Transcription
In today's video, we're talking about financial freedom level two. We talk a lot about, hey, financial freedom is when your passive investments or your leverage investments cover your expenses. By definition, you're financially free. We're taking it to the next level.
In today's video, we're talking about the buy, borrow, die. Now, before you click off, I see a lot of content. We're getting a lot of questions in the UI around this. There seems to be a trend around it, but most of the content that I watched seems to leave out important details, especially the math.
So, we created a free tool, the buy, borrow, die calculator. You can use this for Bitcoin or any other asset. It is 100% free. Just leave tool or let us know in the comments if you want this tool. We'll make sure we send it to you.
Now, before we work through the math, so remember our our goal here is for our net worth to continually increase. So, we are worth more yearover-year while getting paid taxfree income. This is how you never ever pay tax ever again. And there's a point in your portfolio, whatever your portfolio you're building, by the way, we're going to use Bitcoin, but real estate investors do this, Bitcoin investors do this, or at least the smart investors do this.
And also remember, there's there's levels to the game. I didn't know about this stuff when I first started. Just like when I started in business, I I didn't know what I was doing. I was like working in fitness, got my first client. But as I started building multiple sevenfigure businesses, you learn things that you did not know when you started. Just your level of awareness isn't there. When I first started investing and I had a couple $10,000 portfolio, I didn't know a lot of things. When I started building multisefigure investment portfolios, I started learning things that typically you only learn when you get there because the people you're around have those conversations. This YouTube channel and everything we create, I'm hoping is like you don't have to wait 10 years to learn this stuff. You can learn it now.
Buy, borrow, die is a really, really simple concept. I'm going to explain it to you in 60 seconds. You buy a house for $450,000. 10, 20 years later, it's worth 1.5 million. instead of selling it and paying capital gains tax or tax on that income, which could be $350,000 or more. The idea is really simple. You never sell your assets, you borrow against them. And I have stuck to this rule ever since I got into investing.
Warren Buffett, the OG, had some great advice. If you wouldn't hold it for 10 years, don't hold it for 10 minutes. I've done this through real estate. I've done this through crypto. I've done this through DeFi. I've done this through every asset I buy, every business that I build. I approach it with the mindset if if I wouldn't hold this or do this for the next decade, I am not going to do it for a day. And there's there's not just a compound effect that happens, but there's a velocity effect. And that velocity effect, that velocity of money has completely changed my life. In fact, if you want me to do a deepass master class on the velocity of money, I can absolutely schedule a live. We do three to four videos on this YouTube channel every single week and I'm starting to go live every week, sometimes twice a week to help answer questions or to help teach or just to help in any way I can. I think velocity could be a very good topic to talk about. It will absolutely change your life and it's 10 times more powerful than just compound interest. If you do want me to do a master class on that, leave velocity in the comments and I will schedule a live for the near future.
Back to this concept. Give me a thumb up if you understand what I'm saying here. You just never sell your assets. You borrow against it. And if you borrow against it, it's taxfree. At least in Canada, the US, not every country is the same. And then there's a deeper concept to it of like, oh, and when you die, that's where the buy, borrow, and die comes in. In the US, basically the the the tax you would owe dies with you, and you can hand over your assets to the next generation. Now, not every country has that. Canada does not have that. That is like the bonus bonus perk. But even without that, this concept makes a lot of sense.
So, let's go into the calculator here. I'm going to use a really simple example. Let's just say 10 Bitcoin at the current market price is 676. Annual BTC growth rate, I'm going to be extremely conservative and say 20%, for me it's been more like 40 to 50%. And not not every year, but annualized over 4, 5, 6, 10 years, it averages around 40 to 50%. But we're going to put 20% because we're going to be super conservative. And so, let's just say you worked your ass up and you build a $677,000 portfolio. Again, this doesn't have to be Bitcoin. is in anything that you can grow at 20% per year. You could start playing with, hey, how much could I pay myself every year and never ever run out of money and live taxfree. Let's go $70,000 per year, which is more like 100, 110, even 120,000 depending how you're taxed and and how that works. But, you know, if you get paid $100,000, you pay $30,000 tax on it. That's more like 70,000 take-home. Well, in this instance, you're not paying tax on it. So, let's put $70,000. Maybe you want to increase your borrows every single year by 3% and your interest rate on your loan is, let's just say 8%, it's a little aggressive. You can get much better interest rates, especially in the crypto defy world, to to borrow against your Bitcoin, but let's just say 8%. On average, it's been around 4%.
