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Did you know that some experts purport nearly 80% of Americans are living paycheck to paycheck? Or that the World Economic Forum’s 2024 study found only about 50% of U.S. adults to be financially literate? Financial literacy isn’t something that’s taught in schools, and most people don’t grow up talking about money at home — which is why so many people feel stuck when it comes to building wealth.
Recently, MU’s own Justin Williams caught up with Andrew Giancola of the Personal Finance Podcast to break down the 7 rules for creating wealth that EVERYONE should know. We’re not talking about becoming a centimillionaire or some kind of financial guru — we’re talking about the kind of financial security that allows you to stop stressing about money and actually enjoy your life. Most people are barely scraping by, trying to pay the bills and keep up with rising costs — but the same habits and knowledge that help you escape the rat race are the same ones that can set you up for real financial freedom.
Wealth creation isn’t for the elite few — it’s for everyone. Yes, even if you don’t start a Fortune 500 business or inherit a massive trust fund. That’s why our team wanted to create this guide — not just for ourselves, but for our kids and the people we care about most. If you learn these principles early in life (or even later in life), your financial future will be WAY better off. These are the lessons we wish more people knew — and the ones we hope you’ll pass down to the next generation.
So let’s dive into the 7 essential rules for creating wealth — because financial freedom isn’t a dream, it’s a choice!
1. Master Your Money Goals
“When you have that North Star in place, you know exactly where you're going. Then you can actually set up all of these systems to put them in place so that you can actually achieve that goal.”
The first step to financial success is knowing where you want to go. Without a clear financial target, you’re just drifting. That’s why we emphasize the importance of setting a financial independence number — how much money you need to retire comfortably.
A simple way to calculate your number is to take your desired annual retirement income and multiply it by 25. For example, if you want to spend $80,000 per year in retirement, you’ll need about $2 million invested. Once you have that goal, break it down into smaller milestones using a 12-week goal-setting system to stay on track.
To get started, define your financial freedom number and create a 12-week action plan to start making progress toward it.
2. Increase Your Income
“You need to focus your time and energy on earning more because it’s the most powerful lever you have to build wealth.”
One of the most powerful levers for building wealth is earning more money. While cutting expenses helps, there’s only so much you can cut. Increasing your income, on the other hand, has unlimited potential.
Start by maximizing your earning potential at your day job. Use a six-month system to position yourself for a raise, get involved in high-impact projects, and learn the skills that set you apart. If that doesn’t work, consider job hopping — on average, switching companies can increase your salary by 14%.
Schedule a meeting with your boss to discuss career advancement opportunities and take strategic action to increase your earning potential.
3. Reduce Debt and Expenses
“If you are in some high-interest debt, then you need to make sure you get that paid off... You can then take those extra dollars and put them towards investments.”
Not all debt is bad, but high-interest debt can keep you stuck in a financial hole. The priority is to pay off any debt with interest rates above 6% — especially credit card debt, which often comes with 20%+ interest rates.
Use either the debt snowball method (starting with the smallest balance) or the debt avalanche method (starting with the highest interest rate) to eliminate your debt efficiently.
List all your debts, prioritize them by one of these methods, and create a payoff strategy to free up more money for wealth-building.
4. Build a Savings Safety Net
“An emergency fund is a fund that you build up over time in cash that is going to protect you against life... There’s power in having money to help protect you because, if you start to go backwards, how are you going to be able to invest in the future and start to build wealth?”
Before diving into investing, it’s crucial to have a financial safety net. Unexpected expenses and job losses can derail your wealth-building journey if you’re not prepared.
Use the 1-3-6 Method:
1 month of expenses in a high-yield savings account while you pay off debt.
3 months of expenses before you start investing.
6 months of expenses as your long-term emergency fund goal.
Open a high-yield savings account and start automating your emergency fund contributions to build financial security.
5. Invest Smartly
“The S&P 500, historically, over the course of the last 50 years, has returned 10% to investors... It outperforms mutual fund managers 90% of the time, every single year.”
Once you have savings in place, it’s time to make your money work for you. Our suggested investment strategy focuses on passive, long-term investing.
Start by maximizing tax-advantaged accounts:
Employer 401(k) match — If your company offers a match, contribute enough to get the full match (it’s free money!).
Health Savings Account (HSA) — If you have a high-deductible health plan, use an HSA for triple tax benefits.
Roth IRA — Contributions grow tax-free, and withdrawals are tax-free in retirement.
Taxable brokerage account — Invest in index funds and ETFs like the S&P 500 (VOO) or Total Stock Market Index (VTI).
Once you’ve opened an investment account, start contributing regularly to grow your wealth.
6. Explore Entrepreneurial Opportunities
“There are so many side hustles out there that can turn into full-time businesses that allow you to have freedom from your job. The way to think about this is you have one foot in each pond, and then eventually, your side business starts to make more than your standard business.”
Starting a business or buying an existing one can accelerate your path to wealth. Both Justin and Andrew, who own multiple businesses themselves, are prime examples of why entrepreneurship is a game-changer.
If you’re new to business, start with a side hustle. Consider service-based businesses like social media management, consulting, or freelancing. If you’re ready to buy a business, look for profitable, cash-flowing businesses with potential for growth.
