TRANSCRIPT: The Top 7 Money Making Hacks For 2025 That Are PROVEN To Work!

They go, “How should I start investing?” The simplest, simplest way that I advise my family is I say, get a target date fund. So let me explain what that is.

A target date fund is one fund, just one, and you pick it based on the year that you’re going to retire. So if you’re going to retire in 2050, if you’re going to be 65 in 2050, you go and you find that one fund. It’s called a Vanguard 2065 fund or Fidelity 2065 or Schwab 2065. There’s lots of brokers. These funds, it’s one fund. All you do is put money into it. That’s it.

The fund, like a pie chart, is automatically diversified. So as you get older, it gets more conservative because somebody who’s 75 years old should be investing differently than someone who’s 25. One fund. All you have to do is set your money up to go into it every single month.

STEVEN BARTLETT: What is a fund?

RAMIT SETHI: A fund is a set or a basket of stocks and maybe bonds. So we’ve all heard of companies like Microsoft or Google, whatever. A fund owns lots of these. And that’s important because we’ve heard diversification. Like you should have diversified your investments.

Okay, well, how do I do that? You don’t need to go and buy 20 stocks and then figure out how much of each to do. That’s too much work. And honestly, most people are not good at that, even professionals. You buy a fund which automatically owns lots of stocks, like hundreds of them. And over time, all you, the individual investor like me, have to focus on is putting money into it automatically.

Where to Find Funds

STEVEN BARTLETT: So a fund essentially, I’ve got £100 that I want to invest. I find a fund. Where do I find these funds?

RAMIT SETHI: You can go to Vanguard, Schwab, or Fidelity. All those are great companies. What you’re looking for, regardless of what country you’re in, is you’re looking for a low-cost brokerage firm.

STEVEN BARTLETT: But there’s also apps and stuff that I can use.

RAMIT SETHI: You can use apps. I don’t like a lot of the apps because they gamify you to try to invest. They want you clicking and trading. I hate traders. You do not want to be a trader. Traders lose money. Investors treat investing like watching paint dry. That’s how sexy it is. Trust me, I’m not getting my entertainment from investing. I’m going out, go watch a movie, go watch Netflix. But investing is boring and automatic. That’s how it should be.

STEVEN BARTLETT: I used a company called Hargreaves Lansdown in the UK who has an app. When I first started investing in funds, they had a very ugly app, so I wasn’t very compelled to use it. I think it’s better now. But I would just do it on desktop. I do get your point because you don’t want to see all of that notification.

RAMIT SETHI: I like ugly. It should be ugly.

STEVEN BARTLETT: And you don’t want it to be too accessible.

RAMIT SETHI: Correct.

STEVEN BARTLETT: I don’t want to be able to check it every day.

RAMIT SETHI: No, look. On my phone, you will see no investing apps. There should not be. Why do you need to log in and check it every day? What’s the point? In fact, most people should check it every three to six months. And here’s how you check it. You log in on your desktop. Wow, it’s up. Wow, it’s down. Okay, bye. You’re not tweaking anything. It’s like making Thanksgiving dinner. Once you’ve put the turkey in the oven, just let it sit. Do not fiddle with it because you’re only going to mess it up. And in this case, you’re letting the turkey cook for decades.

Putting Money into a Fund

STEVEN BARTLETT: And that fund. So I’ve got £100. I go on a website.

RAMIT SETHI: Vanguard, Fidelity Schwab, whatever they are. I have no alliance to any of them.

STEVEN BARTLETT: Neither do I. There’s various ones in the UK. I actually do recommend Hargreaves Lansdown just because it’s simple. And I think investing in funds, there’s no fees. There’s no fee associated with the investment itself. Obviously, they might take a percentage depending on which fund you’re investing in.

STEVEN BARTLETT: I take my £100. And investing in Hargreaves Lansdown, there’s no minimum rate from what I understand. And if you invest in a stock, they charge £12 per investment. But if you invest in a fund, it’s free. I put my £100 into a fund. The fund is essentially taking £1, one of those pounds, and investing £1 into Facebook. It’s investing £1 into Google, £1 into Shopify, £1 into Spotify, £1 into Nvidia or whatever. It’s doing that for me. It’s managing it for me. It’s making the decisions for me. I just put the money in every month, whatever I can, and I leave it.

RAMIT SETHI: Yeah, and let’s go even deeper. I love that we’re getting into the nuts and bolts here because, you know, honestly, most people, they do not know how to invest. Literally, what website do I go to and then what do I do?

The fund owns these different stocks. And some will go up and some will go down. And it’s inconsequential to you. All you need to know is you own this fund. Now that you’ve opened up an account and you’ve spent £100 or £1,000, great. You’ve made one of the most important decisions of your life.

Now, there’s just one more thing you have to do. Set up an automatic transfer so that every single month you have a certain amount of money going in. Now, if you don’t know how much money, use my Conscious Spending Plan guideline. What did I say? 5% to 10% of take-home is a good guideline. You should be able to do 5%. Trust me. Anyone who comes to me, they go, “Ramit, there’s no way. It must be nice. I can’t afford it.” I go, show me where you’re spending your money. I guarantee you I can find 5% to send in every month.

Now, you’re not trying to send it in. I don’t try to brush my teeth in the morning. It’s a habit. Investing is even easier than brushing your teeth because you set it up automatically. The investment fund will automatically draw from your checking account. And it will pull in $100, $500, $1,000, whatever your number is. And so you’re not going to log in for 3, 4, 5 months. You’re going to log in a few months later. You’re going to be like, “Oh, my God. I didn’t even realize that all this money is in here.” When you add that plus compounding over many years, that is how real wealth is created.

Don’t Treat Your Investment Account Like a Checking Account

RAMIT SETHI: So I don’t want anyone to think that you have to be rich in order to start investing. One of the ways you get rich is by investing.

STEVEN BARTLETT: I’ve got a friend that’s currently actually in this building at the moment. And I had this conversation with them about a year ago. Gave the advice that you’ve just given there. And about two months later, this individual, who I shan’t name, came to me. I said, “How’s your investments going in that fund?” And they said, “Oh, yeah, I had bills. I had a credit card bill, so I took it out.”

RAMIT SETHI: Oh, yeah. She treated it like a checking account. Investments, for me, are places to accumulate wealth. I don’t draw from it. That’s what a checking account is for. So what that is is there’s two parts to what your friend is saying. One is mentally she’s thinking that this investment account is just money I can draw from if I need it. So I would sort of gently change the way she thinks about it. The second is I guarantee her account structure is a little subpar.

So here’s how I would set it up. This is in Chapter 5. It’s all automation. Because trust me, I don’t want to spend time transferring money back and forth. I don’t spend any time on that. You get paid. Your money goes into your checking account. From your checking account, it is automatically transferred to a savings account. In fact, I have sub-savings accounts for vacation, car, down payment, all that stuff.

So you have money set up for specific goals. Money is transferred to your investment account. It’s transferred there. I’m not going to touch that money. I’m going to let it cook. And then I have my guilt-free spending, which is going out with friends, whatever I love, and my credit card bill is automatically paid off every single month. That’s how you want to set it up. It takes a couple of weeks to set everything up, and then you never have to think about it again.

Proving the Power of Long-Term Investing

STEVEN BARTLETT: How can you prove to me that this is the way to make wealth? What case studies have you got that investing in funds over a long period of time is the path to financial wealth? Because you said earlier about the paint-drying thing. The narrative that we see about why people and how people get rich is they sell a company or they have a lottery win or maybe they buy some cryptocurrency and it goes up. That’s what we hear. That’s what we try and emulate. Totally. Prove to me that this fund strategy is better.

RAMIT SETHI: Well, there’s a couple of things. First off, the research over about 100 years shows the returns of the stock market. And the returns tend to be, at least in America, they tend to be around 11%, 10% to 11%. And if you take out inflation, you get about 7% to 8% per year.

Now, for anyone listening, they go, “Okay, well, what does that mean? That number means nothing to me, 7%, whatever.” If you go right now and you Google “investment calculator” and you just plug in your age, you plug in, let’s say, 200, 300 bucks a month and you plug in 7% return and you just watch how that money grows, you will be shocked.

STEVEN BARTLETT: Jack, give me my phone. I’m going to do it now.

RAMIT SETHI: Okay, so let’s search for “compound interest calculator”. And there’s a really simple one. It’s called MoneyChimp.

STEVEN BARTLETT: Okay, I’ve got it.

RAMIT SETHI: All right. All right, so there’s four numbers we need to fill out here. Let’s take a look. Current principal, that means how much you’ve got in the bank.