Now, you'll see a few numbers pop up. You'll see your starting value in 25 years. What will that be worth? That number does include what you paid in principal and interest, which is $4.7 million. And your total appreciation if you didn't pay yourself would be 15. So, not only is your net worth increasing from, you know, 34 of a million to 11 to 12 million, you've also paid yourself $2.55 million in taxfree income. And and you still leave this for the next generation, your kids, etc.
Now, this is where like percentages matter. What if you're not increasing by 20%, by you're increasing by 21%. Just a 1% difference. Look at what that looks like compounded over the next 25 years. It's in the millions. And and you can massage these numbers all you want. So again, maybe you're just like, ah, screw Bitcoin. I want to build a million-doll real estate portfolio, and I'm going to have that real estate portfolio grow by 12% annually. Over the next 25 years, you would grow your $1 million portfolio to $7 million. If you're paying yourself $50,000 taxfree, you would pay yourself $3.35 million. So $1.8 million in income and you still have $4.6 million left over to leave to the next gen, etc.
So this is like this is like financial freedom level two. Again, I think level one and how I like to think about financial freedom. This is how I've done it, by the way. What is my burn? What are my expenses per month? How can I build a portfolio that covers those expenses? Now I have an infinite amount of time to actually build businesses or do things that really really matter to me or or start a career in something that really matters to me regardless of the pay. By the way, that's typically how you become ultra successful in something is you don't do it for the money or at least not primarily for the money. You do it because you absolutely love it. To me, that's success right there.
But once you get there and you have time to work on the things that matter to you, level two, you really start thinking about how do I build a portfolio that grows every single year whether I show up or not, which is why we talk a lot about long-term investing, blue chip assets, BTC's, ETHs. Again, traditional investments are fine as well. Less risk, less reward, but you get the point. How can your portfolio grow year over year over year? Not every year. There's going to be some years where you're not positive. There's going to be bumps in the road and it's it's it's in those moments that most people lose because they sell their assets or they start trading. It's just like, no, no, no. Think a decade out. Like Tony Robbins says, most people overestimate what they can do in a year and underestimate what they can do in a decade. If you're not willing to do it for a decade, don't do it. If you're not willing to hold it for a decade, don't don't touch it.
And and the investor mindset for most is they they they call themselves investors, but they're not. And I'm I'm I'm I'm saying this to hopefully just even if this wakes up one viewer to be like, "Ah, I've been really saying I'm an investor, but I'm really a gambler or a trader. Investors think in decades. If you're not thinking in decades, you're not an investor."
The game here is to become financially free by building a portfolio that covers your expenses. 56 $7,000 a month. Now you have time to actually build something that can really move the needle forward. Something you absolutely love. You'll do for the next decade. You do it every single day. You build an awesome business or you build an awesome career. You start getting paid a ton of money because you're just really good at it because you absolutely love it. Now you really start building a portfolio. This is level two that can grow without you and you can actually start living taxfree. Borrow against it and make tax-free income. Full stop. Done.
Hopefully that's a really good explanation of the buy, borrow, die. And I would love to give you this tool, this calculator. Just let me know in the comments if you want it and actually start plugging in some numbers. Maybe this becomes your like five-year north stars. Hey, I'm going to work to build whatever size portfolio you want to build. So, you can even if it's side income, start earning a side income while your actual net worth and portfolio grows. That's level two.
Remember, there's levels on levels on levels. There's a game on the game on the game. I'm I'm literally in a mastermind group where two guys were talking about um one guy's getting rid of his jet and he's like unsure of which jet to buy because one is a little faster but has less range, the other has more range but is a little slower. And I'm in that convo being like, I have no value to add, but I appreciate you showing me that there is the next level. There's always the next level. And it's not about the freaking jets. Personally, I don't want a jet because it sounds like a headache. It's not about that, but it's like, wo, it opens your mind and and and eyes to there's there's new levels. And I'm going to leave it there.
If you enjoyed this video, help us out. Like this video, subscribe to this channel. YouTube is not pushing crypto content right now. As an investor, that excites me because I know no one is interested. And to me, that's yet another indicator to stack the bags, to double down on my DCA, to really build a portfolio. But we just we'd love this content to get to the right person. And and that's all we ask in return. These videos are free. We don't monetize this YouTube channel with ads. All we ask is like, engage, subscribe to this channel if you're not yet, and share this video with someone you think it could support. And again, if you do want this tool, let me know in the comments below. And with that said, I'll see you in the next video. Happy investing. Peace.