Transcription
Most financial channels out there are lying to you. They tell you to somehow save 200, 300, or 400 Euros a month. Invest in the MSCI World or create a 70/30 portfolio, and in 40 years, you'll be rich. Not because the MSCI World doesn't work, not because saving itself doesn't work, but because they mostly hide the most important variable from you.
If we want to become wealthy, we might go on YouTube and start searching how to get rich. Then we find a few financial channels. It all sounds great. We educate ourselves, and at some point, we come to the conclusion, okay, I'll now set up a savings plan for some ETF, and then things will go really well for me. Then you save and save and save, and somehow nothing happens. The price fluctuates all the time, it moves sideways, sometimes it falls, sometimes it goes up. But you don't really notice it in your small portfolio. That's not because the portfolio itself doesn't work. It's not because saving itself doesn't work. It's because of a variable that most financial channels simply don't want to mention because it's really uncomfortable, but it determines whether you'll be financially free by your mid-40s, or by 67, or perhaps even only by 80.
The reason is simple: they mostly haven't done it themselves, and their target audience is employees who don't want to do anything to become financially free, other than somehow setting up a savings plan and being done with it. Besides, they usually haven't done it themselves at all. I have. I've earned over 2 million Euros with my digital products in the last few years. I still work 15 hours a week, had months that brought in over 100,000 Euros, and now have a portfolio I can live off. And exactly this, this path, I want to show you now, because I definitely would have wished for a video like this earlier. Let me show you why this standard financial advice keeps you poor.
Let's just say you earn 2300 Euros net per month. That's roughly the German average. Then, according to a guideline, you save 15% of that. That's 345 Euros per month. If you're smart, you invest at least in the free stock market and pick some ETF, for example, the MSCI World, which has an average return of 7%, and you let it run. And now the financial channels tell you: "Okay, just let it run, never touch it again, do it for 40 years, and boom, you're a millionaire." 40 damn years is an incredibly long time. You're 27 when you start and 67 when you finally benefit from it. But if we're honest, we all want to benefit from it now, or at least within the next 10 years, and not only when we're almost – and this is putting it very harshly – almost in a retirement home. Hey, don't get me wrong. We need money at 67. We need money at 80. But it's not nicer to have it at 40. And the worst part is, when you're just starting, almost nothing happens in the first 10 years. If you put aside 345 Euros every month for 10 years, you'll be at maybe 60,000 Euros if everything goes well. Is that a life-changing moment? Of these 60,000 Euros, you would have paid in at least 41,000 Euros yourself according to this standard calculation, and the rest comes from the returns. I think that sounds terrible. It feels terrible because it is terrible, and exactly when people calculate this or at the latest during this savings rate or savings phase, let's put it that way, people just stop because they don't feel like it anymore, then they take the money and buy a racing bike with it, and boom, the money is gone again. Investing isn't worth it. That's the general popular belief. Of course, it's not worth it if you do it this way. But the problem is deeper, because the problem is the actual approach to this entire savings logic. 345 Euros, even if that's probably a lot of money for many of you, is far too little money to build significant wealth. And that's why we now come to a variable that nobody talks about because it's uncomfortable. But if you really want to become wealthy, you have to adhere to it or rather, you have to work on this variable. Tada! Your savings rate, not your ETF, not your asset allocation, not whether you're running Allw, MSCI World 70/30, 120, whatever, but how much money you can invest monthly.
And now people start talking about savings rates, and I almost want to throw up. Your savings rate depends on two things: how much you earn and how much you spend. And naturally, you can only scale one direction upwards. You can't save infinitely, but you could earn infinitely. I don't want to put pressure on you to earn infinitely or anything, but the savings rate basically means nothing more than you have your salary, so save as much as possible to increase this rate. But that's basically irrelevant. For someone who earns a million, even with a 10% savings rate, they still save 100 times more than you. Most financial channels out there, including all these FIRE movements etc., always focus only on the spending side. There are of course some exceptions out there. I've also seen really good financial channels that highlight this topic, but it's always a bit uncomfortable. Cancel Netflix, cook yourself, stop buying new bikes. Or even worse, ride a bike instead of a car. And all these things would perhaps lead to you saving 100, 200 Euros more per month. Do you want that? Do you seriously want to cycle 20 km to work every day just to save 100 Euros more? No, I'll tell you, screw the spending side. I've spent too much my whole life and focused on one side, the income side. Every Euro of income you can earn more drastically accelerates your wealth building. Let me quickly calculate this for you. You save 345 Euros per month at 7% return. After 40 years, you'll have 900,000 Euros. Now let's look at scenario number 2. You increase your income by, for example, 500 Euros with a side job or you have a good salary increase or something else, and you save not 345 Euros anymore, but 845 Euros. Now, after 29 years, you already have 900,000 Euros. That means 11 years earlier, not through a better ETF or better asset allocation, nothing at all. Simply through a stupid job, sorry to say it like that, simply through a very simple job, for example, at a gas station. Yes, yes, yes, I know, I hear you grumbling. Yes, it's uncomfortable, I said so. But whoever wants to become wealthy quickly must also generate income quickly.
