The Ultra Rich Playbook [Legal & Tax-Free]

Summary

In this insightful video, Alex Rossi shares his journey to amass $100 million by 32, leveraging his business acumen and investment strategies. Rossi outlines four strategies utilized by the ultra-wealthy to accumulate wealth and legally avoid taxes, including income generation, passive and active investing, and leveraging business ownership. He also emphasizes the importance of value creation, strategic opportunity selection, and the influence of one's environment on financial success. Rossi challenges viewers to think critically, pursue high-leverage opportunities, and avoid common fallacies associated with wealth accumulation.

Takeaways

• 💼 The speaker, Alex Rossi, emphasizes the importance of generating income and learning skills to provide value in the marketplace as the foundation for wealth accumulation.
• 💰 He outlines four strategies used by the ultra-rich to get wealthy: leveraging income, investing in public equities, owning and selling private businesses, and utilizing advanced financial strategies like ESOPs, dividend recaps, and public equities.
• 📈 Rossi discusses the concept of reinvesting income at a passive rate of return to grow wealth over time, highlighting the power of compounding and the significance of tax considerations.
• 🏢 He explains that owning a business and selling it at a multiple of its earnings can be a potent strategy for wealth creation, but also points out the need to reinvest the proceeds wisely.
• 📊 Rossi introduces the idea of using debt strategically, such as in an ESOP or dividend recap, to extract liquidity from a business without giving up control, while also discussing the tax implications.
• 🚀 The speaker suggests that going public can provide significant liquidity and leverage, allowing business owners to borrow against their publicly traded shares.
• 🤔 Rossi challenges the 'fallacy of Warren Buffett', pointing out that Buffett's success is not easily replicable due to unique historical conditions, longevity in the market, and an element of luck.
• 👨‍👧 The importance of a supportive environment and the influence of one's 'zip code' or social context in shaping behavior and opportunities for wealth creation is highlighted.
• 📍 Rossi stresses the need to be selective and patient in pursuing high-leverage opportunities, and to avoid getting caught up in low-impact activities that do not align with long-term wealth goals.
• 💡 He encourages developing the skill of forming independent conclusions and the confidence to act on them, as this can lead to identifying and seizing unique opportunities that others may not recognize.
• 🎁 Lastly, Rossi offers free resources for further learning, including a podcast and courses on his website, aimed at helping individuals understand and implement the concepts discussed for their financial growth.

Q & A

How did Alex Rosi accumulate his first $100 million by the age of 32?

Alex Rosi made his first $100 million by taking $42 million in distributions from his first big company, Gym Launch, and selling it for 46.2 million. He then reinvested that $42 million into a portfolio of companies, which is now worth just over $200 million a year.

What is the purpose of splitting the video into two parts according to the script?

The video is split into two parts to first discuss the four strategies the ultra-rich use to get wealthy, and then in the second part, to explain how those same strategies can be used to reverse engineer a $10 million net worth goal.

Why does Alex Rosi believe that $10 million is a good net worth goal to aim for?

Alex Rosi believes that $10 million is a good goal because at 4-5% per year, which is considered a risk-free investment strategy, one could live like the top 1% in today's market, and this amount can be adjusted for inflation over time.

What is the significance of the 'V2' strategy Alex Rosi mentioned for accumulating wealth?

The 'V2' strategy involves making a certain amount of income each year and investing a percentage of that income passively, aiming to grow it to a billion dollars over time. This strategy is significant because it leverages the power of compounding and the market's average returns.

Can you explain the 'V3' strategy for wealth accumulation that Alex Rosi discusses?

The 'V3' strategy involves making a certain amount of income per year from owning a business and then selling it at a multiple of its earnings, such as 12x. This strategy is about leveraging private equity and the value of the business to achieve wealth.

What are the three sub-strategies under the 'V4' strategy that Alex Rosi outlines?

The 'V4' strategy includes three sub-strategies: an ESOP (Employee Stock Ownership Plan), a dividend recap, and going public with the company. Each of these strategies involves different ways to leverage business ownership for wealth accumulation and liquidity.

Why is the ESOP strategy tax-free for the owner according to the script?

The ESOP strategy is tax-free for the owner because the payment received is considered a sale to employees who are financed by a bank, using the equity sold to them as collateral. This structure allows the owner to receive funds without incurring a tax liability.

