Avoid the Pitfalls of Quick Wealth and Discover the Power of Long-Term Investing

I was in the gym this morning, and while I was there, a few guys in the locker room were talking about making some easy money. A couple of them were talking about how they wished they had bet on the last UFC fight because it would have been easy money. One of the guys said, "I can't wait until my crypto pops off because I'll finally be able to retire and not have to worry about money anymore." At this point, I had to really bite my tongue—not because there's no value in crypto or the blockchain, but because there's a much simpler way to build real wealth and not have to worry about money without the gamble.

Throwing your money into random cryptocurrencies or sports betting, whether it's UFC, NFL, or NBA, is gambling, and you're the one making these companies rich. In reality, there's a much simpler way for you to get rich. That's why today I'm going to show you a boring way to build wealth that's going to take less headache, less stress, less risk, and less work. You can automate the process in five steps, and now you won't have to worry about trying to guess if the Lions are going to win the Super Bowl because they are going to win the Super Bowl this year.

The five steps to make this happen are:

1. Get some money: Once you get that money,
2. Systemize that money: You'll see what I mean by this.
3. Build a money growth strategy: I'm going to go over specific examples of how you can grow your money, so you're not left wondering what to actually do or where to invest.
4. Ride the storm: There are going to be storms when you invest your money.
5. Scale your wealth: This way, you can see bigger returns.

Let's start by talking about number one: getting that money. Your income is going to be the backbone of your financial success and wealth because you're going to use your income smartly to make you rich instead of making everybody else rich. But in order to do that, you have to have some income. You could start your own business, start a side hustle, work five jobs, or work one job—it doesn't really matter, you need some sort of income.

The reason why people get screwed up here is because they buy into this idea that if they just have more money to invest, they'll get rich. You see this on DraftKings and FanDuel all the time, where they give you all this free money to get started. Because once they can get you hooked, they win the game. You see this on the stock market because if they can get you hooked, they can sell you leverage and margin. You see this with real estate all the time—people talking about no money down real estate deals, just get started, buy my program, and now you can start buying real estate with no money.

The reality is, if you want to build wealth, you need money to get started. Everybody's going to try to sell you something to get started with no money because most people have no money. But if you want to build wealth, you've got to have some money to invest because investing and building wealth is all about growing the money that you have. It's not about creating money; it's about taking the money you have and growing that wealth. Yes, you can accelerate that by using debt, but if you don't know what you're doing, that debt is going to amplify your risk and put you in a much bigger financial danger zone.

So, if you don't have money, the first thing you have to do is go out and get some money. Get a job, start a business, or start a side hustle. Go out and start doing things to make some money. I'm not going to go over how you can do that in this article because there are a lot of other things I want to cover, but once you get the money, the next thing you want to do is systemize this money.

The difference between wealthy people and the majority of people is that when the majority of people make money, they start to wonder what they should do with it. Versus wealthy people, who already have a plan in place. Let me ask you a question: if your boss gave you an $11,000 bonus tomorrow, what would you do with that money? Now, think about that, and let's make it a little more juicy. What if tomorrow, instead of getting a $1,000 bonus from your boss, I wrote you a check for $1 million? What would you do?

Now, I know you're a little more financially educated because you're reading this article, and you're doing these things to build your financial education. But here's what the majority of people would do: they would make a million dollars and then go out and buy a nice home, a nice car, go on a few nice vacations, buy some things for their friends, go to some nice fancy dinners, and then realize they have to pay a tax bill, and realize they have no money left, and then realize they will have to continue funding their expenses in the future. And now, they're broke or bankrupt, which is why so many lottery winners end up broke or bankrupt within 5 years of winning the lottery.

What every wealthy person does, and what I want you to do from now on, is build a plan for your money before you get that money. That way, next time money comes into your bank account, you already know what to do with it. Some of this money is going to be spent, some of it is going to be invested, and some of it is going to be saved. You want to have this designation in place, so when you go get that money, there are no questions. You're going to have a job for every dollar that you earn.

A simple rule of thumb that you can follow is the 75-15-10 plan. This plan says that for every dollar you earn, from here on out, 75 cents is the maximum you can spend, 15 cents is the minimum you can invest, and 10 cents is the minimum you save. Some of you have been reading my articles for a number of years now, and you've said, "Jaspreet, I've been doing the 75-15-10 plan, but I heard you talk about this 50-30-20 plan years ago. I think I'm ready to do that now. Can you talk about that again?"