STEVEN BARTLETT: I’m going to say $5,000, and I’m going to start when I was 16. Because if I’d saved my money when I was 16 and not spent it recklessly, I think I could have had that $5,000 when I was 16. Annual addition, what does that mean?

RAMIT SETHI: How much can you invest per year? So for most people, they think about on a monthly basis. They might say $200 a month, which would be $2,400 annual addition.

RAMIT SETHI: Okay. What do you want to say?

STEVEN BARTLETT: I’m going to say, can I say $5,000?

RAMIT SETHI: Yeah, that’s about $400 a month. I think that’s reasonable. I often find that with people making median or slightly above median salary that there are hundreds of dollars a month of money that is unaccounted for that if properly made intentional could be invested. So great, $5,000 a year.

STEVEN BARTLETT: All right. Obviously, once I got past a certain age, I could have increased that though.

RAMIT SETHI: We’re going to talk about that. Okay. Hold on to that idea.

STEVEN BARTLETT: Okay.

RAMIT SETHI: How many years? This was you at 20?

STEVEN BARTLETT: This was me at 16.

RAMIT SETHI: Oh, okay. And how old are you today?

STEVEN BARTLETT: 30.

RAMIT SETHI: Okay. So 14 years. Let’s just do it until today, and we’ll see what happens.

STEVEN BARTLETT: All right. 14 years.

RAMIT SETHI: And then it says interest rate. So what should we assume for that?

STEVEN BARTLETT: Is that 8%?

RAMIT SETHI: Yeah, 7% to 8%. I do 7% just to be super conservative because I never want to be surprised on the downside. Right. If anything, I’m going to make more. So 7%. All right. Let’s calculate it. Okay. What do you see? What do you see?

STEVEN BARTLETT: $133,537.

RAMIT SETHI: Yeah. That’s what you would have had right now. Now, let’s add some context. So this is really important. You see a number that says $133,000 at age 30.

STEVEN BARTLETT: Yeah.

RAMIT SETHI: Okay. Is that a lot? Is that not? Hmm. I don’t know. Let’s break it down. At that point, you started with $5,000, and you invested $5,000 per year. We assumed no raises, even though you obviously made more than you made at age 16. We assumed you stopped investing at age 30, which is obviously ridiculous. And you end up with six figures.

Compounding Returns Over Longer Periods

RAMIT SETHI: Let’s play it out. Let’s take it until 40. So instead of 14 years, you invested for 24 years. What do you see?

STEVEN BARTLETT: I would have $336,000.

RAMIT SETHI: It’s getting better. From just $5,000 a year. It’s not much.

STEVEN BARTLETT: It’s fantastic.

RAMIT SETHI: Again, $400 or so a month is very modest. Remember, people’s income goes up typically in their 30s and 40s. And if you already are investing a little bit automatically, all you have to do is just tweak a number, and it will take an extra couple hundred, three, four, 500 bucks.

Let’s do one more. Let’s go to 34 years just because I want to see what happens, and then we’re going to play with the other numbers.

STEVEN BARTLETT: Okay. So investing from the age of 16 until I’m 50, I would have $736,000 in my account.

RAMIT SETHI: Yeah. Now I want to do the full thing. I want to do a more realistic number here. So instead of 50, we’re going to go 49 years. That takes you to age 65. Okay. And instead of $5,000 per year, your income obviously went up from being 16 years old. So I’m going to pick a number out of thin air, and I’m going to tell you how I picked it.

I’m going to say instead of $5,000 a year, it’s actually going to be $30,000 per year. Let me tell you why I picked that. In your early years, you don’t have as much money, but you were still investing a little bit, which shows that you’re dedicated. As your income goes up, you’re going to start proportionally continuing to invest.

So at a certain point, your income will be really high, and that will bring that average up. That’s why I switched it to $30,000 per year. I actually think this is quite modest, but I’m going to go ahead and do it. So here we have someone starting investing at $5,000. They invest $30,000 per year. Okay. They grow it for 49 years at 7%. Do you know the math?

STEVEN BARTLETT: No, tell me.

RAMIT SETHI: $12,303,000.

STEVEN BARTLETT: So that’s me starting with 5K, gradually ratcheting it up until I’m investing, well, investing 30K a year per average across those 49 years.

RAMIT SETHI: Yes, which is a flaw in this because it’s so simple. That money invested, you’re not actually going to invest that much early on. You’ll invest more later. You’ll maybe have a marginal amount less, but we’re talking $10 versus $12,000,000.

RAMIT SETHI: That’s a lot of money.

STEVEN BARTLETT: Then if I got 8% instead of the 7%, I’d have $17,400,000.

RAMIT SETHI: Yes, but don’t mess with that. This is what people do. They go, well, if I got 13%, I’m going to invest in this PG fund. I go, don’t do that. You’re going to lose all your money. Just stop. 7% is safe. It’s conservative. That’s why I am here. That’s why I want to encourage people. You don’t need to juice your returns. I hope you do get 8%, but I don’t want you to count on that. I want you to count on safe, stable returns, and what matters for you is the time you started early and the amount. You have a considerable amount to invest.

The Biggest Debt We All Pay

ALEX HORMOZI: The biggest debt, one of the things I love saying this, but the biggest debt all of us pay is ignorance. I heard this close at this pitch years ago. This guy got on stage, and he was like, “Hey, man, how much do you make?” She was like “$50,000.” She wrote $50,000 on the whiteboard, and then he wrote $1,000,000 on top of the $50,000, and he subtracted it and said $950,000. He said, “You pay life $950,000 every single year for not knowing how to make $1,000,000 a year.”

It was a crazy concept, and he was using it to close the audience, but the most expensive thing that all of us are paying for is the information that we don’t know. That’s both frightening and also incredibly exciting because fish in the best ponds. A good fisherman knows where to fish.

Sell Where People Value You Most

ALEX HORMOZI: A different way of saying it is find the people who value what you have the most. I’m sure you’ve heard this. Have you heard the story of the father and the son with the car?

STEVEN BARTLETT: No.

ALEX HORMOZI: Okay. Maybe I have fun. No, it’s good.

ALEX HORMOZI proceeds to tell the story of a father who gives his son an old car and teaches him the lesson that his value depends on finding the right buyer who appreciates what he has to offer.

ALEX HORMOZI: And so the father smiles, and he’s like, “And the lesson I want you to know is that it’s not necessarily who you are, but the people that value you the most.” And so you can talk to different people and go to the people who value you.

Fish Where The Whales Are

And I love that story because it’s a huge business story in terms of like sell where the fish are, where the big fish are. Like if you’re going to go hook fish, go where the whales are. It takes the same work, but a lot of it is just belief. People don’t think it’s possible.

And so a lot of times you have to just keep leveling up, and you sell your first $10,000 thing, you sell your first $100,000 thing, you sell your first multi-million dollar package, you realize that it’s the exact same thing. It’s just, so maybe if anybody’s listening right now, it is the same thing. It’s the exact same thing, and sometimes it’s easier.

The Curtain Is Starting to Lift

It’s normally easier. Like you’ve seen that meme that says like, “So what exactly am I going to be getting for this $50 thing, right?” And then it’s like “$50,000 client’s like, wire sent yesterday, like what else do you need?” And that’s totally true. But I think there’s a skill in understanding where to fish.

STEVEN BARTLETT: Certainly a skill. Information, it’s information. It’s even knowing that there was another lake over there. And that’s why like listening to conversations like this is so valuable to people because it lifts the curtain. And you go, “What the fuck, you guys were behind here the whole time partying?”

That’s what my business life has been like. It’s like gradually, like I think I heard Kevin Hart describe on Joe Rogan one time where he said, there’s this other room where these people are playing this other set of money games. And then when you get in that room, you’re almost pissed off that nobody told you this room existed, but then there’s another door.

And then you get through there maybe a couple of years later and you find these other people, these fucking billionaires playing another set of games, and you’re going, “What?” And they’re chilling. They’re just smoking cigars. They’re not even doing any hard work. And you go, “Tell me the games that you guys have been playing in here.”

And then again, the frustration is, and that’s kind of what I feel like in my business life, it’s been like where at the jump I’m charging, I don’t know, I remember my first, we found our first deck from 2014 charging, I remember the package, we had gold, silver, and bronze. It was like, you know, $200 package for like support and then $500 and then the gold package where we threw everything in for $1,000.

And I remember one of my first clients accepting that. And then I think today, like the only difference, okay, there’s skills that have increased, but information is the big thing. Knowing how to do it, you know.

