Speaker 1: If you're looking for a simple way to automate your money, that way you always have money to save and invest and spend, you are in the right place because that's what I'm going to be discussing today. Because the problem is, for the majority of people, you make money and then you spend money and then you wonder where all of your money went. You're only saving and investing what's left after you spend your money and for the majority of people that means you have nothing left over to save and invest, which is why you're always struggling with money, which is why you never feel like you can get ahead because you don't have any money working for you. But for the minority of people, for the people that actually become wealthy, they do something a little bit different. What they do is you make money and then you save and you invest money first and then you spend whatever is left. This is what wealthy people do and I'm going to show you how you can break that down right now. One of the simplest rules that you can follow is my 75-15-10 plan, which says for every dollar that you earn from here on out, 75. 75 cents is the maximum that you can spend, 15 cents is the minimum that you invest, and 10 cents is the minimum that you save. Now, if you want to do this the right way, let me show you. The first thing you have to do is you want to open up three different bank accounts. You don't want to manage your money all out of one bank account because the problem is you might accidentally end up spending your investment money or your savings money. So go to your bank, open up three different bank accounts. Then what you want to do is create an automation. That way you don't have to manually take money and put it here and here and most banks are going to do this for free for you and if they're going to charge you money, find a different bank. So the way this actually ends up looking is you get paid your paycheck from your business, from your job, whatever you're getting paid, your money gets deposited into your check-in account here, which is your spending money, and then automatically 15% of whatever gets deposited is going to go to this bank account, which holds your investing money, and 10% is going to go into this bank account, which holds your savings money. Now, let's understand. How to use this money smartly? Because what people get confused is they think that this savings is there to buy you a home or the savings is there to make you rich, which is wrong. This savings is there to protect you against an emergency period. That's what this is for because if something bad happens, if your company goes to bankruptcy, if you lose your job, something bad happens, you don't want to have to now figure out how you're going to afford your food. So this savings is there to protect you against those types of emergencies. If your income stops coming in that you can keep living your life. Without having to start selling your assets, you want to have somewhere between three to 12 months worth of savings put aside here. Now, this is a big range. And the reason why is because you're going to be in a unique financial situation than me. If you're 22 years old, you don't have any financial responsibilities. You don't got a husband or a wife. You don't got kids. Maybe only need three months worth of expenses put aside. If you're 45 years old, you got kids, you got a wife, you got a husband, you got to take care of your sick parents, and you're not very risk-averse. Well, maybe now you're looking into 12 months worth of expenses. So have some money put aside in your savings. Three to 12 months worth of expenses. But once you hit your savings goal, you do not need to keep saving more money just to save it because your savings are not there to make you rich. Your savings are not there to make you wealthy. Your savings are there to protect you against an emergency. Think of this like a cushion, not as your wealth building machine. Growing up in a traditional Indian household, most traditional Indian families believe that the way you build wealth is by saving a whole lot of money. You make a lot of money, you become a doctor, you become an attorney, you become an accountant, you make good money, and then you save 80% of the money. That's how most traditional Indian households think that you get rich. But that is a lie. Sorry, uncle and auntie. The way that you do it is you have to invest your money if you want to build wealth because every wealthy person, every wealthy person gets wealthy and stays wealthy because they invest their money. It's not because they save a lot of money because your savings are losing value to inflation. It's not because they make a big salary because a lot of people can earn it. It's not because they spend a lot of money and spend it all if you don't know what to do with their money. It's because they invest your money because when you invest your money, now your money will make you money even when you're not working. Your money will continue to pay you even when you're on the beach. Your money will continue to pay you even when you're sleeping. Even if you're not going to your job, even if your business goes bankrupt, you can still get it paid from your investments. That's why you need to have this, your investments. Now, I'm going to talk about the different ways that you can invest your money in just a moment. But there's a couple of different things that you can do. Here with this investment money, you can take this money and put it into a bank account and then invest it when you find a good investment. Or