The Finance Expert: Simple 6 Step WEALTH Formula ANYONE Can Use To Become a MILLIONAIRE! | Jaspreet Singh

24:03This is not me exaggerating. These are all statistical numbers where more than 50 % of people feel this way. And so if now you keep doing what everybody else does, you're going to end up like everybody else. And so this is where now you want to think a little bit different and try to find what's right for you and try to get educated yourself. Because when it comes to the mindset, the first thing you have to understand is that it is possible. Because if you're sitting there saying, it's not possible for someone like me, somebody who has my background, my parents, my whatever, I can't become successful.

24:36I 100 % guarantee that you will not be to become successful. You cannot change your outcome without changing your mindset. Oh, that's big. And in the previous interview we had, we talked about mindset versus toolset, where most of the times we assume that the reason why we can't become successful is because we lack the toolset, when in reality, for 90 % of people, it's lacking the right mindset. Because when you have the right mindset, you'll discover that the toolset is right around you. So it's first believing that you can do it. Because once you know and believe that you can do it, that belief is going to then impact your decisions.

25:14Because now you can say, you know what? Yeah, maybe I can become successful. What are you going to do? You're going to go into YouTube, watch videos. How do I become successful? Then you start watching videos. Maybe you start binging videos. And now you start to realize, oh, okay, I can start to do this. I can change this about my life. I need to change the way I think. I need to change my actions. I need to do more things in my day. I need to stop watching so much Netflix, I need to do this. Then maybe you start reading books. And then you start reading business books because I have read a lot of business books and there's so much wealth in a $20 business book.

25:42Just go on to Audible, look at some of the top business books and just start reading them and you will learn so much. Now you start reading them. Maybe you start doing a little bit. Maybe you don't succeed too much, but you start taking some action and you start to learn even more because your experiences are some of the best teachers in the world. Even if you make mistakes. I have learned from my mistakes. I didn't have a mentor. I didn't have guidance. I didn't have investor family members. I didn't have people telling me how entrepreneurship works. I screwed up a ton, just like you. We made a ton of mistakes and that's how we learned.

26:13And then maybe you go and take a class. Now you're like, okay, I want to learn how to do this. I'm trying to build this business. I'm doing something wrong. I'm trying to get a better job or I'm trying to get a raise. I keep doing something wrong. You've read books. Now maybe you find a class. You invest some money in this class and now you have more education. Now you try more. And now you start to see over time, oh my God, 12 months ago, I had no idea. I didn't even believe that I can do it. Now that I believe that I can do it, I started watching YouTube videos. I started reading books. I started taking classes.

26:39I started taking action. And then you keep doing it. Maybe you hire a coach. Maybe you hire a consultant. I mean, the list goes on and on and on of what you can do. But it all first starts with the mindset. Because if you tell yourself you can't, your mind shuts down and you're never going to find an opportunity. You're never going to look for the opportunity. So that's where that mindset is the most important thing. And if you don't have the right mindset, this is where the first thing you want to do is start learning how do I build self-esteem? How do I build my confidence? How do I believe in myself?

27:08And there's, I don't have a ton of videos on this. I know you have a ton of videos on this. Watch Lewis's stuff, right? So start there. Then we go a little bit deeper now for focusing on finances. Mindset is number one. Mindset is number one. The second thing now, once you build the right mindset is you want to create your financial base. And the best way to understand this is just to think, if you wanted to build a house, what do you do first? Well, you got to build a foundation. If you want to build a bigger house, if you want to build a bigger house, you want to dig a deeper foundation. You want to build a tall building, you need an even deeper foundation.

27:42So you have to start by building your financial base. And what that means financially is first you want to save$2 ,000. At the very least, you want to put aside some cash for savings as fast as possible. Because right now, it's something like 40 % to 70 % of Americans don't have, well, 40 % of Americans don't have$1 ,000 to put aside. And something close to 70 % of Americans don't even have$400 put aside to protect them against an emergency. So most Americans don't have$1 ,000 put aside. Get a$2 ,000 base. So have a two grand as fast as possible. And then you need to cut the financial bleeding.

