How Much Money Do You Need to Be Free? (FIRE is Wrong)
Summary
TLDRThe video script explores the concept of financial freedom, discussing various opinions on the amount of money needed to achieve it, from Kevin O'Leary's $5 million for a secure passive income to Andrew Tate's $20 million for a carefree lifestyle. It emphasizes the importance of tax efficiency and smart investing to accelerate wealth accumulation. The speaker shares personal insights, suggesting $30 million as a comfortable retirement figure and advocating for global diversification, frugal living, and strategic philanthropy.
Takeaways
- 💰 The concept of financial freedom varies among individuals, with different thresholds for what is considered enough to retire or step back from active work.
- 💼 Kevin O'Leary suggests that $5 million is a good target for financial freedom, as it allows for a comfortable passive income without the need to take risks with the capital.
- 📈 The idea of a 'lifetime emergency fund' is mentioned, where the principal of $5 million could theoretically be drawn down over many years without relying on investment returns.
- 🏦 The speaker emphasizes the importance of tax efficiency in growing and maintaining wealth, suggesting that reducing tax burdens can accelerate wealth accumulation.
- 🌐 Moving a business overseas or to a tax-friendly jurisdiction can significantly lower tax rates, potentially allowing for faster wealth accumulation.
- 💡 The script discusses the difference between passive income and active income, with the former being derived from investments and the latter from active work.
- 🚀 Andrew Tate argues for a higher threshold of $20 million for financial freedom, suggesting that beyond this point, life doesn't change much in terms of material possessions.
- 🔑 The script touches on the psychological aspect of wealth, where the comfort of having a stable, passive income allows for more freedom in business and life decisions.
- 🏠 The importance of diversification in investments is highlighted, with the speaker advocating for a mix of dividend stocks, real estate, and other assets for a stable income stream.
- 🌍 Living in locations with a lower cost of living can stretch the value of one's wealth, allowing for a more comfortable lifestyle on a smaller income.
- 💡 The speaker's personal financial plan involves having a stable pot of money for emergencies and treating business as a growth investment, separate from passive income.
Q & A
What is the main topic discussed in the video script?
-The main topic discussed in the video script is the amount of money one needs to be financially free and the various opinions of influencers like Kevin O'Leary and Andrew Tate on this matter.
What does Kevin O'Leary suggest as the minimum amount needed to be financially free?
-Kevin O'Leary suggests that $5 million should be the goal for financial freedom, as it allows for a comfortable life and the ability to take care of one's family without having to work.
According to Kevin O'Leary, what should one do after accumulating $5 million?
-Kevin O'Leary advises that after accumulating $5 million, one should set it aside and not risk it, then start to take risk capital and put it to work.
What is the 'lifetime emergency fund' concept mentioned in the script?
-The 'lifetime emergency fund' concept refers to having a principal amount, like $5 million, that one could theoretically draw down for many years without relying on returns, ensuring financial security.
What is Andrew Tate's perspective on the amount needed for financial freedom?
-Andrew Tate believes that $20 million is the amount needed for financial freedom, stating that after this point, life remains the same unless one wants to buy extravagant items like jets or yachts.
What does the speaker suggest as a strategy to accumulate wealth faster?
-The speaker suggests dramatically reducing one's tax bill as a strategy to accumulate wealth faster, by running a business overseas where taxes may be lower.
What is the significance of the $30 million figure mentioned in the script?
-The $30 million figure is significant as it is considered the threshold for being classified as an 'ultra high net worth individual' in the wealth industry.
What is the speaker's personal financial plan regarding wealth accumulation?
-The speaker's personal financial plan involves having a stable pot of money for security, treating business as a growth investment, focusing on tax efficiency, and choosing to live in places with lower tax burdens.
How does the speaker view the idea of spending money after accumulating a significant amount of wealth?
-The speaker views spending money on extravagant items as less satisfying compared to exploring different cultures and having diverse experiences around the world.
What is the speaker's opinion on the role of passive income in financial freedom?
-The speaker believes that passive income plays a crucial role in financial freedom, allowing individuals to live comfortably, pursue passions, and engage in charitable giving without the need to work.
What advice does the speaker give regarding charitable giving?
-The speaker advises that instead of relying on the government, individuals should choose charities that are important to them and fund those directly with their wealth.
Outlines
💰 The Quest for Financial Freedom: $5 Million Threshold
The speaker discusses the concept of financial freedom and the varying opinions on how much money one needs to achieve it. Influencers like Kevin O'Leary and Andrew Tate suggest different figures, with Kevin advocating for a $5 million 'war chest' that can generate a safe 6-7% return, allowing one to live without working. The speaker also introduces the idea of a 'lifetime emergency fund' and touches on the importance of managing investments wisely to ensure a steady passive income stream.
