The REALISTIC Millionaire Investing Advice In Your 20s

what's the guys it's Graham here so some of you know I just recently turned 30 years old and looking back my 20s have been absolutely by far the most transformative years of my entire life not only in terms of investing my money in building my wealth but also in terms of all the small daily habits that you could begin doing today that add up to something big over time so for anyone in their 20s wondering what you could begin doing today here's everything that I've learned along the way over the last ten years and a lot of this has taken me over a decade to really figure out no joke this is really one of those videos where I wish I could go back in time and just show myself this at 20 years old I think I would have saved myself a lot of wasted time and been way further ahead if I just started some of this sooner like I started off at 18 years old fresh out of high school without a college degree and no real clue what I was doing but I worked my way up as a real estate agent I figured out the most creative ways that I could save money and not spend it I learned the basics of real estate investing by watching what my clients did I then figured out that wait a second I should be opening up a retirement account and investing in index funds by the time I was 30 I had a 6 million dollar net worth for comparison when I was 18 years old I had maybe a few thousand dollars that I had saved up from working part time throughout high school so to go from that to where I am today still seems a bit like a dream that I'm about to wake up from at any moment but assuming I'm not living in some dream like virtual reality states here of all the wealth building personal finance and investing tips it took me years to figure out and I'll just lay them all out for you to pick up and use and hopefully they'll be helpful and make you a ton of money by the time you're older and I have no idea how long this video is gonna be but trust me this is one of the videos that's worth it to watch all the way through from start to finish I want to make it as comprehensive as possible so I don't leave anything out this is really meant to be a one stop video that covers everything you need to know and you can always come back to it to watch it again and make sure you're staying on track and all I ask for in return if you find this helpful in any way it's just a quick like in the video that's it I promise this video is going to help make you more money and just hitting the like button takes up one sixteenth of a second it helps me out help something YouTube algorithm and that's it that's all I ask and of course as a thank you for doing that here's a picture of a kitten so with that said here's everything you need to know and we'll begin right here now since I want to make sure I don't leave anything out in this video I'm going to be breaking it up into segments the first part is going to be about personal finance so you can maximize how much money you make and save and then after that we'll talk about exactly where and how to invest your money so that one day you could buy a Lamborghini if you want to but to do that we'll have to talk about this first to start let's have a quick word about college and student loan debt it's no surprise this has quickly become a really concerning epidemic with 1.6 trillion dollars worth of outstanding student loans and the average graduate with over 31 thousand dollars worth of debt what's even worse is that many young people are pressured to go to college because it's the safe route to take without understanding the implications of how much it's going to cost how they're going to pay for it or even why they're going to college in the first place because of that it's more important than ever to stay out of student loan debt at all cost unless you have a clear career path for you know what you want to do and going to a certain college is going to help you get there it's usually best to go to an inexpensive Community College first save the money and then figure out where to go from there afterwards if there's something specific you want to go for then by all means do it but this is by far the best route to take to save a lot of money and by the time you graduate you're gonna be in the same spots as everybody else except without a lot of student loan debt hopefully this is all just about putting yourself in the strongest position financially by the time you enter the workforce that way you're gonna have more money left over to save and invest without being saddled down by debt and even if you're unsure what you want to do or if college is right for you in the first place don't worry about it that's okay and we're gonna be moving on to the next step the second get a job I really want to be one of those old people one day that just sits on the rocking chair in front of the house and just yells at all the neighborhood kids to go and get a job that's gonna be me one day but seriously if there's anything that helped me out when I was younger it was going and getting practical work experience until you go and do that it's really difficult to fully appreciate the value of your time and just how difficult it could be to go and make money so it really puts things into perspective like my first job ever was back in high school and I worked at a marine aquarium wholesaler doing anything they wanted me to it started out as me wanting to work for free just because I had so much fun doing that but that soon evolved into me getting paid and free fish and free coral and then from there I began taking pictures of their inventory and getting paid a commission depending on how many pictures I could take Photoshop and then put on their website but I'll tell you doing that in understanding how much something costs relative to how much money you make is a really eye-opening experience just going and seeing wait a second that cup of coffee is gonna cost me 30 minutes of my time made me never