First, scenario number 3, and this is for those who are a bit more impatient and want to scale even more aggressively: build an online business. It's easier today than ever before. If you manage to build an online business with which you can earn 2000 Euros per month, meaning net after taxes, of course, and you save these 2000 Euros completely, then you'll have 900,000 Euros after 20 years. 20 years earlier means you'd be financially free at 47 if you start at 27. How many millionaires do you really know in their mid-40s who can say they don't have to work anymore? Almost none, right? And how many people do you know who are very involved with saving and investing and always make sure to turn off the lights to save electricity? You know more of them, right? Now it's okay to question whether that might not be the best way to reach your goal. Get tips from people who are already where you want to be.
So, let's go back to your portfolio. How does a portfolio really develop? Imagine you're 27 now, maybe you are 27, I don't need to introduce this to you, and you save 345 Euros every month. Year 1 to 5. Yes, you have about 20,000 to 24,000 Euros in your portfolio, of which you've paid in 20,000 to 21,000 yourself. Maybe you've paid in all of it yourself, and maybe 2 to 3,000 Euros came from returns. It looks good at first. You're well in the black. Made about 7%. Amazing. Years 5 to 10. Now you're at about 60,000 Euros. You've still invested the majority yourself, but now it's slowly starting to become noticeable that the compound interest effect is kicking in because it's going a bit faster. Years 10 to 20, now it's really fast. Yes, after 20 years, you have about 180,000 Euros. Saved every month for 20 years. You're 47 years old and could have been financially free by then. And now, at some point, maybe in savings year number 30, 40, you've reached 900,000 Euros after 40 years of saving, and then some president comes to power and the stock market falls by 25%. Congratulations. You can't do anything anymore. You can't do anything anymore. You're 67. You would have needed the money now, now there's a crash. Now you might have 600,000 Euros left. Maybe it crashes by 50%, and now you only have 450,000 Euros. So you've saved diligently every month your whole life, only to reap a crash in the end. Congratulations. Welcome to reality. This is the classic path. It's annoying, it's terrible. We're taking a different one. Let's quickly calculate this again. If we actually increase the savings rate, same person, yes, everything the same, but you increase your income by 2000 Euros and can save 2000 Euros per month. Yes, years 1 to 5. Yes, after 5 years, you already have 140,000 Euros in your portfolio. That's almost more than the other, yes, this other scenario we just discussed, your other alter ego had after 20 years. In years 5 to 10, you already have about 350 to 400,000 Euros in your portfolio. After 10 years. Your portfolio is already earning as much as other people earn in a month, and after 20 years, you'll quite likely have a million. Now you're 47, now there's a crash. The thing drops by 50%, and you only have half a million left. Well, it doesn't matter. You still have 20 years to wait a bit. You know, normally, historically, it takes about two to three years after a crash for the crash to self-correct, then you're 50, and the million is back. It's still better than having no money at 67. My portfolio development, that's why I'm a bit brighter right now. I just opened this. In January 2019, I had, and of course, I had saved a bit by then, 10,000 Euros in my portfolio for the first time, January 2019. Then it went a bit faster. Yes, and I actually had 50,000 Euros for the first time in October 21. That means it took me two and a half years from 10 to 50,000 Euros. And I had the first 100,000 Euros in January 23. That means it took another 2 years, almost a bit less than 2 years. 200,000 Euros, or in this case, even 250,000 Euros, I had in July 24 after a year and a half, and since then it keeps growing because I've earned more and more and I'm pouring all the surplus into it. The most important variable in wealth building is solely your income and how much you are willing to invest from that income. There are people who earn 5000 Euros net and save 2500 Euros net every month. Of course, they reach their goal much faster than you. Now you might be asking yourself: "Ah, why hasn't anyone told me this yet?" And well, it's true, when I calculate it like this, I can never really become financially free. The answer is simple. Most people who give you tips on how to build wealth build wealth by giving you tips on how to build wealth. I build online businesses, or I have built an online business and gained a different perspective through it, and that's why I was able to build wealth through it. That's why my perspective is also online business. I believe almost 100% of the financial channels that exist today were started by employees. There isn't a single financial channel out there, I believe at least. I don't know for sure, but all the ones I know were started by employees and not by self-employed people. And they eventually became self-employed through the videos they started as employees, on how to make money. Of course, that's an effective way, and of course, everything they say works. But it's just not the fastest way. And when I look at people who sit in streams and watch every YouTube video and everything from every financial channel, in that time you could have had a side job, and your portfolio would grow much faster. Or even better, you could have made your own videos and started a small online business.