Research side hustle ideas and take the first step toward earning extra income outside your job.
7. Use Money as a Tool for a Great Life
“Spending is a skill... We see money as a tool to get you the things you want out of life.”
At the end of the day, wealth isn’t just about having money — it’s about living a fulfilling life. Too many people obsess over saving but never enjoy their wealth. The key is to spend intentionally on things that bring you joy.
Instead of hoarding money, use it to create experiences, buy back your time, and support causes you care about. The goal is to achieve financial freedom, so you have the ability to do what you love without financial stress.
Reflect on what a fulfilling life looks like for you, and make sure your financial decisions align with that vision.
Final Thoughts: Create Wealth With Intention
Building wealth isn’t complicated, but it does require discipline and a clear plan. By following these seven rules — setting goals, earning more, reducing debt, saving wisely, investing strategically, exploring entrepreneurship, and using money as a tool — you can create financial freedom and live life on your terms!
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Transcript
Part 1
Justin: [00:00:00] Seven rules for creating wealth. You ready? Let's go. Hey, what is going down all you beautiful money making geniuses out there. This is your hostess with the most is Justin Williams. And this is the millionaire university podcast. Today is a special day because I have got two treats. For you, not one, but two treats.
First off, you probably noticed that this is not the only, but the second episode that we are publishing today. Think of this as like a pilot or a beta test. We want to see what happens when we publish more than one episode in a day. If it goes well within a few weeks, you may start seeing two episodes per day on the millionaire university podcast.
So stay tuned for that. As always, I will pull back the curtain and let you know how it goes, whether it was a huge success, a huge flop, the things that we learned because here at MU, it's [00:01:00] not just about sharing amazing content, bringing on amazing guests. But pulling back the curtain, sharing with you what we're seeing, what we're learning, what we're doing in our business now, and how that can relate to you.
So stay tuned for updates on that. Today essentially begins a three day test we'll be doing of publishing two episodes per day for three days. So I'm very interested in seeing how it goes. This test will have a huge impact on the direction that MU will be going this year, what my year is going to look like and what MU may or could look like going forward in the future for you as a listener.
So pretty exciting stuff. If I do say so myself. Treat number two, two days episode marks the first of a three part three day series that I just completed with my good friend, Andrew Giancola of the personal finance podcast here at MU. The main thing that we spend most of our time talking about is how to start and grow a highly successful.
Full business, a money [00:02:00] machine. But what do you do if you're not quite there yet? If you're not quite ready to take that leap, what are other ways that you can start creating wealth and improve your life situation? We're calling this series seven rules of creating wealth. And I actually created it with my kids and some other people I know in mind.
But I personally learned a ton. I've actually been in talks with Andrew about the possibility of him coming on as a more regular millionaire mentor here at millionaire university. His values really match so much of what we are doing here at MU. Yet his background experience skill set also really compliment and fill in a lot of the gaps or areas that I'm not really expert in, and I really.
Feel like a lot of our listeners could really benefit from. So hopefully we can make that happen. But in the meantime, let's get to it. Ladies and gentlemen, rise to your feet. Put your hands together for Andrew Giancola and seven [00:03:00] rules of creating
Andrew: wealth. My story is I started when I graduated from college where I got my first entry level job and I started in finance.
And when I started in finance, you would think someone in finance and corporate finance would make a lot of money. I did not at all. I was in an entry level job making 30, 000 per year. And so when I started to make that 30, 000 per year, I realized very quickly that I was living paycheck to paycheck. This was not enough money to help me get by.
And so after that, that point in time, I was at a gas pump at one point in time and I went to go Fill up my, my tank with gas. And when I went to go fill up that tank, I did not have enough money in my checking account in order to fill up my gas tank. And so right then in there is when I vowed I am going to make a change here.
And I'm going to make a huge, huge difference. And so the, I started to increase my income. I started to invest my money and try to grow my wealth over time. And in two years I had saved up over a hundred thousand dollars just from trying to increase my income and trying to grow my wealth, which led me to continue to try to climb up the corporate ladder over time.
And then two years later, I [00:04:00] finally left my corporate job and started. to invest in real estate full time, which is, um, something that was actually a really fun journey. So over the course of the next two years, I started to invest in single family rental properties and small, um, small multifamily rental properties.
And during that timeframe, I learned a ton about business. I learned a ton about real estate, um, ended up selling that entire portfolio with my business partners and then moving on, starting other companies after that. But it was really that financial foundation that started, uh, at that point in time at that gas pump, where I decided I am going to make a huge, huge change, learned.
All about how personal finance work and became a millionaire. 10 years later.
Justin: Wow. That's awesome. So like I mentioned in the intro, we are talking about the seven rules for building wealth. Andrew and I have a lot in common, but we have a lot that is different. I, 30, 000, that sucks, man. My wife, she was getting paid like 25, 000, but this was, you know, I think we're like.
I don't know. Are we 10 [00:05:00] years older than you? How old are you? Anyway, I don't know if you mid 30. You're what? I'm
Andrew: 36.
Justin: Okay. Yeah, I thought you said you're 26. I was like, Whoa, wait, wait, hold on. Yeah. So we're like eight years older than you. Um, but man, 30 grand. And so, but it's inspiring to see. Now, you, did you get a degree turn 30 grand a year?