🤔 Reevaluating Financial Goals: From $5M to $20M and Beyond
This paragraph delves into the perspectives of different individuals on the amount of wealth needed for comfort and luxury. While Kevin O'Leary suggests $5 million as a safe threshold, Andrew Tate argues for a $20 million net worth, claiming that beyond this, life remains largely the same unless one desires extravagant purchases like jets or yachts. The speaker also mentions personal anecdotes and the psychological aspect of wealth accumulation, emphasizing the ease of spending money versus the desire for meaningful experiences.
🌐 Global Strategies for Wealth Accumulation and Preservation
The speaker explores strategies for accelerating wealth accumulation, such as reducing tax liabilities by operating businesses in lower-tax jurisdictions. They discuss the benefits of having a stable 'lifestyle emergency fund' and the importance of tax efficiency. The paragraph also touches on the idea of diversifying investments and living in countries with favorable tax laws to protect and grow wealth, highlighting the contrast between accumulating wealth for security versus display.
🌍 Lifestyle and Philanthropy: The Philosophy of Wealth Beyond $30 Million
In the final paragraph, the speaker reflects on the significance of having $30 million as a comfortable retirement figure and the notion that $100 million is more about prestige than necessity. They share their personal financial plan, which includes having a stable fund for security, treating business as a growth investment, and focusing on tax efficiency. The speaker also expresses a preference for philanthropy and living in locations that offer a good quality of life without excessive financial drain.
Mindmap
Keywords
💡Financial Freedom
💡Passive Income
💡Tax Efficiency
💡Inflation
💡Portfolio
💡Entrepreneur
💡Lifestyle
💡Wealth Preservation
💡Yield
💡Risk Capital
💡Ultra High Net Worth Individual (UHNWI)
Highlights
The concept of financial freedom and the varying opinions on how much money is needed to achieve it.
Kevin O'Leary's perspective that $5 million is the target amount for financial security and the reasoning behind it.
The idea of a 'lifetime emergency fund' and how it relates to financial independence.
Differentiating between passive income and actively managed investments.
The importance of considering lifestyle when determining the amount of money needed for financial freedom.
Andrew Tate's view that $20 million is the threshold for financial comfort and beyond which life doesn't change significantly.
The psychological aspect of wealth accumulation and the point of diminishing returns in material desires.
Strategies for dramatically reducing tax bills as a means to accelerate wealth accumulation.
The benefits of living in tax-efficient jurisdictions and how it can impact passive income.
The significance of $30 million as the benchmark for ultra-high net worth individuals according to the wealth industry.
The distinction between passive income for lifestyle maintenance and wealth as a status symbol.
The role of personal financial planning and the importance of having a stable pot of money for security.
The impact of inflation on the perceived value of financial goals and the need for adjustment.
The idea of treating a business as a growth investment separate from a secure financial foundation.
The value of diversification in investments and living a lifestyle that includes experiencing different cultures.
The concept of financial freedom enabling greater clarity and the ability to pursue passions or charitable endeavors.
The final thoughts on the varying thresholds of financial freedom and the personal choice in defining what that means.
