Wealth Creation 101: How You Can Change Your Mindset and Build Long-Term Wealth w/ Brad Sugars

0:00The definition of leverage, which is the key to financial success is do the work once get paid forever. Hey, you won't believe what Brad Sugar's had to say. He spoke about wealth in general, his journey of wealth creation, mindset, wealth strategy, misconceptions, and risk. Stanley and Danko wrote a book called The Millionaire Next Door where they worked out that for 70-something percent of all millionaires got there by being in business for themselves and owning their own home for more than 20 years. If you're going to get good at buying something, you can get good at buying deals. When you go shopping, go shopping for a business.

0:36Don't go shopping for a pair of shoes. Go shopping for a deal that'll make you money. Brad Sugars, you won't want to miss what he has to say. Okay, so what does wealth mean to you beyond financial success? You know, there's rich and there's wealthy. Rich is the cash, cash flow, asset base. Wealthy is about the whole spectrum. You know, relationships, health, all those sorts of things. I think there's, you know, I guess when you're young, a lot of the time you want to go for rich. And as you get older, you realize that wealth is more important than rich sort of thing. And so, but if you define the money side of it, it's about how many days can you live at your current lifestyle without working.

1:26So what level of recurring income do you have? You can call it passive or recurring. Passive is not really a thing. It's like you can get income to come in, like from my book sales, but if I don't promote the books, my recurring income disappears sort of thing. So, yeah, that's sort of the distinction between wealth and that. Having all of the money but no friends to hang with. Like, what's the, I love the fact that I get to have a suite at sporting events and take a bunch of friends. The sporting event's more fun when you're high-fiving your friends and family than it is if you're just sitting there by yourself, you know?

2:10I hear that. So I recently completed your 30X program. I just have a few questions. So can anyone become wealthy? Anyone can become wealthy. If they're committed to it, though. You've got to do the learning. You've got to do the study. You've got to apply yourself. You've got to go and make offers to buy things. You can't just study it. You've actually got to do it type thing. But wealth is not complex. It's pretty easy. It's make more money than you need to spend. That amount that you make over and above what you need to spend, you invest. and over a period of time, those investments become more than your income.

2:58But you know where most people go wrong? Most people go wrong as they get a pay rise, they then go and get an expense rise. Well, I got a pay rise. I'm going to buy a new car. I got a pay rise. I'm going to go and buy a boat. Now, I got a pay rise. Instead, maybe instead of getting an expense rise, go and get an asset rise. Go and get an investment rise when you get a pay rise. Okay. My second question is, what are some common factors of those who successfully build wealth? Consistency would be number one. They're consistent about investing their money. They do it month in, month out, week in, week out.

3:36That happens all the time. The amount they invest keeps growing. Because if you invest in your knowledge, Bree, like if you keep getting better, then your income keeps going up. Yeah. Okay. You can't expect your income to go up by much if all you do is stay the same. If you want to get a higher income, you've got to add more value and make more money for the people that are paying you, whether that's your customers or your boss. As you increase your value, then you get paid more. I mean, that's pretty simple. And so if you keep increasing your income and you keep increasing the percentage of your income that you're investing, then there's a pretty good chance you do it.

4:24But all of that comes back to knowledge, too. You've got to have a set of rules to be a good investor. You've got to pick your niche and know where am I going to become an expert type thing. And most people, you know, actually, you know what most people's question around investing is? It's not as good as your question. Most people say, what should I invest in? And my answer to that is some books, so you don't have to ask me such a stupid question. Like, you've got to invest in knowledge first, things second. Got it. All right. How did you approach building wealth when you started your business?

5:00I don't think it, when I first started, it was not about wealth. It was about making some money and, you know, making enough money to do good and build an income. Only when I got an income level high enough did I start thinking about, holy heck, I got to learn how to invest this. And I think that was good in the fact that I think a lot of people start studying investing too early. Like they're only making 100 grand a year or 50 grand a year. And they're like, well, what am I going to invest in? Nothing. You don't have any money. You're living. You know, if you're still living paycheck to paycheck, you've got to increase your income and decrease your expenses type thing.