Andrew: I did. And so initially, right when I graduated college, I took the first job that I could take. So I had a degree in economics and finance. Um, and then just took the first job that was offered to me. Didn't learn about negotiation or anything. I learned all of this stuff after the fact, which allowed me to kind of grow my wealth over time.
Cause I actually learned the skills that I needed.
Justin: Well, this is perfect. And it's funny that I'm kind of like unintentionally feels like I'm laughing at you, but the irony, the irony is I think I'm all smart, but I ended up out of. Not long out of college, like with 120, 000 of debt from jacking up my business.
So at least you were making money. I was losing money. But this is perfect because so many of those who are currently [00:06:00] listening, they didn't follow my path. They weren't like right out of college. I'm going to drop out of college, start a business, go make us happen. See what happens. The majority of people are more risk averse like yourself.
And they've, they'll be familiar with your path. So I'm excited to have you on to kind of go through this and help people in all different kinds of situations, get to where, you know, you currently are today. Right. So let's start with rule number one. And I mean, you can state it in your own words. I know we were talking previously, we kind of went through, I've been listening to a bunch of your podcasts and.
We came up with like some titles for these rules, but I would say rule number one is like, have a plan or have goals. What would you title rule number one? We're just, we're making this happen as we go.
Andrew: We have an app, actually, we talk about this all the time where we call it mastering your money goals.
And at the very beginning, you need to kind of understand where you're going and have that North star to understand what you need out of life. And so what we typically will do is we will try to figure out what is my financial independence number? What is the number that I need to hit in order [00:07:00] to achieve financial freedom?
And so we figure out what that number is by looking at our current expenses and saying to ourselves, Hey, how much do we want to spend every single year in retirement? So say, for example, you want to spend 80, 000 a year in retirement. That's a low number for a lot of people in, in different locations. Um, for some people that are.
Completely fine with 80, 000 per year. So if that's you, I'm using 80, 000 per year is easy math. Sure. The quick example is just to multiply that by 25. And the reason why we do this, um, is cause that's going to get us to 2 million per year, or that's going to get us to a portfolio of 2 million. And if you have a portfolio of 2 million, you can draw down 4%.
Every single year and preserve your wealth and not run out of money. And this is based on something called the Trinity study or the 4 percent rule. And so when we talk through this, it's finding out what that North star number is, but then beyond that, we want to find ways to cashflow. We want to find ways to have financial abundance, but we're just trying to find that bare bones number first so that we can know, Hey.
This is F you money. We don't have to keep a job. If we don't want to, we can keep this money invested over time and be able to have [00:08:00] and buy our freedom. And the ultimate goal in my life, at least is to go out and to buy my freedom. And Justin, you and I have talked about this a lot. That's the ultimate goal and why we want to do a lot of this stuff.
And so our, with the end in mind, we start to go through some of these goals. And then we have a very specific system on if you want to achieve very specific goals and how to do that and go through that process.
Justin: Okay, I love it. Um, are we ready for number two or do we need to go into that a little bit more like dive into it more if you want?
Cause I think
Andrew: one, one cool thing about that is that I, we do our goals in, in 12 week segments. And so the way that we set these up is that I always go look at all my financial goals. Let's say, for example, you want to go and buy a house this year. We're gonna do something simple. If you want to go out and buy a house this year, we set up, Hey, here's our savings goals over the next three months.
We want to make sure that we are on track every month, every, every week, and kind of break it all the way down to these 12 month cycles. And so when we have these set up, it's going to be a way to keep, to keep you on track going forward and to keep accountability going. And the number one thing that we talk about with goals is just [00:09:00] automating all these systems.
So once you have them in place, you can start to automate the system. And then we do a review once a week to make sure that we're on track. Okay, love it. So you come up, you said you come up with 12 month segments. Is that what I heard you say? 12 week. Okay, 12 week year. Okay, and so it's every 12 weeks. We kind of do a review when we try to set, we try to achieve these goals every 12 weeks and then we kind of review, assess and make sure we're on track and then we go to the next 12 week cycle again.
Justin: Okay. Love it. But at the end of the day, I mean, figure out like, what do you want out of life? How much money do you want to be making each year? And just, you got to have a vision. You got to have a goal. You got to know where you're going, what you want. Like, what do you want to do for fun? Like how much money do you think I always tell people?
You know, our brain, we receive like 11 million bits of information per second. That's insane. Like we don't take it all in to our conscious and all that, but if you don't know where you're going, like you've heard of like the red car theory or white Camry, whatever it is, where if someone's going to work and you're like, Hey, how many red cars did you see?
They're [00:10:00] gonna be like, I don't know. But if you say, okay, I'll give you a hundred bucks for every red car you see on the way home. They're going to see a ton. Cause that's where their mind gets focused in. We can't take in all this information. But if we, if we, so if we have no goals, no vision, we don't know where we want to go.
Our mind is not going to get work, get to work solving a problem that it doesn't know exists. Right. So we've got to get clear on that. And once we have that clarity, it helps us reverse engineer that as to how we can get there. Right. Exactly.