The Stair Steps of Leverage

STEVEN BARTLETT: When you think about curtains that have lifted, that have really shifted the games you play from a value money perspective, like where someone’s turned the lights on, you go, “Fuck, of course.” Is there anything else that comes to mind?

ALEX HORMOZI: I will answer it with the stair steps of how each order of magnitude changed my income. So when I went from being an employee to self-employed, I went from making four figures a month to five figures a month. And that was for me just like, “I am now in control.”

The level above that was I started having other people who worked for me. And then went to six figures a month, right? And then from there, stayed there, did the turnaround business, still had the same organizational structure, had another degree of leverage. And so the next degree of leverage was that I started licensing.

So it’s digital, right? So the cost of goods is basically nothing. But all of these things are about leverage. And so this is like one of my favorite topics in the whole world. But we define leverage as the difference between what you put in and what you get out. So if you have a lot of leverage, you put a little bit in, you get a lot out. If you have no leverage or low leverage, you put a lot in, you get a little bit out.

Stacking Degrees of Leverage

ALEX HORMOZI: And a lot of times, people who are listening to this and are not making as much money as they want, they’re putting lots of input in and not getting a lot out. They have low leverage opportunities. And so understanding how to get more for what you put in is the game overall.

And so the first level that I ascribed was labor. It’s just work. First, I was working for someone else, then I worked for myself, then I got other people to work for me. First level, each of those levels was more leverage. Above that, I had media, which is the thing that I was licensing out. So another degree of leverage.

I made it once, and I could license it out infinity. On top of that, I have capital. I can take capital. I don’t have to sacrifice time in order to get something for it. So it’s high input output. Above that would be some sort of technology. You build the code once, in theory, obviously. You continue to improve the code, but theoretically, you build the thing once and then a million people can use it.

And so you want to stack as many types of leverage as you can and as much of them as you can because Joe Rogan also has a show and somebody else has a podcast. They both technically are using media as their vehicle for leverage, but he has significantly more of it. So it’s not just like, “I’m going to use all these, right?” Yes, but it’s also how much and to what degree.

Find Your Unfair Advantage

ALEX HORMOZI: But like Facebook had other people’s money. He used media, had other people’s work, max leverage. Amazon, same thing, right? They used every element of leverage and they maxed all of them out. And that’s at least the curtain.

And Naval talks about this. If you’re familiar with Naval Ravikant, he talks about these things as the elements of leverage or four types of leverage. And understanding that for me has kind of been a blueprint for wealth overall.

And then capital, there’s degrees of capital, right? Like first you can get friends and family to give you money. Then you can get institutional money and then you can get public money, right? Which you saw like the IPO money, like the fact that the NASDAQ was 4X, the Dusseldorf exchange is not where it was, right?

There’s just significantly more capital in that market. And so same work, more zeros. And so I love this topic because I think that that’s fundamentally like the people who move faster in life don’t actually move faster. They get more for every step.

CODIE SANCHEZ: If right now you want to find where is your unfair bet that can make you your millions with your skillset that nobody else in the world can replicate except you. Here’s what I need. I would need a whiteboard. I would need a pen, which I would do if I was you. And I would need a smart friend. Perfect. So I’ve got Steven here.

Codie proceeds to sketch out an exercise on how to identify your unique skills and talents to find your “unfair advantage” that you can leverage to create wealth.

CODIE SANCHEZ: And at the top of the whiteboard, I would write on this side, skills. Oh my God, you’re going to see my handwriting like a doctor. And on this side, I would write money. And I would start writing down all the things that we’re brilliant at. So let’s pretend it’s Stephen here.

And we’ll pretend like you don’t have all the things that you have, but your core skillset. You can put your hand on the screen, by the way. It makes me nervous. Am I doing this like a boomer? I am. So handwriting’s a little bit, it’s giving doctors. Okay. Oh yeah, look at that.

STEVEN BARTLETT: Okay. So embarrassing.

CODIE SANCHEZ: Okay. So social media, right? You’re incredible at social media. What else are you probably good at?

STEVEN BARTLETT: Well, you know a lot of people. You’ve got a network. What else?

CODIE SANCHEZ: Well, it’s not just social media though. It’s actually a few particular things. It’s like YouTube. And I think you’re one of the best in the world at short form video, right? You’re also one of the best in the world at like a data-driven social media strategy. So you can kind of say upfront, “Hey, we think this is going to go viral because the data says this thing over here.” What else is Stephen good at? He’s charismatic. He can probably get people to agree to things just by talking to them. You know, what else?

STEVEN BARTLETT: British accent.

CODIE SANCHEZ: You know, so probably you want more in-person interaction because we’ve got, you know, a very charismatic person. What else is Stephen really good at?

STEVEN BARTLETT: Well, he asks a lot of questions. This is my Hintz profile, by the way. I’m totally just going to copy and paste all this stuff over.

CODIE SANCHEZ: Exactly. Yeah. Good looking, funny. Yeah, exactly. So we’ll just say these. There’s a lot more deal flow, but let’s just pretend that all you’re good at is social media. You’re good at getting to people, which is a network.

Finding Your Most Profitable Skills

CODIE SANCHEZ: You don’t even have to know rich people. Just can you get to them? You’re charismatic. You’re data-driven. Okay, great. We’ve got all these skills. Now, how could we apply these skills to get the most money humanly possible? And I would do exactly what you said. So how do you figure out most money humanly possible? It’s two things.

It’s the, how would I do this? It’s the size of the problem. It is the value of the solution.

STEVEN BARTLETT: Interesting. Okay.

CODIE SANCHEZ: And so if I’m thinking about this for you, if I go and I give your social media skills to a trade or service business, I’m not going to make that much money. How do I know I’m not going to make that much money? Because I’m going to go look up online. What is the average revenue of this business and the average profit margin?

Now, you probably didn’t even think this way when you were thinking about it, but you guys look online right now. What’s the average profit margin of a biotech company and average revenue? Let me tell you what it is. It’s going to be like 50 to 80%, and it’s going to be hundreds of millions that you could potentially get. Trade services business, a lot less.

And so that’s where I would start. Skills plus money really equals to three things, which is like sector, size of the business, and profitability of the business. And I would play this game. And what that might look like is you go, “Okay, I know that I have some friends in, let’s go to the places that we know have the most cash, in Silicon Valley, on Wall Street. If they could make a lot more money, if they had a lot more attention, because what I’m selling is attention, I want to get to the people who can make the most money with the most attention.”

And that means that I’m not going to go to Walmart, who only has 6% margins. I’m going to go to the highest person that I could get to. And it’d be fun. If anybody’s listening to this right now, try it. Tag Stephen and I in your stories on Instagram of your little charts, and I’ll give feedback. Anybody that tags me in it, if you’re like, “Here’s what I think my skill is, here’s what I think the industry is,” I’ll tell you one way or another. And it can be fun. You can see other people’s examples live.

The Highest-Paying Writing Jobs

STEVEN BARTLETT: So people that are only listening on audio and that can’t see what this…

CODIE SANCHEZ: Chicken scratch.

STEVEN BARTLETT: Chicken scratch you’ve just drawn on this iPad. On one hand, you list your skills. And then on the second side, you’re listing the ways you believe you could make the most money from those skills based on the size of the problem you’d be solving with them and the value of the solution.

So for example, let me try and play this game with you then. Okay, so I am a writer. So I’m going to do my skills on the left hand. I’m a writer. And on the right, I’m going to write money. I’m a writer. I’m really good at writing stuff. That’s it. And I kind of get the internet. So I kind of understand LinkedIn blogs and stuff like that. But that’s it. I’m a writer.

CODIE SANCHEZ: Let’s go with what would be the worst. What would be the worst thing you could do if you’re a writer?

STEVEN BARTLETT: To make no money.

CODIE SANCHEZ: To make no money. Because sometimes it’s easier to do the negative.

STEVEN BARTLETT: Okay, working for a local newspaper.

CODIE SANCHEZ: Yeah, local. I was thinking like fantasy books. Like you could write like fiction, you know, really hard to make money in. You could write for a local newspaper. That’s an even worse idea.

So I like that. So now you’ve got your bottom tier, right, which is like $14 an hour or something like that. Now if you look about, I mean, you could Google this. What is the highest paying jobs for writers?

STEVEN BARTLETT: I bet the thing you’d find on top, copywriter.

CODIE SANCHEZ: Why?

STEVEN BARTLETT: I got a better one.

CODIE SANCHEZ: Oh, what’s a better one?

STEVEN BARTLETT: Do you know why I know this? Because when I was working in Biotech, we could hire one, which is a medical writer.