28:22that means your high interest debts your credit card debts your hard money loans your zero percent apr loans which are now charging you 20 to 25 these need to be paid off as fast as possible because these are loans that are skinning you alive financially so i mean it seems like credit cards are one of the biggest things that hold people back look credit cards right credit cards are a tool they are a tool if you're not educated with them you could get stuck if you have this tool without the education it will burn you i only spend with a credit card i spend you know how to use a tool because i know how to use a tool and now because i know how to use my credit card what happens well i don't spend more than i would otherwise because i use my credit card just as a medium of exchange i'm going to spend this money anyways might as well use my credit card when my credit card benefits gives me perks it gives me cash back it gives me fraud protection it gives me free insurance it gives me hotel upgrades it gives me all these things just because i use my credit card instead of paying with cash.

29:23And so now again, it's the financial education because now some people will say, oh my God, these credit card companies are scams. Well, the reason why they're looked at as scams is because we don't have the right education on how to use them, right? It's a tool without the education on how to use it. And this is where now you have to build that financial education and money times you're going to have to go out and do it yourself because your credit card company is not incentivized to give you the financial education because they're going to make less money right it's profitable to keep people poor it's profitable to keep people financially uneducated because now if you just keep spending money in your credit card because you have no idea what you're doing now your credit card company is gonna get rich the average household in America has sixty two hundred dollars with the credit card debt so if you have credit card debt in America you probably have an average of sixty two hundred dollars now let's talk about that because if and what's the interest on that.

30:15Well, that's at 15 to 25, 28%. And that's going up. Every month you're paying that. You're paying it every month. So it's not 6 ,000 a month. It's really, you know, over years, if you never fully pay it off, you're just paying more and more and more. And the interest rate on your credit card isn't fixed rate. It's variable interest rate. So as the Federal Reserve Bank raises interest rates, the interest rate on your credit card also goes up. So if you are 21 years old right now, and you invested$6 ,200, which is the average household credit card debt right now, if you invest$6 ,200 right now and you got a 20 % return on your money and you did that for the next 45, 46 years, you were going to retire with$20 million.

30:58$20 million. And you never invest another penny again. Say it more time. If you invest$6 ,200 today and you never invest another penny again. At 21. At 21. And you get a 20 % return on your money, you're going to retire with$20 million. Wow. And you're going to say, just believe, what in the world am I going to get 20 % return on my money year after year. You're right. But your credit card company is doing it every single day. They're charging you. And so when you have that sort of credit card debt, that's you making your credit card company richer. Now, whether or not you think it's a scam, look, let's move past and understand what's going on.

31:29That way now you can use it to your advantage. Because I get tens of thousands of dollars worth of cash back every year from my credit card company because I use it as a tool and I understand how to use it. And this is where, look, if you don't want to use a credit card, it doesn't matter. But just don't, if you have credit card debt, you have to pay that off because that is skinning you alive right now. Understand the financial education aspect. So that's the first thing you want to do is create your financial base. So you got to save some cash and you got to pay that credit card debt off. Cut the financial bleeding.

32:01Cut the financial bleeding. What's the strategy if you got three credit cards? What's the strategy to get rid of that debt? So Dave Ramsey is going to tell you to do something called the snowball method. Smallest first. Smallest first to the base. Because you're building momentum, right? A financial advisor may tell you the opposite. Do the debt avalanche, which is now pay the highest interest rate first and then go down because now you're going to pay off the most interest first. So it costs you the most money in the long term. The reason why Dave Ramsey recommends the snowball method is because psychologically when you get those small wins of paying something off, you feel like you're winning and you can pay it off faster.

32:36An advisor is going to look at the math and say, hey, look, these numbers are telling me that pay off the higher interest rate first because it's going to save you the most money in the long term. Which one's right? Again, I'm not going to say which one. Do what's best for you. Because I know if I was in a situation, I'm not. I like the idea of paying down the heavy interest rate first because that's how my brain works. I don't need the small wins like that. I can work for the long term. I think the entrepreneurial mindset where I know how my mind works. So I understand myself. And this is just honestly being open and honest with yourself.

33:08If you can't stay true with it, then do the snowball. It does not matter. Screw paying it off a few months early. Just get it away and pay it off as fast as possible. Cut the financial bleeding and have a$2 ,000 base. That's step two. That's step two. Now, the next thing you want to do is what I call lead your money. So this is where you want to create a financial system and start investing your money because your savings will never make you wealthy. You cannot save your way to wealth. You have to invest your money. Your savings won't make you wealthy because of what we've talked about in previous interviews, inflation.