Andrew: I couldn't agree more. And I think that's when you have that North star in place, you know exactly where you're going.
Then you can actually set up all of these systems to, to put them in place so that you can actually achieve that goal. It's very important to have
Justin: that. I don't know why though. Okay. I love it. So this'll get more clear. I think as we go through each of the numbers, then people can go back and think, okay, number one, like, what's my plan, where do I want to go?
Um, and they'll have a better idea of how they can get there. So number two, and these aren't all in like an exact order, right? I mean, they kind of are, but they're not perfectly in an order. So just keep that in mind. There's just help [00:11:00] us with the flow of the episode. So number two is. Make more money, right?
You want to dive into
Andrew: that a little
Justin: more?
Andrew: Absolutely. So earning more is one of the most important things that you could do. So most people when they have something like if you're in my situation and you had an income problem where you only had so much money coming in, you can only cut back so much for most people.
Their biggest financial problem is their earning potential and their earning power and how much money they can actually earn. And so we talk about this all the time that you need to focus your time and energy on earning. More because it's the most powerful lever that you have to build wealth. And so the way to do this initially is if you work a day job, for example, is figuring out how much you want to make in order to, you know, start to achieve some of these financial goals.
So the way that we do this is we start to negotiate our salary. Now we have a very specific system on how to negotiate your salary at your day job. So if you have a corporate job, or even if you work a blue collar job, this has worked for so many different people. We have had people get 50, 60, 70, [00:12:00] 000 raises just by kind of following this system.
And so what we talk about is when you have a year, an annual review with your boss every single year, you want to start to have a conversation with them about six months before that annual review. And so when you start to have this conversation, you say to them, Hey, how can I be involved in projects that are going to have a huge impact later on in the company?
And you're going to have a conversation saying, Hey, I want to be promoted or I want to make more money. What are some things that I need to be doing in order to do that? What this does is it sets the tone to have them let you know what you actually need to be doing day in and day out at your day job so that they can give you that information.
And then you start to execute. And then every single month you start to execute on the exact action items that they talked about. And you're going to check in with them every month. And you're going to do it the next month and the next month. And so by the time that you get to your, your yearly review, they are not surprised.
You're not walking into your boss's office and just saying, Hey, I want more money and you need to give it to me now. Because every single time I saw people do that, it never, ever worked. And so we developed [00:13:00] this six month system that helps you actually do things that That give value to your boss on then at the end, then you both have set the expectation.
Hey, I want to be either earning more. I want to get a promotion. Um, and that's how you do it at your day job. So the number one thing is to start at your day job. And then another thing that we talk about all the time is if your day job won't give you a promotion or if you've done this a couple of times, you've gone through different cycles, then you can do job hopping.
So job hopping on average, studies have come out and said that about four, you earn about 14 percent more when you actually go to another company. So loyalty is dead for a lot of folks in the world. Uh, and you actually earn a lot more when you change jobs. And this actually happened to me with my first job.
When I was ready to leave, they offered me a promotion of about 40 percent more than what I was making. So I asked for promotion after promotion and every single year I'd get 10 15 20 percent raise in this six month plan. But then once I was Actually deciding to leave, then they actually offered me that huge, big promotion with a 40 percent raise.
And so job, and that
Justin: was the job you were, you were [00:14:00] at, right? Not the job you hopped to you. Like that was the current job you were at offered you that much more job.
Andrew: I was at, isn't that wild? Yeah, I was hopping to actually was offering even more. So it was an interesting dynamic.
Justin: Very interesting. Yeah. But the leverage there, the unintentional leverage, right?
Because you were out looking for the opportunity and then even more opportunity comes.
Andrew: Yeah, exactly. And if you want to earn more at your day job, if you're sitting there and you're saying to yourself, Well, I don't know what to do. Then when you go talk to your boss, I want you to focus on the skills of the folks that are above you.
So what I would do is look at people who are in the positions that I wanted to be in and said to myself, Hey, what skills do these folks have that allowed them to get to that point in time? So I was in finance. So for us specifically, the person right above me was able to create these skills. Really customized Excel reports for the CEO and C.
O. O. So he had direct access to the decision makers in the company. This was a multi billion dollar company, and so he was working directly with him by creating these unique reports. And so immediately I started to work on my Excel skills. I went through all these different Excel classes and was able to get a [00:15:00] promotion just based on those Excel skills.
Then I said to myself, Hey, what is another skill that has a huge impact? Well, it's sales. It's negotiation. It's learning how to play the game in corporate politics. Even though we all hate it, you have to play that game. So this is the kind of thing that I would try to identify. If you're a nurse, look at what certifications you could get to increase your income.
If you are in a blue collar industry, look at what certifications you can get to raise that income. Cause there's a lot of different things that you can do, but you just got to say to yourself, the people above me, what did they do in order to get to that spot?
Justin: Tell you what, if I had employees and our team members come to me with that, I.
Like I would love it. I would absolutely do everything I could and work with them to get to those points. And you know, you know, they're looking for it. Right. So in the, in my mind, I'd be like, okay, I know this is what this person is trying to achieve. So if I want to keep them on the team, like this is what they're going to be looking for.