want to go and buy a cup of Starbucks coffee and that gave me a really deep appreciation for never wanting to waste money this also taught me how to interact with adults the importance of customer service and just practical skills that will help make you more money this is why I highly recommend everyone if at all possible get a part-time job that you could do throughout high school college or really as soon as you could begin working I really think this is going to be one of the most valuable experiences you'll ever have and I do have to say I can tell a difference between the type of person who has work experience and the type of person who does not so trust me when I say this this is gonna be a good experience for you and you'll get paid to get that experience what's not to like from that and lastly I just want to mention that if you're in the mindset where you don't want to go to college and you're not exactly sure what to do with your life or what you want to do for work potentially just look into trade schools plumbers electricians welders you name it can pay really well as you gain experience and a lot of those fields will continue to see more and more demand each and every year so go and look into a trade school I would highly recommend it and I think a lot of those careers are absolutely fantastic number three is something that applies to any point in your life but it's especially important during your 20s because this is a time that it's easy to get carried away and that would be stay out of consumer debt this means that you don't go and rack up a whole bunch of debt to buy stuff you don't need don't go and finance a really fancy car don't go and rent yourself a really lavish apartment don't go bawling out to impress your friends with how much money you have all of that is stupid it's reckless and I guarantee you'll look back 10 years from now and regret it it's that just stay out of consumer debt like this at all costs and basically if your debt is not making you more money don't do it listen from everything that I've learned your 20s are really the best time to get away with living like you're totally broke and no one will question it if you live with your parents it's okay if you drive a beat-up car that's totally fine if you live in a rough part of town with a whole bunch of roommates that's cool all of these things just become a little bit more difficult as you get older and it becomes less socially acceptable to live with your parents in your 40s and like eat frozen dinners every single night because you're cheap when you're like 45 and it just people start looking at you a little bit differently but in your 20s hey that's okay it's to be expected so that means don't go and buy a new car in your 20s don't go and spend two extra money to live in an apartment in the cool part of town save as much of that as you can and go invest it go and live with roommates if that's gonna save you more money if you could hunker down and save non-stop in your 20s you could potentially set yourself up for the rest of your life with the decisions that you end up making right now and if you find yourself in any sort of consumer debt or credit card debt or anything weighing you down at least make that a priority right now to pay off my rule of thumb has always been this if you're paying more than a four percent interest rate then most likely it's worth it just paid off as soon as possible if the debt you have is under four percent then it's okay to take your time paying it off but I'm going to be going into more details about that shortly because right now we should talk about this next number four and this is something I wish was just shook into me the day I turned to 18 years old and that would be to go and get a credit card and build up your credit score as soon as possible I think I opened up my first credit card when I was 21 or 22 years old and even though I had people telling me earlier to don't open up a credit card I was just too stubborn to listen I just grew up thinking that credit cards were bad that only broke people needed credit cards and that I would be in a better position financially if I just used a debit card and pay cash for everything but wow I was wrong when I went to go buy my first property every single bank denied me alone because I didn't have any credit history whatsoever and because I didn't have anyone to co-sign for me every bank just flat out said no despite me having two years of tax returns and money in the bank that was a huge wake-up call for me to take building credit very seriously and as stupid as it could be to go and put all your spending on a credit card and then pay it off immediately afterwards it's just how the system works and it's better to use that to your advantage then try fighting against it so I opened up a credit card and immediately afterwards I became obsessed with maximizing the rewards getting free stuff traveling places with paying zero dollars out of pocket and increasing my credit score now eight years later doing that is giving me access to millions of dollars in low-interest rate mortgages more free travel than I know what to do with and a credit score that gets me the best lowest interest rates anytime I want to leverage my money and honestly your late teens and 20s are the best time for you to build up your credit score because you have the time right now to build it up before you need to go and finance anything and all you need to do to get started with this is just open a $200 secured credit card put a few expenses on the car - each and every month and then pay it off in full that's it zero dollars an interest you will build your credit score and over time you can continue getting more credit cards adding into the mix and maximizing rewards doing this is going to be totally free and the only thing it's gonna cost you is maybe ten minutes of your time and I have another video that outlines all the details that you need to know so I'm just gonna link to that