33:43You're losing money in the savings. If inflation is higher than the interest you're getting at the bank, then your savings are effectively making you poorer each and every day because your savings are losing value to inflation. Now, does this mean you should not save any money? No. It means you need to save your money strategically. So you want to save your money for three reasons and three reasons only. Save your money for an emergency. save your money for a big purchase. If you want to buy a car, you want to buy a house, you want to buy a nice watch, whatever you want to buy, you need cash in order to do that.

34:16And then three, save your money for an investment. If you're not saving your money for one of these three reasons, you're saving your money the wrong way, and it is making you poorer by saving that money. So now we focus on the first aspect of saving your money for an emergency. How much do you save? This is now, again, going to depend on your risk tolerance. You want to save somewhere between 3 to 12 months worth of your expenses. And the amount of money you save is going to depend on where you are in life and how much risk you're willing to take on. If you're like, hey, dude, I'm 25 years old.

34:47I don't have any financial responsibilities. I don't need that much savings. Fine. Save a few months worth of savings and that's it. Invest more aggressively. If you're like, hey, I have a family. I have kids. I have a spouse. I don't want to take on all this risk. then save six months, nine months, a year's worth of savings because now it will give you that peace of mind that you have some extra cash put aside. So it's going to depend on your risk tolerance and what you want. But this, in this lead your money step, this is where you want to understand that there's more to putting your money aside than just saving your money.

35:19You also want to be putting your money to work. And the best way to do this is to create a system where no matter how much money you're making, you are going to proportionately continually invest and save based on your income. So what does that mean? Well, one of the simplest things you can do is follow something like my 75, 15, 10 plan, which means for every dollar that you earn, 75 cents is the maximum that you can spend. 15 cents is the minimum that you invest. And 10 cents is the minimum that you save. And this never changes with your income. The only thing that you would ever change is after you hit that savings goal for your emergency savings, you don't keep saving your money for the emergency because you built that whatever months you want.

36:05You put that towards your investments. And now whether you're making 40 grand, 400 grand, 4 million, 40 million, you just keep following the same thing and you're living below your means and now you're constantly putting monies aside for your investments. Now, again, we talked about this before. This investment money can either be passively invested, all of it, or you can put this money aside to be invested. So you can put this money into a bank account. You're looking for a rental property. You're looking for a business to buy. You're looking for a cheap stock to buy. This now depends on your investment goals, right?

36:39Where do you want to be invested? How do you want to invest your money? And this is that financial education now of, you know, what do you want to do? And your personal goals. If you don't want to be involved with your money, you don't want to be, hey, day-to-day investing or paying attention to the markets. You hate that idea. You'll just passively invest it. Right.

36:57You've become wealthy with your investment money. Your savings are there to protect you against an emergency. Your spending money is what allows you to live your life and have the nice things. And so now we'll get into now how do you live more, live better today by earning more money in a bit. But this is where now the passive investing is the most accessible way for somebody to start investing. And then somebody is going to say, what do I invest in? because we're talking about, well, you can invest in the stock market. There are funds, like there's index funds, ETFs, mutual funds. They all work similarly with some nuanced differences that allow you to invest into a basket of stocks, a group of companies.

37:34So for example, I like ETFs just because they're very convenient. So you invest in a ticker symbol. ETFs stand for? Exchange traded funds. So for example, if you wanted to invest in the stock market, the general stock market there's a fund an etf called vti now i'm not telling you what to invest in just giving you some examples vti is a total stock market etf if you invest in that one ticker symbol you're getting exposure to the united states stock market you're getting diversified getting diversified in the stock market not across different asset classes but within the stock market you could then you know pick oh i want to invest in let's say the s p 500 which is the 500 largest companies in the stock market.

38:15SPY is an ETF that gives you exposure to that. Let's say you want to invest in the Dow Jones. That is the most commonly discussed fund. It is a group of 30 companies in the stock market, big, large companies. DIA is an ETF that gives you exposure to that. You could invest in three stocks, which would be hundreds of stocks throughout those three investments. ETFs, yep. Those three ETFs would give exposure to hundreds, not thousands. And all All you need to do is invest in those three things and set it and forget it. And now you can just set it automatic. Remember, automatic. So the key here now is you invest when the market is up and down.