Right. I, one of the worst mistakes turn I ever made was we had, we hired back in the day, this girl who was running our business for us for [00:16:00] 8 an hour. Now I'm getting kind of up there. You see the gray hair on my beard, but. Still like 8 an hour, like it was kind of, she seemed happy. She seemed fine. And then one day she comes and she's like, guys, this has been amazing, but I got an offer on another job for 10 an hour.
And so I'm going to go do that. And like, we'll give you like, we'll give you 10. We'll give you 11. Like, what do you want? You know, and now it'd be a lot more, but I was like, what do you want? 11. It's yours. She's like, no, I'm sorry. I already committed to them. And I. And I was just like, no. Right. So anyway, I know that's from the other perspective, but if she would have come to us and been like, Hey, these are my goals.
Like she would have, we would have happily given her more. And I've learned to jump as an owner. I've learned to like, get ahead of that as well. But no, it's very, very powerful what you're talking about
Andrew: a hundred percent. And I have, now I have about a little over a hundred employees. I have never had, you have a
Justin: hundred employees.
Wow. Okay. This is interesting. I didn't realize that we'll get into [00:17:00] this
Andrew: across all businesses. That's what, that's what we have. I have never had that
Justin: man. That's why you're busy. You mentioned you're pretty busy. I'm like, I have one F one employee right now.
Andrew: It is one of those things that will make you want to pull your hair out, but I have never had one of them come do that.
Come and do this. And this is going to allow kind of stand out as well, because this is one thing that every single person that we, we kind of teach this system to when they go through this exact system, they immediately stand out to their boss because they're at least trying to help increase the efficiency or the bottom line or whatever.
Right. Big time. You might
Justin: feel like you're being pushy or annoying. I would say absolutely not. And if. If you do, if they do see it as that might be time to look somewhere else. Right? Like if you're not going to get a raise there, then, then maybe consider somewhere else. Right. But exactly.
Andrew: Cause when you have this conversation and you finally get to the bottom line where you did everything they asked you to do, and if they say to you, Hey, we just don't have it in the budget, or we're just not going to be able to give you this raise that's red flag.
Number one. And then if it happens again, and that's usually it's two strikes and you're out with me, uh, and that's kind of how I think
Justin: about it. [00:18:00] I tell my kids all the time, I'm like, never stay stagnant. Like. Most people don't make as much money as they want to make because they don't push to make more money.
So it's whether you're in a job, like always kind of, maybe you're not looking like 20 hours a week for the next job, but all those kind of keep your eye out, look for those new opportunities, try to get raises. I mean, I'm big on starting businesses and stuff, so, but if you're not going to do that, at least.
Maximize the amount of money that you can make from wherever you're at. My daughter is, she's like, I don't want to go to this job. It's a better one might come up, like take the job. I mean, she's only 16, like take the job. Cause it's not like you have a hundred people like offering you right now. You're going to gain experience, but then if something else pops up, you're, you're moving up now.
Right. You're so anyway,
Andrew: always.
Justin: Yes. I think that's the biggest problem. I think most people just, they get in a rut and they just like stay stagnant. We just want to keep that growth mindset. Keep going. Keep it interesting. It'll make you feel fulfilled. Not getting to those like low, like depression type feeling cycles.
Like, yeah, I love it. It [00:19:00] was good stuff.
Andrew: Exactly. And for a lot of people, they also, they come in and they say, well, what if my boss says no? Well, it is not your job to say, say no to yourself. It's your boss's job to say no to you. So you still need to come in with the ask to have the conversation. And this is.
This is something that I think a lot of people need to realize is there was a study done and I think it was published in business insider originally, um, uh, folks who went out and they actually asked for just small amounts raises. So one person did not get a raise and the other person got a 5 percent raise every three years.
The person that got the 5 percent raise every three years made multi million dollars more over the, over the course of their career than the person who did not ask for the raise. And so it's a multi million dollar decision just to get good at this. And that's why it's really, really important if you're going to work in the corporate world.
Justin: And if you're not getting at least some kind of raise, you're not keeping up with inflation. So anyway,
Andrew: exactly. You're going to be taking a pay cut every single year. Yeah,
Justin: exactly. Exactly. All right. So let's talk about number three, which I wrote down. And once again, you, you have the right to, uh, uh, I'll say Trump these.
I'm not referring to our [00:20:00] president, but to, uh, uh, veto veto. That's the word I'm looking for. Um, number three, reduce debt. Um, and or expenses.
Andrew: Let's talk about
Justin: that.
Andrew: And so there's there's obviously good debt and there's bad debt and good debt is that we kind of look at, you know, if you're investing in real estate, you go and get a mortgage and you're cash flowing on a property.
That's good debt. That's something we look at that we'd be interested in. Or if you're starting a business and you get an SBA loan and that loan is helping you actually get the business funded and started and it's starting to cash flow, then that's good debt. But there's bad debt specifically when it comes to your personal finances.
So things like. Credit card debt or things like a personal loan or something that has a really high interest rate. And so to us, a really high interest rate in most situations is anything above a 6 percent interest rate outside of your mortgage. So if you have say really high interest debt, like a 9 percent interest rate on a personal loan, or if you have credit card debt, which is the big one that most people have, where that's usually a 22 to 25 percent interest rate is what you were paying every single month.
