Where do the rich store their wealth...

hey everybody it's ken so thank you guys so much for all the great questions that you're sending in i have been reading them and looking at them and and it's certainly helped me design new content exactly for you so keep the questions coming in thank you so much one of the questions that keeps coming up is where do the rich store their wealth and so that's what we're going to talk about today is exactly you know some of the studying that i've done personally and also what i'm doing right now during this crisis as you we all know you know unemployment's going to run out probably at the end of july at least that's what they say at the moment businesses have not been open and some are now just opening but it's kind of a new normal they're not opening to the the robust uh customers that they had before and they're certainly not making the money that they were before a lot of them and a lot of them just aren't opening so so we are kind of dealing with this right now and what i want to do is i want to try to focus on you know what we could be doing not necessarily where we are right now but what we should be doing what we should be studying so the first thing is that i want to go over is um i want to talk a little bit about the uh these are the habits of the investment habits of the of the uh poor the middle class and the rich so i'm going to call these investment habits so what's happening right now is everybody's blaming everybody people want to blame the government they want to blame trump they want to blame their republicans they want to blame the democrats you know and as long as you guys are going to continue to do that you will not move forward that's a fact the the situation that we're all in is based on the choices that we've all made now i do understand that some of us have advantages and some of us have been through different kinds of circumstances and some of us just are working really really hard to get what we have and maybe we're working really hard and we're not getting what we have and i just want to walk through these these are talked about in the cash flow games they're talked about in rich ted poor dad and they're talked in a number of books and so the poor what they do is they make their money and they basically spend expenses typically on rent and i'm you know maybe they have some savings they go on vacations et cetera et cetera nothing wrong with that but that's typically the the way that the poor are in uh are handling their money now the middle class what they typically do is they do the same stuff on the expense side they buy liabilities like cars and and boats and things like that uh over here and then they turn their money over to a wealth manager uh for it or or they stick it in deposits fixed deposits or retirement savings or wealth management and that's kind of where the middle class is and by the way my definition a middle class you know that could be somebody that has millions of dollars okay i'm talking about rich so i'm not talking about people that have uh you know that have a lot of toys and stuff because that's exactly the pattern it's not necessarily a good sustainable pattern unless they have a good solid income the rich do things very very very differently so they still have the expenses and the liabilities and all that stuff but what they're doing is that they're investing in assets and the definition of an asset is something that puts money in your pocket so um robert kiyosaki says uh and a lot of people have said that the rich don't work for money and this is true so right now i have 8 000 tenants paying rent paying mortgages all our billing paying all the expenses paying all my employees and all that stuff and i have what's called passive income coming in now a lot of those people got hurt a lot of them are paying but with the stimulus money a lot of them are paying the point is is i'm in assets so i'm not actually working for my money it's already at work for me it's called the velocity of money and so this is kind of the pattern of um the middle class and this is the pattern for the rich and so what i wanted to show here is that most middle class they go to work for a job and then they pay big taxes and if you want to see a great tax video go take a look at some of tom will wright's work because the uh a sole proprietor or the employee is one of the biggest tax uh there can be in fact that is where most of the tax uh comes most of the businesses down here like for me i have things like depreciation and bonus depreciation and things that i can write off in my business legally to reduce my taxes significantly and and typically the middle class are buying they're getting loans for things and they're paying those loans and their the money's not coming back so the difference between the rich and the middle class on the low side is right here here in this arrow and basically the the money comes back as the rich build businesses and they acquire new skills and they study and that's what we're going to talk about here is right here this studying piece um and then they invest in assets that come back like apartment buildings or office buildings or retail or whatever it is now this is complicated this is hard to do but the truth is if if you can if you can change your habits then you're going to change your results and if you don't change your habits then you're not going to change your results the best quote ever is jim rohn he says the formal education will make you a living and it's true but a self-education will make you a fortune if you haven't studied jim rohn he's a great great person to study and so what i'm going to walk you through is kind of some of the things that i've done from an education standpoint and also some of the things that you can do to just think differently about money and how you can end up on the other side of this crisis in a better situation so the first thing that i want you to know is that um for a lot of people you know this self-education is a process so what happens with education a lot of times it certainly happened with me when i got out of school you know i'm like okay i have all this knowledge even though it was knowledge from a book and not experience and practical knowledge i didn't really have world knowledge i didn't really have a self-education i had a formal education but i didn't have a self-education and i have a lot of friends that have never even been to college that are very very very