How does the dividend recap strategy differ from the ESOP strategy?

The dividend recap strategy involves the owner going directly to a bank to secure a loan using the entire business as collateral, as opposed to the ESOP strategy, which involves selling a minority stake to employees with the bank financing their purchase.

What misconception does Alex Rosi address regarding the ultra-rich and taxes?

Alex Rosi addresses the misconception that the ultra-rich should pay tax on unrealized gains. He argues that it's不合理 to tax someone on gains that they haven't realized yet, comparing it to taxing someone on a paycheck they haven't received.

What is the importance of the 'measuring stick' analogy used by Alex Rosi?

The 'measuring stick' analogy is used to illustrate how wealthy individuals think in terms of larger increments of money and longer time horizons, which influences the opportunities they pursue and the risks they are willing to take.

What advice does Alex Rosi give for individuals aiming to accumulate wealth?

Alex Rosi advises individuals to focus on income generation, be selective with opportunities, surround themselves with people who have bigger 'measuring sticks', and to have the confidence to make their own conclusions and act on them despite them being contrary to what others are doing.

Outlines

00:00

💼 Wealth Accumulation and Tax Avoidance Strategies

Alex Rosi, a self-made millionaire by the age of 32, introduces his video series on how the ultra-rich legally accumulate wealth and avoid taxes. He outlines his own journey to wealth, including his first $100 million from his company Gym Launch and subsequent investments. The video is split into two parts: one explaining the four strategies the ultra-rich use to get wealthy, and the other on how to apply these strategies to achieve a $10 million net worth goal. Rosi emphasizes the importance of a risk-free investment strategy and the potential of reinvesting and leveraging public equities to grow wealth over time.

05:01

📈 Advanced Wealth Strategies: From Income to Equity

This paragraph delves into the more advanced wealth strategies that Rosi has learned over time. He discusses the concept of making a billion dollars through various methods, including leveraging income generation, investing in passive income strategies like S&P 500 indexes, and selling businesses at a high multiple. Rosi also introduces the idea of Employee Stock Ownership Plans (ESOPs), dividend recaps, and the benefits of going public to achieve wealth while maintaining control and ownership of the business. The paragraph highlights the importance of understanding debt and equity in wealth accumulation.

10:01

💼 Tax Implications and Wealth Goals

In this section, Rosi addresses the tax implications of the wealth strategies discussed and translates these strategies to the $10 million net worth goal. He explains how some strategies, like ESOPs, can be tax-free, while others, like dividend recaps, are not. Rosi emphasizes the importance of business growth to support debt obligations and the risks associated with relying on loans against public equities. He also touches on the tax benefits of qualified dividends and the importance of generating income to invest and grow wealth.

15:01

🚀 Leveraging Business Ownership for Wealth Creation

Rosi introduces the concept of leveraging business ownership to create wealth, suggesting that owning a profitable business and selling it at a high multiple can result in significant wealth. He discusses the potential of earning $1.2 million per year from a business and the wealth that can be generated from selling such a business. The paragraph also explores the idea of becoming an employee or partner in a company that goes public, allowing for access to liquidity and the ability to live like the ultra-rich through loans against stock value.

20:03

🤔 The Fallacies of Warren Buffett and Wealth Mindset

This paragraph challenges the common belief that one can simply mimic Warren Buffett's investment strategy to achieve wealth. Rosi identifies three fallacies: the timing of Buffett's investments, the unique historical context of American growth during his career, and the element of luck in wealth accumulation. He stresses the importance of generating income, being selective with opportunities, and the influence of one's environment and social circle on financial success.

25:05

🏆 The Measuring Stick of Wealth and Opportunity Selection

Rosi concludes by discussing the concept of 'measuring sticks' in wealth accumulation, suggesting that the wealthy measure opportunities over longer time horizons and with larger financial units. He emphasizes the importance of patience, selectivity, and surrounding oneself with people who have bigger aspirations. Rosi also encourages viewers to come to their own conclusions and act on them, as the ability to identify and capitalize on unique opportunities is key to extraordinary wealth.

Keywords

💡Ultra-Rich

The term 'Ultra-Rich' refers to individuals with a significant amount of wealth, often in the hundreds of millions or billions of dollars. In the video's context, it is used to describe the subject of discussion—how these individuals amass their wealth and legally avoid taxes. Alex Rosi, the speaker, positions himself as someone who has insight into this group due to his own success in accumulating wealth.