CODIE SANCHEZ: Oh, so smart. Hyper specialized.

STEVEN BARTLETT: Honestly, so a typical copywriter, when I was working in my social media company, we might pay entry level £25,000, which is probably about $35,000. Okay. A medical writer, someone that can write about the psilocybin compound in my psychedelics business would get paid $150,000 or more.

We just couldn’t find some. We found loads of people that could write. Yeah. But nobody that had within their skill stack, even though it’s quite easy to teach, it’s quite easy to write using medical words, slightly medical words. It doesn’t mean you need a medical degree. You could probably learn how to write, become a medical writer in a month if you really committed yourself to it.

CODIE SANCHEZ: That’s so true. And same with finance. We go to the things we know. So, you know Biotech, so you know there’s a niche there. I know finance and I know that, again, it’s one of the highest paying industries. So, a financial writer. What would that look like? It would look like somebody who knows how to write, probably an investor update. Yeah. Right?

STEVEN BARTLETT: Yeah, yeah, yeah. So, hugely lucrative.

Getting Paid in Equity

CODIE SANCHEZ: The other thing you could do is, I guess I didn’t even think about this before, it would be like size of the problem, it would be value of the solution, and then it would also be structure of your job.

So, like if you’re a copywriter, I wouldn’t take a job for $35K. What would I do? I would say, “Hey, pay me. What is the salary you want to offer? $35,000? I’ll take $10,000 so I can eat because I’m hungry. But can I have a percentage of the upside that I drive above and beyond goal? So, if I’m going to write copy that converts into revenue, like I’m going to write a funnel for your biotech company, or I’m going to write a funnel to get investors for you, if right now per month you get $100,000 through that funnel, how about you just pay me an extra 10% of everything I drive above your 100K?” So, I think that’s another way you can make more money, is getting smarter on deal structuring.

STEVEN BARTLETT: Well, that’s actually when I moved into biotech, how I got paid. And when I talked about being paid 1,000 times more than I would have previously, it’s because the way I got paid was in options in the IPO. Brilliant, yeah.

So, I got given, in that particular company, I got given 400,000 shares effectively in the company at a certain price. And so, when the company IPOed at $3. 2 billion on the NASDAQ in July 20, I don’t know, 21 or something, even though I’d only worked in the company for about six months, just helping them build out the marketing team, I think my net return was, on the equity value at the time, was quite close to 10 million. So, six months work, 10 million return. And really the reason I did it was because I was so interested in psychedelics, but it just opened my eyes to the fact that any kid with social media skills that knew how to structure a deal with these people could have walked in there and said, “Give me some stock in this IPO and I’ll run your social media for six months.”

CODIE SANCHEZ: You’re so right.

STEVEN BARTLETT: Could have changed your life.

Learning How to Do Deals

CODIE SANCHEZ: Yeah, and it’s something I’m struggling with, trying to get people to understand right now, is that even if you never buy a business, which is what people fixate on, “Well, I haven’t bought a business yet, I haven’t bought a business yet.” It’s like, you’re never going to regret learning how to do deals. You’re never going to. I think that is the most valuable skill set in the world.

STEVEN BARTLETT: I completely agree. And it’s so unfair that people don’t know about it. It’s so unfair, but it’s also your fault if you don’t know about it, because nobody’s gatekeeping this information anymore.

It used to be gatekept. Like when I first started off in private equity, I wasn’t allowed in the rooms where they were actually doing the deals and the terms. And if I wanted to see what the final terms were, like I had to kind of sweet talk my way into figuring out how they structured it.

STEVEN BARTLETT: But it’s an unknown unknown. So before I knew, I didn’t know that I didn’t know.

CODIE SANCHEZ: Yeah, that’s true. Yeah, that’s very true. But now I think there’s enough people out there talking about it where you’re like, I mean, if you think about whether you like Donald Trump or not, what is he really good at? Deals.

STEVEN BARTLETT: Yeah, the deal.

CODIE SANCHEZ: Like, that’s it. And that is what, I mean, Elon Musk. How does Tesla actually make money? They make money through credits, through credits for solar. So he was able to survive for those 10 years of building that company because he has some of the best solar tax credits in the world that he negotiated with the government.

Main Street Millionaire Book

STEVEN BARTLETT: So where does one go then? Where does a 25-year-old kid listening to this go to learn how to make deals?

CODIE SANCHEZ: Well, I have a book coming out called Main Street Millionaire. Yes, exciting. I know. And we have stuff we can tell them about that later too.

STEVEN BARTLETT: Well, I’m going to link Main Street Millionaire below so everyone can pre-order it. I pre-ordered I think 10 or 20 copies of it, maybe a couple more.

CODIE SANCHEZ: I like that. But that’s like 30 bucks and you learn almost everything you need to know about doing a deal to start. And that book is only what you need to know. I made it on purpose, not really long, not overly intense. It is exactly what you need to know.

And then if you like learning deal-making and you like that book, then you go to contrarianthinking. com and we have courses and free newsletters and a community all about buying businesses. But that’s where you should start.

How the Wealthy Play the Tax Game

STEVEN BARTLETT: The other thing I came to learn as I got money, and it was almost like someone pulled the curtain back for me, is how wealthy individuals play the tax game. Oh, my gosh. And it’s a tax game that the average person has no idea is going on.

SCOTT GALLOWAY: Got to talk about money. Tax avoidance is a key skill to building wealth. And by the way, we don’t talk about, I speak openly about my, I won’t call it tax avoidance, but my tax strategies.

It’s like they said, if you’re a prisoner of war, you have an obligation to escape. If you’re trying to build wealth, you have an obligation to pay as little tax as possible. Do it legally. But Apple will issue their IP to Apple International in Ireland, and then they will use Apple Ireland, they will license their IP to America, charge them tens of billions of dollars, thereby increasing the income of Apple Ireland at a lower tax rate and decreasing the income in the US, thereby lowering their overall tax rate. That is pure tax avoidance. Every organization, every corporation does this to the hilt, and so should you.

By the way, I will vote for people who have an alternative minimum tax. We have to raise taxes on corporations. The 25 wealthiest Americans pay between 6% and 8% tax rate.

STEVEN BARTLETT: What are the tax games they’re playing?

SCOTT GALLOWAY: Oh, the rich people, there’s a bunch of them. First and foremost, it’s you buy stocks, you never sell them, you borrow against them.

STEVEN BARTLETT: Okay, explain that to me like I’m a 10-year-old.

SCOTT GALLOWAY: Sure. You own $100 in Amazon stocks. Yeah. You need money to buy something. Instead of selling the stock, and let’s say it’s gone up 50%, let’s say it’s doubled, you would have to realize a capital gain and pay long-term capital gains on that $50 gain. No, just borrow against it and let the stock continue to grow. And you pay a little bit of interest, hopefully from your current income, but basically it’s invest, borrow against it, and die. Put it into a trust and then pass it on to your kids.

There’s a lot of state arbitrage. Jeff Bezos just moved to Florida to spend more time with dad. Isn’t that sweet, Steven? Isn’t that nice? No, it has nothing to do with his father. Give me a fucking break. He aggregated $160 billion in wealth. He would pay about another 8% or 10% in state taxes in Washington because he’s got to leverage the public school system, the University of Washington, the Seattle-Tacoma Airport, the hospital system. But in the U. S. , you’re allowed to peace out to Texas or Florida and pay no income tax.

So all the people shitposting California or New York, show me someone who all of a sudden can’t handle San Francisco politics. I’m going to show you someone who needs to recognize a capital gain and has all of a sudden decided they like Texas politics. It’s really not very, very disingenuous.

There’s the tax loophole I’ve leveraged. In the U. S. , there’s something called 1202 or qualified small business. So when I started L2…

STEVEN BARTLETT: What’s L2?

SCOTT GALLOWAY: L2 is my analytics company. I started it. I invested a small amount of money. Because it was a business worth less than $50 million, your business would qualify in the U. S. as QSB small business.

Tax Loopholes for the Wealthy

SCOTT GALLOWAY: If you hold onto that stock in that company for longer than five years, when you sell it, the first $10 million or 10 times the basis are tax-free. So the first $10 million out of L2 was tax-free. Zero.

That makes no sense. If that sounds like we’re screwing the middle class, trust your instincts. I invested in a company, brought a company out of bankruptcy. I invested $2.5 million. The first $25 million got very lucky. The company got sold for a lot of money. The first $25 million were tax-free. The tax code has gone from 400 pages to 4,000, and that extra 3,600 pages are to turn rich people into super rich people.