38:50You don't change it. So when you see the market crash happen, you don't stop. You keep investing. The only thing that you would change is potentially buy more. Yes. Because when you see these types of market pullbacks, most people are selling and they're running away because they're panicking and getting scared that my investment is going down. That's when you want to become it and buying aggressively because now investments are going on sale. And so this is where it's, again, that mindset shift of understanding what is it that you want to be investing in and how long are you investing for? If you're investing for the long term, who cares what's happening in the next two months or next two years?

39:22You're investing for the next 20 years. I call it a decade of sacrifice. If you want to become wealthy and seriously wealthy, not like, oh, I have a little bit of money. No, you want to become wealthy. You got to put in what I call that decade of sacrifice where you're working to spend less and earn more. That way you have more money to invest. And most people are not willing to go through that sacrifice because that means I can't have that Gucci belt today so I can have more investments today. I can't show off my stock portfolio or my real estate portfolio the way that I can my Gucci belt. And most people would rather have the show, would rather have the look than the actual thing that will make you wealthy.

39:57And that goes back to the mindset, the thing you talk so much about. Your mindset has to be focused on saying, you know what, I want to become wealthy. And that's hard because now, for one, you have to be convinced yourself. and now you might have a spouse you might have kids and that means you all have to be on the same page financially right because this is a money is a team game it's in the house if you think you know i'm gonna go and try to build my wealth myself and then your husband or your wife is going out and spending all this money they're gonna be pulling you back so you gotta be on board where i'm mentally on the same page my spouse is on the same page my kids are on the same page we're gonna build wealth and we're gonna build something that we've never seen before and And that's that first mindset where now I believe I can do it.

40:37I'm going to do it. Now you start putting in that sacrifice. So we start about the passive investing. Next is active investing. And I also should mention that you can do passive and active investing. I do both. What's the example for you? So I invest my money in five places. I invest my money into businesses, which are my own businesses and startups that I invest in. Invest my money into physical real estate. Invest my money into stocks. I invest some of my money into cryptocurrency, a little bit more of a speculative play. And then I invest a small piece of my portfolio, about 2 % of my overall investment portfolio, into physical gold.

41:12So my gold, my cryptocurrency, and some of my stock market investments are passive. Meaning this happens for my stock market every week, for crypto every day, for gold every month. It's the automatic, passive, and consistent. I don't touch it. it is automatically pulled out of my checking account and it is invested. Interesting. And your bank, you can set up parameters in your bank to automatically do this. Yes. Two specific places you want to invest. Exactly. That's nice. Technology has made investing so much more accessible. Do all these banks do this or what are like the top few that you see that?

41:46Many banks will allow you to move money from one bank account to the other. These investment accounts, you're going to have to work with a particular brokerage. There's tons of brokerages out there that do this. You can find whatever you like for, let's just say you want to invest in the stock market. there's a bunch of brokerages out there that will allow you now to invest your money into the stock market through this passive type of system you just have to find what's right for you and this could depend on what country you're in uh you know and just the your what interface you like the best and it's become very accessible there are so many it is so much simpler now than 10 years ago let alone 50 years ago right so we are very blessed to be able to do this now right on the active side This is where now I invest into my own businesses.

42:26I invest into real estate. And then I also invest in some stocks. Do you do real estate funds or do you do your own individual real estate buildings yourself? I have done some real estate funds, but that is the smallest piece. Most of it, probably 99 point some percent of it, is actual physical real estate that I'm going on and buying myself. And so now it's when we talk about active investing, what does this mean first? This means now that you are going out, finding investment opportunities to invest in, and then you're putting your money in. And now this is where the research is important. So like, for example, in business, I invest in my own businesses.

43:05I also invest in some startups. Startup investing is very risky. Nine out of 10 startups will statistically fail. So I know that when I invest my money in these startups, a big chunk of this money I will probably never see again. But my goal is now that a small piece of these startups that I invest in will go big and then that will make up for the other losses. With real estate, my goal is completely different. With real estate, my goal is cash flow. I call it cash flow because cash flow funds the guac flow. And what that means is now when I own a cash flow producing asset, I'm getting money coming into my account now every month with my real estate that I don't have to actively work to earn.