💡Tax Avoidance

Tax avoidance refers to the legal use of tax laws to minimize the amount of tax owed. In the video, Alex Rosi discusses various strategies that the ultra-rich use to legally avoid paying taxes, such as structuring deals and utilizing certain financial instruments that are not subject to the same tax rates as regular income.

💡Wealth Generation

Wealth generation is the process of creating and accumulating wealth over time. The video outlines several strategies for wealth generation, including reinvesting income, passive investing, and leveraging business ownership to create wealth. It is central to the video's theme of explaining how the ultra-rich become and stay wealthy.

💡Reinvestment

Reinvestment is the act of putting money earned from an initial investment back into the business or portfolio to generate further income. In the script, Alex Rosi mentions reinvesting $42 million in distributions into a portfolio of companies, which is a key strategy for growing wealth over time.

💡Passive Income

Passive income is money earned with little to no effort on the part of the recipient, typically resulting from investments or assets that generate earnings. The video discusses the importance of passive income in wealth accumulation, such as earning from public equities like the S&P 500.

💡Private Equity

Private equity refers to investments in private companies or assets that are not publicly traded on stock exchanges. In the video, Rosi explains how owning and eventually selling a private business can be a strategy for wealth generation, as these businesses can be sold at a multiple of their earnings.

💡Employee Stock Ownership Plan (ESOP)

An Employee Stock Ownership Plan (ESOP) is a type of defined contribution plan in which the company provides employees with shares of company stock. In the video, Rosi describes how an ESOP can be a tax-efficient way for business owners to sell a portion of their business to their employees, providing an example of a sophisticated wealth-building strategy.

💡Dividend Recap

A dividend recap is a financial transaction where a company takes on debt to pay a large dividend to its shareholders. Rosi explains in the video how this strategy can provide immediate liquidity to the business owner while still retaining control of the company.

💡Public Equities

Public equities are shares of stock in a company that are available for public trading on stock exchanges. The video mentions public equities as a means for wealth generation, particularly when a company goes public, allowing the original owners to realize significant gains.

💡Leverage

Leverage, in a financial context, refers to using borrowed money to increase the potential return of an investment. The video discusses leveraging opportunities as a way to maximize wealth, such as taking loans against public equities to access liquidity.

💡Measuring Stick

In the video, a 'measuring stick' is a metaphor for the scale or magnitude by which one measures success or wealth. Rosi uses this term to illustrate how the ultra-rich think in terms of larger sums of money and longer time horizons, which influences the opportunities they pursue and the risks they are willing to take.

Highlights

Alex Rosi's journey to his first $100 million by age 32 through strategic business moves and reinvestment.

The four strategies the ultra-rich use to accumulate wealth and avoid taxes legally.

The concept of reverse engineering a $10 million net worth goal with a passive income strategy.

Understanding the importance of reinvesting at a 9% return to achieve wealth accumulation.

The strategy of selling a business at 12x earnings for significant post-tax gains.

The overlooked aspect of what to do with the money after selling a company.

Three sub-strategies under V4 for wealth accumulation using business income and debt.

The Employee Stock Ownership Plan (ESOP) as a tax-free method for business owners.

Dividend recap as a strategy for leveraging bank loans against business equity.

The benefits of going public for liquidity and real-time access to cash.

The fallacy of Warren Buffett's investment strategy and its inapplicability to most.

The role of luck in achieving ultra-wealth and the importance of opportunity recognition.

The significance of the zip code in determining long-term success and its implications.

The importance of income generation as a foundation for wealth building.

The concept of 'measuring sticks' and how the wealthy think in terms of larger financial increments.

The value of patience and selectivity in pursuing high-leverage opportunities.

The necessity of coming to one's own conclusions and acting on them in wealth creation.

Alex Rosi's free resources for deeper understanding of business concepts and wealth strategies.