Transcripts
how much money do you need to be totally
financially free I'm going to show you
what everyone from Kevin o to Andrew
Tate says about how much you need in
your War chest and I'm going to give you
my unique perspective about how to get
there a lot faster by dramatically
reducing your tax
[Music]
bill I think a lot of people think how
much money would I need to
retire a lot of people so that they can
literally quit their job and retire and
those of us who are Entre rurs so that
we can just feel a little bit different
and put more energy and purpose into our
businesses and so there's all sorts of
different numbers of how much you need
to build into an Estee to where you can
just step back and live off of the
so-called passive income and I say
so-called because I don't think anything
that you ever have to manage uh
particularly stocks or bonds or crypto
or any kind of portfolio that's throwing
off income is passive and you had to
work really hard to build it but I want
to show you what a couple different
influencers are saying about how much
you can save and then give you my
feedback on that as well as tell you how
you can get that number almost twice as
fast as they would here's what Kevin o
said and why he thinks $5 million should
be your goal you have to get to a place
where you have $5 million in the bank
because you can survive the rest of your
life no matter what happens and your
family you can take care of a lot of
people making six or 7% of $5 million
when you make that you have to set that
aside and you don't risk it then after
that you can start to to take risk
capital and put it to work I think the
number from Kevin o I'm going to show
you another clip from Kevin o in a
minute I think it's a little bit low but
this actually speaks to well first of
all what are you doing to make $5
million in the first place where you
still have plenty of time okay set that
aside now you've got a lot more Runway
you're doing something that most people
consider risky Kevin Larry myself maybe
you are entrepreneurs where we question
ourselves but we have this great
optimism in ourselves to where you're
moving fast enough it doesn't seem risky
to do the business that gets you to $5
million what this sounds like to me is
the idea I came up with years ago of the
lifetime emergency fund where
theoretically you could just draw down
the principle of $5 million for many
years to come and not have to rely on a
return now obviously you know at the
very least you could put it in some kind
of term deposit and you know get these
days as much as 5% 5% on you know 5
million is going to throw off you know
$250,000 you know he's talking about
dividend Stock Investing plus maybe
there's a little bit of capital
appreciation you could you could take
out for his you know 6 or 7% so could
you live on $250 or $300,000 you
absolutely could I like his idea the $5
million of this is something where maybe
you just draw it down obviously
inflation in recent years has been a
force to where that $5 million you know
a couple years ago might have been you
know worth $6 million in today's terms
and so you know for someone who's you
know in their 30s or 40s the drawing
down does get dicey but if you run out
of saving chart on again even just
putting in the bank at one or 2%
interest rates that we had a couple
years ago uh you could still have this a
Runway just drawing it down to zero
before you die that's where I think the
$5 million number Works here's what else
Kevin olarry had to say what amount of
money would you say it takes for someone
to be wealthy or at least comfortable it
depends what you want out of your life
it's all about lifestyle you can live
off half a million bucks in the bank and
do nothing else to make money because
you can make off that about 5% in fixed
income with very little risk or you can
make 8 and a half 9% if you put some of
it in equities too and we're willing to
ride the volatility do not invest in
your brother's restaurant or a bowling
alley or a bar or all that other crap
you'll lose your money on that I
absolutely agree in the brother's
restaurant absolutely agree in the bars
to me that's stuff that you just have
more money than you know how to invest
and you just want to take a flyer uh and
even in my uh yield portfolio I didn't
mention it when I talked about this
recently uh I bought some shares the
Reit the real estate investment trust
that owns the petronus towers because
I've loved them since I'm 15 years old
it's not a bad yield actually and the
stock will do okay uh but I did it more
as kind of a Sentimental thing just
because I can afford to do that and if
it goes down a little bit I'll just
collect the yield uh in perpetuity now
the $500,000 number does certainly seem
low and that's a number where you really
got to be careful I don't know five or
six% of that I mean where you living on
25 Grand we've talked about the cheapest
places in the world to live speaking of
Malaysia I mean think koal and poor
might be on the top of my list I've said
it's the best value place in the world
to live I have a home there Nomad
capitalist live is coming there again
this year so go to nomad.com and find
out how to join us at our 4-day annual
event we've got a lot of great speakers
of Kevin Larry's ilk and other experts
on lowering your taxes investing
overseas and we're going to be hosting
at a hotel that is owned by a Reit you
can buy uh so check that out but I I
think one reason to check out all them
poor is the quality of healthcare the
quality of life the English the weather
like everything it's really cheap for
everything that you get so that's the
kind of place I'd be living if I'm
earning uh if I have 500 Grand stashed
away I almost wonder if he meant to say
the 5 million and just took a zero off
somehow but if you're making five or 6%
you're making 25 or 30 grand I don't
know where you're living in the United
States or uh the UK or Australia on 25
or 30 grand which uh you know Kevin olry
lives primarily in the United States
these days so that number seems to be
difficult now I'm going to talk to you
about some of the bigger numbers in a
minute and where I think the number
should be for me the the secret that
