Do This Once You Save $1000 | 8 STEPS

so there's a lot of different things we can do with money once we save one thousand dollars in our checking account like for example starting a new hobby this one's called cardistry and it took me forever to learn we can also start leveraging our money we can even open up credit card accounts start paying down debt opening up retirement accounts start investing that money but if there's one thing we absolutely need to do first is to do this [Music] abundance mentality makes you feel rich and now you know what the a7s 3 240 frames per second looks like at step two think of a card in your mind as i go by but don't look at the front it's too easy ready three two you get one you are thinking of this card right here smash the like button if i got it right and if i got it wrong comment down below and let me know why you didn't follow the instructions now let's get in to the things you can do with one thousand dollars once you save it in your checking account let's begin hi my name is andre jack hope you're doing good hope you're feeling well and as well as anyone can feel in 2020 and i miss this face right here which is weird to say because i'm looking at a lens that's reflecting back my own face so i guess i'm a narcissist and if you have 1 000 extra to your name then this is what i would do let me show you with where i'm at right now this is my robinhood dividend portfolio i don't show this to show off i'm just showing you my progress because i make these videos once a month to update you where i'm at because i started with one thousand dollars and it took me six years to get to this point and as you can see on screen right now this is how much money i'm collecting every single month from this portfolio without actually selling any stocks we're just holding on to them which is pretty cool hopefully this year i'll break the seven thousand figure and maybe next year we'll get to 10 000 or maybe even 1 000 a month consistently that's the goal is to make money while you sleep which is ironic because we spend so much of our time converting it into money but then converting our money back into time but before we get to this point there's a few steps we need to take which is what this video is all about so without further ado let's start with step one figure out how much money you need it's really funny because i made a video which performed horribly by the way so don't go watch it where i went to my local university and i asked freshmen seniors even finance majors how much money they thought they needed to be retired for life and the answers i got were hilarious 100 million i feel like 10 million i don't know 10 trillion 10 mil i got like maybe 200 like thousand that would be good the rest of my life like 20 million dollars i just don't feel like that's a little too little 350 000 80 000 i'll be chill like somebody gave me 20 out of the couple dozen people that i asked two to three knew what they were talking about which goes to show you that the education system doesn't teach us this stuff because the real answer is this it's gonna get a little complicated but i promise i'll break it down if we use the bureau of labor statistics people ages 65 and over are spending roughly fifty thousand eight hundred sixty dollars in retirement per year now if we do the monthly on that that's around four thousand two hundred thirty eight dollars but if we work backwards and use that same four percent rule and we divide fifty thousand eight hundred sixty dollars by point zero four move the decimal over two spaces we get roughly one point two seven million dollars which is how much money you need saved and invested for a relatively safe 30-year retirement but that is not the full accurate picture because we also need to take into consideration social security once we reach retirement age the average social security paycheck is one thousand five hundred fourteen dollars which is eighteen thousand one hundred sixty eight dollars per year if we subtract that from the original fifty thousand eight hundred sixty we get thirty two thousand six hundred ninety two dollars and the four percent rule for that by dividing 32 692 by 0.04 we get 817 300 so technically that is the real number that we need saved and invested assuming we wanted to retire the average age which is 65 and we took into consideration social security income assuming that it's around by the time we reach the age of 65. and yes this does take into consideration inflation as well but that number could actually be a lot lower assuming you have more cash to spend during tough times or you get a part-time job or better yet you can live on being a little bit more lean like instead of eating steaks eat tide pods so the second step is now that you know the rough objective amount which is about 1.3 million dollars without social security and around 820 000 with social security is to compare that versus how you're spending money right now it's really interesting because it's going to inform you what your progress is looking like right now so take into account the big three which is your housing your food and your traveling and that includes of course your car expenses like insurance and any monthly payments you're making on the car so as soon as you do this also make sure to do the extra credit parts which is entertainment hulu netflix puzzles and dragons yes i still play that stupid game so add everything up per month and then multiply it by 12. so for example if you spend three thousand dollars a month take that multiply by twelve thirty six thousand dollars and multiply that number by twenty five that is how much money you need saved and invested in something like the stock market to apply that same four percent rule so if your number right now is more than what i mentioned in step one then you need to cut back on your spending but if it's about the same or if it's less then your progress is pretty good and you're going to have a good retirement but also remember that when you're older your health insurance costs are going to be a bit more and assuming you want a more comfortable lifestyle when you're older then you can add something like 10 to 20 on top of the number that you got unless you want to retire earlier at something like ramen phi which is ramen noodle financial independence which i did for a while but now you are ready for step three and step three smash the like button as well as the little bell button because it'll notify you when i post my videos next otherwise my youtube career is over please do this for the doge and step four calculate your savings rate this one is a huge thanks to mr money mustache who is one of the first few people to inspire me to nerd out about finance eight years ago so this one assumes that we can make five percent rate of return on our money during our working years after inflation that turns out to be a real seven percent rate of return per year which is very close to what the stock market does over a long period of time the other assumption is that we withdraw four percent like we talked about in step one so here is how long it will take you to retire depending on the different savings rates if you can save 10 of your income which is the average then you have a higher chance of getting abducted by aliens and taken to area 51 because that's how many years it's going to take you to retire so let's not do that one and go to the next one which is 30 now at that rate it's gonna take you 28 years to retire not bad but we want to aim for 50 at that rate it's gonna only take you 17 years to retire and that's actually possible to do on a 50 000 a year salary i know this because that's what i was doing for around six years to build up my robinhood dividend portfolio but i was never able to do the ultimate savings rate which is 65 now in that case it's only gonna take you ten and a half years in order to retire but to do that you have to have a higher salary of around six figures but as far as what