Then this, well, every year, I
Justin: [00:21:00] mean, I mean, you're paying, I just want to, because. Because we don't talk about this a lot, they might miss what you said. If it's a 22 percent interest rate, that's an annual rate. So you're not paying 22 percent interest every month. You're paying one 12th of 22 percent interest every month, but that's still very high.
A 22 percent annualized interest rate is very high. So sorry about that, but just.
Andrew: It is a, it is a massive amount. And really I have seen so many people just making minimum payments on credit card debt, for example, and they just fall further and further and further backwards. This is a pants on fire if you have this and you need to make sure that you were paying it off.
And so we talk about this all the time, but this is priority. Number one is that if you are in some high interest debt, Then you need to make sure you get paid off outside of your mortgage. That's a different situation. You can refinance it later on. Uh, but everything else that is in that high interest rate, you need to make sure that you get that paid off.
Um, and so this is going to be a huge, huge proponent for most people. So we, we talk about this so much and we've had so many people kind of go through the process of, of getting that paid off, that it [00:22:00] is one where you can then take those extra dollars and put them towards investments. If you want to invest in businesses or real estate or in the stock market.
Those are the big things we want you to do, but debt is robbing you of that if you can't get there. And if you're living paycheck to paycheck and you're in debt, that is the reason why.
Justin: So we're going to get into investing in step number five, but step four. So it's like, first we're talking about, you got to make more money, right?
You can't invest or, um, save money that you're not making, right? There's a, there's a, there's a cap there. So you want to raise that cap. And once again, this is not necessarily in total perfect order because you want to reduce your expenses right away. Or you don't want to, I got to make more money before I reduce my expenses.
So don't do that, but make more money, reduce debt and expenses, starting with the highest interest rate, any debt that you have highest interest rate. If you have like a student loan or a car loan, and it's like a low interest rate, maybe a 1%, 2%, 3%. Then maybe that's not, you know, you can hold on to that a little bit longer.
[00:23:00] Um, and then let's talk about say, so next you want to save money before we get to investing, you want to save money. Why are we saving before we're investing? Cause I can't, you make more money investing. Like, why would I want to save first? Let's. Talk about that. And so
Andrew: this is something that we want a lot of people to be able to protect their wealth building ability.
This is what we talk about all the time. And so we have something called the one, three, six method. And the way that it works is that first you get your starter emergency fund going. Now, if you don't know what an emergency fund is, this is a fund that you build up over time in cash that is going to protect you against life.
It is inevitable that your car is going to break down, or if you own a house, it is inevitable that something is going to break in your house. And it's going to be an unexpected expense that you had no idea was coming. And for me, it seems like. Every time this happens, it's 10 things all at once. And so if you could lose your job or something, right, you could lose your job or something.
Job loss is the big one that will, we really want to be protecting against. And so when this happens, um, you know, it's something that you have no [00:24:00] idea that's happening, but you have to have the cash on hand. And I remember the first time that I finally got my emergency fund built up, I had a car. You know, my car broke down.
I wasn't making much money still at that point in time. And so I had a 2, 500 repair at that point in time. If I did not have an emergency fund in place, that would have been detrimental to my finances. But because I had that emergency fund in place, it was stress free because the money was just there and there's power in having money just there to help protect you.
Because if you start to go backwards, how are you going to be able to invest in the future and start to build wealth? We got to make sure that we have this in place. And so what we talked through is the one, three, six methods. So the one stands for saving up one months of expenses in a high yield savings account.
Now, the reason why we do this in a high yield savings account is it has a higher interest rate than going to your standard, you know, chase bank or whatever else. So what a high yield savings account does is it allows you to get three, four or 5 percent interest, depending on, you know, the time and the place right now, it's like three and a half percent.
Um, but it all, it depends on what the fed rates are and those types of things. And so you get one month of expenses inside of this high yield savings account. [00:25:00] And from there, then we go and we go pay off this high interest debt. And so we attack this debt as fast as we possibly can. That one month expenses just protects you from life against things happening over that time frame.
We go after this high interest debt, pay that down. Then we try to build up to three months of expenses. And so once you have three months of expenses, then you can start to invest. And so we have three months and we start invest. And our ultimate goal is to get to six months of expenses. Because of job loss.
We want to have that six months to protect us against job loss. Because for most people, if you go out and you lose your job and say, we're in like a recessionary environment, like 2009, if you go lose your job, it's going to take you a couple of months to get your resume going and to actually land interviews, it's going to take you a month or two to go through the rounds of interviews that you need to go through.
And by the time you finish all of that, it's going to be about six months before you land your next job. Now, if you do it sooner, that's absolutely great. But for most people, it takes six months or longer, uh, to land their second job, especially if you're trying to get a higher paid job in the corporate world.
And so that's why we talk about the minimum at six months over time. But once you get to three months, you could start investing and starting to grow your wealth. We don't want you to wait too [00:26:00] long for that. In fact, we want you to do it as fast as possible. Uh, but that's what we've got in this order.
Justin: Now, why, if I can earn more money historically, at least in the stock market, I think I just gave it away, but like, why wouldn't I want to go invest it there and then if an emergency comes up, I can just sell.
