This is the advice that if I could go back to when I was 18 and teach myself I would be, today, sitting on a yacht laughing at my ridiculous success.
Instead. I discovered this at 43.
That's ok for me. I'm blessed with good genetics and I have the same energy/health I had in my 20's so I can keep building, but I'll impart this wisdom on my younger friends here on bhw.
Most of you won't manage to do this though. It requires discipline and it goes against everything the influencers preach, but for the handful of you that do, you're in for an amazing life.
Here's the biggest secret that no one talks about.. (really)
You only need to compound 8-9% to get wealthy. You don't need to make 15%, 20% or higher returns.
The S&P 500 has done about 11% average over the past 100 years.
Over a period of 20-30 years you're going to get 8 to 12% with it. Likely more like 12% given the debasement of currency and the technological growth of the economy, but you only need 8%. Anything else is a bonus.
Here's your life plan:
Age 18 to 30 - You have maximum energy. This is also the worst time for men. Trust me. 40+ is the fucking time to be a man
18-30 is your prep-years. (Whether you want a wife or to be a playboy. Doesn't matter. Build and focus on you first and you'll get a super high quality wife at 30-35+ and can build a huge family with ease if that's what you want. Which imo is the best path.)
Use this time to bank hard. Don't try to grow companies.
Venture Capital is a big scam. It's slavery wrapped up in a nice box. They want your energy to make them rich.
If you can net just $2 mil by the time you're 25, here's what the numbers look like with 9% compounding :
That means, $2 mil in VOO or an S&P 500 tracker. Don't overcomplicate it. This is all you need. Banks want to sell you fancy things because they make money on them. They don't make much money on simple index's.
In 50 years, you're worth $150 million.
That means, if all you do, is bank $2mil by age 25, when you're 75 you're a deca-millionaire. And in current time's, 75 year olds are going to be like 40 year olds are today.
But here's the magic..
You keep working and banking until you're about 30. At this point, you've maxed out your VOO. Job should be done. The more you get in it pre age-30, the more you'll have later in life.
Now you might think life is going to be boring until 75.
But, you're now 30, your future is set. You know what you can do now?
Use your energy. Earn, spend, have fun. You can make $500k/year and spend every penny on lifestyle. Travel, party, drive sports cars.
By the time you're 40, your $2mil you banked in VOO at 25 is worth $7.2 million.
At this point, you can start taking loans against it. 2% is the sweet spot. You can take 2% per year for the rest of your life and never pay tax on it and never get margin called.
At 40, your 2% loan is $145k/year. $12k/mo tax free, work free, that will only increase year on year.
Want to buy a house? You can get a super low rate mortgage against your principle. The house and the principle compound.
Let's say you take a loan of $800k for a house. Your $800k keeps compounding at 9%. The house compounds at 5-6%, and the loan interest is 4-5%.
By the time you're 50, your principle is $17 mil and your tax free yearly is $344k. At this point, you own a home, have $30k/mo tax free and never have to work again. Or, you can keep hustling and making cash. Maybe you're working and making $50k/mo. You can fly private, charter yachts and have fun, all safe in the knowledge your lifestyle is secured for the next 100 years.
2% loans yearly will keep your LTV under 25% indefinitely.
By year 60, you're worth $350m and if you want you can take out a couple extra big loans for big purchases if you want.
You're 85, but you have so much wealth you've had access to all the best supplements, peptides and anti-aging medicine so you look like a 55 year old.
It's that easy.
Age 18-30 - Just earn and bank. Don't grow companies. Don't reinvest heavily into a company. If you can bank $300k-$400k/year for a few years you're good. Build a company to $1mil/year, and bank $800k/year. Don't try to grow it to $5mil/year by reinvesting that $800k. Just get to $5mil in VOO before 30 and you're good. $10-$12m by 30 and you're going to stinking rich at 60.
Everyone makes the mistake of either spending, or trying to grow a company early.
It's easy to make $1mil/year for 5 years.
It's very hard to build a company to $10mil/year. Not many can do it. You have to be truly good at business, and this takes years, which defeats the point.
30-45 - This is your earning years. You've got more skills. You can probably make $2-$3m/year at this point. Don't save it. You don't need to. Spend spend spend. Go fucking crazy. Life like you're super rich, because when you're 50, you will be super rich without working. At 30-45 you have to work to be it, which is fine.
45-50+ - Choice is yours. Spend time with the family. Be a playboy. Work. Don't work. Play WoW. Doesn't matter. You're a decamillionaire. Enjoy life.
P.S. Copy and paste this into chatgpt and ask it questions. Ask it to give you tables of year on year and ask it about LTV, how to take loans against your principle, what VOO is, what buy, borrow, die is and practicalities of what I'm saying, but most of all, keep it fucking simple. The reason this won't work is if you try to get fancy and make higher %'s or you want to sell and spend your principle. Just s&p 500. That's all you need.
P.P.S: Are you 40+ ? This won't work well. You need to build a company and sell it for $10-$12m by the time you're 45-50 and you're set. Still do-able, but you can't do it with $2m-$5m unless you can wait until 80+. If you start at 50 with $12m, by the time you're 65 your principle is like $35m. It's do-able though. You just need to build a decent company to $5m ARR and you can sell for $10m-$15m.