43:44because I have a property management company in place. I have a system in place. So it's not like I have to go to work to earn this money. I buy the properties. I have the systems where we renovate the properties with the contractors. We do the right inspections. Then I give the keys to the property manager. My job is done. Now, every month I'm getting cash deposited into my bank account. Every month and every quarter, I get financial reports going over what's going on with my properties. So it's hands off. I still review the properties. Like I review the financials. I review what the property manager is doing, but I'm not going to work to earn this cash.

44:15Now, I should also say it took me a ton of work and a ton of time and a ton of headache and a ton of mistakes to learn how to do it the right way because I didn't grow up with real estate investors in my family. I had to go out and just kind of do it and figure it out and it was very stressful. A lot of people on the internet make real estate investing seem like this. Holy grail, go buy some real estate and you're gonna be swimming in the dough. But here's the thing, when you buy real estate on your own, it's almost like a full-time job, managing the property, managing if you're doing the Airbnb or short-term rentals, it's like you're gonna constantly clean and adjust and promote it and market it and deal with the Airbnb stuff, or you need to find someone to pay to manage it.

44:57And ultimately at the end of the day, you gotta deal with the taxes of it, you gotta deal with the expenses of it, you gotta deal with the fixing of it, you gotta deal with the regulations around it, whatever it might be. So how do you invest where it doesn't become a time suck and an extra job in that real estate, but it's actually cash flow that is more passive. Is that even possible with real estate? I can only speak from my experiences, because for me, it was a huge time suck. It was like a full-time job. It was more than a full-time job. I couldn't sleep at night because of how many issues I dealt with.

45:30But it was something that - So why be in real estate today if it caused you so much pain previously? Well, see, you go in with a vision, right? Like entrepreneurs, you have to be a little bit crazy. You don't know how something's going to work out, but you're putting in countless hours. You're not sleeping at night. You're sacrificing vacations. You're not talking to your family. You're doing a bunch of crazy things because you think this thing is going to work. That's how it was for real estate. I'm known for being like that stupid person, and I've always been that thing. And for me, it's like I believe something so much that I'm willing to make a lot of sacrifices and keep doing something.

46:03and for me when i invested in real estate i was 19 when i started when i bought my first property and um i did it kind of all by myself because i told my dad i wanted to invest in real estate and i grew up in a very traditional indian house my parents are immigrants my state in india called punjab so my parents came to this country with very little and so yeah exactly you got the pangada moves down that's our dance we were just talking about pangada before this is a traditional dance. But my parents came here with very little. And they wanted me to be a doctor. And it was very strict that you have to become a doctor, nothing else is the option.

46:42So anything that wasn't medical related was like a big no-no. So becoming a lawyer, you were a failure. Yeah. And that was a huge compromise for me to become an attorney with my parents. But this is before I even became an attorney where I said, I want to invest in real estate. And my dad was like, and I was actually studying for the medical college admission test when I had the idea to start investing in real estate and i had some cash saved up because i was working on a event planning company at the time when i was in college my parents didn't know about that so i was making a little bit of money and i was like i want to invest in real estate my dad's like you're stupid go study go become a doctor and then worry about all this other stuff that you're doing so i was like all right i'm just gonna do something yeah you know so how much was your first deal it was a small condo that i bought the condo about three or four years prior to me purchasing it sold for about$150 ,000.

47:28It went through foreclosure. The banks had it listed for$8 ,400. Oh, man, you got the jackpot of that thing, it sounds like. I made an offer for$4 ,000. Oh, my gosh. I didn't know what I was doing, right? So I'm like, well. Did you get it? Well, I put an offer for$4 ,000. They said, we'll give it to you for$7 ,000. And I said, no. I don't know what I offered. Something else. Maybe less than$5 ,000. Yeah. And then another person came in to potentially buy the property. And so the bank says, we have another offer on the table. Give us your highest and best offer. Now, to put this in perspective, I didn't know this was a good deal because I'm 19.