Some of my stocks, this is the
Andrew: number one question that we get asked. And the reason for that is because if you look at the stock market, historically, it's going to have 30, 40%. And this is very, very normal for the stock market. It's fact you should expect it. If you're going to invest in the stock market to have these pullbacks.
And when it goes, when it goes down, that stocks are on sale, which we can talk about later. But if you have your emergency fund invested. And the stock market pulls back and then all of a sudden you lose your job. Well, your emergency fund just got cut in half and now you have a major problem because now you only have two or three months of expenses in that emergency fund and you risked it all.
So anything that you are going to need for like five years or longer, we always recommend or five years or any, any savings that you save up and you're going to need to [00:27:00] utilize it within the next five years. Uh, we always recommend that you keep it in a high yield savings account. And then beyond that, if it's, you know, longer than five years, then you can keep it, you know, invested if you want to.
Justin: Okay, um, last question on number four before we head to the meat and potatoes of this episode, where would I find these high yield savings accounts?
Andrew: So there's a bunch of great places online. For example, one of my favorites is Ally Bank, only because it allows you to do what are called savings buckets.
And in these savings buckets, you can kind of basically budget inside of your savings account. So if you want to have a fund for car repairs, or if you want to have a fund, uh, to, to buy your next rental property, you want to buy a business and you want to have a fun there and you want to have one for your emergency fund, it'll actually allow you to segment all of these different sections inside of that account.
So I like to look for high yield savings accounts that have buckets, um, like that, but there's a bunch of other great ones out there. Marcus, uh, is another one, you know, betterment even has them now. So there's a bunch of great high yield savings accounts out there online.
Justin: Okay, awesome, and you can still, I mean, it's a savings account, but you [00:28:00] can.
Still get the money in and out. It's very liquid. What's the difference between like that and a bank? Would you still have a bank account or do you not need the bank account anymore?
Andrew: So the only other thing that I would have is typically for, for the banking side is a checking account and that's just a pass through account.
So all the checking account does is it has my direct deposit. It pays the bills outside of the bills that I put on a credit card and everything else just kind of passes through there and then I save inside the high yield savings.
Justin: So versus having a checking and a savings account that doesn't yield you anything.
You're going to still do all your regular, but you're gonna have enough money in there to pay the bills, like your monthly expenses and stuff, and then you'll put everything else in the savings account.
Andrew: Exactly.
Justin: And
Andrew: everything that goes in the savings account is all automated. I don't even have to look at it.
It just all automatically goes into the specific buckets. It's all there every single time. And I just go look and make sure it went, but that's, that's about it.
Justin: Awesome. And you're making a good. A decent return considering
Andrew: it's much better than is all you really want it to do. Yeah.
Justin: 0. 01 percent or whatever [00:29:00] 0.
1 percent of the bank pays or whatever it is. Give it up for Andrew Giancola. Remember, this is just part one of our three part series, seven rules for creating wealth. So stay tuned for tomorrow. Remember tomorrow we will be publishing just like today, two episodes. So while this series will be released.
Three days in a row, it will show up in your pod player as every other episode. In the meantime, if you enjoyed today's episode, please share with a friend. This is a series that I will be sharing with everyone. I know these are very basic, yet incredibly important lessons that everyone should learn as early on as possible in their lifetime.
The best time to plant the financial tree is as soon as possible in life. But the next second, best time is. Now, today, so keep learning what you got to learn. Keep doing what you got to do, and we will see you tomorrow in part two. Until then, this is Justin Williams, your [00:30:00] money making machine fanatic signing off.
Adios.
Part 2
Justin: [00:00:00] Seven rules of creating wealth part two. Hey, what is going down? My beautiful, hellicious money making machinists. Welcome to the millionaire university podcast. This is Justin Williams. And on today's episode, we will continue with part two of our three part series, seven rules for creating wealth. If you have not yet listened to part one, go back to one of.
Yesterday's episodes. I say one of, because yesterday we released two episodes. So don't just go to the last episode, go to the episode before that. And then we will finish off this series manana. That's tomorrow for anybody who don't know a north Spanish already. Well, let's get back to it. Ladies and gentlemen, I give you the one and only Andrew Guillen Cola, seven rules to create wealth.
Let's get into the meat and potatoes here. Um, investing. So we've, we've [00:01:00] improved or worked towards improving our income a little bit, or maybe we already had a good income, right? Um, we've reduced our debt, we've paid off those like 16 percent credit cards. Cause there's no point in investing. If you're paying 16 percent interest, um, we have our savings, you know, maybe we're at three months and we can start investing, right.
And then we want to invest, uh, save a little bit as we're investing. Um, And now, so we're ready to start investing. Where do we start? So like if we're, yeah, it's all right, go ahead, go for it.
Andrew: Is the first place to start to look is to see if your employer, if you're working for someone has a 401k and you look for the 401k match is specifically what you're looking for, because this employer match.
Is the best rate of return that you're ever going to get. 'cause it's a 100% rate of return. So the way that this works is that you go to your HR department and you say to them, Hey, do you have a 401k option? Can I open one? And if they say yes, then you say, do you have an employer match? And if they do, you can put up, you know, depending on whatever the [00:02:00] company handbook says, you know, maybe you put in 3% and they match you 3%.