What this is, is if you're ready, well, now guess what? Instead of living off of 75%, you can live off of just 50 cents of every dollar you earn. I get it—this is going to be very difficult for many people, but if you can get here, that means you have more money to invest and more money to save. Because the reality is, this is where your wealth is built. Your wealth is not built with your savings. Your savings are there to protect you against an emergency—if a kid breaks their arm, if your wife has a problem, if somebody gets sick, if something breaks in your home, you have cash to fall back on so you don't have to go into credit card debt.

You want to have somewhere between 3 to 12 months' worth of savings. The amount of money you're going to save depends on your financial situation, how old you are, your financial responsibilities, but somewhere between 3 to 12 months' worth of savings. Once you build that savings cushion, now instead of saving more money, you're going to reallocate that money into your investments. That way, now you're investing more money because this is where your wealth is built. Your savings are here to protect you; they're not here to make you rich. Your spending is what funds your food, your home, and your car. But the whole idea here is you're always going to have money to invest before you spend all of your money because this is where your wealth is built, and this is what so many people get wrong.

The next question is, "Okay, Jaspreet, I'm going to put money aside so I can make myself wealthier. I'm going to put this money aside so I can build wealth, but what do I actually do with it?" Everybody's making money on DraftKings and FanDuel. Everybody's making money throwing their money into these random places. What do I do with this money so I can actually build wealth?

This brings me to part three, which is knowing your strategy. Now look, I have to give you a disclaimer—I am not a financial adviser. I am just a random guy writing an article. Everything that I'm going to talk about and everything I'm going to show you here are for example purposes only. I am not telling you what to invest in. Investing has risks, and you are never guaranteed to make money when you invest. In fact, you will lose money at some point, so make sure you always do your own due diligence and never blindly trust a random guy writing an article.

When you talk about your investing strategy, what you have to understand is: what is your goal? Do you want to see growth with your money? Do you want to see cash flow from your money? Do you want to protect your money because you're worried about something? Your goal is going to dictate what you do with your money.

Let me go over a few examples of what this means, and then I'll go over specific examples of how you can actually invest your money. If you were to go out and invest in growth, what that means is you're going to invest in something that you think is going to go up in value. You want to buy a stock for $100 because you think it's going to go up to $500. That's what growth means. Cash flow means you want to invest in something because it's going to pay you money for owning it without having to sell it.

For you to invest in the total stock market without having to find the perfect company, consider ETFs like SPY. SPY is an ETF that gives you exposure to the S&P 500, a group of the 500 largest companies on the stock market. SPY is created by SPDR, an institution that creates these types of funds. By investing in SPY, you gain exposure to the 500 largest companies in the stock market. If one of the companies goes bankrupt, your whole investment doesn’t go bankrupt—the fund will then kick that company out and put another company in, making it more passive on your end while exposing you to the United States stock market, particularly the 500 largest companies.

Another example is DIA, an ETF that gives exposure to the Dow Jones. The Dow Jones is one of the longest and most well-known indexes in the stock market. An index is a group of companies, and the Dow Jones consists of 30 large, well-known, generally Blue Chip companies. Blue Chip means large, established, and well-known companies. By investing in an ETF like DIA, you can invest in the Dow Jones without trying to find the perfect company.

Now, if you want to create cash flow or a new income stream that you don’t have to worry about all the time, there are funds that can give you exposure to that type of cash flow. Here are a few examples: NOBL, VYM, and SCHD. These have asterisks because I personally have money invested in them.

Starting with NOBL, this ETF gives you exposure to Dividend Aristocrats in the S&P 500. This means it invests in dividend-paying companies that have increased their dividend every year for at least the last 25 years and are among the 500 largest companies in the stock market. Then you have VYM, another ETF created by Vanguard, which is a high-dividend-yielding ETF. If you want to invest in broader companies that pay higher yield dividends, this ETF provides that exposure. A similar competitor is SCHD, an ETF created by Charles Schwab, which also focuses on dividend-paying companies in the United States.

