Transcription
There's a number the government watches more closely than unemployment, more closely than interest rates, and it measures one thing: how fast money moves. And when that number drops, the most powerful people in the economy, they start to panic. And then they print trillions of dollars to fix it. And it's that mechanism behind the number, the one that grows the entire economy, that the wealthy use to build their wealth faster than you do.
Now, most people's version of this number is basically zero, and nobody's printing you a check. So, I'm going to do three things in this video. First, I'm going to show you the exact return your money needs to hit your goal, your number.
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Second, I'm going to show you the gap between that number and what the market actually gives you. And then third, I'm going to show you how the wealthy raise their number, the system they use to manufacture returns that the market can't. Now, by the end of this video, you're going to know your number, you'll know your gap, and you'll know what closes it. You ready? Let's go.
Okay, so before we get to the mechanism behind the number, the number the government is fixated on is called the velocity of money. Now, it's pretty simple, the math behind it. It's basically how many times a single dollar gets spent in a year. You see, $1 moves from you, and then you give it to the store, and then the store gives it to the worker, and then the worker gives it to the next business, and now that $1 just went to four people. That $1 created $4 of economic activity, $4 of GDP off of one single dollar. So, you divide the activity by the dollar and you get a velocity of four. That's the score. Velocity of money is four.
Now, the faster the dollar moves, the higher the score. And the faster the dollar moves, the more the economy grows, the more the wealth, the GDP of the economy grows. So, that's that's all the Fed's formula is: total output divided by the money supply, GDP over M2. Now, the economy doesn't just grow from more money, it grows from money that moves, right? The faster it moves, the more it grows. So, that's how it works.
Now, here's where it actually is right now. The number, the velocity of money, it peaked in the late '90s, and then it started falling, right? 2008, it dropped it, and in 2020, that number completely fell off of a cliff. You might remember during the pandemic, the whole economy was shut down, the world was shut down, people panicked, and they saved their money. If they didn't want to save it, there was nowhere to go spend it anyway, and the velocity of money dropped all the way down to 1.13. This was the lowest, the lowest velocity of money score in history.
Now, 2020 is where most people get the story backwards, because they printed trillions of dollars, right? The most money in history. So, you'd think velocity would explode, but it did the opposite. It collapsed. Why? Well, because the money didn't move, right? People sat on it. They were scared. So, the government sent out the stimulus, but the stimulus landed in savings accounts. It landed in bank reserves. It landed in asset prices, and it just stopped. Trillions of dollars frozen in place. That's the lesson the economy taught us back in 2020. Money that doesn't move, it doesn't build anything, right? The money has to move.
But, it's that exact problem, the dollar that sits instead of moves, that's happening on your balance sheet right now. You see, your money has a velocity, too. Now, for most people, it's about zero, almost nothing. Your cash sits in a savings account, right? Your equity, it sits in your house. Your 401k, it sits in one position, and it never moves. So, $1 doing, you know, one job. It's you know, some of it's doing no jobs at all.
But, the Fed, they use velocity to hit a target, right? So, the Fed projects out, the more more precisely, the CBO projects out where the economy will grow over the next 30 years. So, they want to grow the economy. They want to avoid a recession. Well, you can use the same logic to hit your number, as well. But, first, you have to know your actual number.
All right, so the first step to doing this, the first way you can find this out is uh three things. There's three things you have to fill out and I call this the wealth GPS, okay? This is just like Google Maps. Anybody ever use Google Maps? Of course you have, right? Okay, so the first thing you do if you open up Google Maps is it would ask you your destination, right? What's your goal? So for you that might be $5 million, right? Maybe that's $10 million. Maybe it's $1 million. Whatever your goal is, you want to write that down, okay? That's the very first thing you need.
Now the next thing Google Maps would ask you is, okay, so I know where your destination, where you're trying to go, then they would ask, where are you? Like where are you now? Where you starting from, right? So well, again, you have to put that in there. So what do you have right now? 250k, you know, 2.5 million, 25 million, whatever it is. So you have your destination, where you're trying to go, you have your starting point, where you're at, okay?
Now once you're there, then Google Maps says, well, what's your timeline? So what's the time line or your let's call it your trajectory. So they may say, you know, which route do you want to go? Do you want to go by bike? Do you want to go by car, by train, or you going to fly, right? What's your time frame? How long do you have to get there? And let's say that I choose by car, okay? Well, then it say, you know, it might say, well, you can take this road, but it's going to take you an extra 10 minutes. You can take this road, but there's a toll and it's going to, you know, get you there on time, whatever. So only once you have your destination and you have your starting point, then you can get a timeline and trajectory and you get route options, okay? So sounds sounds easy enough, right? You've You've used Google Maps.