allows you to get there twice as fast is
dramatically reducing your taxes Kevin
air was born in Canada I think he's
primarily now in the United States he's
paying high taxes and the stuff he's
doing and so if you have a business
which is with bringing in this 500,000
to 5 million in his scenario and rather
than paying 21 or 25 or 28% corporate
tax and then when you take a
distribution you pay more or if you're
in the US you have an LLC you just pay
you know 35 40 45% all in on the money
you take out of your LLC what if you ran
that business overseas and you paid zero
or you paid five or if you're an
American okay you're probably going to
pay a little something but it's going to
be a lot less than just staying in the
United States what if you can pay from 0
to 10% it's a fair number that pretty
much anybody could pay going offshore
allowing for some lifestyle adjustments
Kevin o we talked about he got
citizenship in the UAE now they do have
a tax on lot of different you know
corporate structures now at 9% hey still
a better deal than what you're what
you're paying anywhere in the western
world and so if you could pay even 9%
tax versus what you're paying now
wouldn't you save the $5 million faster
I take risks according to most people
but I see myself as an extremely
conservative person and so I like the
idea of the lifestyle emergency fund
I've talked about my you know dividend
portfolio that would put some people to
sleep but it is consistent ly churns out
yield every year and it stays relatively
steady it just grows a little bit it's
not wild swings ups and downs there's no
100% growth in this portfolio of a year
but I like that as a super conservative
thing to as Kevin lry says just put it
to the side have sumon cash have sumon
yield maybe have some some slower growth
stocks have some real estate to make
sure you've got a place to live that's
kind of my my pie my four four pieces of
pie in my personal plan because I I
agree with what Kevin lry is saying and
what I think he was trying to what he
was alluding to there was exactly what I
believe which is if you're an
entrepreneur and you have your $5
million and you're set for life in his
analogy you don't want to stop but now
you get to play entirely for the
business because now you're not taking a
salary of the business if you don't want
to uh you can put all the money back in
the business you can really put the
pedal on the
gas and to me that's what separates
people I mean some people get the 5
million I'm done I'm retired I'm out
I'll live in the 300,000 a year the
entrepreneur says okay well going to
make the bigger impact and you're going
to play the Warren Buffett game where uh
I want the number to get as big as
possible and when I die that goes to
charity like Warren Buffett does give to
charity says I don't give more because
uh you know I I think I can build it
bigger in my business uh I can just put
it back into more stock and I'll have
more to give to charity in the future
like that's the difference that I I kind
of like what Kevin o Larry is saying so
that's his $5 million number now whether
you like him or you don't like him
here's what Andrew Tate has to say why
it should be 20 million after $20
million life is basically the same if
you don't want to buy a jet and you
don't want to buy a yach you'll never
any more what's actually kind of amazing
to me is when I was poor I thought I got
rich I'd buy all this stuff and now I'm
rich and I can buy anything I want and
there's nothing to buy there's nothing
to buy clothes I already have too many
my wardrobe is completely full head to
toe don't wear most of them diamond
watches you get 10 how many do you you
need cars I have 28 I've drive like four
of them like what's there to buy 20 25
million that's as good as life can
really get fate you're H what drive the
car theth you want you have the watch
you want and that's it I think Andrew
Tate is probably a bit more of a spender
than I am uh 25 million okay listen I I
finally I finally broke down and I took
a couple of uh private flights with
within Europe over the uh the Christmas
holiday uh I can't like the idea of like
I'm going to fly from you know Bogata to
qualm po uh and it's it's 300 Grand I if
I 25 million 250 million it's just like
little Rich for my blood I I I like to
spend I like to keep things Frugal and
so obviously the more money you make for
someone who who has my mentality if you
want to do that really nice stuff that's
why 5 million I don't think is enough so
he's saying $20 million and uh you know
don't don't you hate it when you have 10
diamond watches I don't know what to buy
anymore damn it um obviously you know
this the old adage I mean more stuff
doesn't doesn't help yeah you know I I
probably don't I don't like the diamond
watches it's nice to have a few watches
uh but yeah eventually all the stuff
that you thought was cool it's like all
right whatever I've done that um the
number that I've heard from people from
you know Bankers that I've gotten along
with to people who have sold their
companies is $100
million and they say after that I mean
forget passive income on the on the
income they said above that there's
really nothing you're going to do I mean
you're not going to buy the world's
biggest yacht with that but but you can
buy a nice boat for $10 million and when
you have 100 million and 10 million goes
away again it kind of send Shivers up my
spine a little bit but you're going to
be fine right I mean I think for people
like me the psychology of just getting
comfortable of you know letting the
money go and knowing you're still going
to be okay is is is good but the real
number I've heard is after 100 million
it's just totally for show uh it's just
I want a bigger yacht I want a bigger
plane I mean you can buy planes and
Yachts and you'll still have plenty of
money and then you can invest the money
and and and live off of that for me I
like the number that the banking
industry the wealth industry uses which
is $30 million as that's what they call
an ultra high net worth individual so
there's High net worth there's very high
net worth and there's ultra high net
worth individuals there about 600,000 of
them that we know surely there's more of