Transcripts

how the ultr rich get rich and avoid

taxes legally and if you don't know who

I am my name is Alex rosi I got my first

$100 million by age 32 and I did that by

taking $42 million in distributions from

my first big company gym launch and I

ended up selling that company for 46.2

million I reinvested that 42 million in

distributions into portfolio of

companies that's today at acquisition.

comom just over $200 million a year and

so that's my evidence to why I have

something worth saying about this now

that being said I'm going to split this

video into two parts one is the four

strategies that the ultr rich use in

order to get wealthy and then the second

half I'm going to explain how you can

use those same four strategies to

reverse engineer a $10 million goal and

the reason I use $1 million as the net

worth goal is because $10 million at

four or 5% per year which would be

basically a RIS risk-free investment

strategy you'd be able to live like the

top 1% in today's market so you could

move these dollars up as dollars get uh

inflated and all that kind of stuff but

for now these are the big four

strategies and so these developed over

time as my understanding of money

improved and so for me I now want to

make a billion dollars or at least be

worth a billion

dollars haha lots of zeros okay so the

first version of this that I thought in

order for me to be worth a billion

dollars was to make

1.5 billion dollars I know a lot of zero

in income all

right because after taxes which would be

67% taxes in the US which is the highest

federal tax rate that you can that you

have to pay you'd be left with $1

billion overall post tax okay that's the

zero leverage version of making money so

this is just income Generation all right

V2 of this is thinking okay well if I

make a billion dollars or I make income

every year I'm going to invest a certain

percentage of that income into making

money for me passively and so this feels

harder than making $100

million per year and reinvesting that

money at 9% so the Clear Point here is

I'm just saying this is just the S&P

this is just the market this isn't doing

anything fancy you're just buying

indexes of the S&P 500 now at $100

million a year in 10

years you would make $1 billion now

that's because this post taxes uh you'd

have

600 and sorry $67 million post tax

income that you then invest at that same

9% which would get you your billion

dollars after a decade you're like okay

well making $100 billion a year in

income versus making $ 1.5 billion in

income over however long period of time

this feels a little easier because now

I'm giving two things I'm generating

income

plus I'm using public equities all right

so I'm I'm using passive investment

strategies for things that are ready

available to the public for everyone the

V3 version of this it gets spicier and

spicier every time is that you do you

make $100

million per year and you own the asset

you own the business that makes this

much money and you sell

it at call it 12x when I say 12x means

12 times earnings which a company of

this size it' probably be fair that it

would get that kind of multiple because

it's so big which means that you would

make 1.2

billion which would leave you post tax

with around $1 billion now what people

don't talk about this as a total side

note and as somebody who sold multiple

companies is that everyone has this big

dream to sell a company and get the

check but what they don't tell you is

that you then have a check and then you

have to do something with the check so

now you have to translate that check

back into equities so you just sold

equities and you get money and then you

have to buy equities yet again

and so then you have to think to

yourself am I going to get a better

return on this billion dollars than I do

within the existing business or asset

that I ended up selling and I'm going to

translate these zeros down to the $10

million goal that we're talking about in

a second but I just like to show what it

looks like at scale so that this can

just so you can see how the Big ultr

Rich stuff actually happens in the real

world now this is the the V3 version

this is income so that's the skill plus

private Equity all right so this was

public Equity this is priv private

Equity all right so a little bit

different this business isn't available

on the market there's institutional

buyers who raise funds and then they

will give you a check for the business

that's V3 of this now V4 of this is very

sexy and has three different sub

strategies all right and so in this

instance you have your business that

makes $100 million per

year and so you choose one of three

paths path one so we'll go a we'll go B

and we'll go C

so at the top level you can do something

called an

ESOP an ESOP is an employee stock

ownership plan where you sell between

33 and 49% mind you this is a minority

stake in your business and a bank will

finance your employees back stopping

that debt with the equity that you sell

them employees get the equity here bank

is here and then there's you and so the

bank gives you money and lends it to the

employees to pay you using the stock

that you gave them as collateral now

what's interesting about this at least

in the United States and I'm sure

there's different functions like this

internationally is that this payment at

least in our tax laws is taxfree and so

you get a smaller multiple because banks

will always pay less because they have

to think about risk not upside then

potentially a private Equity buyer would

but this is taxfree to the owner which

is pretty sweet now one of the other

nice things here is that you still

maintain control of your business

because you still own majority and so if

you do it in this way you can help your