5:44So I think I was lucky that all I wanted to do when I started was make more, make more, make more. And then when I got to a point where I was doing a million a year, it was like, holy heck, I better invest this because just sitting it in the bank was doing nothing for me. Like, you know, a couple of points of interest, that didn't do anything. So it was then that I sat down and said, okay, what am I going to invest in? And I had to understand I can buy companies, I can buy real estate, or I can buy shares. They're really the only things. I did buy racehorses and art and jewelry and thought they were investments and realized later on they're not investments.

6:20They're stupid. But they were fun, you know. Some things are, sometimes part of your money has to go to just fun. but the lesson I did learn is that your toys and your fun should be paid for by your investments not by your income if if if I invested my income first then my assets would pay for my toys that was a because then once the toy is paid for I've still got the asset and I've still got the toy. Yeah. Okay. Can you share one or two strategies you used early in your career to build well? Early in my career, it was business and real estate. They were the only two things I learned or understood.

7:09Business, I knew how to buy companies. And I learned more and more about that and how to, you know, what are the criteria that I want? What are my rules for a company that I would buy in the beginning I bought broken companies and fixed them because that's what I knew how to do I could do better sales better marketing and even simple things like clean the joint up and and raise the prices and give better customer service and and we all go into businesses every week or every month that are just run badly and you're like how are you still here We just did that here in Vegas. We found a restaurant site.

7:48It was, oh my God, no, it looked awful. They had all of the right ingredients, but it just looked bad. The staff were awful. The food was just okay. Take that over, turn it around, refurbish it, make it look good. And that's what I do. Today, more so, I find good businesses and I globalize them. so a business that might be in one city and say how do I put this in a thousand cities type thing real estate for me back then all I knew how to do then was how to again buy something and fix it that was like if you go to a nice street and there's one ugly house there's almost always one ugly house and it's the crazy cat lady and the trees are overgrown and the swimming pool's a mess.

8:43Well, when that goes up for sale, no one wants to buy it because no one wants to live in that. But what I knew was I could buy that and on my weekends I could, like I would buy it, live in it, and on my weekends and nights I would do the garden. You know, like go and get a chainsaw from the place. I'd rent a chainsaw, cut down all the stuff and take it to the tip. I'd repaint it and, you know, pull out the carpets, put in new carpets. And carpets I actually paid people to do. I could do the painting myself. But eventually, well, I very quickly learned I was not good at doing that stuff. So I would hire people to do that stuff.

9:26I didn't enjoy painting. I didn't enjoy doing those things. So I would hire people. I didn't mind the gardening side of it. So I'd do that. But as I got better and better at that, and I didn't flip. I don't believe in flipping houses at all. The only times we sell property, well, actually, let me go back to why I don't flip. Flipping a property is just trading time for money the same as you would. If I buy that property and I own it for 40 years, it increases in value four, five, 10 times over that period. Does that make sense? Whereas if I flip it, I only make money once. the definition of leverage which is the key to financial success is do the work once get paid forever if i buy a house and i remember one in sydney uh australia i bought this house and it didn't have anywhere to park the car right there was no garage there was no nothing now there was room on the side of the house to put just a carport like a a aluminum or aluminum Sorry, I'm in America.

10:33I've got to say it the American way. An aluminum thing with a couple of pillars and some concrete paths, right? Well, that thing cost me$1 ,000 to put on that house. But it allowed me to increase the rent$20 a week,$100 or$100 and something a month, because they had an undercover spot to put their car. Now, so here's the thing. $20 a week,$100 a month, that's$1 ,200 a year. It cost me$1 ,000. and I got$1 ,200 back in the first year. That's 100 % by fixing it up. Then I learned to put furniture in places, and I wouldn't buy brand-new furniture. I would go to yard sales, garage sales, and auction houses and stuff, and I'd buy second-hand beds, and I'd buy old cupboards, and I'd put them in there.

11:24They didn't even need work. But a furnished house rented for 30 % more than an unfurnished house. So for a few thousand dollars, I increased the rent per year by a few thousand dollars, 100 % return on my furniture in the place. So businesses, buying them and fixing them, real estate, buying them and fixing them. The only difference was the businesses I would sell because to keep running it took mind share. It took thought, whereas the real estate, once I'd fixed it, I would give it to a property manager. and they would charge me back in those days it was 8%. These days it's around 10%. You can get them for a bit less than 10 % but they would charge me that to manage it and I wouldn't have to think about it.