But let's run a real one. Let's say, let's say that your goal, let's set a goal of $1.5 million, okay? And my timeline to get there is 15 years. So I need to achieve this in 15 years. And then I need to know my starting point. So, let's say that I have $100,000. So, I have $100,000. In 15 years, I need it to be 1.5 million. All right. So, now we have to figure out a math. The The beauty of this is once you figured this part out, which is hard, What What do you want? Once you figure this out, it all just becomes a math problem. It becomes an engineering problem. Okay?
Now, what this tells us here is that the math tells us the exact return that I'm going to need to make in order to make my 100 grand turn into 1.5 million in 15 years. In order to do that, I'm going to need about 20% a year. Let me show you another way. A better way to look at this would be like this. So, down here I have 100 grand. And I need this to grow to 1.5 million over the 15 years. Okay. So, what's the rate of return I need to get there? Well, I'm going to need a 20% return in order to achieve that. Okay, easy enough.
But, look at what the market actually gives you. So, let's say that I'm, you know, investing in my pension fund or my 401k, my mutual fund. I'm investing in the stock market broadly. Well, the stock market broadly is giving me about 8% and over the 15 years, it's going to end up being about $317,000. Well, shoot, that plan is only getting me here. There's a big gap right there. I need the 1.5 million, but that route that I chose is only going to get me to 317,000, right? So, I'm not even close. I missed it by 1.2 million dollars. So, that space right here, this gap right here between the 8% and the 20% that I need to get my gap or to get my goal, that is the gap. How much is the gap? Well, it's 20 minus the 8 that I get, so the gap is 12% return per year, okay?
Now, here's the part that changes everything, right? You can't save your way across that. Let's look at a couple other variables just so you can understand this cuz you may not even be making 8%. Let's say that I'm only making 6% blended across all my assets. Well, if I make 6% over that time frame, I'm still very short. I'd only be at 240k. Well, I'm even lower. Well, let's say that I get a little bit better. Let's say that I get up to 10%. A little bit better, okay? Sounds pretty good, right? Well, that's only $408,18,000. I'm still way short. Now, let's say that I get up to 15%. All right, so now I'm really crushing it. We're at 15%, but of course, I'm still going to be falling short, right? Only the top, only the 20% is going to get me that number. It's the only one that's going to help me actually hit that number.
Now, index funds, they don't live up to, you know, they don't live at that level, right? So, that 12-point gap, it has to come from somewhere. It has to be manufactured or what I say is it has to be engineered. Now, that gap is the whole reason that you work as hard as you do, right? It's the reason why you work as hard as you do and you still feel behind because your money isn't pulling its weight, right? Now, mine does, but it didn't always do that.
Now, if you want your number, if you want your real rate, if you want your real gap on your actual balance sheet, well, I'm hosting a live event where I'll walk you through the entire thing. I'll put a link down below. I'll put a QR code here on the screen. But, if you want to know your number and the system that it takes to close that gap, then come join me live.
But, before I show you the system, I have to just stop real quick because there's definitely a wrong way to to hear everything that I'm about to say, okay? The wrong way is go chase 20% in one bet, right? So, people go to start chasing like every hot tip, you know, they're on Twitter and Reddit and watching YouTube videos, they're in Telegram, whatever, right? They're responding to like anonymous DMs on Instagram, getting scammed, right? So, you're trying to buy crypto pump and dumps, you're buying meme stocks, you're, you know, you're whatever, you're dumping it all in, you're trying to swing for the fences on that one num- one number, but that's not velocity, okay? That's how you grow broke faster.
Now, I've watched so many people do it. I get DMs from people that fell for these scams way too often, way too common. And what they do is drive themselves crazy trying to chase everything. They're trying to pay attention to everything, trying to go after that one thing, the one lucky break, which if the lucky break really worked, then why do 75% of lottery winners go bankrupt within 5 years? It's not about the one lucky break. It's never going to work, right? Piling into one single trade, it's never going to work cuz, you know, whatever, then the market drops 30% at exactly the wrong moment, and now you're forced to sell at the bottom, okay? So, the lucky break isn't going to work, right? The risk isn't worth it. You need a system, all right? Those people that lost that way, they didn't just lose the gain, either. They lose the thing that they started with. They lost this the the starting point. They lost the startup capital. So, chasing tips, taking, you know, huge risks on speculative assets, that's not going to be the answer for us.
What's the answer? Speed. Speed is the answer, but speed without structure doesn't build wealth, it destroys it. You see, the wealthy, they move really fast, but they move fast inside of a structure. So, the structure is the entire point that we're going to make this video or the rest of the video about. And I know this personally cuz I had to learn it the hard way.