employees get wealthy you get a taxfree

check uh they get to participate in the

growth of the business and often times

esops can go well because then now you

have a huge team of people who are also

incentivizing growing the business and

quote act like owners but they didn't

need to come up with the money it's like

here's your stock and then they go

straight to the bank and then the bank

gives them the loan to pay you for the

stock you gave them it's kind of how it

works okay that's version a of this now

the way this works though is that you

just traded the equity and you get cash

for what you gave the employees but you

still own the asset and so the asset is

still worth what it is in the private

realm so if you add those two things

together you still have a billion dollar

but you get the liquidity and you keep

the control the version B of this is

something called a dividend

recap so dividend recap is using the

same bank structure that you'd have with

an ESOP except you just cut the

employees out of it you just go directly

to the bank and say hey how much will

you loan me using my entire business as

collateral now if you think huh that's

weird think about it like buying a house

if you buy a house you go to the bank

you put x% down and they give you debt

for the rest of it and then you pay that

debt off and so the business actually

works the same way so if you have no

debt on the business or even if you do

have debt on the business you go and say

hey we can reliably produce this much

income and so we could pay off this

level of debt and so then a bank would

say okay well we'll give you four times

or five times your total eida or your

earnings for the year roughly and will

give you that as debt so if I make $100

million a year they might give me a $500

million loan that they know that my

business will be able to pay the

interest off on which for them makes

sense because they're just getting paid

to give money that they that they loaned

out right and then you have terms

associated with that debt right now if

your business is growing then it makes a

ton of sense to do that you drisk a

little bit as an owner and the key Point

here is that the business carries the

debt not you personally and so you as a

person the owner of the business gets to

take the $500 million but the business

pays the debt off and so let's say 5

years later maybe the business pays all

of the debt off you got the $500 million

and you still own the business just like

owning a house at the end of paying it

off works the same way kind of cool now

the third version of this is one that

people are a little bit more familiar

with which we kind of used earlier which

is public equities meaning you go public

with the company that you have and so

now when you go public you only have to

sell a small percentage of shares in

order to make them available to the

public and by doing that the remainder

of the stock that you have starts to

have an actual Marketplace value and so

the value of this and one this is one of

the biggest benefits of going public is

that you don't have to sell 33 to 49% of

your shares you could sell 10% or 5% of

your shares and then the other 95% has a

market value in real time and so then

you can still go to those same

institutions Banks Etc and say Hey I

want you to loan me and the thing is is

here you can do it peace meal you don't

have to go through a six-month process

or 12month process to get one specific

amount you can say hey lend me uh 5

million a day lend me 20 million

tomorrow lend me you know 100 million on

this other day and you can do that

process in 24 hours because you have

equities that are publicly available

which they can collateralize meaning

they can then take that if for whatever

reason you don't sell and so most of the

times banks will loan up to 50% of the

value of the stock that you have and so

if I have a billion dollars in stock I

can get a loan up to $5500 million and

so this is exactly what Elon did when he

went to go to go buy to buy X he just

took a loan out of his wallet and then

just bought it in cash kind of cool

right and so the idea here is that these

are three different ways that you can

use and you're like okay well then

what's the meta strategy for V4 V4 is

you have an income producing thing plus

you understand debt because all three of

these strategies use a bank or an

institution to front the capital and the

main thing with all three of these is

that you actually retain ownership and

control and so as my understanding of

money and markets Improv approved I

started to understand different ways

that I could achieve my billion dollar

goal now if you're like okay Alex that

sounds great but you said there was

something about the ultr rich and

avoiding taxes well let's talk about the

taxes and let's translate it to the $10

million goal okay so here this is

taxfree pretty nice with the ESOP thing

the dividend recap also the uh this

isn't taxfree because you have to take

it as a as a as a payment right so that

one you still have to pay taxes on here

it's taxfree because it's it's a loan

against your public equities part of me

feels like dividend recap might be

taxfree not sure on this but the uh

public equities absolutely the loans

that you take against them are taxfree

because they're loans and you pay

interest on them and then you have to

pay loans back and that's the big thing

and there's a big you know I would say a

little bit of a misconception on this

it's like oh these rich people uh they

should be paying tax on unrealized gains

well until someone gets money for

something I think that it's like having

someone pay income tax on a paycheck

they haven't gotten yet I feel like

that's a little bit ridiculous on the

other hand with the public equities

peace you still have covenants that you

