Financial Advisors Correct The Internet

0:00I hear it's time for some tough love because the internet needs to be set straight.

0:04Brian Preston:Brent, I am so excited about this, but understand if something is on the internet, it has to be right. True, right? Let's see what we have today. If you want to get rich, don't buy the S &P. What? Buy a Ferrari. Let me explain. Every time a supercar drives by, there is a cranky buy and hold investor saying, if they only took that money and put in the S &P 500 for 10 years, it would be worth millions. This investor, while he thinks he sounds smart, is using the internet's most favorite piece of fake data, the 12 % annualized return in the S &P 500. The problem with this, and even if we cherry-picked, the real return is more like 7%.

0:40Brian Preston:And that is backward-looking into an environment that looks nothing like the one we're in right now. Right now, multiples are trading around 21x. At high multiples, the forward return is more like 2 % to 3%. In real terms, that's 0 % or even negative. That means that the biggest myth of getting rich from buy and hold is officially dead. And you might as well just buy a Ferrari because the 458 Speciale returned 14 % last year alone, according to Hagerty. In this scenario, at least you'd have something cool to brag about. All right, I have to admit something. Am I really telling you to buy a Ferrari and assuming that the Ferrari price will appreciate into infinity?

1:14Brian Preston:Of course not. But what I am telling you is if you expect to get rich from lazy buy and hold investing in an environment with high multiples and enormous chaos in the market, you are going to be sorely disappointed. You will never have Ferrari money. And I dare you, go ask the guy in the Ferrari how he got rich. I can assure you he's not going to say buy and hold investing.

1:36Were you trying to read the fine print?

1:38Brian Preston:I was trying to read it. I couldn't wait to say, I can't wait to sell you some whole life insurance, or I've got a strategy, or I've got a system. I was waiting for what the solution that he had in place for it. First of all, let's, the Ferrari, which he then came back and said, no, I'm not really telling you to buy a Ferrari. Of course not. The Ferraris are never, even if they appreciated the 14%, the transaction cost of going through the broker houses and other things to process or sell that type of vehicle is astronomical. So we can go ahead and cut off the 14%. He assumed if you buy in, whenever he recorded this, he said that the, I guess the forward looking price to earnings ratio was like 21.

2:11Things don't say that way. That's right. Just like the day we're recording this, the market has now had a 10 % shift down. Yep. And if you're always buying, you're buying in throughout the process. We showed that there was actually a 25-year period during the Great Depression that the market was down during that entire time. But if you were buying every month, your annualized rate of return would have still been close to 11%. Set it and forget it. Yes, this is the path. Believe me, if you go do research on where are the millionaires and how are they making their money, we ask our millionaire clients how they did it.

2:43It is through slow, steady to build wealth through things like the S &P 500.

2:49Brian Preston:Even if you want to take, he said, oh, I don't use 12%, use 7%, which I think is a little low. A 7 % annualized rate of return over an entire lifetime, over an entire working cycle, is going to build a lot of wealth if you can just stay consistent, put your money to work. He's just flat out wrong. You are not successful when you have a high FICO score. I have a high FICO score. All it means is you gave the bank a whole bunch of interest. I haven't given the bank a bunch of interest. That's all a FICO score says. I have an 800 FICO score. And when someone tells me that, I always say, I'm so sorry.

3:22Brian Preston:It's like saying I have high blood pressure and bragging about it. No, it's not. No, thank you. Your FICO score is not a measure of financial wealth or health. It's a measure of how much you've been screwed. Oh, come on, Dave. Look, I consider Dave a friend. Yeah. Now, I don't think he would say that I'm his friend, but I consider him a friend of mine. And I like a lot of what Dave does, but this is one of the ones that drives me the most nuts because I just think he could not be more wrong about that. Assuming that you have a high credit score, assuming that you've exhibited the fact that you can use credit responsibly, does not suggest that you've thrown away tons of money and interest, that it's the I love debt score.

