The Untold Truth About Investing Your Money | Ramit Sethi EP 356

0:00Hi, my name is Lewis Howes and welcome to the Daily Motivation Show.

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1:13You wouldn't believe how many entrepreneur friends I know who have a good business and they don't invest at all. And that's a huge mistake. What should we be investing in if you have a good business. Simple, low cost target date funds is a great way to go. Entrepreneurs index funds. Yeah. They get a little too smart for their own good. They say, I could just put that money in my business. And I always say, look, I'm glad you have a business that's throwing off tons of cash. That's awesome. Most businesses don't last 80 years. So be smart. Give yourself a small plan B put 5k a month, 10k a month, whatever's appropriate for your level of success.

1:48and hey, maybe your business does really well. That's awesome. But maybe one day something goes wrong. Always want to be prepared. You never want to have your back against the wall. So I just want to encourage everybody, whether you're making 250K or 2.5 million for the high earners here, don't get too smart for your own good. Keep investing and saving. What are the three or four main things you invest in with that 10 to 30 % a year? And does it change year to year? Yeah. Once you have a certain amount of capital, you do have a few opportunities that you probably didn't have before. Everybody has this idea that, you know, the rich have all these crazy tax breaks and captive insurance and this and that.

2:26And I've looked into all that stuff. Here's the truth. The truth is. Some stuff is a little sketchy, but yeah. Definitely. And I'll say my core values are that when it comes to things like taxes. I love your principle on this. I'm very conservative. I'm like, dude, only in this country could I have been this successful. I love this mindset. I'm happy to pay my taxes. It means that I had the opportunity to create something great. And if I pay an extra 5 ,000 or 30 ,000, it doesn't change my life at all. And I want to be able to give back to the society that enabled me to do what I do. That's a powerful mindset.

3:01And it gets you away from, you still want to optimize tax breaks that are out there, but it gets you away from trying to constantly look for some of the shortcuts or like schemes or something. It's like, yes, I've always found that the people, especially entrepreneurs who talk about tax breaks all the time are typically the most unsuccessful ones. Two reasons. One, why are you talking about tax breaks instead of growing your business? And two, it's a very scarcity driven mindset. Ooh, I only have this much that I have to protect when really you can just grow the pie and your taxes are simply a proportion.

3:36Make more. Just make more. Now, yes, you do want to optimize and take advantage of all legal tax breaks. So as you earn more, you do have more opportunities. You have not only your 401k, you have all kinds of advanced IRA options. You have HSAs, you have a variety of things. But at a certain point, if you're making enough, you're gonna max all of those out. So what do you do when you max it all out? So then the next step is to simply create a taxable account. It's just a typical non-retirement account, just at Vanguard or where I use Vanguard, whatever you want. And you just continue to invest.

4:09So that's one. And that's going to keep making you money over the long term. It's just you're not going to get those tax breaks from a 401k, an IRA, etc. The other thing is, as you accumulate more and more assets, you're going to start to notice a lot of different people are going to come with opportunities. As you start to accumulate a lot, you're going to want to do, have a little fun with your money when it comes to investing. Five to 10 % once you've got all your other stuff automated, you've got your index funds, lockdown, HSA, your different accounts. So if you want to do crypto, if you want to invest in somebody's bar, you want to do angel investing, if you're qualified, et cetera, be my guest.

4:44But don't jump to that first. Get all your stuff automated. And at a certain point, the compounding is so insane. You will start to actually earn more from your investments than you will from your income, even if you're making 500K a year.

5:09Thank you so much for listening to today's episode of The Daily Motivation, and I hope you have an amazing rest of your day. If you enjoyed this episode, make sure to click the link in the description. That will take you to the full episode of our main podcast on The School of Greatness. And if you are loving the daily motivation, please follow us over on Apple Podcasts and Spotify and leave us a review over on Apple Podcasts right now. And if you want more exclusive content and ad-free listening experience, make sure to subscribe to our Greatness Plus channel on Apple Podcasts right now. And if you want to get even more inspiration from our world-class guests and learn how to improve your life and take it to the next level, then make sure to sign up for the Greatness newsletter and get it delivered right to your inbox over at greatness.com slash newsletter.

5:59Again, have an amazing day and I'll see you tomorrow with another episode of the Daily Motivation Show.