have to be responsible for to whoever

gives you the money and so it's not like

you get the money and you can do

whatever you want with it you have to

pay it back that's how loans work now

the only way that this works longterm is

that your business continues to grow if

the business goes down then you're in

deep so you can lose it all and so

there's risk that's not being

appropriately valued when people say oh

these rich people just take loans off

their stuff but this is fundamentally

how you can do it and get liquidity or

cash from something that you own that's

valuable okay now if you're like all

right Alex that sounds fantastic but I'm

not trying to make a billion dollars

right now I'm trying to get to $10

million over the span of my life ideally

as fast as possible in net worth and the

reason I use $10 million is that because

at 5% you can make about 500,000 a year

at least in the US which would be about

the top 1% in terms of earnings pretty

sweet now as a side note this you also

pay less taxes on so this is usually

going to be something called qualified

dividends meaning you only pay 20% on

this rather than paying income tax so

you actually get more for your money

when it's off of passive distributions

Okay cool so if we're using these four

strategies here V1 of this is just the

pure income method which means that over

the span of your life you're going to

need to make $15 million in income and

then after your 67% tax rate you'll be

left with 10 million bucks okay that's

V1 not a lot leverage but you can do it

that way the V2 version of

this is that you make your $1 million

per

year per year oops there we go $1

million per year and you make and you

still pay your taxes on that but you

invest that post

tax at

9% and then after 10 years you have $10

million so a total interesting side note

on this is that with 10 years then at 9%

and given the the tax rate that exists

in the US is that on a 10-year time

Horizon you can measure how good someone

is at investing their money based on

what their value of their portfolio is

10 years later relative to what their

income would have been untaxed and so if

I made a million a year in 10 years I

should have $10 million if I paid zero

taxes but since I pay 37% taxes or

anybody who would make this would pay

37% taxes then every year they're

actually making $670,000 and so if you

invested that 670 at 9% then you'd make

at the end of that period $10 million so

you'd actually be back where you started

because you had to invest to make up the

difference in taxes and obviously the

first year of that 10 is significantly

more valuable because of compounding

than the last year of that 10 I'm

keeping this simple and not getting into

living expenses and things like that

which obviously would complicate this

okay so that is income income plus

passive investing income Plus

active investing so V3 of this is that

you make $1.2 million per year from an

asset meaning you own a business that

let's say it does $10 million in revenue

and it does $1.2 million in

distributions or owner earnings all

right and let's say that you can sell

this thing at uh 10x all right so less

than the company over here but the only

way you'd be able to sell a company at

this value which you can at this size uh

reasonably you know if it's a business

that truly is an asset so right now

there's HVAC companies that are selling

at 10 12 14x there's dental offices

there's accounting firms so these are

real businesses that can be sold if

you're in the right Market again I'm

going to use Simple illustrations here

so this would then give us $12 million

that you would get pre-tax and then you

pay your capital gains taxes that you'd

have to pay within the US which would

leave you with 10 million bucks now

again same as before okay I have this

thing that was passively making me $1.2

million a year $100,000 a month well

what am I going to buy with my $10

million that's going to replace this

thing sometimes thinking the Second Step

Ahead can influence whether or not you

want to sell this overall but I do like

to make the point so this one is income

plus our active or private Equity so we

had public

here we had private here and then V4 is

going to look a little bit different

because we have this $10 million goal

and so I want to tell you a different

strategy that I think is wildly

underrated which is you can go and

become an

employee at a company or a partner

depending on how you want to see this of

a

company that then goes public for a

billion dollars that you own 1% of and

that you earned over five years and

what's cool about this particular path

is that you get all the benefits of this

path over here is that you can take

loans against the stocks that you have

that are worth 1% and you too can live

like the ultra rich and take those those

loans taxfree now you can't do an ESOP

because you're you're not the owner of

the business but you can do in my

opinion the most attractive of the three

of these things which is that you can

have in real time access to liquidity or

cash to buy the things that you need

based on the value of the asset you have

and so let's say that you uh you start

working in a business they say we'll

give you 0. 2% per year times 5 years

and you do the five years and the over

that time period the company goes public

for a billion dollars da da one billion

well you get the idea then your stock is

worth $10 million but here's the nice

part is that you paid probably a very

very very gracious tax amount to get

this or these options Associated um with

the shares and then you have something

that is worth $10 million that you can

then take loans against all right so

these are the four strategies from the

ultrich translated into normal income