4:00Brian Preston:It just shows that you are a reasonable and responsible financial decision maker. We're successful. We have high credit scores. We've not given tons of interest to any bank. I think Dave just flew too close to the sun. I mean, if you think about earlier in his career, he ate debt like a cookie monster. And then, you know, all of a sudden realized, oh my gosh, this makes my belly hurt and I have bad things happen to me. So then he was like, oh no, because I was the cookie monster of debt, nobody should have debt. It would be a false thing to say that rich people or wealthy people don't use debt, don't have FICO scores that are high.

4:36Because by the way, use this now for your utilities, your insurance. There's all kinds of things that go into having a good FICO score. All it means is that you're just good with money and responsible with it. Dave wants you to go kind of treat debt like it's lurking around the corner, going to attack you at every street corner. And that's just not the reality of the world or life that we live in.

4:58Brian Preston:This is your reminder that saving$5 a day is$1 ,825 a year. Cancelling your$20 Netflix subscription, well, that saves you$220 a year. And skipping your weekly takeout, that saves you$2 ,000 a year. Then if you invest that$4 ,045 each year, an 8 % average annual return, then in 45 years, you'll have over$1.85 million. But the real pro move is investing in you. If you take that$4 ,045 and you learn a new skill, business buying, then you figure out how to do creative financing. You buy a business that makes$100 ,000 a year in profit. You buy it for$200 ,000. hey, I know you don't have the money to do that, but you only put down 10 to 20%, which means you're able to buy it for 10 to 20K down and you just replaced a six-figure job to do it.

5:45Brian Preston:Then you grow it to 200K in profit and you were able to then sell it for 400 to 600K because the more money you make, the higher the price. So yes, save, but also invest smarter. Look, she's not wrong, but she could have also said this. Hey, look, I can tell you how to win hundreds of millions, how to have hundreds of millions of dollars. All you gotta do, you just pick the right lottery numbers. You go buy the ticket before the numbers are pulled. And then once you have the right ticket with the right numbers on the boom, you're worth hundreds of millions of dollars. What she just said is, yeah, go buy a business that has$100 ,000 of profit.

6:17Brian Preston:One, it's about to be a very profitable business. And two, someone has to be willing to sell it. And then you have to be the one that was able to source it to find that business. And you got to be able to buy it. Then you got to be able to operate it. Then you got to be able to keep it. Then you got to be able to scale it and double it. It's just not quite that. It does work that way, but it's not that easy to find. And by the way, if you're going to be buying businesses for$100 ,000,$200 ,000, these are not big businesses. These are some of those businesses you see on social media. Well, it depends.

6:43Brian Preston:It wasn't top-line revenue, just profit. So that's even another thing, right? If it's a$100 ,000 profit on a$10 million revenue business, it's a razor-thin margin. So you have to think through that as well. Yeah, so I don't think that this is the easiest thing. There's always a kernel of truth in these things, but this is not going to be how you build your first million dollars. I'm just being honest with you. I think that that's why there's a better way to do money, the financial order of operations. If you will do this and then start thinking about between step seven and eight that you want to get into entrepreneurship, I'm all for it.

7:15But let's make sure we're funding the Roth IRA. Let's make sure we have emergency reserves before we start swinging for the fences. It's kind of like if you look at the hierarchy of investing, entrepreneurship would not be the first stone I would turn over. I was loving what she was saying because she was spot on. And I was like, yeah, yeah, yeah. No, no, no. Okay. This went a little sideways.

7:40Brian Preston:You need to completely rethink your personal financial strategies in your 20s. I know so many people who are trying to hop careers to gain salary. They're going to get an MBA to boost their salary. You should not be doing this. You should be focusing all of your assets and time and money to get on as many game shows as possible to win money. We all watched Deal or No Deal, Family Feud, Survivor growing up. None of us actually go and do it. I called my friend yesterday, very successful guy. I was like, have you tried going on Deal or No Deal? And he was like, no. And I was like, what are you doing?

8:14What are you doing with your time? This is tongue-to-cheek, right? Instead of having a million-dollar-a-year revenue business, you can just make a million dollars in one night by selecting the right suitcase. Definitely tongue-to-cheek.