Now, the myth around taxes is the following, that rich people don’t pay their taxes. Actually, the sort of rich pay a disproportionate amount of taxes. So if you make all of your money from current income, that is salary, and you make a lot, you’re actually paying more taxes than anyone.

So mom’s a baller. She’s a partner in a prestigious law firm making a million bucks a year. Dad’s a chiropractor, has three people working for him. He makes $1.6 million a year, total ballers. In order to make that kind of money, they probably have to live in an urban center in a blue state, where at that level, they’re paying 45, 48, sometimes 52% tax rates.

But if dad decides to raise capital and buy a bunch of chiropractic clinics, and they become investments, and he sells them for $50 million, his tax rate plummets. So you don’t want to be a super earner. You want to earn enough money to invest so you can become a super owner. The top 25 wealthiest Americans pay about 8% in tax, right?

So actually, the bottom half pay almost no tax. They pay a lot of consumption taxes, but it’s the super earners that get screwed, what I call the workhorses. But once you jump to light speed, and you own things, and you make your money from buying and selling assets, your tax rate plummets.

Borrowing Against Stocks

STEVEN BARTLETT: The really sort of actionable thing there for the average person as well is probably the first point where you said, what rich people do is they’ll buy a stock. So I’ll spend 10K on Amazon stock. And then I go to a bank, and the bank gives me a $5,000 loan against my Amazon stock tax-free. And I just hold the Amazon stock. Now I’ve got 5,000 tax-free.

If the Amazon stock goes to $20,000 in value, then I can go to the bank and say, it’s gone up now, give me another $5,000. And I just spend and live off that money. Now, if the Amazon stock collapses, I’m fine, because the loan was against the stock. So they’ll sell the stock at a certain point as it’s collapsing to get their money back.

SCOTT GALLOWAY: Yeah, I mean, you don’t want to get into too much trouble, but leverage is how smart people go broke. But the idea is that one of the great tax schemes in history is that stocks grow. Think of yourself as a stock. You go up in value a million bucks a year. You’re making a million dollars a year doing a very successful podcast. Every year, the government in the UK is going to take 40 cents of that, 40% of it. If you own a million dollars in stock, and it goes to two million, you don’t get taxed on it until you sell it.

STEVEN BARTLETT: Yeah, so just never sell it.

SCOTT GALLOWAY: Never sell it. And that’s what Elon’s doing with his company. People say he’s got $200 billion, whatever. In fact, he’s borrowing tax-free against those companies. And then when he finally needs to sell it to pay off some of those loans, he moves to Texas, despite the fact he built all his wealth in California. Smart.

The Importance of Good Tax Advice

STEVEN BARTLETT: I think one of the great advantages of life as it relates to wealth creation is really getting good tax advice. Because I’ve sat here over and over again with people that have great tax advice and some people who didn’t have any at all. And the outcomes are, quite frankly, shocking. The variance in outcomes are, quite frankly, shocking. From one person going bankrupt to the other person becoming a multibillionaire. And some of it comes down to their tax strategy and how they thought about tax.

And being around a lot of people now that are masters in tax, it was like… I describe it as someone pulled back a curtain that I never knew was there. And all these people were doing magic behind this curtain. And no one ever told me that curtain existed. And it’s called tax. We don’t all pay the same tax.

SCOTT GALLOWAY: Because we’re not supposed to talk about it. Again, not talking about it is rich people trying to keep poor people down. Because rich people talk about their taxes all the time.

The brightest woman in my entire professional universe is a woman named Lucy Lee, who is my tax Yoda, who works at a big law firm that I pay $1,800 an hour to to figure out the smartest… When I set up a company, I talk to my tax person. When I’m about to get a big payment for my podcast distribution company, I talk to my tax person first.

This is… It is everything. But the key when you’re young is to become an owner, not an earner. You’re an earner. You want to bust a move out of earning and develop an army of capital that goes out and kills for you at night. $500 is a lot of money when you’re 21. $500 when you’re 21 is $10,000 when you’re my age. Right? And it’s going to go really fast.

Become an Owner, Not Just an Earner

SCOTT GALLOWAY: So just start. And then once you become a super owner, you have $10,000, $50,000, $100,000, a million dollars in assets, then you can become a super tax avoider. That sounded awful, didn’t it? That sounded awful.

SCOTT GALLOWAY: That sounded awful. Sitting here with your bucket of sand. Oh my God. That’s right. This is how we fuck the middle class, Stephen. This is how we really screw over the little guy.

Morgan’s Simple Investment Strategy

STEVEN BARTLETT: What is your capital allocation strategy? How do you invest your money? This is the thing people want to know most about you.

MORGAN HOUSEL: I keep it as painfully simple as I possibly can. So literally my entire net worth is cash, a house, and index funds. And some shares of Markel where I’m on the board of directors. And that’s it. There’s nothing else.

I can summarize everything so easily and so cleanly. And truly, that’s it. It’s not even like I have 20 bank accounts. I have one bank account, one brokerage account, and a house and that’s it. So simple.

STEVEN BARTLETT: Why index funds? You’re the reason I… Your capital allocation strategy is almost identical to mine. I want to talk about the housing as well. But after reading your book, I stopped trying to pick stocks. And I invested all of my available capital into index funds outside of investing it in starting companies.

So I’m a shareholder in, I don’t know, 50, 60, 70 companies. All my other available capital is invested in index funds. And then I have a very longstanding, large position in Ethereum, which I’ve held for like six years or something. Which has done me very well. That is it.

And the Ethereum investment is also based on the fact that I run a software business that is in blockchain. And I could see that developers are building on top of Ethereum more than any other blockchain. So that insight was really beneficial to me. And six years.

MORGAN HOUSEL: So even with the big fall of the last two years, you’re still up a lot.

STEVEN BARTLETT: Yeah, I think your book taught me that successful investing is when you lose the password to your investment account.

MORGAN HOUSEL: Yes, that’s exactly it.

STEVEN BARTLETT: I don’t actually think you said that in there, but that’s like, when I lose the password to my investment account, I’m so proud of myself. Because it means I haven’t checked it in forever. And so it’s funny, because you were coming today. I thought, “Oh yeah, I have all this money in these index funds. I’ll check it.” And I thought, “Fuck, I don’t know the password.”

MORGAN HOUSEL: Good, that’s why you’re going to do okay.

Maximizing Endurance, Not Beating the Market

MORGAN HOUSEL: The reason I do this, what’s important is that I am not one of the people who says nobody can beat the market, so therefore use index funds. That’s not what I believe. I think it’s extremely hard to beat the market and very few people will do it. But I think there are really smart people who can do it and people who I know, who I could invest with.

The reason I don’t is not because I don’t believe it can be done. It’s because the variable that I want to maximize for in my investments is endurance. If I can just earn average returns for an above average period of time, it’s going to lead to amount of success that will literally put you in the top 5% of investors.

My parents are a great example of this. My parents are smart people but they have no financial background and they have like minimal financial interest, I would say. But they have dollar cost average in the index funds for going on 40 years now. And literally, if you look at the returns, they’ve never sold anything ever. And literally, if you look at the returns, they’d probably be in the top 3% of professional investors.

STEVEN BARTLETT: For anyone that doesn’t know, what is dollar cost averaging and what is an index fund?

MORGAN HOUSEL: Dollar cost averaging means you buy the same dollar amount of investments every single month come hell or high water. It doesn’t matter what the stock market’s doing, recession, boom, bust, you say, “I’m going to put $100 or whatever it is in the stock market on the first of every month.”

Now, most people who like have a 401k at work are doing this whether they know it or not. They have $100 or whatever removed from every paycheck and it goes into the funds that they own and they don’t have to do anything. Whether you know it or not, you’re actually doing it. The contrast to that would say, “I’m going to buy and sell based off of how I feel in the stock market. I wake up, I watch CNBC, I decided to sell, I’m going to put it back in when I feel better about the market.” It’s the contrast to that.

An index fund is just a single fund that owns hundreds or thousands of stocks within it and if it’s diverse enough, if it’s big enough, really what you’re doing is you’re owning a slice of the global economy which is how I think about it. It’s thousands of individual stocks in there, Tesla, Apple, whatever it be but really what you’re doing is you’re owning a slice of capitalism.

The Power of Compounding Over Long Periods

STEVEN BARTLETT: If I was your son and I said, “Dad, prove to me that that’s a better creation strategy than buying crypto or buying companies that I use or like,” how would you explain that to your kid?