48:04I knew nothing about money. Five grand is a lot of money at 19. It's like all your money. Yeah. So I know nothing about investing. I didn't know what passive investing was. I had only read books about investing. So I'm reading some books and now I'm just going out doing it because I know nobody in real estate. I didn't even know you could invest in real estate. So I'm like, okay, well, somebody's making an offer. I kind of like this deal because I'd looked at a few other properties. So I was like, well, how about I make an offer for$8 ,000? We'll see where they go. And the bank took my offer. The other person offered less than what I did.

48:35Wow. So I bought it for$8 ,000. I put in a few thousand dollars worth of work. And then I listed it for$600 a month. And the profit on that was between$250 to$300 a month, depending on the month, which now sounds great, right? This is the beauty of real estate. the downfall is it was a big pain because i didn't know what i was doing i hired a i don't want to say scam property manager because i haven't been able to validate that but i don't know if they were licensed right the tenant moved in we didn't have a lease the tenant was absolutely crazy they had my phone number so now i'm going to class like i remember i was coming out of my chemistry classes or my physics classes and i had these voicemails these multi-minute long voicemails of the tenants talking about how the world is ending they're like this property is going to go up in flames so i was like what's going on i get an electrician out there we go to the property and this is like after multiple issues that happened i went with an envelope of cash i probably had like 50 of cash in this envelope that i gave to them because i felt bad for the tenant electricians looking at the property they're like yeah your light bulb fused we can just replace that that's it that was it yeah there was an instance where they were cutting cucumbers on the countertop they missed the cucumber they scratched the countertop she calls me crying that she needs a brand new countertop.

49:49Oh my gosh. I gave it to them. Oh. Because I didn't, I don't know what's going on. So like I dealt with a lot of issues and that was just the first one. I mean, like the first, I would say three were my learning curve where I was like a full time, like I'm on the phone talking to people, trying to find contractors. I'm trying to find the right attorneys. I got screwed over by attorneys. I mean, I made every mistake possible. Why'd you keep doing real estate after the first three failed? So yeah, see, this is where the stupid comes in out of me. Well, I read books and people talk about how investors own thousands of real estate units.

50:25I was like, how can somebody deal with thousands of tenants like this? Like, it's not possible. Like, there has to be a system. I just had to figure out how to crack that code. How do I break this system? And that was my journey was learning it. And it was very painful, very expensive, and very stressful. because the third deal literally depleted my bank account. I was talking to my wife about this the other day where that third deal was so stressful because I made every mistake possible. I talk about this on YouTube. It's my worst real estate deal ever. I bought the deal because my contractor told me it was a good deal.

51:02He told me that, hey, we can fix it up for not a lot of money. And because it's such a good deal, you're going to be able to make a lot of money on it. So he's like, don't even worry about getting an inspection on the property just want to buy it so that's what i did i trusted him right bought the property gave him the money he ran away i didn't know that he wanted the money because he was running into financial problems then this property it turns out had a lot of defects behind the scenes which i didn't know we had the city come out and look at the property and it was the repairs cost way more than what the actual property cost and so now i was really in trouble because i wanted to get this property rented out my bank account that property account literally went negative and i had an overdraft fee on this account uh which i had no money to pay at the time for that property because i was putting all my cash into this and like i was saying before i was in that event planning party business which was a cash business so i had like literally a bag of cash in my room so I went to my last resort which I pulled the cash out of my bag and I gave it to the contractor I was like we got to get this done I need to get this I need to get some income out of this property because I couldn't sell it right I couldn't get a certificate of occupancy I couldn't rent it out and so it was like I was so stuck I was fortunate that I had that cash but I mean it was a tough situation that was my real life tuition like that was where I learned like I say that one deal taught me years worth of real estate in one property because I learned so many things that I should not do.

52:33But then from there, I was able to stabilize. I made some more money with other ventures that I was doing because I was making money for one reason, to buy real estate. That's all I was doing. And losing it in the real estate. And losing it in real estate. But I was learning. That was my learning process. So I guess I can't, I wouldn't change it because I learned a lot from it. Very stressful. When I say I lost sleep, I lost a lot of sleep at that time. So when you're going to buy a property now, what is the approach that you take so that it maximizes your return, saves you time and energy and minimizes stress.