8:25Brian Preston:I don't see the lie. He isn't wrong. There was a documentary that's fascinating. You have to go find it on The Price is Right. And there was this very eccentric person that had noticed that The Price is Right was getting lazy. They were using the same things over and over. So he started tracking a spreadsheet of all the sponsored products that they were having. He got to the point where he could do showcase showdowns and get within like$100, which means you get two of them. That is far from passive income to sit around and figure out if there's an inefficiency in the game show circuit. I would tell you, if you're looking for an arbitrage situation, it's understanding the value of your time when you're young.

9:06So if you can invest early and often, that's the way you're going to easily build wealth. Bo, there's a lot going on in the world right now that affects small business owners like us. And much of it, we just don't have control over.

9:18Brian Preston:That's right, Brian. We can't control things like interest rates or tariffs, but we can control how efficiently we operate. And automating things like payroll and HR is one of the best ways to get your time back and focus on what actually moves the needle. And that's why we love Gusto. Gusto is an online payroll and benefits software built for small businesses. It's all-in-one, remote-friendly, and incredibly easy to use. So you can pay, hire, onboard, and support your team from anywhere. Gusto helps you save time with payroll, direct deposits, health benefits, even 401ks. And they have options for pretty much every budget.

9:52They even make it quick and easy to switch to Gusto. Just transfer your existing data and you don't pay a dime until you run your first payroll.

10:00Brian Preston:Look, you can't control everything. But you can control how much time you save by automating payroll and HR processes. So try Gusto today at gusto.com slash money guy and get three months free when you run your first payroll. That's three months of free payroll at gusto.com slash money guy. Brian, I think one of the biggest surprises when you start a business is realizing you're responsible for everything. That's exactly right. At the beginning, you're the marketing department, operations, HR, customer service, all of it. Yeah, and it can be exhausting if you don't have the right systems in place, which is why having the right tools and the right partner can be a game changer.

10:38Brian Preston:That is where Shopify comes in. Shopify is the commerce platform behind millions of businesses around the world and 10 % of all e-commerce in the U.S., from startups to popular brands like Allbirds and Untuckit. And they help you get up and running fast. You can build a great-looking online store with ready-to-use templates, and their AI tools can handle things like product descriptions and even improving your product images. Shopify can even help with the email campaigns and social media, so you can actually reach customers instead of just building something and hoping people find it. And everything from inventory to payments to analytics is all there in one place.

11:13Brian Preston:So you're not wasting time trying to connect a bunch of different tools. And that's huge because it means you can spend less time on the mundane tasks and more time building something meaningful. So start your business today with the industry's best business partner, Shopify. And start hearing. Sign up for your$1 per month trial at Shopify.com slash MoneyGuy. Go to Shopify.com slash MoneyGuy. That's Shopify.com slash money guy. 50 grand. What would I do with 50 grand? I would probably use 50 grand to go buy a business. What kind of business? Some existing business. It's probably been around five to seven years or longer.

11:54Brian Preston:Give me an example.

11:59Brian Preston:I probably wouldn't even use the 50. I would use the 50 in a bank account to show the guy that I'm legit. and then to figure out a deal where he actually gives me money to take over the business. He gives me the keys and I get the income. So I'd find some businesses, net profit of 50 grand a month. I'd use the 50 in an account just to make me look like something. 50 grand a month with$50 ,000 net profit. Show up here and see what we see what we say, Grant. I'd be like your business is doing 50 grand a month. I'm going to let's say he's making 50 grand a month. Has been for years. You keep the first 50.

12:31Brian Preston:I get the keys. I get the business. We keep the name on it. You go home. You keep getting 50. I get everything above that. What's an example of a business like this? Laundromat. Okay. Could be an apartment building. Bar wash. Could be, it could be the deal. You can't get any of those deals with 50 grand. Probably not, but it could be any, any kind of cosmetologist business, a tattoo business. You need somewhere where some guy's tired. Okay. He's tired of being in the business. So you can go be tired. Let's trade your tired for my tired. Yeah, go find a business that's profiting$600 ,000 a year.