MORGAN HOUSEL: Your ability to do well over the next one year or five years is going to have no role whatsoever on your lifetime ability to generate wealth. All that’s going to matter is not what are the best returns you can earn. All that matters is what are the returns that you can sustain for the longest period of time. All that matters is your endurance. It doesn’t matter if you can double your money this year or double your money again the next year. All that matters is can you stick and keep it going for 50 years? That’s where compounding comes from.

STEVEN BARTLETT: Prove it.

MORGAN HOUSEL: Because the formula for compounding is returns to the power of time. That’s not quite it but like more or less that’s it. So in that equation, if you understand the math, all of the heavy lifting comes from the exponent.

STEVEN BARTLETT: Give me a case study where someone has followed that strategy and done well.

MORGAN HOUSEL: Okay, here’s one way to explain it that I use in the book. 99% of Warren Buffet’s net worth was accumulated after his 60th birthday. After he turned 60 years old, 99% of his wealth has been accumulated after that period because the longer you hold that 4, the crazier the numbers get.

When he was 60, I think he was worth about $3 billion. A lot of money. He’s a multi-billionaire but now that he’s 90, he’s worth over $100 billion and he’s given like $100 billion away to charity. So if he didn’t do that, he’d be worth, he’d go from $3 billion to $200 billion since he’s in 60 because the numbers just get crazier at that point.

He’s worth $100 billion so if his numbers are crazy, he’s worth $100 billion. So if his market, if his net worth goes up 10% in one year, he makes $10 billion which is three times that he was worth when he was 60. So that’s when you look at somebody like Buffet, is he a great investor? Is he a great stock picker? Of course. But the real secret to his success is that he’s been a good investor for 80 years and if he had retired at age 60 or at age 50, nobody would have ever heard of him. He would have been like one of the other multi-billionaires who lives in Florida and plays golf and he’s one of them.

The reason he’s a household name is because he’s been doing this non-stop since he’s been 11 years old. He’s never stopped. It’s just the endurance that’s made him so wealthy. Not necessarily the annual returns.

STEVEN BARTLETT: Patience. It’s a difficult thing.

The Janitor Who Became a Millionaire

STEVEN BARTLETT: It also reminds me of the story that you talk about in the introduction of your book about the janitor, Ronald James Reid.

MORGAN HOUSEL: Yeah. Who when he died in 2014, aged 92, had a net worth of over $8 million. And he was a janitor. How did he do that? He took what very little money he could save from his job as a janitor mopping floors at the gas station. He put it in stocks and he left it alone for 70 years. And that’s it. That’s all you need. That’s all you need to do. If you have endurance in your investing and you can keep it going for years or decades, you don’t need to be a genius stock picker.

And no, you do not need to do it. If you have endurance, you’re going to be literally 97% or 99% of the genius stock pickers. And what’s so interesting about it is like picking the right stocks is hard. It’s supposed to be hard.

Endurance Matters More Than Stock Picking Skill

MORGAN HOUSEL: There’s no world in which everybody who tries to beat the market is going to do it. Of course it’s hard. It’s like being an NBA player is hard. But having endurance is like largely in your control.

It’s so much easier to just be patient than it is to pick the right stocks every single day. And I think some people nature nurtures. Some people like probably Ronald Reed and my parents just understand it naturally. It’s not hard for them to be patient.

But there are professional investors who work 80 hours a week for 30 years to try to beat the market and they can’t do it. Not only some, that explains like most of them. And even the ones who can do it are maybe going to beat the market by half a percent per year, 1% per year.

But if you can have endurance, that’s a bigger benefit than you can have by even being like a very successful stock picker. Like somebody who outperforms the market by 1 percentage point per year and they can do that for 10 years, that’s amazing. That’s like Mount Rushmore investor. But somebody who earns average returns and does it for 20 years, he’s going to have way more money. You do it for 30 years, you’re going to be filthy rich. You’d be like Ronald Reed, you can be a janitor who leaves $8 million to charity when you die.

Buying a House as a Lifestyle Decision

STEVEN BARTLETT: Is buying a house a good or bad financial decision? My brother, who works in my company and he’s the one that introduced me to your book many years ago, said to me something along the lines of, “Steve, don’t buy houses to make money because you have the ability to play a different set of games that very few people can play.”

And what I mean by that is he kind of explained it to me. He goes, “Listen, everyone can buy a house so the returns there aren’t going to be huge. Go find a game that only you can play and you’ll get bigger returns.” If you’re buying a house because you think it’s going to be a good financial investment, stop. Even if it turns out in hindsight that it was, it doesn’t matter.

MORGAN HOUSEL: I think these are just purely lifestyle decisions. And I think so many people get screwed up when they’re in a spot in their life where they should be renting because they need to be mobile. They need to move around and get a new job, new career, new school, whatever it is. But they end up buying because they think they’re going to make money doing it. And that’s the problem.

So I own a house and if I ended up losing money on it, I don’t think I’d care. That’s not why I’m owning it. I’m owning it just because I want the stability for my family. People buy houses because they think they’re making loads of money from doing it. Because there have been periods of time in which people have made loads of money. Historically, that’s the anomaly.

Historically, in the US and the UK, housing prices adjusted for inflation have been flat as a pancake for the last 20 years. That there’s this very brief window of time that owning a house was a great investment. Robert Shiller won the Nobel Prize about a decade ago for his work in showing that over the last 150 years in the United States, adjusted for inflation, most home prices have been flat as a pancake. It’s just the last 20 years that have inflated people’s expectations of what a house can do.

STEVEN BARTLETT: Statistically, there’s going to be at least one person listening to this that has made an offer as we speak for a house with the assumption that it’s going to help them stack wealth. If they were purely doing it for those reasons, what would you tell them to do instead?

MORGAN HOUSEL: If that’s purely the reason, run for your life. Don’t do it. Particularly, I mean, it used to be, and maybe it still is like this in many cities in America and the UK, but it used to be that rentals were almost without exception shitty houses. There were no good rentals. A big change, at least in America in the last 20 years, is that most big cities have tons and tons of luxury apartments to live in and there are great places to live and they’re in the city centers and they got beautiful granite countertops and they’re great places to live.

Don’t fall for the idea that you can’t live well if you’re renting. I think that’s the problem and realize that if you’re doing it for financial reasons, you’re probably about to borrow a shitload of money for an investment that historically has been a very bad investment. If you put it in those terms, what are we doing here, man? You’re going to borrow hundreds of thousands of dollars for an investment that historically has been a loss? That’s what you’re doing here? You feel good about that? That’s what I’d say to that person. Godspeed. I would love to be in the room somewhere where that person has just looked at their partner after persuading them to make that offer because it was going to make them rich. Sorry, guys.

Understanding the Blockchain

RAOUL PAL: To make sure I and everyone listening understands what the blockchain is, it’s this public, you can think of it as this database in the sky and the database in the sky is checked by everybody who has their computer on and is interacting with the database in the sky. You no longer need a government or a bank checking the transactions and the contracts in the database in the sky because now all of our computers that are on interacting with it are in the background checking that if I send you one Bitcoin, if I do something on this database in the sky, it is in accordance with the history of the database and it is in line with that database.

STEVEN BARTLETT: Yeah. To make it less complicated, it just makes it a source of truth.

RAOUL PAL: Okay. In a world where we don’t even know who is who online, who owes each other what, any of these things, we now have a source of truth that everybody can agree on. And everyone can see. And everybody can see. You don’t need to trust anybody. And so that as a technology solves many things, problems that we don’t even know we’ve got because they’re so part of how we exist. So the technology is not about money. The technology is about truth and exchanging value and creating value in a digital age.

The Reward System of Blockchain

RAOUL PAL: Now what is interesting and powerful about this technology is we’ve seen technology similar before, the internet. We’ve seen broadband. We’ve seen these big global infrastructure things. Most of those, the internet was a public service good. Broadband was all built private sector. We didn’t get to make money out of these things really. Amazon made the money or whoever it was building the broadband. They all went bust as well.

What we’ve got here is this very clever thing that everybody in this blockchain gets rewarded for the role that they play. In maintaining the blockchain. In maintaining the blockchain. And because these things are scarce and let’s say Bitcoin being the most classic example is only 21 million that will ever exist. You’ve created this scarce asset that is a reward system.

So the people who mine the Bitcoin, they use the electricity to solve the algorithm to get the Bitcoins to make sure there’s only 21 million. Well, they get rewarded. The people who verify the chain get rewarded. And then we can buy the asset, which is actually us investing in the future use cases of this thing. Are people going to use it for storing wealth or building stuff?