you can have this money automatically go into your investments. There are some brokerages out there that will allow you to automatically passively invest this money into stocks or ETFs or mutual funds or index funds. That way you don't have to worry about actually doing it yourself. That's going to go down to your investing strategy. I'll talk about that in just a moment. But just understand this is where your wealth is built. The more aggressively you can invest, the wealthier that you're going to become. And once you hit your savings goals, then what you want to do is reallocate this money here so it becomes 75-25. Because now once you hit your savings goal, you don't have to keep saving your money. You can invest more aggressively, build your wealth faster, build your wealth sooner, and build more wealth. This is your spending money. This is the money that you use to buy your food, to pay for your mortgage, to buy a house, to buy a car, to buy your watches, to buy your vacations. This is your spending money. Now, the tough part is many people are going to say, Jaspreet, I'm struggling as it is to live off of 100% of my income. You're telling me I have to live off of 75% of every dollar that I earn? And the answer is yes. And now you might say, how do I do that? Well, think of it this way. If the government came in tomorrow and said that they're going to impose a new 25% tax on you, what are you going to do? You might kick, scream, complain, cry, talk about it on Facebook. And then you've got to figure out how you're going to pay it because if you don't, you're going to go to jail. Think of it that way. Now, it's not as extreme, but the whole idea here is you can figure it out. And if you're spending every dollar that you earn, you're never going to get rich, let alone build wealth. You're never going to have any freedom. You never have a chance to build wealth if you're spending every dollar that you earn because you're making everybody else rich. You're making your credit card company rich. You're making Gucci rich. You're making the hotel companies rich. You're making your car company rich. It's never going to be possible for you. So if you want to build wealth for yourself, that means you've got to stop giving your money to everybody else. You have to spend less than what you earn, period. So start there. Find places that you can cut back on. Find what you can sell. Find what you can downsize on. Sell your car. Get a smaller car. Stop eating at restaurants. Downsize in your home. Move. Do what you've got to do, but you've got to spend less money. Now the question is, once you understand this, how do you actually build wealth? Investing your money gives you three different types of benefits. Number one, it helps you build wealth. Number two, it gives you financial protection. And number three, it can help you take advantage of tax laws and tax strategies as an attorney who's not your attorney. What I can tell you is that our economic system, our tax code, is designed to benefit investors. It is not designed to benefit employees. I'll show you. But this is where, if you are an investor, it pays to keep up to date with what's happening in the financial markets. And that's why I created Market Briefs, which is a free financial newsletter which keeps you up to date on what's happening in the financial markets every morning into a quick five-minute read. It's a fun newsletter where we break down what's happening in the economy, the stock market, the crypto market, the housing market, and the global economy into a fun five-minute newsletter. If you have not joined Market Briefs yet, I've got the link for you to join down in the description below. And I promise you that you are going to love it. And you might wonder, well, Jaspreet, how can you promise that? Well, if you don't love it, you can unsubscribe at any time because it's free. Let me start by breaking down the tax side because I think this is one of the most interesting, one of the most overlooked, and one of the easiest to understand. Our tax code, our IRS tax code. Taxes income differently depending on how you earn it. How do I know this? Because I am a licensed attorney. Obviously, I don't work as an attorney, but I spent a lot of time studying the tax laws. And you have three general buckets of income according to the IRS. You have earned income. This is also known as ordinary income. You have portfolio income. And then you have passive income. Portfolio and passive income are two different types of investment income. So if you go out and you invest your money into the stock market, if you own a stock for five years and it doubles in value and you sell it, that is portfolio income. If you own a rental property and it's paying you income every month, that's considered passive income. That rental income is considered passive income. These two types of income, your portfolio and your passive income, are investment income. And the reason why you want to understand this is because your investment income comes with either A, lower tax rates, or B, higher tax write-offs compared to your ordinary income or your earned income, which is your W-2 income, the money you make from your job. When you make money from your job, you're paying the highest tax rates and you're getting the lowest tax write-offs. So if you are a high income earner, you're making hundreds of thousands of dollars a year, maybe you're a doctor, you're an attorney, you might be paying about half of that money in taxes. Because you got your state taxes, you got your FICA taxes, then you got the