Look, I'll now give you three concrete ways you can do this, without all the complaining, because you're probably thinking, "Well, I can't just build an online business and earn 10,000 Euros right away." True, I didn't know that either. Nobody said that. I'm talking about every Euro you earn more, and ideally without investing too much time, makes your wealth grow faster. You don't need a business that makes 10,000 Euros. You might only need one that makes 500 Euros. And building a business for 500 Euros, man, you can do that. But very briefly, back to employees, but really very briefly, the easiest ways to earn more money as an employee are, of course, a side job, but that requires courage. Perhaps a salary negotiation with your supervisor, or maybe even a job change. I know it's totally uncomfortable, but we've heard it a few times now. Wealth building can also be uncomfortable. I know people who eventually say: "Oh well, I'm quite happy with my salary, and I can afford my life." Perfectly fine. But if you're sitting there and saying, I want more, I want to be truly wealthy someday, then you have to do something for it. And by that, I don't mean watching financial videos about the best current stock ETF. Whether the market is crashing right now and going down 10% or up 5% is irrelevant if you can save 8,000 Euros every month or 20,000 Euros. It simply doesn't matter. You'll get rich either way. That's why we're focusing on online business now. And if you're generally interested in online business, how I built it, you'll always find the first link directly under my videos. That leads to a workshop, it's free, I explain my system there. You can then adapt it if you want. Otherwise, if that's too much effort for you, subscribe to my channel and watch more videos. The leverage of online business, in my opinion, is currently the one that surpasses everything. Because whether you don't feel like making YouTube videos or being active on Instagram, it's the easiest way today, because you don't even have to show yourself anymore. Look at large financial channels. Many of them don't show themselves at all. They make some slides, put a voiceover on them, and then they just talk about a few topics. Then this channel eventually earns thousands of Euros every month through affiliates, commissions, collaborations, YouTube ad revenue, and the thing scales faster and faster in the long run, and that's the beauty of it all, an online business and the earnings from it are virtually unlimited. An employee can earn at most as much as their employer is willing to pay. And that doesn't depend on how great you are, but primarily on what others earn, because you're not supposed to earn ten times as much as your colleague. However, an online business can grow while you sleep, and you can earn more with an online business than a chief physician, even though you were standing in the kitchen last week cooking for other people. And most people then say: "Yes, I think that's great, but I have no idea. I don't know what to sell at all. I have no reach." And then they quickly fall into a hole and say, "Well, it's not worth it for me. This isn't for me." Let me briefly show you three types of online businesses and which of them might work the fastest. Then you can see if something is for you.
The first type is freelancing. You sell your time. You do something you're good at. You do web design, you write texts, you advise people on a topic. You're trading time for money, but we just said, well, I don't have to earn that much. That means if you have one consultation a month and that consultation brings you 200 Euros, and you're happy with that, hey, that's great. If you earn only 200 Euros a week, you're a small business owner and don't even have to pay taxes on it. That's perfect.
The second type is a bit more involved. You build reach, you build digital products, meaning you create an online course, an ebook, or a template, and you sell it long-term, hundreds or thousands of times. The problem is, at the beginning, you need a lot of know-how to create it all. You need a lot of time to build it up. But once it's set up, it scales without you eventually, because whether you sell one course or 100 a day doesn't really matter.
The third type is so-called subscription models, and that's also quite easy nowadays. You can go to schoolcom, for example, I've also linked it below the video. There you build a community, turn it into a membership. So it's like software as a service, and you earn recurring small amounts every month. Yes, that's also possible in the hobby sector. If you ride mountain bikes or racing bikes, for example, then you create a racing bike community, and either it's free, and you work through commissions later because you always link certain things, or this community costs, say, 5 Euros a month or something. Yes, and you can scale something like this up.