intelligent people and it's all because of self-education but i don't know about you guys but here's basically the story of my life so you know first i get out of school and i get a job and it's not exactly what i want and then i go get another job and it's not exactly what i want or i decided to start my own business so then i started my own business and then i had a partnership fall out and then i started my another business and then i had some relationship issues you know and then i started another business and i started investing in things that i didn't understand and you know on and on and on and so i think a lot of you guys have very similar situations but here's the thing here's where most people don't focus they don't focus here they don't focus when things are down and that's where we're heading and so what happens is i don't think my life is any different than anybody else's i've had my shares of wins and i've had my shares of losses and i've had my shares of failures just like anybody but the point is if you don't actually learn from these then you're going to be in big big trouble big trouble and it's at these times if you could sit back and and take a look at exactly what are some of the behaviors and some of the habits that you've done then i guarantee you you can ride this next wave up because this education piece it is a process you know there is inside of you a bigger you for sure you just haven't seen it yet and so what happens is a lot of people are scared they're scared of failure they're scared to ask questions maybe they're analyzing things too much and they never make a decision whatever it is it's a process and you gotta break three and free and you just to try things you just got to take one step then the next step now i'm not saying to be not prudent you have to be prudent you have to make the right decisions you have to counsel you have to watch videos like this you have to watch other people's videos even ones that have different opposing views of me because that's all just good education as long as you can just keep an open mind then you'll progress forward so the biggest thing that i learned was that information versus transformation so information can be a lot of different things and for a lot of people it's typically a formal education and but it isn't until the transformation kicks in which is you know which is here at the bottom that you actually learn i can tell you from personal experience when i was in uh when i was making a lot of money and we were you know we were really killing it up in here i wasn't learning a thing in fact and that's what we're all going through right now everybody's just made a lot of money and what happens is you're not necessarily taking a big picture of you about what could go wrong and so that's the situation everybody's in and they're fearful they have uncertainty and they're angry a lot of them but it's their own issue and i'm telling you guys from a kid that grew up with nothing from parents that never went to college and never even barely graduated from high school i'm telling you that you can do this i'm telling you i grew up with parents that were just after the depression and you know they couldn't afford anything and they couldn't and my mom used to say we can't afford this we can't afford this we can't afford this those are mindset issues and so if you can transform those into how i can't afford to i can't afford you'll be much much better off and so what i want to end on here before i jump to how the rich store their wealth is the difference between self-education it lowers your risk and that's what we're trying to do the more you know the more books you read as an example here's some here's some books that i read in the last recession i pulled these out for this video the great reset boom bust and echo big shifts ahead i bought these in 2009 10 years ago because i wanted to learn okay i just got hit in my stock portfolio i just got hit in my real estate portfolio what can i do i don't have all the answers but there's a lot of people that are very smart that can help you through this and the more you ask the more videos you watch the more books you read you're going to lower your risk you're going to make better decisions going forward so the question is that everybody's been asking is where does the wealth wealthy store their money and what should you study okay so that's what we're gonna talk about next so one of the great things that we do at rich dad is we study books and one of the books that i studied was called crash course with chris martinson and this guy is a genius um he's got a great story he's got some really good facts in here and i've i've had an opportunity to hang out with him a lot in mexico he's been up to my resort up in sedona as we were looking at bringing that resort fully sustainable so i would recommend chris martinson looking him up peak prosperity but one of the things that i really learned from him were that there's three tiers of wealth and i think you guys are going to learn a lot here because there's primary secondary and tertiary and once i can lay this out to you i can kind of talk to you about once i kind of lay this out for you i can show you how there's kind of a herd mentality into the top tier which is the most risky tier and so the three tiers of wealth as chris calls them are primary secondary and tertiary and so what i wanted to do here was just kind of walk through um so as far as an investment is concerned you basically have choices you could you could invest in the tertiary you can invest in the secondary or you can invest in the primary so let me walk through what those are so the primary is land oil gold timber coal water so you get it so those are primary so these are what you could call natural resources so here's the interesting thing this is not where most people invest so now i i like to put land in here because that's what landlord you know land is also uh even though the business is in the secondary category it really is um something that a lot of people store their wealth in land oil gold timber coal water et cetera these are things these are natural resources these are all things that come from the earth okay now the interesting thing is the secondary tier which is basically business so think about this so let's just talk about mobile oil mobile oil is a business and they extract oil into their business and their business is a functioning unit okay it has income and has expenses