The Democratization of Investing

RAOUL PAL: So now you get this global infrastructure layer of which people can invest. Now let’s go back to the example of AI. AI, 99% of people listening to this will not be able to invest in it apart from buying some of those big public companies because they’re not accredited investors, they’re not allowed, they don’t get to see it, it’s an insider, all of this stuff. This is the inverse. It is fractionalizable.

So a Bitcoin, you don’t have to buy one at 60 whatever thousand that is today, you can buy a fraction. So remember we talked about property and the guys who own the big high-end property make all the money. None of us can buy the $50 million apartment in Manhattan and then do it up and flip it for $250 million.

Now blockchain, we can all put 10% of our paycheck in it.

STEVEN BARTLETT: Do you think people should?

RAOUL PAL: Yeah and more. But the point being is this is the only globally homogenous asset on earth. It’s the same in Nigeria as it is in Brazil, as it is in London, as it is in Silicon Valley, as it is in India, as it is in Papua New Guinea and everybody is on an equal footing. You can put the same percentage of your worth in it.

Okay, that is mind-blowing and it bypasses the banking system, the brokerage system and all the other incumbent things that get in the way of a Nigerian buying an international investment.

So we’ve got a playing field that’s leveled in the fastest growing technology of all time in the fastest of pre-taxing assets in price terms of all time in the shortest period of time that is globally available to anybody. And then you realize, holy shit, okay, this is important.

Now, why that’s important is because having more investors in it means the asset becomes more valuable which means you’re more likely to secure it. People want to join the network to earn some of these tokens to secure it. The more use cases get built upon it because people are making money and it bootstraps it. Behavioral economics, it’s an incentive-based system to bootstrap the most ridiculous startup idea of all time which is I’m going to entirely disrupt money and create a new internet. I mean, that’s laughably stupid and that’s what’s happening.

Use Case: Web3 Games

STEVEN BARTLETT: I run a company called Third Web which is a Web3 infrastructure business. We’ve raised quite a lot of money for the company, about $30 million now and we have a big team and it’s interesting for me to observe the use cases because people come to Third Web to build on the blockchain and one of the really interesting use cases we’ve seen over the last, I’d say 12 months that’s really exploded is gaming.

People building Web3 blockchain-based games because if you think about games like FIFA which is a huge game obviously in the UK where we’re big soccer fans or other games like, you know, RuneScape back in the day where you have assets in the game. In FIFA you have a messy card. In RuneScape you might have a sword.

The thing that the blockchain now enables us to do is to take those assets from the game and actually trade them outside the game. So I can, if the sword was on the Ethereum blockchain, even though I’m not inside the game I can trade that sword on the Ethereum blockchain and so one of the most exceptional use cases we’ve seen at 3rdWeb is people building AI games. Sorry, people building Web3 games because these assets are now valuable.

It’s great for the game developer. They’ve now got this brand new economy for their company and it’s great for the people that own those assets in the game because those assets are now more valuable because more people can access them.

RAOUL PAL: And if I own Ethereum, if I own an Ethereum token, which I do by the way, I’ve been stacking it and refusing to sell, but how do I benefit from the fact that games are now being built on Ethereum?

STEVEN BARTLETT: It’s really simple. If we’d all been given shares in Facebook when it started, we’d have all been hilariously rich, but we didn’t. The VC’s got it and then it went to the public market and then you have to have a brokerage account, you have to be approved, right?

What this is happening, you buy an Ethereum token today, if Ethereum ends up becoming bigger and more uses, your token value goes up. It’s as simple as that. So you get to participate in an entire technological revolution really simply from your mobile phone and you don’t need anybody to approve it or do anything.

Yes, there’s regulation stuff, but simple stuff like that, it’s pretty straightforward for almost everybody in the world. So therefore, we talked about how do you invest in your disruption and the future of technology. Okay, here’s one where you can really do it and it’s easy to do.

How to Invest in Crypto

RAOUL PAL: A couple of questions here then. So you said it’s easy to do. Yeah. Let’s talk about the practicalities. How does one do it? I can do it on my phone, I have to call someone. How do I invest in crypto?

STEVEN BARTLETT: You just open a crypto account with one of the big crypto providers, Coinbase, Kraken, Crypto.com, whoever, Gemini.

RAOUL PAL: What about this though? My bank, my digital bank is offering me to buy crypto on there. Should I do that?

STEVEN BARTLETT: Yes, you can. And you could do it by PayPal. Start somewhere.

RAOUL PAL: I’m not going to say no, but you will go down the journey that everybody goes down, which is the easiest on ramp is the best. Revolute, whatever. I don’t care. Just do it. Get a feel for what it’s like to own an asset that goes up and down a lot, particularly down.

When it goes down, it makes you feel terrible and you’ve got to learn about how to deal with it. And then because it goes up over time, if you don’t do anything and you’ve chosen a good quality asset that’s provable as an asset in itself, it’ll probably go up over time. In fact, highly likely to go up a lot.

And then you’ll start thinking, do you remember Raoul saying that the bank owns the stuff and I don’t own it? And then you might say, “Oh, but the magic here is, unlike the bank where I can’t take more than 10 grand out, I can put it all on my little ledger device.”

STEVEN BARTLETT: What’s a ledger device?

RAOUL PAL: A ledger device is, it’s actually a company that provides it, but what it is, because this is just an address on a blockchain, and think of it, it’s like your mailbox. You can send stuff to it, but you can’t actually take it out.

Securing Your Crypto Assets

RAOUL PAL: Like your email. Somebody can’t read all your emails, but they can send you emails. Well, that part that’s private, that secure passkey essentially, well, you keep that to yourself and it’s stored on a device. And there’s a complicated way of doing it and you’ll have to go through that, which is you have to have this seed phrase that does it.

This technology will change quite soon. Fingerprints, face prints, and a bunch of other stuff. But basically, a little USB stick will secure that you can go and put in a safe or go and take it to your nan’s house, or whatever it is, can secure your money, that it’s only yours and nobody can take it out.

STEVEN BARTLETT: I have mine on a ledger. So I have my Ethereum on a small, it’s kind of like a small USB stick, and then that USB stick is protected by like 24 words or whatever it is.

RAOUL PAL: That’s right. And those words are on pieces of paper in different countries at the moment.

STEVEN BARTLETT: That’s right. And it means that no matter what happens, no matter where I am in the world, no matter who comes for me, I can always retrieve the X thousand Ethereum that I have on this ledger device.

RAOUL PAL: Yeah. Unlike a bank where my account could get frozen by the government, or they could empty my bank, they could freeze my bank. I will always have that value.

And also, there’s a famous example of the conversation of gold in the United States, and it’s been done in many countries in the past. The good thing about this magic internet money is you don’t have to physically cross borders with it.

STEVEN BARTLETT: Yeah. Think of all the Jewish people who had to take money and diamonds and gold out of Nazi Germany and out of Europe. It was hard to do. Here, you don’t have to do anything. You just need to remember a seed phrase.

RAOUL PAL: A seed phrase being basically a string of words. Yeah. Yeah.

Breaking the Paycheck to Paycheck Cycle

STEVEN BARTLETT: Do you know if people that are in that paycheck to paycheck cycle, which I was in for many, many years of my life, where I’d get paid for my call center, I’d go and spend the money. I’d pretty much spend all the money within the first couple of days of getting the paycheck, and I was just waiting the next three weeks for the next paycheck. What advice would you give them about getting out of that cycle? Because you almost feel imprisoned by that cycle.

JASPREET SINGH: Absolutely. Well, before I give the advice, I want to explain to that person what’s happening, because you are the prime customer for our economic system. Banks love you, because they can sell you payday loans, they can sell you credit cards, they can sell you lines of credit, and they can keep you in debt for the rest of your life, which means you keep making the bank rich.

Corporations love you, because you’re not going to think twice when we show you this nice bag, when we show you this nice vacation. You’re going to want this stuff, and so we love selling you this stuff. The government loves you, because you’re going to pay the highest taxes. Employees pay the highest taxes.

And so when you’re in that situation, you are making everybody else rich at your expense. And so if you want to break out of this, the first thing you’ve got to understand, you need to make yourself rich before you make everybody else rich, because when you’re spending all your money, you are putting your money into their pockets, and you have to stop that. You’ve got to keep that money for yourself.

You’re in a boat. Think of it this way. You’re in a boat, and this boat has water just flowing in, and you are sinking, and you’ve got to start by sealing the holes, and that means you’ve got to stop the spending. So if you are in what I call the financial danger zone, which is you don’t have $2,000 saved up for an emergency, and you have credit card debt, if you are in that situation, you are in the financial danger zone, and you have to make drastic changes.

That means right now no more eating at restaurants, no more vacations, no more doing anything that doesn’t put money in your pocket, and no more Netflix.