Which path should you take? I always recommend, just start with consultations. One-on-one consultations. Eventually, you'll do group coaching. From the group coaching, you'll have a lot of questions because you've gotten to know the target audience. From that, you'll build an online course and sell it. You don't need a million-dollar idea. You just need a general topic. You can then enter that into YouTube, search for all the financial channels or all the other channels you're interested in, and see what they're selling. Then you might already have your idea. And what most people don't understand is, you don't need a huge reach at the beginning. Especially if your reach is small. Of course, you have to reach someone, but it's enough if you can reach, say, 50 or 100 people through a few posts on Instagram or elsewhere. If your product fits, if the case fits, and if people are interested, they'll buy it even then. Reaching the first regular 500 Euros with your online business is achieved much faster than you think. A small example: you have a talent, for example, speaking in front of the camera or creating slides and doing a voiceover over them, and start a YouTube channel. I'm almost sure that in one to two years, solely through YouTube AdSense, you can earn your 500 Euros per month with 2 to 3 hours of work per week. That means research, thumbnail, upload, etc. Eventually, this channel will run, you'll get better and better, and then you'll relatively quickly earn a few hundred Euros per month in a niche through YouTube. And if you do everything right, that scales further and further in the long run and faster and faster.
And now come the objections. I know what you're thinking right now. I don't have time for an online business. I started with 5 hours a week back then. That's about 40, 45 minutes per day, and I started by breaking down my ultimate goal of an online business of 30,000, 100,000 Euros a month into many small, immediately achievable goals. Because I know, when you get into it, you'll realize relatively quickly, oh, there's quite a lot I need to learn. All cool. Take a DIN A3 sheet, DIN A3, so larger than DIN A4, and make it your brainstorming sheet. And every topic you think you need to know, write it down. And then for each topic, take a sheet of paper and write down what you would like to know about it. Then you just go through it step by step. It doesn't matter how long it takes. You don't need to stress yourself. So you don't need to work 40 hours a week on your business. That usually comes from people being impatient. It's enough if you can work 2, 3, 4, 5 hours a week on it, and most people already have that time available somewhere.
Number 2, I don't know what to sell. You usually don't need a brilliant idea. You need a problem that you can solve. What can you do better than others, perhaps? What have friends already asked you? Where do people come to you for advice? That could be your product.
Once, number 3, I have no reach at all. You don't need your own reach to sell your first product. Okay, reaching a few people would be good. My first customer with my new business came directly from Instagram, from an Instagram story. My first, I think ten customers came more or less from a network I had. Yes, I had a product. Many people were simply interested in it. So, it actually came from my network one-on-one, and then I slowly started to build it up through social media. That of course took a little time, but as I said, it doesn't have to happen immediately. You also don't need 10,000 followers to earn 500 Euros a month. That's obsolete. If you can do the things that are important, you can already earn your first 500 Euros a month with 200 followers. I can't go into that too much now, otherwise this video would take hours, so let's move on to objection number 4.
But isn't that totally risky? Do you know what's really risky in my eyes? Saving 345 Euros a month for 40 years, only to hope that when you have enough money to live on, there won't be a crash. That's risk. Building an online business will bring you immeasurable knowledge in the coming years and also immeasurable money, so that you won't care if a crash happens. If I say now, wow, I need money next month, I'll quickly develop a new product, build the landing page, set up my automation, send out an email list, do a small launch, and already I have 30, 40,000 Euros more in my pocket. That actually happens eventually, when you have reach and when you make a big launch out of it, you can make 100 or 200,000 Euros from it. Eventually, you'll know how to print money, and then you just have to decide how often you activate this lever.
I could talk about this topic for hours, but I don't want to lull you too much. You must, you must, you must, you must. At the end of the day, of course, you can do what you want. The important thing is just to understand that with a normal savings rate, you'll never make more money than you need, for example, to live or to live well, because you always have to restrict yourself a little bit at the end of the day, yes, and at the end of the day, you're totally dependent on some markets. You can't save 500 Euros every month and then hope to become a multimillionaire to live in luxury. That means if you save every month now, you won't be able to make big leaps in the withdrawal phase either. But if you build your life in such a way that you prioritize your income and continuously increase it, then you will truly experience luxury at some point. Definitely watch this video here as well. I think it's a very good addition, and I'll see you next time. Take care. Until then. Your Sebst. C.