federal income taxes you got to pay. Well, if you make that same amount of money from your portfolio income and your passive income, you're going to be paying a whole lot less. You could be paying 20% of your income in taxes. That's the top tax rate on portfolio income today. Because if you made a million dollars from your long-term stock market investments that you sold, well, the top tax rate today is 20%. When you earned that money from your job, it's a whole lot higher. We're talking about double that here. So top tax rate of 20% here. But if you make this money from real estate, now it's a little bit different because you qualify for a whole lot higher tax write-offs. Because as a real estate investor, one of the things that you can do is you get to tell the IRS, hey, I made a million dollars from my real estate investments, but I qualify for a tax break because my property is one year older. Yeah, I know my property went up in value by $200,000, but I still deserve a tax write-off. It's 100% legal, and this is why you see so many real estate investors bragging about how they can make millions of dollars and pay little to no money in taxes legally. Our economic system and our tax code is designed to benefit investors, not W-2 earners. This is one of the things they should have taught in school before you graduated, but unfortunately, they didn't. But this is why it is important for you to become an investor because you can take advantage of what's happening on the tax side of things. Now, let's move up to protection. Many people know me from Minority Mindset, my podcast, this YouTube channel where I talk about all things financial education. But the funny thing about this is Minority Mindset is my hobby. My full-time job is I run a company called Briefs Media. I'm the CEO of Briefs Media. Now, the risk with that is I run this company. And businesses go bankrupt. If my business were to go bankrupt, my income goes to zero, I stop making money. That's the problem. But here's the protection that I have. I also own investments. I have a real estate investment portfolio. I have a stock market portfolio that pays me with dividends every three months, every quarter. And so now, if Briefs Media were to go bankrupt, I'm not going to starve tomorrow. And the reason why is because I'm still making rental income every single month for my investments. I'm still making dividend income. Every three months for my stock market portfolio. So I have a layer of protection because now I'm not solely reliant on one income. Now, I want to say this with a little bit of caution because there's a lot of people on the internet that talk about how millionaires have seven streams of income and ten streams of income. You have to have multiple streams of income. And then what people think that they should do is I need to go out and create seven streams of income. So now you start to do as many things as possible. You try to start an e-commerce store. You try to day trade stocks. You try to flip real estate and do all these things. And you're going to end up going nowhere with everything. The reason why millionaires and successful people can have multiple streams of income is because they built one successful stream of income first. And once they built this, once they made a million dollars from this one thing, they could then diversify into a second and then diversify into a third. See, it's easier to diversify once you've built one thing. And that's kind of the way you need to think. So if you're working now in your job and you're working to grow your income here because this is your active. This is where your time is. To grow your career. To grow your skills here. That's good. Nothing wrong with working a job. I don't understand what people on the internet try to say. Oh, you should not be an employee. Look, if you like what you do, great. If you hate what you do, look for something else. Okay? I want you to love what you do. You don't have to start a business. Starting a business is not for everybody. I just want you to enjoy what you do. So if you're working a job, great. Continue to work to increase your income there. But then you want to work to create a second stream of income which is something you can do without working very hard to do. And I say this with caution because I don't want people to get caught up in this idea of I'm going to go out and build this online business that doesn't require any work. Because when people talk about how you can make $10,000 a month without doing anything on the internet, they're generally selling you a scam. So what I want you to understand is when we talk about this type of protection now, it's investing your money into proven assets. Real estate. Stocks. Things that have been around for a long time that have built a lot of wealth. I mean, real estate and stocks are two of the asset classes that have built more wealth than anything else over the last 100 years. And so if we can now funnel this money into these assets, you now can create a second income stream that you don't have to work to earn. And this can continue to pay you even if something happened to your ordinary income, to your job or your business. That's why you need to be investing your money. Now when it comes to your wealth, what I want you to understand when you invest your money is you have two general strategies of investing. You have what I call an active strategy. And then you have a passive strategy. Passive investing is a set-it-up strategy. Passive investing is an invested strategy. Active investing is where you're looking