down below in the description if your 20s are the best time to live below your means and no one's gonna bat an eye seriously I have found that the older you get the less socially acceptable in it to live like a broke college student and also the less you want to live like a broke college student so now is your best chance to get away with doing all of the cheap and frugal things you've always wanted to do without people calling you out for it so if at all possible live as though you're making twenty five to fifty percent less than you actually do and then keep it that way here's the thing in psychology there's a term called the hedonic treadmill and it's reminds ability to always return to our baseline level of happiness regardless of what happens so even though you might move into a nicer spot or get a new car and that will temporarily make you happier over time you're going to return to the same level of happiness as you were before except now you'll need even more to reach that same level of happiness as you're reached previously and that just continues further and further so by recognizing this early on you could cut out all of your spending that's not going to make any difference put that instead towards something that matters the most and then just make the most of your 20s trust me when I say this but living really frugally throughout my entire 20s is what's made everything possible for me today had I wasted my money on designer clothing lavish dinners expensive apartments everything sure would have been temporarily fun but then I would have had nothing to show for it instead I just lived as though I was making thirty thousand dollars a year and then anything over that was just saved and invested even now to this day I still do the exact same thing to a certain extent I only spend whatever my investments make and then anything else they make is just saved and reinvested I'm just a firm believer that it's totally okay and even encouraged to live well below your means in your 20s if that means you could set yourself up for the rest of your life your teens or your 20s are really a time for you to hunker down save as much as you can work overtime and just suck it up for the sake of saving and by the time you're 30 I promise you're gonna be really happy with the decisions that you've made if you're not going to remember those expensive shoes you bought 10 years ago but you will remember every single morning when you look at your bank account extra zero in there I promise that's gonna be way more fun to look at everyday now number six all of the items that I just mentioned are not going to matter without this one and that's the importance of tracking your spending throughout your 20s seriously I know I've said this one before multiple times but it's so true that tracking your spending is really like the glue that holds all of this together you cannot effectively cut back and live below your means without figuring out how much money you're making where it's all going where you're spending your money and where you can come back I have been tracking every single expense on mint.com and personal capital comm since 2012 and doing this has helped me optimize my finances a lot the most important aspect of this I will say is that it's not always the big expenses that add up to the most amount of money oftentimes the best savings comes from all of the small frequent daily purchases that you make without even thinking about it that just adds up to a lot of money over time like imagine going and paying fifteen dollars for a lunch on its own it's not that big of a deal but do that every other day for a year and all of a sudden that's 2700 dollars gone without even thinking about it that's why it's really important to get in the habit of doing this now because the longer you wait the more difficult that's going to be even though I'm not sponsored by either of these companies to mention them I do highly recommend either mint.com a personal capital com both of them are free and then all you need to do is make an account and then track your spending every few days and monitor where all of your money goes you'll be able to see where you're wasting money how you can cut back and how you can increase your savings over time when it comes to this the most difficult part is really just starting and you know the saying whatever you measure improves and that's very true with your finances except sorry guys not not with that but with your finances it doesn't prove the seventh and this one is an exactly personal finance related but it did end up helping me make a lot more money and that is getting used to taking uncomfortable risk I've really found that the worst place that you could be in your 20s is complacent if you're satisfied with where you are right now but you know deep down you're not living up to your true potential the only way to break past that is to put yourself under pressure you have to start getting used to making uncomfortable choices and taking calculated risk to get yourself out of it and to get yourself ahead for example I was working at Coldwell Banker as a real estate agent for seven years making a six-figure income with a really streamlined clientele but I deep down as though I had plateaued and I needed a change of scenery in order to push myself the next level I could have just taken the really comfortable easy approach to stay where I was at or I could take the risk and move my business over to the Oppenheim group where I could try out something different at the time I was really nervous about making that decision because Coldwell Banker was really all I knew but looking back in hindsight making that move was one of the best decisions and has challenged me in so many other ways where I would not be here today without it same thing also applies with making YouTube videos this is something I've wanted to do since 2011 but I never had the courage I honestly thought who would watch me I would just make a fool of