53:04What is the approach if you're like, okay, am I buying single unit properties? Am I buying apartment buildings? Am I buying duplexes, fourplexes? Am I working with another investor and buying a bigger deal? What is that thought process into buying a deal first off? And then how do you set it up so it doesn't take you a lot of time to manage it? Sure. So I would say the first thing is I need to know what my return is going to be. And generally, my general rule of thumb is I need a 7 % cash on cash return. Annually. Annually. And what that means is for every dollar that I invest, I want to see 7 cents of cash flow.

53:39That's money that's hitting my bank account after expenses that has nothing to do with appreciation. So I want to look at those financials. I want the 7 % cash on cash return. Then I got to look at where am I investing? So I like to invest in areas that are growing, that have more up-and-coming-ness to it. So this is now, I want to see populations at least stable, if not rising. Do a quick Google search of any city, and Google will tell you what's happening with the population. It's made it so easy. Wow. What are the top three cities that are rising that are also not over, I guess, overpriced right now?

54:17What are those top three cities? Let's see in 24 months where that actually is because we're going through this correction in real estate right now. So let's see where interest rates go because that's going to influence housing prices and real estate prices in general. Interesting. But keep an eye on interest rates. The general thing is as interest rates go up, property prices will go down. So let's re-discuss that. What do you think is going to happen in the next 12 months with interest rates? Well, the Federal Reserve Bank says that they're going to raise interest rates. And if they keep doing that, they're going to push this economy into a lot of pain.

54:50Because it came down a little bit, right, recently? So mortgage rates and interest rates are two different things. Okay. Interest rates set by the Federal Reserve Bank are called the federal funds rates. This is the interest rate that one bank pays another when they lend each other money overnight. So think of it like the wholesale price, right? When you go to buy this mug from Amazon, Amazon's buying it from the manufacturer. They're buying it cheaper. Then they sell it to you at a marked up price called the retail price. So banks have this wholesale price called the federal funds rate, then they jack it up and sell it to you as the mortgage rate.

55:24So federal funds rates, the Fed rate, can influence where mortgage rates are going. So interest rates can be different than mortgage rates. Right. They are different than mortgage rates. What's the current kind of interest rate at the time of this interview? For mortgage rates? For the interest rate versus mortgage rates. So the federal funds rate right now is right around 5%, just under 5 % the federal funds rate. Mortgage rates are hovering around the mid-6 % for a 30-year fixed rate mortgage. Now, the question is, where are we going to go from here? The Federal Reserve Bank has a mission to fight inflation.

55:57That is a big deal. It is a super serious problem. And we've discussed this in other interviews. I'm not going to go too deep into like, what is inflation? Why is this happening? We have an inflation problem. And that is a serious problem because if we don't solve the inflation problem, then we risk a serious currency crisis. We risk potential hyperinflation. We risk our dollar losing the reserve currency status. So it is a serious issue to bring inflation down because, yeah, a recession is bad. A currency crisis is even worse. That's why the Federal Reserve Bank is working to increase interest rates because that brings down inflation.

56:33They're looking to increase them. Increase interest rates. And what about the mortgage rates? So that pushes mortgage rates higher. Higher. So now rising interest rates have a consequence. And that consequence is a slowing economy. Because when you raise interest rates, it makes borrowing money more expensive. And less people want to buy. Less people borrow money. Less people buy. And now if you remember what we said just a few minutes ago in our economic system, spending is good for the economy. Higher interest rates, less spending, bad for the economy. Our economic system wants people to spend money.

57:04In fact, they want you to be in debt. and spend money. Because if you're in debt, and you're spending money, they're making money. They're making more money. I hope you enjoyed today's episode, and it inspired you on your journey towards greatness. Make sure to check out the show notes in the description for a full rundown of today's episode with all the important links. And if you want weekly exclusive bonus episodes with me personally, as well as ad-free listening, then make sure to subscribe to our Greatness Plus channel exclusively on Apple Podcasts. Share this with a friend on social media, and leave us a review on Apple Podcasts as well.

57:38Let me know what you enjoyed about this episode in that review. I really love hearing feedback from you and it helps us figure out how we can support and serve you moving forward. And I wanna remind you if no one has told you lately that you are loved, you are worthy, and you matter. And now it's time to go out there and do something great.