If you’re looking to invest in companies inside the United States that pay dividends, these are a few examples to start your research. But let’s go a little deeper. What if you want to invest in companies outside the United States? Here are a few examples: MCHI, INDY, and EEM. MCHI is an ETF that gives you exposure to Chinese companies. INDY gives exposure to Indian companies. EEM is an ETF that gives exposure to emerging market companies, which obviously have a bit more risk and more potential upside.

It’s important to consider what your strategy and goal are. For me, the goal is cash flow, which drives the bulk of my investments, particularly in real estate, which is my largest passive investment. Real estate is for cash flow purposes, as is my stock market investing. Although I do invest in some stocks, startups, and other areas not for cash flow, the majority of my investments are for cash flow purposes because that’s what I like and understand. I invest in things that will pay me for owning them without having to sell my investments to get paid.

But you need to know your goal. If your goal is growth, value, or exposure to emerging markets or international companies, once you know what it is, you can build a strategy. Just understand that wealth isn’t built by investing your money once or twice; it’s built by creating a passive investment system where every week, every two weeks, or at least every month, you’re investing your money into these things. You do this whether the market is up or down, setting it and forgetting it, which is an automatic investment system. If you’re looking for a platform that can help with that, you can check out some of the services mentioned in the article.

There’s one more part to your investment strategy that many people often overlook. We talked about being financially prepared, which is having money to invest. The second part is having financial education—knowing how to analyze your investments. We touched on investing in ETFs versus index funds versus mutual funds. But you also need to pay attention to financial trends, not just financial news. Financial trends involve shifts in spending habits and where money is flowing, which is what you want to look for as an investor.

For instance, in real estate investing, a trend might be people moving into a new neighborhood or city, creating a good investment opportunity. In the stock market, you want to look for industries where money is flowing, such as areas with new innovations, changing regulations, or increased investment dollars. Paying attention to these trends helps you identify growth areas in the next 10 years rather than dying ones.

If you want to learn more about finding these trends, resources like Market Briefs can provide financial news, and Market Briefs Pro offers insights into financial trends. Over the last 100 years, we’ve seen big stock market crashes like the 2020 crash, the 2008 crash, the 2000 dot-com bubble burst, and the Great Depression. Despite these events, the stock market has gone up, although not in a linear fashion.

Many people believe the stock market is a scam or rigged because they buy when everyone is making money and then panic when the market drops, leading to losses. However, the financially savvy understand that these downturns create buying opportunities. For example, during the 2020 crash, financially savvy investors were buying stocks at a 30% discount. In 2008, they were buying real estate for pennies on the dollar, and during the 2000 dot-com bubble burst, they were again buying at discounted prices.

To take advantage of these opportunities, you need to be financially prepared, have financial education, and understand your strategy. If you’re dollar cost averaging—investing every week, two weeks, or month into funds on a passive, automatic system—the only thing you change when markets go down is that you buy more. Don’t panic sell, as many people do with their 401ks and lifetime retirement accounts. Instead, use downturns as opportunities to buy more.

To scale your wealth, there are three factors to consider: time, return, and money. While you can’t control how much time you have, you can control the return on your investments and how much money you invest. To invest more money, you can spend less or work to earn more. There are strategies to spend less, like cutting subscriptions, negotiating lower utility costs, or making sacrifices like cutting down on cars, homes, or vacations. You can also work to get a second or third job, start a side hustle, or start a business.

You can also work to increase your returns by improving your financial education. This might mean looking for more sophisticated investments, investing in individual companies, learning to read financial statements, and studying companies. Additionally, consider cutting down on investment fees, like those in a 401k. Your 401k has fees, which 90% of Americans don’t know about. Check the expense ratio of your 401k funds, and look for funds that offer similar returns with lower fees. Even a 1% fee can significantly eat into your returns over time, costing you hundreds of thousands of dollars.

To understand how much a 1% fee could cost you, use an expense ratio calculator. Then, compare your current 401k expense ratio with other options that might offer better returns at lower costs. Remember, time, return, and money are the three factors that determine wealth. While you can’t change the time, you can improve your returns and invest more money. The markets have grown by around 10% a year for the last century. Market crashes happen, but the key is to invest consistently and focus on proven strategies rather than chasing the next hot stock. This approach is a low-stress way to build wealth over your career.