myself I'd look stupid on camera and like I just kept pushing it off again and again but after years of wishing I could make youtube videos I finally went and did it and now then obviously that's one of the best decisions I've ever done I absolutely love the process I had so much fun doing this I met some of my best friends through YouTube and if it wasn't for me pushing through those insecurities and was pushing myself out there I would not be here today just take a look when it comes to this in your own life you always have an experience the most personal growth every time you push yourself past your comfort zone just get used to doing that in your 20s and I promise you it's gonna be way easier and these are gonna be decisions you're not going to regret later on okay so with that out of the way in the foundation build let's go over the practical step-by-step guide as to how you can increase your net worth how you could invest how you can build your wealth with as little work as possible and it all begins right here first you're gonna want to open up a retirement account these are accounts that end up saving you money in your taxes and some of these can be used as a tax write-off other of these allow your profits to grow completely tax-free just depends on which ones you want to use and the entire point of doing this is that it just leaves you with more money left over at the end of the day and who doesn't want more money left over so here in the United States we have three main retirement accounts that we're going to be covering in this video the first of which is what's known as a Roth IRA this is an account that allows you to contribute up to $6,000 a year and then any profit you make within the account is going to be completely tax-free after the age of fifty nine and a half the reason I like this one so much is because the money you put within this account is known as post tax money which means you've already paid taxes on the money that you have left over what's so good about this is that in your 20s you're probably not making a ton of money anyway and because of that you're not high tax bracket and because of that you're not losing a lot of your money to taxes so that just means you end up having more money left over to invest with on top of that your money has plenty of time to grow with what's known as compound interest which means your money ends up making you more money which ends up making you even more money and then by the time you're sixty you're gonna have plenty of money left over completely tax-free for you to use on whatever you want and of course as usual I have another video down below in the description where I cover everything you need to know about a Roth IRA and want to start one up in all the details so again it's down below in the description now the second account that you can look into opening up is what's known as a traditional 401k now this is an account that you can invest pre-tax money into and then you're taxed on the money once you begin withdrawing it after the age of 59 and a half for example if you invest $500 a month into a 401 K you're gonna be taxed as though you're making $500 a month less than you actually are that saves you money up front and that saves money allows you to invest more money than if you would just pay taxes on it now from my perspective the 401 K makes a lot of sense if your employer offers what's known as a 401k match this is when your employer will match your contribution dollar for dollar up to a certain amount essentially this is like you're immediately doubling your money with no risk whatsoever and the rule of thumb of doing this is that you should always do it don't even think about it just do it without hesitation always invest up to the maximum employer contribution you possibly can always and third with all the health concerns lately you could also look into investing in what's called a health savings account which is also known as an HSA and this one is probably the best retirement account you could ever possibly do of course there are some qualifications you must follow and you can easily figure that out with a quick Google search but assuming you qualify you can contribute up to $3,500 a year completely tax-free into this account now this account is specifically used to pay for any out-of-pocket medical expenses that you might incur if you don't use them one year then that's okay it rolls over to the next year no this is really great because like I said this is probably one of the best tax advantaged accounts in the entire planet first of all you don't get taxed on any money you contribute to the account so right there two tax write-off a second you don't get taxed on that money when you spend it on any out-of-pocket medical expenses so again that's also tax-free it's basically like you're getting completely tax-free money that you're never going to have to pay taxes on for any medical expenses which inevitably we're all gonna have at some point or another so again there's pretty much no reason you should not be looking into this and not doing this next after opening up your retirement account you're gonna have to figure out where you're gonna invest your money and like I mentioned before in a previous video everything you need to know about investing could really be summed up in under a few minutes and here you go these are those few minutes for most people out there who want to invest in retirement accounts it doesn't make any sense to go and research individual stocks to buy and sell or go and invest in Tesla options and make all of these yolo bets on Robin Hood instead there's really just three things that you need to invest in and that's it this is what's known as the three fund portfolio and it pretty much covers everything so you are investing in the entire world just going up in value and that way to if one business or industry goes down it doesn't really matter you got hundreds and thousands of others to pick up the pace and all of this