them than that but let's say it's
600,000 people in the world if you get
to 600,000 of eight billion you're doing
pretty well and let's take the Kevin oer
story so Kevin oerry is more of how do I
get on passive income Andrew Tate is
more of you know can I pay for the Jets
obviously passive income can pay for the
Jets can pay for the watches and if
you're getting to a certain point in
stopping if you're say okay listen I got
to 30 million I'm done well then the
passive income is to pay for the stuff
that you want and maybe this year it's
watches and next year you decide to do
something else you know you could invest
in in the bank these days and it
probably won't last forever with
interest rates going to go down but you
can get $1.5 million now again let's use
my tax story if you have $1.5 million
you can live in a tax free or a
territorial tax jurisdiction you can
move around every decade to some country
with a 10year tax exemption you can live
in a non-dom country and you can say hey
I'm going to spend most of my money
outside of the country you can move to
Ireland or Malta or Cyprus or something
like that and say hey I'm going to spend
only a couple hundred grand in the
country and then I'll go to Dubai and
drive my race cars and I'll go over here
and buy this and I'll go over there and
buy that and you know your tax bill
might be you know 10 or 12% something
like that on on passive income when
you're not working for it or live in a
taxfree country and you can just pay
zero but you know that one and a. half
million you're going to get to keep most
of that and um you know listen you can
easily spend $100,000 in a month I mean
you book one private jet flight from
London to Dubai there's 100 Grand I mean
the idea that like it's so hard to find
things to spend money on does it is a
little silly you can spend money very
easily but how much of that do you
really want I mean for me if I'm flying
from you know somewhere in Europe to to
my home in qual andore yeah Turkish
Airlines business class is perfectly
fine me and if you spend enough money in
your credit card I mean I I think I have
a couple million miles now that I could
flip into Turkish Airlines miles and
thetically never pay for that flight I
have not flown a 12-hour flight uh
private certainly even a small private
plane is a little bit less comfortable
so I was okay if you have endless money
uh you can fly from wherever you want to
wherever you want uh if you have endless
money you can buy a plane and I know
people have planes but if we're just
talking about hey how do I get to some
level of wealth and then stop that's how
much I'm going to rely on for the rest
of my life life then you have to make
some kind of sacrifices these guys are
uh alluding to now what I've told you my
personal financial plan is I'm going to
have a pot of money and just know that
it's going to be very stable and okay no
matter what happens businesses go up and
down who knows what going to happen that
money is always there and if I ever had
to start over I have my skills and then
you treat your business as the growth
investment I think the keys here for me
are tax efficiency on the money if you'd
like to be charitable use the money to
be charitable the Govern is not the best
charity right I choose Charities that
are important to me and I fund those and
then I live in places where they don't
want to take half my money whether it's
on the way up or whether it's once I'm
living up the passive income so I think
that again having that passive income as
much of it as possible let's you put the
most into your passions if that's
building a business building a cause if
it's charitable giving it goes more it
goes further you know for me you if I've
got $30 million I'm not going to go and
live in
Nicaragua uh but I do I mean I I like
spending part of my year in quum
Malaysia it's hard to spend money there
now they got a Gucci store every every 5
m and so you can you can go there and do
that but I mean just going out for
drinks going out to nice places going
out for nice dinners I mean you you
would you would you'd have to really you
know struggle now if you want to buy the
finest Champagnes and you want to buy
cavier you'll pay more for that in Asia
than you will in Europe but you don't
want to you're probably not going to do
that every day having you know what I
would want to do with this kind of money
is exactly what I've done Diversified
having a couple homes around the world
where you can spend time and you could
have different experiences because i'
I'd rather you know spend a month a year
in Latin America and then get to go to
Asia in the winter where it's warm and
then get to be you know somewhere that I
like in Europe you know during the
summer months and uh travel around and
meet friends I'd rather do that than be
like I'm going to buy another diamond
watch I mean it's a lot more satisfying
to be able to go and explore different
cultures at least for me and so I think
$30 million if you take my number
whether that's in dividend stocks
whether that's just cash uh you can
easily and I think relatively safely
turn that into you know a million and a
quarter a million and a half million six
a year and if your taxes are in in good
shape you can uh you know that can go a
long way and you'll probably end up
having plenty to to donate and you could
argue uh you could force yourself to
spend that money to enjoy it or you
could just kind of pile it back into the
portfolio so I think $100 million means
you have you really have nothing else to
buy other than just showing off $30
million is a comfortable retirement $5
million is uh with Kevin O's number is
you're in good shape I don't know what
this $500,000 is about leave a comment
below
uh click the Subscribe button while
you're at it if you want to hear more
about how to keep more of your own money
and be more free and take advantage of
opportunities in other places where they
would like you to be there and tell me
how much you think you need to be
totally financially free and be able
either to step away from it all or to
step into it all and do more with a
greater clarity
[Music]
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