goals now I want to zoom out for a

second because I think this will be

helpful for everyone no matter which of

these paths you choose or the versions

of the past that you want you'll notice

some common themes the first one is that

you have to be valuable

like you have to learn how to provide

value to the marketplace either as an

employee or as a small business owner or

as a larger business owner overall but

either way you have to learn how to

generate income and the way you generate

income is by solving problems for other

people and learning skills and so a lot

of time I see dedicated to content from

people who don't talk about the most

important thing which is sure you can

have all these passive investment

strategies but if you're working off of

$35,000 a year it's never going to

happen like we like to talk about the

one lady who worked at McDonald's for 50

years and saved every penny she ever had

so she could end up with a million

dollars but is that really the ideal

strategy when maybe taking a weekend and

getting a certification can bump you to

50 or $60,000 a year or you just learn

outbound sales and you bump yourself to

$150,000 a year five times the earning

potential and so I think that the

investing stuff gets really sexy because

it feels passive but you live your whole

life and so you might as well get five

times 10 times more for the time you are

guaranteed to have to give we all spend

seconds every second we're alive and so

you might as well get more for them the

second one is what I want to talk about

is the fallacy or the three fallacies of

Warren Buffett so Warren Buffett a lot

of people like I just want to do what

Warren Buffett did he just slowly

invested right well let me walk you

through what the fallacies of Warren

Buffett

are so three

fallacies of Warren Buffett number one

I'm going to be just like him well did

you buy your first at age

seven and did you do that weeks after

Pearl

Harbor when there was literal blood in

the streets well if you didn't buy your

first stock at age seven literal weeks

after Pearl Harbor then maybe you don't

already have the makeup of somebody

who's going to be the greatest investor

of all time something to consider the

second is are you going to live through

the greatest growth in American history

as you start your investing career which

is exactly what Warren Buffett was able

to do and the third one is one that I

actually talk about that I don't hear

talked about a lot which is just luck

and so let me hear me out I think Warren

is brilliant and I talk about him all

the time and I think there's a lot of

things we can learn from him but what I

see when I look at the top 0.1% whatever

the top of the top of the top of the top

is that you have all the skills all the

TR traits all the everything comma and

luck because the only way like if you

were to think of the hypothetical the

the number one person on Earth in

general would have all of the things

plus luck because some everyone's going

there is luck that goes around and so

the number one person is going to have

everything that's required plus luck

there's plenty of investors that are

brilliant investors that are worth $1

billion instead of $100 billion they

just didn't get the luck part right or

they've been only investing for 30 years

instead of 70 right or 75 for 85 or

whatever the amount of years he's alive

now all right and so I think these three

things are some are things that are not

considered when people like oh I want to

do the strategy and I want to highlight

this because the main theme of all of

these is that you have to generate

income you have to make money it's the

only way you can even have the income so

like right now I have a handful of

Investments that are doing exceptionally

well but the only reason that I would be

able to make those Investments is

because I have excess capacity in terms

of cash Capital that I could deploy if

you don't and this is where like living

below your means to make more so you

have the Delta so you can can you can

get aggressive is so important and I

think it's really lost in the narrative

today and so the last thing I want to

talk about is what Rich parents give as

the greatest gift to their kids and so

the number one predictor of success

longterm is the zip code you're born in

all right and I find that really

interesting and also disparaging in some

ways because it means that it controls

for IQ it controls for ethnicity

controls for gender it's the ZIP code

that you're born in and I see that as

mostly due to the association conditions

of other people in that zip code and so

it's like okay that means that

conditions can create our Behavior or

shape our Behavior so then what Behavior

changes happen in a rich environment

versus a poor environment and I think

that it can really come down to one main

thing which is the leverage of the

opportunity vehicles that you pursue and

so I remember this clear as day because

I I came from what I would consider

upper middle class so my dad's a doctor

um but when I went to Vanderbilt I was

exposed to an entirely different level

of wealth that I didn't even really knew

existed I'm from Baltimore there just

wasn't any like New York money like it

wasn't really a thing like if like it

just it was a concept I didn't

understand but for them the opportunity

vehicle that they wanted their kids to

pursue had leverage meaning they got

more for what they put in and so a

middle class parent might say hey you're

a Salesman awesome and you sell cars

okay well you sell cars and cars cost

whatever and the top top top cars SM

salesman might make you know 300 to

400,000 a year okay now some people are

like there's this one guy cool well good

for him but for most like let's call it

top 1% are making $3 to $400,000 a year