but they're getting oil from someone they're getting it from you they're getting it from me or maybe it's land that they bought whatever it is it's coming out of the ground okay same thing with warehouser let's say for timber wherehauser is based out of the northwest um they i know for a fact that they harvest timber off of other people's land and they have their own land and so they're a business they're a secondary business and they pull timber and then they turn it into lumber and then they sell it to the lumber stores which are also businesses so that's there's a big big world of business but it all happens here in the primary sector in fact there is no secondary without primary so in other words there is no business unless it derives its resources from here and this is where all wealth is created so all wealth is created at the primary level if you think about it the problem is is that a lot of people don't invest here what they do is they invest here or they invest here and so the last piece at the top is paper so we have natural resources business and paper and what do i mean by paper i mean stock i mean bonds i mean etfs derivatives and i'm even going to throw cash in here because i think right now cash is being printed so much it technically is paper it's fiat money and so what happens is it says education issue and so a lot of times what's going to happen is you're going to work hard and you're going to turn your money over and you're going to put it into this tertiary sector into this paper category and it's going to stay in stocks bonds etfs and derivatives and i just want you to understand how far away you are from the actual source because if you're buying let's say a warehouse or stock you're buying a stock in the secondary and then the secondary has all kinds of contracts and excavation and things that they're doing from somebody that owns the timber and so what you want to be the wealthy invest here they invest in the primary category they invest in real timber they unrest they invest in real land that has oil in texas we were buying properties that had oil reserves near them and we were cutting deals with oil and gas to drill vertically down under our properties and we were getting residual income because we owned the land and we had an apartment property on top of them and so not only were we making money from the rent of the property but we were making money by cutting a deal with oil and gas companies because they were drilling down underneath and going vertically and in some cases they could go miles but every property that they went under vertically they had to cut a deal with and so we were getting residuals based on their production and so the problem is that most people what they do is they invest here and this here guys this is what the stock market in 1933 when it busted this is the reason it's because most of the wealth was stuck in the paper asset category and so that's what's happening now is most people aren't educated enough where they turn their money over to a financial planner or a wealth manager and they're investing in here and the biggest reason is because the people that are putting you into these categories they get fees for doing it it's very hard to invest in these categories because you have to find a landowner like myself and understand how to buy things and understand what it means and understand what the contracts are with these businesses etc but most people most of the wealthy people they're investing here and they're investing here i'm not saying that you can't make a lot of money in the stock market i'm not saying that you can't make a lot of money in wall street but i'm saying that is it is the most risky in my opinion of all things because what we're starting to see now you're starting to see the government bailouts here at the secondary level and maybe maybe not it works up to the tertiary level these these a lot of these businesses are on life support right now but the end of the day when when businesses go out when companies go out of business what still will stay are the primary resources the natural resources and there will always be a company that will get wealthy extracting and extracting resources from the earth because this is where all the wealth is created so as you guys try to navigate all this and you try to figure out what to do next just be very very careful about turning your money over to somebody else and not understanding where it is even if it's in the etf form so i had a great question this week somebody said what's the difference between gold etf and physical gold and i said literally it's literally that it's i pulled out a gold coin and i said this is a gold coin it's worth about 1800 bucks right now for one ounce and uh it eventually makes it way all the way up into the these etfs what you need to know is that when you add up all these etfs there's actually more gold etfs than there's actual physical gold and so you need to be very very careful on what you're doing and turn over your money and this all has to do with what i said before about education and transformation because if you guys aren't getting educated and you're just turning your money over to someone else then that's your own fault and i'm telling you guys you do have the power to turn this around use this next time use all this pain this depression the stimulus money this time that you have to educate yourself find a coach find a mentor read some books watch videos ask lots of questions and try not to have a fixed mindset on any of this stuff keep a very open more of a growth mindset and i tell i'm telling you this will be a small correction it'll be a learning correction just like i showed you at the bottom of you know at some of mine those were times where i had the most reflection i had the most accountability and i took responsibility for every decision i made and that's the only reason that i'm doing well during this particular downturn so thank you again for watching

Channel: Ken McElroy

Views: 381,060

Rating: 4.8767581 out of 5

Keywords: Rich Dad, Entrepreneurship, Investing, Personal Development, Get Wealthy, Earn Wealth, Ken McElroy, Entrepreneur, Rich Dad Advisor, Success, Business, Self-Help, Coaching, Real Estate, Real Estate Entrepreneur, Real Estate Investing, Freedom, Lifestyle Business, Hustle, where do the rich store their wealth, where do rich people keep their money

Id: Zs1S2DWCogM

Length: 23min 19sec (1399 seconds)

Published: Sat May 16 2020