12:11They would just do that for me. So that was my starting point. Okay, good. Nice to know. So how can I change my mindset to believe that wealth can happen for me? I don't know if you have to change your mindset. you have to grow your mindset when people think about changing their mind it's like they fight against it change is something people naturally are like I don't want to change I like my old ways and your brain is almost hardwired to fight change your brain wants to keep you safe your brain wants to keep you not embarrassed Your brain wants to keep you that way, but you can grow your mindset.

13:00And as you said, you're watching the videos, you're reading the books, you're doing those things, you're growing your mindset. One of the fundamentals of goal setting is that you cannot achieve the goal when you set it, but you can grow into it. if I was to say to you Tiff alright here's what I want you to do is I want you to run a marathon tomorrow your body and your brain are going to go no chance not happening can't do it but if we said in two years time I want you to run a marathon can you learn, train get better, practice of course you can If I said, tomorrow I want you to buy your first investment piece of real estate, your brain and your body are going to go, whoa, dude, no, not ready.

14:00But if I said to you, two years from now, I want you to make an offer on your first piece of real estate to buy as an investment, you can train, study, learn, grow, and get there. Yeah, does that make sense? I think a lot of people try and get there in a day rather than say, okay, I've got to do the learning first. And that's back to the formula, dream, goal, learn, plan, act. The reason we set a goal is to know what we need to learn. Once we learn, we write the plan. And once we write the plan, we act. People seem to think that it's goal action. It's not goal action. It's goal, learn, plan, act.

14:42If you haven't written the plan of how you're going to invest, like I suggest, and you learned this on 30X Wealth, I suggest everybody writes a business plan for their wealth. It would be the Bree Wealth Plan, right? Or your family wealth plan, right? and you write a plan for your wealth and people go what does that plan entail great question how about you read some books listen to some podcasts study some uh blogs and and read enough so that you can write your wealth plan like what will your wealth plan be will it be real estate and if it is real estate what type of real estate will you buy and what will you get good at will it be the shares okay if it's going to be shares how will you buy shares what will you do where will you get the income for your wealth business from you know that you and and your partner you make the money you put in a percentage of it into this business and this business then its job is to make that money make more money so make the money make the money make more money then repeat until you've got enough where you can just enjoy.

15:58Yeah, it's an interesting question, isn't it? Thank you for that. So, can you explain the main differences between rich thinking versus poor thinking? Oh, how many hours we got on that one? You know, let's first of all start with the money side of poor versus rich. We'll throw middle class in the middle, okay? So Sharon Lecter and Rob Kiyosaki wrote the book off the teachings of Keith Cunningham, Rich Dad, Poor Dad, right? It shows that poor people basically spend every dollar they make. So if I make it, it's gone. Middle class, and I personally think the middle class are worse off than poor. Because the middle class get a good credit rating.

16:45And once you get a good credit rating, what does that mean you normally do? you go into debt. Yep. And once you're in debt, you're always, it seems to get worse and worse and worse. So the rich thinking is instead of borrowing money, how can I lend money? So how can I take that money, invest it and have it make more money? Now the approach to that is, there's so many different mindset thinking, But if we just think of growth mindset is a rich thinking. I can grow into my goals. I might not know how to achieve my goals today, but I can learn it. I can grow into it. I can become the type of person that does that.

17:31I can grow and become. That's one way of the way rich people think rather than poor people. Rich people think about serving others, not getting money from others. Like, why do I write books? Because I can serve millions of people through books. I can only serve so many people through one-to-one coaching. Why am I doing this podcast? So I can serve more people for free. Those who want to learn it can come for free and learn. I mean, heck, if you want to learn, I'm happy to be here and I'm happy to answer questions. But you've got to make that commitment. And so there's a lot of personality traits about being wealthy, but I think learning is a big one.

18:17Growth is a big one. And knowing that you must invest. Invest in knowledge, invest in your health, invest in your family, invest in relationships, but invest in assets that make you money. And an asset by definition, by the way, is it's got to have capital gain and cash flow. If it doesn't have capital gain and cash flow, it's not an asset. It's going to churn the money out. In your 30X wealth program, you separate wealth creation into three parts. So buying, building, and selling businesses is one. Two, real estate. And your third is stocks and shares, et cetera. So I have a question for you.