STEVEN BARTLETT: No.

JASPREET SINGH: And the reason why I say this isn’t because you’re going to save $15 a month. It’s so you can save two hours of your time a day. The average American is watching more than two hours of television a day, and if you don’t have $2,000 saved up, if you have credit card debt, you cannot afford those two hours a day being wasted on TV.

And that means right now you have to go out and start using the time to learn, start using the time to work, and start using the time to make some extra dollars. So what do you do? Start selling stuff.

STEVEN BARTLETT: Stop spending money.

JASPREET SINGH: Selling stuff you own.

STEVEN BARTLETT: Selling stuff you own. So if you have a TV that you’re not using, sell it. You have a car that you can’t afford, sell it. If you’re living in a house that you can’t afford, sell it. Downgrade. Move smaller. And then work to earn more money.

The Sacrifice of Building Wealth

STEVEN BARTLETT: I’ve got to say, the couple of things that came to mind as you were saying that, and funnily enough, I put myself in the shoes of 18-year-old Stephen Bartlett when I was in that small apartment with three or four immigrants in Moss Side Rush Home, and I was, you know, my rent was nothing. My rent was £150 a month, which I could not afford and I could not pay, and I was intimately working between call centre jobs, and whatever money I got, I spent.

And part of the reason I spent it, Jaspreet, is because like many people watching, especially men who sometimes feel the need because of the way society is, I was trying to get laid at the same time. And it’s hard when you’re a young man, and I say young men in particular because the stats do support the fact that there is an expectation that men pay. When you’re a young man, it’s particularly difficult to do all of these things, to cut back and also get laid.

And what am I going to do? Defer getting laid for 10 years? When I say laid, I’m really saying meeting someone and falling in love and having a life. So if I’m living in a shoebox, which I was, I can’t bring anyone back there. I can’t take anyone for dinner. I can’t take anyone to the movies. So what do I do?

JASPREET SINGH: This is why every Indian parents tell their kids to become a doctor so their son can get married. It’s the same concept. But here’s the thing. You have to pick your heart. Either life’s going to be hard now or it’s going to be hard for the rest of your life. And you have to pick what’s more important to you right now.

And if we talk about balance, if you want to have a balance of everything, where you want to find a girl and you want to make money and you want to stay healthy, you are dividing your attention everywhere. Not saying it’s impossible, but very few people can actually do everything all at once.

And if your number one goal is to become wealthy, if your number one goal is to turn your finances around, you have to get serious about it. Because where you put your attention is where you get the results. And so if you want to be in a better financial situation, you are going to have to make sacrifices. And it’s difficult. I can’t come here and tell you it’s going to be easy because that’s going to be me lying to you.

STEVEN BARTLETT: I’ve got to be honest. I did make a sacrifice. And to me, the sacrifice was I started a business. And frankly, that meant that I didn’t have time to be going out, getting laid or meeting people or socializing. But my story arc ends with it going well. And then the romantic situation taking care of itself many years later, once it had gone well, because I was so focused on myself.

And it’s funny, there is a bit of a paradox to life that the more you actually focus inward, the more you become a magnet. And the more I focused outward, the more I pursued and chased and sort of neglected myself, the harder it was to get people interested in me.

JASPREET SINGH: Yeah. And I also want to say that when I talk about building wealth, I’m not talking about becoming a money hungry, this money greedy, this evil person that just cares about money. That’s not what I’m talking about. Because I want you to live a holistic life because money is just one part of your life.

But the second part to that is I’m not telling you to never enjoy life. I’m telling you to make a sacrifice for a period of your life that way you can enjoy the rest of your life and never have to worry about money again.

Thinking of Life in Seasons

STEVEN BARTLETT: It’s hard for us to naturally see life as seasons, especially when we’re looking forward. When we’re looking back, it’s very easy to say, oh, that was that season. Like I can sit here now and say, oh, that 20 to 25 was that sacrifice everything in my life to make myself something season. And then 25 to 30 was like building and learning.

And then I now, you know, can think of, it’s easier actually now to think forward in seasons, now that I’ve been through some seasons. As someone that hasn’t been through seasons in life, it’s hard to think about life in those terms. I now think of my life in these five-year seasons. And that helps me to say to, you know, even have conversations with my partner where I go, this is the season I’m in. And it will last probably roughly this long. And I’m going to sacrifice these things and prioritize these things in this season. But it’s hard for people to understand this idea.

JASPREET SINGH: It’s difficult. And that sacrifice is difficult, especially during a time where everybody’s showing off everything on Instagram. You look at your friends who have a crappy job, but they’re driving around in nicer cars, going on better vacations, going to the nicer restaurants, and you’re thinking, what did I do wrong?

And then especially if you’re a guy, you have a girlfriend, you have a wife, she’s going to say, how come they keep getting to go to Cancun? They keep going to these nice restaurants.

The Pressure to Look Rich

JASPREET SINGH: How come you can’t take me to these nice places? And now you feel like you’re doing something wrong because where is this discrepancy? The reason why I call my show The Minority Mindset is because I’m a big advocate of not doing what the majority of people do.

The first time I made a million dollars in a year, I was in my 20s. I was driving a car worth $500. It didn’t have a bumper on it. It was not pretty. My wife sat in that car with me, and my employees drove better cars than I did.

So, you know, you got to be confident, and you got to work for something bigger, and you want a partner that’s going to understand that. That’s my belief.

STEVEN BARTLETT: Which is not the easy thing. It’s interesting because confidence is such an internal thing, and I just feel like I probably just didn’t have it then because I think I was scared for someone to know that I was broke.

I was so scared for someone to know that I was broke that I just didn’t entertain romantic relationships. And that is the reason why so many people will go into debt to buy vacations, to buy things, to buy stuff, to look rich. And ironically, that’s the key thing that keeps so many people poor for the rest of their life is they’re scared to look broke. And now when you try to look rich, that’s the thing that’s actually keeping you broke.

The Struggle of a Miserable Life

STEVEN BARTLETT: There’s another element to this, which is my life was pretty miserable. So when you have a relatively miserable life, when you don’t have many nice things because you’re working in a call center as I was until 11 o’clock at nighttime, doing overtime, every overtime hour I could get, then because you’re also lonely, you’re going home alone, anything that gives you a little dopamine hit, gambling.

This is why all the gambling shops are in the areas that struggle the worst financially because those, I mean, a lot of people save because those people are looking for that big payday, that dopamine hit from a payday.

My TV in my tiny, tiny little bedsit room was like half the size of the wall. I was making reckless spending decisions because I think it gave me some kind of hit that I was missing in my life. It gave me like a dopamine rush that was… And there wasn’t many things giving me a dopamine hit at that point in my life.

JASPREET SINGH: See, here’s the thing. During that time, you are making emotional decisions as many people are. And it’s very difficult to speak logic to emotion. But this is where now you have to be able to understand the difference because if you’re listening to this and you’re in that situation, you have to understand if you want to continue being able to live that lifestyle, you’re going to have to make some changes today. Otherwise, you’re going to be stuck in this lifestyle for the rest of your life.

And it’s only going to get more difficult. And that’s the thing is if you want to become wealthy, the first part is just your own mindset. It’s your own discipline. And until you can conquer that, I can tell you everything about investing. I can tell you different ETFs and index funds to invest in. I can tell you different investment institutions out there. I can tell you which stockbrokers to use. I can tell you just invest 15% of your income into this for the next 10, 20, 30 years and you’re going to become wealthy.

But until you can get over that mindset, you’re never going to become wealthy. Because then what happens in that situation is when you’re in that state of I just want to look rich. I just want to have that dopamine hit. I just want to have some nice things because I deserve it. I’ll work hard. You know what happens next? You’re going to get caught up in all the get rich quick schemes.

Because someone’s going to say look, put $1,000 into this. You’ll have $10,000 in the next 3 months. Or I’m going to show you how you can live the laptop lifestyle. You can work 5 hours a week, make $10,000 a month, $10,000 a week. You’re never going to have to worry about money again. Just buy this program. And now you’re a prime candidate. Because now you are driven by this emotion of I want that. I can’t imagine if I had an extra $10,000 a month and I don’t even have to work for it.

Because you can’t see past it. All you’re doing is being sold by emotion. You’re the one that’s going to get caught up in the get rich quick schemes. You’re the one that’s going to make the bank rich because you’re going to stay stuck in debt. Corporations are going to love you because they can keep selling you the nicest and newest stuff because you want to look rich. You want to show it off to your friends. You want to show it off to the girls. Isn’t this cool?

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