we can control remember that by spending less money not only do you have more to invest but also you'll need that much less in retirement to begin with and also just remember all of this assumes your gross income minus taxes this is your net take-home pay aka after tax income but also if you don't want to do all this by hand you can just download an app like personal capital or mint where it keeps track of your net worth and your expenses it's really useful i'm not paid or sponsored by any of them they're just really cool when i use them step 5 get rid of any unsecured high interest rate debt so i'm talking about these guys smash the like button to give credit where credit is due get it but i actually did do this for my dad two years ago where we took out what's called a heloc a home equity line of credit which takes out equity from your house and turns it into a loan and this is a secured loan which means if you don't pay that loan they will take away your house but in return we were able to pay back seventeen thousand dollars worth of his debt all in one go while substantially lowering his interest rates therefore his monthly payments but you don't need to own a house to be able to do this here's another way you can do it you can transfer your debt or balances into zero percent apr introductory credit card offers now one that i can suggest is the city double cash card which gives you a zero percent interest for 18 months on balance transfers if you qualify now i'm not paid or sponsored to promote that one but it's a good credit card for a lot of other reasons but the idea behind this is that you're hopping from one credit card into another for a year and a half giving you the chance to pay back your debt at zero percent interest rates therefore having a lower monthly payment allowing you the chance to actually make a dent on that debt because remember the national interest rate for credit cards is 17 and remember the stock market gives us a return of only 7 per year so by paying off that high interest rate debt you're effectively making a return of two and a half times on your money and step six create an emergency fund now this one is optional but if you have liquid assets meaning investments you can easily and quickly convert back into cash then you don't need to do this but if you're a conservative person like me then have at least three to six months worth of expenses saved up to cover the basics netflix starbucks coffee puzzle and dragons you know the essentials personally though i've been converting a part of my cash reserves into digital currencies now notice this is very different from me saying invest and buy something like btc so here's how i'm doing it i'm sending a part of my dollars and converting my dollar into something like usdc which is coinbase's stable dollar meaning a dollar is a dollar is a dollar it doesn't fluctuate in value now at that point once i've converted my dollars i will send it over to something like block fi which i use where it gives me up to 8.5 annual compound interest which is insane that is literally more than the stock market in fact if we compare that to the highest high yield savings accounts for the dollar from ally bank that is actually 0.6 percent that is a 14-fold difference now before i sell you on that i'm not saying you should absolutely do this because the difference in the downside is that unlike a bank which is fdic insured something like blockfy is not fdic insured which means if those companies fail you are not protected otherwise ally bank and fdic insured banks protect your money up to 250 000 meaning if they fail you get all that money back but if block five fails technically you are not legally owed that money back at all so that is the risk difference but for me it is worth it and i'm getting paid 8.5 interest but it's an option that i at least want you to know about and step seven i would be remiss if i didn't mention opening up a roth ira account do this as soon as you possibly can because the more time you have on your side the more your money compounds tax free in retirement this is an awesome account you can open it up with m1 finance like i did you could do this with robinhood you can even do it with weibull if you deposit at least 100 with them you will get three free stocks two of which could be valued up to sixteen hundred dollars each this promotion ends at the end of this month so links down below but please do this as soon as you turn 18 you owe it to yourself now once you've done that though i can't legally tell you how to invest or which stock you should buy and give you any investing advice but if it were up to me then this is the stock that i would continually buy every single month otherwise you can also load this account up with dividend stocks because the income that you receive in this account is going to be tax-free so the idea is once you've set up this account once you purchase dividend stocks inside of this account you'll start to receive that income which you will then use to reinvest and buy more stocks with and that's going to be tax-free which is awesome because it also reduces that number we talked about from step one now step eight with all the money that you have left assuming you didn't use it all to pay down high interest rate debt which is a priority assuming you already maxed out your roth ira which is a priority assuming that you maybe built yourself an emergency fund which is optional and with all the money you have left you've transferred it to a high yield savings account which is optional then this next step there's two things that you can do and the first one is to use this money to build yourself a side hustle or a business and basically invest in yourself now i've always sold myself short if i was a stock i'd be gamestop because that's like the most shorted stock in the world but with all the money that you have left you should invest it in yourself because win or lose it's going to be a valuable lesson for you for the rest of your life and if you succeed that is passive income potentially also for the rest of your life for me that was youtube so i will always vouch for investing in yourself the second thing i would consider doing with this money is averaging into the digital currency world now for argument's sake let's use twenty percent of that thousand which is two hundred dollars let's assume that you lose fifty percent of your money which is a hundred dollars that is not life-changing money and you could probably make that back regardless of how old you are but if you ended up being right that 200 could 10x to 50x in the next two to three years and that could be life-changing money that could help you pay down debt or even start a new business so from that perspective i think it's worth it and while i think most people will think this is silly i guess i'll quote gandhian saying that first they ignore you then they laugh at you then they fight you and then you win so i've put my money where my mouth is but i guess we'll see if i'm right or wrong by the end of next year and if you want to get in touch with me follow me on instagram i post from time to time and i will also try to respond to every comment that i get love you thank you so much for watching my video i will see you back here on monday and friday if you want to reach out to me my p.o box is down below i'll see you soon bye

Channel: Andrei Jikh

Views: 686,247

Rating: 4.9508643 out of 5

Keywords: investing, investing for beginners, investing in your 20s, how to invest, how to invest in real estate, how to invest in stocks, stock market investing, stock options, robinhood, robinhood app, best stock trading app, how to be a millionaire, credit score, credit score explained, credit cards for beginners, passive income, how to build wealth, real estate 101, unemployment update, andrei jikh, best investments, investing 2021, best investment, save money

Id: 8bcvHwR1efA

Length: 14min 50sec (890 seconds)

Published: Mon Nov 30 2020