is is just investing 80% of your money in an SP 500 index funds now this tracks the top 500 publicly traded companies in the United States like Apple Microsoft Google Facebook Netflix you name it then you're going to be investing 10% of your money in an international stock market index fund that's going to be covering all of the emerging markets this way you're going to be getting even more diversification as other countries just grow and develop and lastly you could put 10% of your money in a bond to index fund like this one vit bollocks see typically how this works is that when the stock market goes down bond prices go up so think of this one a little bit like your safety net this one's gonna give you a little bit more stability in your account so you don't see all of these like wild fluctuations day today between all of these funds you should expect to see a 5 to 8 percent return each and every year with dividends reinvested accounting for inflation that is completely passive income building your wealth totally tax-free over decades and decades even if you invest $500 a month into one of these accounts starting at the age of 20 by the age of 60 that could potentially be worth one point eight million dollars totally tax-free just by following this advice and alternatively if you want to go even easier than this just invest in Beatty Sachs or a total stock market index fund that one literally covers everything it's pretty much all in one fund and all you got to do is buy that same thing consistently each and every month and that's it then of course in the future if you have more money to best width you could start going into real estate or other diverse investments but until then this for most people is going to be the most simple easy approach now in terms of any investment specifics we don't really have to get too complicated here but just remember they're really easy saying time in the market beats timing the market that's it there have been numerous studies that show the more you buy and sell stocks and try to perfectly time the market the lower your overall return becomes and over a period of twenty years the most successful and profitable traders just buy and hold that's it they buy when the market goes up they buy when the market goes down they just keep buying and buying and buying that's it in fact the strategy of just buying into the market every single month consistently even outperforms perfect market timing where you keep your money in cash and then buy in all at once when you see a big drop and the reason for that is that one actually being successful in timing the market accurately consistently every single time becomes nearly impossible and during the time that you're holding out in cash is waiting for a drop you miss out on all the times the stock market goes up that's why it's almost always better to buy into the markets consistently then keep your money in cash and try to wait for the perfect drop even right now whenever you're watching this the stock market might seem a bit overvalued but in twenty years from now it's almost certainty today's prices are gonna look like a bargain even if it ends up going down in the short term so it's better to get yourself in the markets don't worry what happens in the short term just keep buying in over and over and over again and finally in your 20s after you've done everything I just mentioned it's really important to understand how all of this pieces together and understand just how much money you can make if you're able to save just fifteen dollars a day in a Roth IRA beginning at the age of 20 invested in an index fund like this one by the time you're 60 you'll have roughly one point six million dollars tax-free so right there you'll be a millionaire with $15 a day that's your complete retirement right there then if you increase that same investment to $20 a day you'll get one point eight million dollars tax-free and of course increase that to $30 a day and you'll have 3.2 million dollars and really the most difficult part from all of it is just starting and then staying consistent from here like a nearly guarantee if you follow these strategies you will be a millionaire in retirement just by sticking with it and I say this as someone who follows all of this advice consistently and if wasn't for this I would not be here today I always make sure to stay out of debt track my expenses reinvest money into the markets live below my means and of course as usual smash the like button for the YouTube algorithm so with that said you guys thank you so much for watching I really appreciate it as always if you found this video helpful it would mean a lot to me if you subscribe to and hit the notification bell also feel free to add me on Instagram I post you pretty much daily so if you want to be a part of it there feel free to add me there as in my second channel the Graham Stefan show I post there every single day I'm not posting here so if you want to see a brand new video for me every single day make sure to add yourself to that and lastly if you guys want to free stocks use the link down below in the description and weeble is going to be giving you 2 free stocks when you deposit $100 on the platform with one of those stocks valued up to potentially $1400 if you want to free stocks it's one of them potentially valued up to a lot of money use that link down below let me know it's two free stocks you get thank you so much for watching and until next time

Channel: Graham Stephan

Views: 1,106,849

Rating: 4.9668088 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 market investing for beginners, stock options, robinhood, robinhood app, best stock trading app, how to be a millionaire, how to be a millionaire in 3 years, credit score, credit score explained, credit card, credit cards for beginners, passive income, how to build wealth, how to build wealth in your 20s, real estate 101

Id: CW5OtlPSdNc

Length: 23min 0sec (1380 seconds)

Published: Mon Jun 22 2020