How Much Money Do You Need to Be Free? (FIRE is Wrong)

Summary

The 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

00:00

💰 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.

05:02

🤔 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.

10:02

🌐 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.

15:03

🌍 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.

Keywords

💡Financial Freedom

Financial freedom refers to the state where one has enough wealth to cover their living expenses without having to work actively for basic necessities. In the video, it is a central theme, with various influencers suggesting different amounts of money needed to achieve this state. For instance, Kevin O suggests $5 million as a goal to reach a place where one can survive without worrying about financial instability.

💡Passive Income

Passive income is money earned with little to no effort, typically from investments or assets that generate earnings over time. The video discusses the concept of living off passive income once a certain financial threshold is reached. Kevin O's mention of making 6 or 7% from $5 million exemplifies the idea of using passive income for financial freedom.

💡Tax Efficiency

Tax efficiency pertains to the strategies used to minimize the tax burden while maintaining an optimal return on investments. The script emphasizes reducing tax bills as a way to accelerate wealth accumulation, suggesting moving businesses to jurisdictions with lower tax rates to keep more of the passive income.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video mentions inflation's impact on the perceived value of $5 million over time, indicating that what was once considered a substantial amount may be less so due to the erosion of purchasing power.

💡Portfolio

A portfolio refers to a collection of financial assets such as stocks, bonds, and cash equivalents held by an investor. The video discusses the idea of managing a portfolio to generate income, with the speaker expressing skepticism about the 'passivity' of such endeavors due to the initial hard work required to build and maintain them.

💡Entrepreneur

An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The video script mentions entrepreneurs in the context of building wealth to a point where they can focus more on business growth and purpose rather than just survival.

💡Lifestyle

Lifestyle refers to the interests, opinions, and behavioral patterns of an individual, group, or culture. The video mentions lifestyle in relation to determining how much money one needs for financial freedom, as it varies based on personal desires and living standards. Andrew Tate's quote about $20 million being enough unless one desires extravagant items like jets reflects this concept.

💡Wealth Preservation

Wealth preservation is the strategy of maintaining and protecting one's wealth for the long term. The video talks about having a stable pot of money that can withstand economic fluctuations and serve as a safety net, emphasizing the importance of having a secure foundation before pursuing growth investments.

💡Yield

Yield in finance refers to the earnings or profits derived from investing money. The script discusses yield in the context of dividend stocks and real estate investment trusts (REITs), which provide a steady income stream, contributing to the passive income necessary for financial freedom.

💡Risk Capital

Risk capital is money that can be invested in ventures that carry a higher risk but also offer the potential for higher returns. Kevin O's advice to set aside a portion of wealth without risking it, and then use additional funds for riskier investments, illustrates the concept of balancing security with the pursuit of higher wealth.

💡Ultra High Net Worth Individual (UHNWI)

An ultra high net worth individual is someone whose net worth or wealth is over $30 million. The video uses this term to describe a level of wealth that is considered a comfortable retirement and a significant milestone in financial success, with the banking and wealth industry recognizing this benchmark.

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]