for individual investments. I'm not talking about stock trading. I'm not talking about real estate flipping. I'm talking about looking for an individual company, an individual piece of real estate that you are going to own and manage yourself for the long term. Passive is you're investing into somebody else's real estate fund. Hey, I'm a real estate investor. I'm looking to raise $5 million to invest in this apartment complex. Do you want to invest $10,000 into me? And then I do all the work. That's passive investing. You're investing into the stock market and you're investing into an index fund or an ETF or a mutual fund that's managed by somebody else. And now you just keep giving them money every week or every two weeks or every month. And you don't have to worry about it because you have this manager that is managing the fund. And now you have this diversification because you're investing into a whole broad list of companies. And it's a set-it-up and forget-it strategy. You just keep investing every week, every two weeks or every month. This is where you have to think about what type of investor you want to be. And you don't have to pick one. I do both. I have a passive investing strategy where my money is invested into my portfolio of ETFs. This happens every Wednesday whether the market is up, whether the market is down. It does not matter. Now, I got to give you a disclaimer because investing has risks. You are never guaranteed to make money when you invest. In fact, you will lose money when you invest which is why you need to do your own due diligence and never blindly trust a random guy on YouTube. I don't recommend what I do to anybody else. I'm just telling you what I do as an example. I invest passively every Wednesday. I don't care what's happening in the markets because I want to grow my exposure and the bulk of my passive investments are for cash flow. They were dividend producing funds. Then I also have an active investing strategy which is now I'm looking to invest my money into individual stocks. I'm looking to invest my money into individual real estate. So I have money going into bank accounts that are sitting there waiting to be invested. When I find a good real estate investment, when I find a good stock market investment, then I will take out that money and deploy it there. But it's not automatically happening. The money is automatically being saved and I'm just waiting for a good investment. That's what active investing is. You've got to find what's right for you. Do you want to be more involved? Do you want to be less involved? Do you want to take on more risk because active investing has more risk than passive investing? Or do you want to take on less risk? Do you want more potential upside? Active investing has more potential upside than passive investing but it comes with more risk. And that's where now you're going to dig into your own financial education and understand what is the right investing strategy for you because if you blindly copy what somebody else does, you're going to lose, which is why you have to invest in your own financial education. This is why investing in money is so important. You can take advantage of the tax laws, you get the financial protection, and you can build wealth. This is what wealthy people do. Wealthy people invest. They own real estate. They own stocks. They invest in businesses because that's what allows them to keep their income, grow their income, and continue to fund their lifestyles. But you have to take the first step and start investing because I get it. It's scary. It's risky. But in order to do that, you've got to systemize your money with every dollar that you earn. Once you do that, then you can start investing. And I know this can be overwhelming. If you've never invested your money before, it's scary. If you've never opened a stock brokerage account before, it seems like there's so much work involved. But I want you to remember this. When you take a look at somebody trying to get healthy, trying to get fit, you can get into this rabbit hole of how do I exercise? Do I need to do high-intensity exercise, resistant exercise? Should I do Pilates? Should I do yoga? What do I do? And what about my diet? Should I go keto? Should I go low-carb? Should I go vegan? Should I go pale? Should I go paleo? Should I go carnivore? What should I do on my diet? And it can get very, very, very overwhelming. But one of the best things that you can do is just get started. Get on a treadmill and put down the donuts and ho-hos, and that's how you start. And then you can start learning more and doing more. It's the same thing with your money. It can be very easy to get overwhelming about looking at ETFs and analyzing index funds and analyzing mutual funds and expense ratios and different yields and this and that. But just get started. Systemize your money and start investing. Start investing your money and then optimize after you get started. The reason why many people lose isn't because they picked the wrong fund. It's because they never got started. And so the key is just get started. If you don't have any money to go out and invest, it doesn't matter what's going on in the markets. It doesn't matter if you found an amazing investment opportunity tomorrow. If the stock market glitched tomorrow and you could buy any stock you wanted for 90% off, but you have no money to invest because all of your money is going to pay off your credit card bills, well, that doesn't do you any good because now you don't have the money to actually take advantage of that opportunity.