13:06Brian Preston:Find someone who's ready to be out of that business. Show them a bank statement that has$50 ,000 and say, hey, I'll take over this business that's netting you$50 ,000 a year, but you pay me to take it over and I'll take the business and we'll just lock you in where you are and I'll take up any growth that I do. That's just not the way that it works. It's not the way that succession planning works. It's not the way that business acquisition works. It's not the way business disposition works. Grant is good at rage bait. He says these things. He knows if we sat down, I bet if we sat down and broke bread with Grant, he'd be like, yeah, he got you, didn't he?

13:34He got you all fired up because you know that that is disconnected from reality. But there's a lot of aspirational people that watch content to get motivated more so to just for the motivation than the actual create the action. And I think that Grant, he sells systems to do that. And that's why he's very effective at it and has made himself just completely filthy rich off of selling what could be to people who want to think that they could be a part of this. If you're looking for your first thing, if you have your first$50 ,000 financial order of operations, because it's going to help you out with that emergency reserves.

14:11It's going to help you out on that Roth IRA. It's going to help you out with your employer 401k. let's get you to your first financial foundation before we're doing the crazy stuff at the top of the investing pyramid. Love it.

14:24Brian Preston:Financial advisors putting your money in an index fund.

14:34I've seen this. I even told a client about this. I think the content team put this in there thinking we'd be like wonder what the guys will do because they know we love index funds. The reality is, if this is all your financial advisor is doing, they're not really financial advising. I mean, because where is the looking at your emergency reserves, your taxes, your retirement plan, your estate plan, your insurance and risk management, all these things come into play. And by the way, the closer you get to retirement, the more complicated it all gets. I wish it was a matter of just putting people into an asset allocation and then going, no mess, no fuss, send me the money, it doesn't work that way.

15:13Brian Preston:Yeah, that's not the way that real financials operate. Although there are a number of financial advisors, there are even a number of fund companies that actually do do that. They say, hey, I'm going to repackage this S &P 500 index fund, but I'm going to call it something else. I'm going to put growth on it. I'm going to put some other name on it, and I'm going to charge you for that service when realistically all you're actually getting is S &P. So you ought to be aware of what you're buying, what you're spending on it and what you are actually getting to make sure you are getting your money's worth.

15:42Do you realize what a position of power it is to create one of the largest financial platforms? Openly tell everybody, hey, do what I do with my money and go invest in index funds just like we do and still have a phenomenally growing financial planning firm where people aren't locked in, by the way. Every one of our clients can vote with their feet and leave tomorrow if they wanted to, but yet they keep showing back up and we keep growing at these double digit rates. You have to ask yourself, there must be something to that for people to just willingly give their money and stay when they're already, majority of them are multiple seven figure people.

16:21I love it when people think that all financial planners do is put you in an index fund and then count their money. That obviously doesn't pass the sniff test.

16:28Brian Preston:Financial services is threatened by sports bettors because we're not getting young people to do IRAs, mutual funds, doing sports betting. 55 % of all stocks ever on the S &P 500 has lost money since inception. That's why I don't think it's gambling. It's strategy. But you got to know the game. Just like if anybody hopped in the stock market, they don't have to trade options day one. They don't have a short stock. They'll get murdered. And so with the responsible gaming, putting 5 % of your paycheck into that and setting discipline, it's no different than stock, than crypto, than real estate. Yeah, it actually is.

16:58Brian Preston:It's exactly different than stocks, crypto, or real estate. Financial services is threat. When you're sports betting, you're betting on an outcome. You're not investing on a future. It's not the same thing. How many times have you seen someone, Brian, walk into a casino and say, no, I'm going to work. I understand how this works. I understand how to beat the system. I understand how to do it. It's gambling. It's not investing. Gambling, sports betting, you're the fish. You're the mark. If you don't believe that because maybe you found out, hey, you know what? I can count cards. You realize casinos, if they realize you have figured out how to count cards, they restrict your ability to do that in their casino because they want to have the upper hand.

17:36They want to keep you the fish. This is complete BS. If you don't realize that you're the product or the fish of the situation that's waiting to get hooked and pulled in, then you are on the wrong side of this. You're not the house. So act accordingly. I never invest in stocks. I don't trust the stock.