of supporting your local bookstore. If you have one that you love, obviously you can get it on Amazon, Barnes and Noble, anywhere else. And you can find more information at the5typesofwealth.com and you can find me at Sahil Bloom on any platform.

50:37Well, thank you so much for coming on BiggerPocketsMoneyDay and sharing your story. This was a wonderful, wonderful conversation to have with you. I think folks learned a lot and a lot of good perspectives that you share here, a lot of wonderful frameworks that you bring to the table in terms of life and wealth building. So thank you. Thank you. Thank you, Sahil. And we'll talk to you soon. All right. That was Sahil Bloom. Mindy, what'd you think? I thought that that was very interesting. I have been giving a lot of thought without actually putting a name to it about his five types of wealth just recently in conversations that I've been having with Carl.

51:11And the time wealth is absolutely the most important thing. You can't do anything. The clock always keeps ticking. I recently saw that movie Interstellar where they talk about time warps and the theory of relativity, and it kind of went way over my head. But here on Earth, we have a clock that keeps ticking and keeps moving forward with no way to go backwards. and the freedom to choose how you spend your time is so important. But also social wealth. I mean, what are you doing with your time if you're just sitting at home alone doing nothing all the time? Social wealth, your relationships, mental health, I'm sorry, mental wealth, your purpose.

51:49We just had Doc G on with his new book, The Purpose Code and that book is so, so good at walking you through figuring out what your purpose is going to be. physical wealth. Scott, I started going to another gym. I started going to a gym last week, or I'm sorry, last year, and it closed on December 30th. It was so disappointing. I know. Yeah, I'm like, what? How does a gym close? Turns out Longmont has a lot of gyms. So I found a new gym. I've been going. I can't say that I love it, but I love the way I feel when I'm done. And obviously financial wealth, which we have spent a lot of time on, but this show talks about the financial wealth.

52:30It doesn't really talk so much about time wealth and social wealth and mental wealth and physical wealth. But those are all part of being a wealthy person, a well-rounded wealthy person. It's not just about money in your bank. And the rest of his story was fascinating too, but that really, really hit with me. Yeah. I'm a big believer in this. I see this pattern a lot. And Sahil is a great example of this where folks, you know, go well past the point where more money really incrementally has an impact on their happiness or, you know, or lifestyle. And once they actually make the change and pursue the options that that brings them, they're able to pop up and think about more of these other areas of life in a different way.

53:23And that's kind of sad about capitalism in America in 2025 is that for a lot of people, it kind of takes that reality to take place. So I think bigger pockets money, we need to enable that for more folks so you can get over the finish line here and have enough assets to well more than cover your lifestyle needs so that you can pop out and think about those other things. And I don't think we will pretend to have a lot of answers on how to have fitness, although my next book title after Set for Life will be Sweat for Life. So look at that in 2027 here. But I don't think we pretend to have a lot of answers in all those other areas on there.

54:04I hope that folks view us as a means to getting to that point so that they can really begin that next part of the journey on there and focus on those other levels, those other areas of wealth outside of that. Yeah, well, I have a suggestion. Don't do it like I did it. Carl and I were just like Sahil and his wife, focused on the money. And well, maybe not his wife, just Sahil was focused on the money and focused on the money. And all of a sudden, he's like, I'm only going to see my parents 15 more times in my life. Something has to change. And once we reached financial independence, we looked around and we're like, oh, that wasn't a very enjoyable journey.

54:41Focus on your time during your journey. Focus on your relationships during your journey, your mental health, your purpose, your physical health. Focus on all of these things, not just the finance aspect of it. Because we might have retired or Carl might have retired a year later with a much more enjoyable journey. And because of that time thing where we don't have go back in time do-overs, we can't go back and see if we would have had a better journey if we would have done it right, done it differently the first time. Your advice is wonderful and people should take it. And for the many people out there who will definitely not take it and will still obsess about the money, my advice to you would be to just know the finish line.

55:27And when you get there, make the pivot on that front. Make sure it's not decade away. Make sure it's just a few years away and do it like Sahil did and make that transition and get to work on those other things because time is finite. Mandy's answer is better, but if you can't do it, do that, do that, get just to find that finish line and get there and then make the pivot, make the change. Yeah. And don't keep pushing the finish line, really do your research and figure out what your finish line is. And then don't keep pushing it, figure out what you want to do once you hit that finish line. And I mean, you can always change your mind, but the, the, the one more year and one more, you know, Oh, just a few more dollars.

56:07And Oh, I'm not sure if the 4 % rule works and, you know, keep changing all of this. then you're never going to be done. Love it. Well, should we get out of here, Mindy? We should, Scott. That was an awesome episode. And that wraps up this awesome episode of the BiggerPocketsMoney podcast. He is Scott Trench. I am Mindy Jensen saying, can't linger, wedding singer.