19:02Which one of those would you recommend to somebody coming out of college or somebody who's starting their first job? Uh, where should you start? Um, let's do the basics first. Okay. So we live here in the States. So my suggestion, I just literally had my daughters do this. So they set up a Roth IRA account. Uh, you can put in about 7 ,000 a year into that. So a few hundred a month is the maximum you can put in. You don't have to, you can start with$50 a month. you but what the Roth IRA is is it's tax deferred meaning and every country in the world has a similar process to this right it's called different things but what it means is you're not paying tax on the earnings until you take the money out at 65 then you pay tax what that means is it compounds so instead of paying tax and then only making interest on the the after-tax money you're making interest on all the money, no taxes until you're later in life.

20:09So it grows faster. So doing something like that is a great starting point. If you're not willing to a Roth IRA, because that puts the money away until you're 65. So you can't touch it. The reason I love that is because you can't touch it. You know, if you just want to start, then an even easier thing to do is set up two bank accounts, a savings account and a trading account, meaning that you have your paycheck goes into your savings account and you draw out of it the thousand dollars a month you need to live off of or whatever that amount is you need to live off of. Another one would be a low cost mutual fund.

20:55So we would probably take an index fund. An index means the Russell 2000, the Dow Jones, any of those indices, and you follow the index. Most of those indices over a long period are going to be somewhere between 9 % and 11 % growth. So if you're in a low cost, which means they're not charging you many fees, mutual index fund, usually that is a great way to start. Now, if you want to be more active, start with a side hustle. Start with a business doing something that you're good at. Whatever it is you get really good at, start a business doing that. And you're not necessarily doing that business to make a lot of money, but you're doing it to learn sales or learn marketing or learn customers or that sort of thing.

21:46Real estate. I would 100 % recommend all young people start in real estate. As soon as you can buy your own first home, do that. But buy a shitty home. Your first home, don't go and buy something that's beautiful and downtown. Or don't go rent. And this is what kills me. I see young people go and rent the most beautiful condo they can afford downtown because they want the lifestyle. And they're killing their future wealth. Now, different choices for different people. But if you're watching my podcast, you're not here because you want lifestyle to be the priority. You're here because you want to build yourself something that means later on lifestyle is your priority.

22:33So what I would do is buy the biggest house you can afford when you're young, right? Preferably somewhere next to a college or between a college and a hospital. all and if you get a five bedroom place or let's say you get a four bedroom place but it's got extra areas you can add two more bedrooms like if it's four bed three bath and you can make it a six bedroom three bath now when i say add the extra bedrooms i don't mean um you know it's stuff that needs city planning i mean where you can put up an extra couple of walls because they had a entertainment room or something like that well then you rent it out room by room and hey presto your income from that should pay your mortgage well and truly plus you're still living there as a young person and all the while you're fixing that property up and over a year or two years depending upon where you live some countries it's one year you don't have to pay tax if you buy it and sell it other countries it's two years if it's your own personal residence and you buy it and sell it.

23:36But what you do for the first 10 years of your life in your 20s, early 30s, is every two years you buy a shitty home and fix it up. And you spend two years fixing it up on weekends and nights and stuff. And you do that for 10 years. Well, at the end of that 10 years, you've pretty much set yourself up for the rest of your life. Yeah. No worries. I'm going to take that and use it. Monopoly. Buy, you know, four green houses, one red hotel. Well, hey there, and thanks for listening. I've noticed that 78 % of you are brand new, which means you haven't hit the subscribe button yet. By subscribing, you help us bring on even better guests, better quality content, and serve you better with even more podcasts.

24:18So please hit that subscribe button. It only takes a second. It makes a huge difference. If you support us, we're going to support your success and help you achieve big success together. How important is diversification in building and sustaining wealth? In the beginning, diversification is dumb. As you get older, diversification is important. In the beginning, you don't have a lot of money, so to diversify just means you're not going after what you want. I'll just use me as an example. My first piece of real estate took every spare dollar I had because I didn't have any money. So I wasn't trying to diversify into a bunch of different things.