now the upper class salesmen or the

upper class or the ultra Rich whatever

you want to call it Ultra

salesman sells

companies and guess what he makes 4% on

the deal and so if he sells a $200

million

company he makes 8 million bucks for one

sale and so same fundamental skills

obviously there a little bit more

analysis here but fundamentally you are

selling stuff and all somebody who is

wealthier does is tries to get more for

what they put in they try and add zeros

to the price tag of the things they sell

if you sell a $500 million building you

get a commission for that just like you

get for selling a $50,000 house same

concept you just add scale to it and

every one of these people has the same

number of hours per day which just means

they get more for their time and so

thinking through this what poor people

or middle class people miss that rich

people or Rich Kids Rich parents pass to

their kids is which opportunities to say

no

to they don't even

consider the quote lower class or middle

class opportunity and I think of this on

something that I like to refer to is

measuring

sticks and so I'll give you a little

story to illustrate the point so when I

was a kid

in high school I worked I started my

first job when I was 15 and N months

which was like the legal age that I

could start working I started working as

a blender tender at Smoothie King and as

I as I leveled up and became a lead and

then I think a manager at some point and

then eventually I shifted to catering uh

which I got 25 bucks an hour for which

was awesome back in my day anyways I was

hoodrich and the thing is is that I

measured how much money I had and how

many Chipotle burritos I could buy

because I knew that Chipotle Burritos

were about seven bucks and so so I was

like man I just got you know 200 bucks

for this shift that's like 28 burritos

that I can buy now which is awesome

right I was super excited about it and

so what happens is the measuring stick

that you use to measure stuff the

wealthiest people in the world just have

a larger stick in two ways one is they

measure over longer time Horizons and

they also use like they literally call

by the way in Wall Street a stick is $1

million so that's the slang among rich

people like if you're like oh I didn't

know that there was slang for a million

dollars there is slang for a million

dollars when you have lots of millions

of dollars you say give him two sticks

it means two million bucks and so when

you hang around people who talk in

increments of $1 million imagine the

opportunities that they're pursuing and

more importantly for everybody who's

listening to this the many things they

say no to and so this is where you lose

years and Decades of life is that you

say yes to opportunities to you

otherwise shouldn't and so they're able

to be patient or more selective because

they know that they're going to get they

want to maximize how many dollars they

get out for the effort and time they put

in and unless something is going to

ladder up to remember we're thinking

longer time Horizons something where

they can get sticks for their time then

they're not going to do it they're

willing to take a job for $50 or $60,000

a year or $80,000 a year as an analyst

at you know PWC or eron young or

McKenzie or an investment Bank League

Goldman Sachs they're willing to eat dog

for that period of time because

they know that that's not the plan this

is just the period that they're learning

and gaining experience so that they can

do the next thing they see it in

stepping stones and the vast majority in

my opinion of people who stay stuck

don't have a plan they don't see where

things lad are up to and they don't

reverse their goal into the present and

so no matter what whichever of these

paths you use one you have to focus on

income generation and learning skills

two you want to make sure that you

actually say no to the things that don't

matter and be very selective about the

things that will give you the highest

return three surround yourself with

people who have bigger measuring sticks

in terms of time and money than you

because whatever opportunities they're

discussing will likely be higher

leverage the opportunities that you're

considering and then finally in with

regards to the fallacy of of Warren

Buffett if you want to make obscene

amounts of money you will not make it

the way that someone else has already

made it it will be made in a new way

which means the single greatest and most

valuable skill that a human being can

have is the ability to come to their own

conclusion and have the confidence to

act on it despite it being contrary to

what other people are doing because if

it's what everyone else is doing then

it's not an opportunity because the

funny thing about opportunity is is they

look like Risk while they're

opportunities and the moment they're no

longer risky is when the opportunity has

closed and that's how life works you

have to make bets and you want to make

the bets that you feel like you have an

information advantage over other people

so you can come to your own conclusion

rather than listening to other people

have an amazing day hope you enjoyed

this stuff that's how the all Church do

it and if you you like these kind of

deeper business Concepts I have two two

free gifts for you I wrote $100 million

offers and $100 million leads these are

both available for free on my podcast

which is the game Alex Rosa you can just

search my name you'll probably find it I

also have these in course if you like

watching rather than listening uh on my

site at acquisition. comom you can just

click training and you'll see the

courses that we available they're all

free um but if you do like something

hard you can grab these wherever you buy

books and uh hopefully make a lot more

money