You see, in my 20s, I sold my first tech company. It was a high-tech medical device business. I sold it to Henry Schein. They were the world's largest distributor of medical and dental supplies. And then suddenly, I I had a big chunk of money, like a real chunk of money, like life-changing money. But I didn't really have any idea what the wealthy actually do with that money. So, what do I do? Well, I went and I found out. I I hired a wealth firm, and they taught me this principle that basically changed everything for me. They told me that the wealthy don't sell their assets to fund their life. They hold them, and then they issue credit against them just like a bank. Some of you have heard of the banking concept before, right? They they hold the assets, I issue credit against those assets, and then the assets continue working, and I live off of the credit.
Now, the first version of what they gave me, it was kind of limited, right? I mean, I was I was pretty new, so of course it was very limited. It was one narrow tool, and it didn't really fit every situation. So, I've basically spent the next, I don't know, 15 years building my own version of it. I've been, you know, reading everything, including a lot of Robert Kiyosaki, who's now, I'm lucky enough to call him one of my good friends now. And it was really Robert Kiyosaki was the one that taught me the bigger principle underneath all of this. And he basically said that this isn't about one product. It's about using your assets to fund your life without paying the tax that kills everyone else's compounding, all right? So, that's what I want to show you right now. I want to show you the shape of it, right? Not because I read it in a book, it's because I've been struggling with it. I've been been working with it. I've been experimenting. I've been running it for over 20 years.
Okay, so let's go back to calculating your number. Like, remember your gap, right? You needed 20%, but the market gives you eight. So, the missing 12 points it has to come from somewhere. And like, like we just said, right? It's not coming from gambling, right? It's not It's not coming from like hot stock tips or whatever. It has to come from structure. It has to come from structure for a lot of things because maybe you get lucky once. Probably not twice, but let's say that you do get lucky twice. But you need to get that number for 15 years. Like, you can't be lucky consistently over 15 years, right? So, the only way it's going to work for you is it has to come from velocity. The same thing the Fed measures, right? But you have to run this on your own money.
Now, here's what almost everybody does. They, you know, listen to Dave Ramsey, and Dave Ramsey tells you to take take your dollar and save it, right? Put it into a mutual fund. And in that mutual fund, it's going to earn 6%. Maybe it Maybe it's 8%, and that's it. So, I'm I'm I'm I'm earning, and I'm saving, but all those dollars just go on to do one job. And they're just in that doing that one job in that mutual fund or whatever, doing that one thing forever.
Now, some people move on past that and they say, "Hey, you know, I understand putting that into the mutual fund. That 401k isn't probably going to be enough for me, so I need to start investing on my own." But what they do is they do a structure like this. So, I have my $100 like this and maybe, you know, I don't know, a good portion of that, 60% of that, that'd be $60, goes into that 401k and whatever the plan administrator is doing. And then maybe I'm going to take, you know, 25% over here and, you know, maybe I'm going to buy some real estate with it. So, this is going to go up at, you know, 6%, you know, this goes up at 5 5%, you know, I'm going to maybe I'm I'm a little crazy, I'm going to buy, you know, 5% of Bitcoin, something like that. Let's call that Bitcoin and that's going to go up at 25%, something like that. So, I'm going to I'm going to go ahead and do that. But if you notice what I'm doing is I'm investing horizontally. So, I'm slicing this into fractions and what I do is I get the average of this. So, 6, 5, you know, maybe because of the small percentages, maybe I get this to 8 to 10%. Pretty good, except for I'm still, you know, 8 to 12 points off of my money. That's the problem. What I did here is I diversified my way straight back to the gap. Right? That's what we call horizontal investing. It's flat and it's never going to get you to 20%. Even if I do get those lucky picks, I can't put my entire portfolio in that. So, maybe I take 1 to 2% of my portfolio and swing for the fences. Uh so, let's let's call these bets. And even if I get lucky and I hit a 50, you know, 50%, it's barely going to move the needle cuz it's a small percent. Maybe I get to, you know, 9 to 11% or something like that. As you can see, I'm still way off the where I need to be. So, you can see it's the structure that's the problem.
But you see the wealthy do it the complete different way. The wealthy take the same $100, but they go vertical. Watch what happens here. So, I'll do the same thing. I'm going to take the same $100, but instead of going vertical, what I want to do is I want to start with one asset. So, I'm going to put it into one asset. Let's call that asset number one. Okay? Now, that asset, if I hold it, it goes up, it appreciates, it's compounding, I never sell it, but instead I issue credit against it, all right? What that does then is that means that I can pull some of that liquidity out and I can go into, you know, asset number two. All right? And now the first one is still working, so let's say this one's compounding, you know, at 5 to 10% a year. Maybe that's a house, maybe that's real estate. And then I put this into, you know, the Nasdaq, let's say. This is uh some tech stocks. And now this is going up at 17%. But now I have two assets growing up, one at 5 to 10%, one at 17% on the same dollar. Now, that one I could also issue credit against that, and now I could buy some Bitcoin here, and now that's going up at 25%. But instead of averaging this, now I'm adding these together. Now, a structure like this could get me to the 15, it could get me to the 20, it could get me even higher than that depending on how I set this up and how I structure it. Now, when we do it horizontal, like we did over here, you can see I get the blended return and it's about 8%. But over here, I can build the structure I need. Do I need 12? Do I need 15? Do I need 18? What's the number that I need and then I build a structure deliberately for that.