25:04I was doing the biggest play I could make with the money I had available type thing. When you look at the stock market, I think diversification is still not that smart. Why? Why? If I'm good at one thing, why would I invest in 20 industries that I have no clue about? You know, like for me, I love energy, solar energy, wind energy. I just, I read about it and I watch videos about it, ocean cleanup, how do they do it, all these sorts of things. I would read it and study it even if I wasn't investing in it, if that makes sense. so I look up all the companies in the market that are in that genre and I study them my kids I give them a list of a hundred stocks right Disney Nickelodeon so luckily I got five kids so I can do different ones but like one of the kids loves Nerf guns and he's like dad I want to invest I want to buy a share in the company that makes Nerf guns.

26:14Excellent. I love that idea. Great stuff, the whole thing. One of my kids loves slime, and there's this slime, like, great, we're going to buy shares in the slime company. You know what I mean? So that you do what you're interested in and learn about that. But as you get older and wealthier, you want to reduce your risk by putting less of your entire wealth into any one deal. In the beginning, literally I'm 100 % all in because I didn't have much money. As I get older, it's like, okay, 2 % goes into any one deal because we're not going to risk millions in a deal. because, okay, if we lose 20 million, that's a chunk.

27:02If we lose a million, that's okay. Yeah. Well, how do you manage your risk when maintaining your wealth?

27:13I don't know if the word, see, when you look at risk, risk is just lack of knowledge, okay? There is many types of risk. There's market risk. There's interest rate risk. There's bank risk. I mean, there's risks that we have no idea about, you know, pandemics. Who would have ever predicted those sorts of things? I think you get to a point where you understand that if I've got enough knowledge, I'm reducing my risk. If I know what I'm doing, then risk is lower. Like, if I said, hey, you know what, Bree, we're going to go jump out of an airplane. We've got to pack our own shoe. Neither has ever done it before.

27:52That's very risky. if we go jump out of an airplane after taking a day of lessons and we have the best trainer in the country and we have the people packing our shoots that they pack their own shoot and ours and they let us pick which one we we jump with and they're an expert and they've done it a million times the risk is reduced like um you know for us action coach we're a business coaching company how do we help people reduce the risk of being in business for themselves they come to us and we coach them yeah it reduces their risk so I think by getting knowledge I reduce my risk all right and what are some misconceptions about wealth and business

28:37success oh yeah let's start with the dumbest ones oh they got lucky or I love the one is you know they must sell drugs or they must like you know what they must rip people off you know rich person they must have stolen it from some you know or they don't pay proper wages or they take advantage of people like all the dumb misconceptions and really that's just someone's excuse for them not doing it themselves like well I don't have it so therefore the person who has it must be bad you know that's that's their justification of why I well I didn't do it you know that sort of thing so they make it bad because then they want to make themselves feel good it's kind of like why do people watch reality shows because then they realize well my life's not as bad as that idiot you know and and that sort of thing i think um the one of the big misconceptions is that to be rich you've got to be like a sports star or a movie star or you got to be something of that nature or you inherited it type thing.

29:46Stanley and Danko wrote a book called The Millionaire Next Door where they worked out that it was like 74 or whatever, 70 something percent of all millionaires got there by being in business for themselves and owning their own home for more than 20 years. So they paid off their own home and they built it. And it was interesting, the number one profession of the spouse of the business owner was teacher teachers were the best at uh being the spouse of helping manage the money of the person because in a relationship usually where money is done well in a family is where one is good at making and one's good at managing yeah there's two roles in money someone's got to be great at making money and someone's got to be great at managing money.

30:36And if you have the two, one that makes it and one that invests it, then you're off to the races. Most families, there's one that makes it and one that spends it, or one that makes it and two that spend it type thing. It's no, no. See, rather than getting good at buying, if you're going to get good at buying something, get good at buying deals, get good at buying real estate, get good at, when you go shopping, go shopping for a business. Don't go shopping for a pair of shoes, go shopping for a deal that'll make you money, go shopping for shares. You know, when the, when the stock market falls 30%, recognize that that's a 30 % off sale.

31:13Okay. Okay. And pick the, like, you don't go to a 30 % off sale at the store and just buy everything. Yeah. You go and pick what's the thing that's the best value in that. Like my, my second oldest daughter, she is a genius at knowing which handbags are going up in value out there. Like, you see the whole Rolexes. People are now buying and trading Rolexes because they go up in value. Kenzie is like, Dad, that handbag, you watch. I'm going to get it for this price. It's worth this much. Like, she knows how much they're worth. And she'll go to a garage sale and stuff like that. And she'll pick out a Prada handbag for$1 ,000.