Now, I want to be clear about what I'm doing right here, okay? I'm showing you that it works. I'm not showing you how to build it. Don't copy this, all right? Because how high you stack it, how you size each of the layers, that's the part that either makes you wealthy or, yeah, it could wipe you out. I know a lot of you're like, "Dude, that sounds crazy." It could wipe you out if you don't do it the right way. And that's not just this drawing on the screen, that was for illustration purposes only, but we'll get to that later. But what I want to show you is the is the shape of it. Let me show you the shape of it another way.
So, let's say I like to think of it more like a flywheel. So, I get like an asset, right? Asset number one. And then that asset becomes collateral. And then that collateral becomes liquidity. And then that liquidity gets me, you know, asset number two. And it gives me some of my lifestyle. What happens is now I have two assets compounding, which makes my base bigger. So, then as this continues around, I have more collateral, which means I get more liquidity, which means I get more assets. Which then means I can have a bigger lifestyle, and my flywheel continues growing. Each time it goes around, the the collateral base gets bigger and bigger and bigger. Every time it spins, it gets bigger round and round and round. That's the wealth velocity. $1 doing three, four, five, six jobs at one time, and nothing ever gets sold to do that, right? That's the part that that, you know, breaks most people's brains here. The first asset is still yours. It's still compounding. While its own value funds the next one.
Now, the Fed couldn't force the economy's money to move in 2020, right? Everyone decided to hold it. Even though they sent trillions of dollars, people still held it. But you, you can. You can force your money to move. Now, going vertical kills the two things that steal your wealth without most people ever even noticing. Number one is tax. Every time you sell to move money, you trigger a tax bill, okay? That's the velocity killer. But credit isn't a sell, okay? When you when you issue credit against an asset instead of selling it, there's no taxable event. The money keeps moving, and the government doesn't get a cut. And inflation, the dollar sitting still loses value every single year to inflation because the dollar is getting printed more of, so the dollar moving through hard asset outruns it.
Now, let me just real quick, let me be straight about what I'm not showing you, right? What I'm not showing you is how much credit do I issue, and which assets do I issue those credit against? Like which assets? Like in which order? Like when do I pull back? Well, that's the part that you don't freelance, please, because that's the part that could blow people up if they get this wrong.
But let me leave you with the part that surprised me uh at least the most uh when I first ran the system, okay? We used a hundred thousand dollar example. You needed about 20% to hit your number. But watch what happens when you have more. Let's say that you start with one million and now your goal is to say to get to 10 million, okay? So if I if I have that, well, I have the same let's say 15 year gap right here. Well, now the rate that I need actually drops. It drops down to about 17%, which is a little bit easier, right? Because the more capital that I have in the system, the more capital that I start with, then the less velocity that I'm going to need. Now, the person with a million, they can compound slow, they can be calm about it. Uh you have to run faster because you started later, okay? That's not your fault. It's just the math. And that's the part that I really want you to take with you from this, all right? Because it flips everything that you've been told about money and investing. You've been told that to catch up, you have to take more risk. You have to bet bigger, you have to pick the hot stocks, right? You have to swing for the fences, but that's the advice for people who are behind. It's exactly backwards, right? The wealthy don't hit their number by taking more risk than you. They hit it by taking less risk than you, structured better, right? They're not gambling harder, they've built better structure, right? The whole game is structure, not risk, more architecture, more engineering, uh less gambling, less risk, less adrenaline, right? Now, that one idea that you close this gap with structure instead of risk, that's the difference between the people who make it and the people who spend 30 years working hard and they're still coming up short.
Now, here's where you are right now. You know there's a number, you know your gap is real, and you know that saving harder or or gambling harder, please don't do that, it's not going to close that. What you don't have yet is your number. What you don't have yet is your real rate and your real gap. And you don't have the structure to close that safely. Now, that's the whole reason that I run live workshops. We do this once a a month or every other month. It's all free. You bring your numbers. I'll show you your rate. I'll show the gap. And I'll show you the engine that can help close that without the part that blows people up. I'm going to put a link in the description down below. We'll put a QR code right here if you want to come join me. But, the government watches one number to keep the entire economy alive. You should start watching yours. All right? I'll see you over there.