So this is a 100% rate of return. So we always tell people even before you start, yeah, that's a no brainer. Yeah, exactly. Uh, so even like max
Justin: that thing out, right? Yeah. You said even before you pay off debt, right? Cause that's a hundred percent rate of return. It's the
Andrew: highest rate of return you can get. I might go get a job, man.
Exactly. Is it so, so we've kind of run the numbers on this a bunch of different ways. And you know, someone who actually gets their 401k match over the course of 35 years, if you work in the corporate world for that long, um, over the course of 35 years, they're going to have about an additional seven to 800.
1, 000 in L and K just with that 3 percent match. And so some, why do employers do
Justin: that?
Andrew: So it's double that. And so it's, it's very interesting, um, to kind of start there.
Justin: And so is that just kind of like insurance? Like, why, like, I'm trying to think, why would an employer do that? It's almost feels like it's throwing money away, but I guess if you can, if it.
It fits into your compensation plan. Is that the whole thing? It's like getting insurance. It's just [00:03:00] part of the plan. Like exactly. So it's
Andrew: part of their compensation plan. They get a tax deduction when they do it. So they have some tax benefits that happen when they do it, but at the same time, it's just part of the compensation plan.
A lot of employees expect it now, uh, to have a match. Now, some companies, if your company is not going to do a full 401k match, they'll do 50 percent of a certain number or something like that. And it's still worth it. Uh, 100 percent to that 50%.
Justin: So I guess if, and when you're job hunting and job trading, that's something you want to look at, but also don't, I feel like sometimes people are like, oh, I need, um, insurance and I need this match.
And so they'll take like. You know, I'll make 80, 000 less so I can, I'm like, no, don't do that. It's a full calculation, right? Exactly.
Andrew: It's just, it's, if you're looking at compensation packages and somebody's going to pay you a lot more every single year, and your decision making is between the match, that is the wrong way to look at it.
It's only the comp plan first and how much they're paying you. And then the match is just gravy on top. Yeah, awesome. Okay.
Justin: Okay. [00:04:00] So what do you do after that? We got we max out our our match contribution, whatever it's called employer match.
Andrew: So our next step that we always look at, and this is going to be the wild card that a lot of people don't think about.
But there's something called the HSA, which actually stands for health. Savings account. Now, the amazing thing about the HSA is the only retirement account with triple tax benefits. You're saying retirement account. You just said it was health savings account, and it is. But the way that this works is that money goes into the HSA tax free.
It can grow tax free, and you can invest the dollars inside the HSA, and you can pull it out tax free. As long as you have a qualified medical expense. And so what is a qualified medical expense? There is a laundry list on the IRS website that tells you what a qualified medical expense is. So it could be toothpaste, it could be certain, you know, dental hygiene products.
It could be things that you buy every single day. But it also can be your medical bills. Now the cool thing about this is, is there is no date as to which that medical event needed to happen. So say, for example, you went to the doctor at age 25. And [00:05:00] you had lung surgery, you can reimburse yourself for that lung surgery at the age of 65 if you want to.
And so how this works is you get this triple tax benefit, and then once you turn age 65, it just turns into basically a traditional IRA is the way that taxes when you pull it out. And so. As long as you have qualified medical expenses and you save those receipts, then you're going to have zero issues with that.
And you can pull money out completely tax free for that triple tax benefit. So I actually don't even use the HSA as a health savings account. I use it as a retirement account and it is one of the best accounts out there.
Justin: Okay. So I'm going to go back to the 401k and talk about the HSA together. 401k.
Like, how do I know what they're investing in? I know we're going to get into investments here in a little bit, but is it just like the S and P 500 or like,
Andrew: So your 401k provider, and we'll kind of get into even more of the 401k in the next steps too, but your 401k provider is going to show you different investment options.
And so they're going to give you the investment options of who [00:06:00] they partnered with. Typically they're HR. You know that your company's HR department will partner with a specific company. So mine, they partner with Vanguard. My wife's, they partnered with Fidelity. And so they had these partnerships put together, um, that allowed them to, you know, then present all these different investing options.
So typically, it is things like mutual funds, index funds, and target date retirement funds are the three different things that are usually in your 401k. And so you have to decipher, hey, where do I want to land? And what do I need to do there? Uh, we could talk about the differences between those, but usually that's what's going to be in there.
It is. Is different types of mutual funds. So you still have some choice in that. Definitely still have some choice. Sometimes if you're your 401k provider is not that great, you're going to have some really bad choices, but for most people nowadays, they always are starting to include low cost index funds, ETFs, those types of things.
Okay.
Justin: And is a 401k. And so this is kind of the next, as we talk about, let, let's talk about the HSAA little bit too. Can, can I do an HSA if I'm not employed or is that only if you're employed? So the
Andrew: HSA you can do at any [00:07:00] point in time. You don't have to be employed, so you can open one up. Okay. Like, fidelity is my favorite place where I keep mine.
Um, and sometimes your employer will offer it as well. And so the the key with the HSA, and this is why it doesn't apply to everybody, is you have to have a high deductible health plan, meaning that your deductible has to be a high. Your deductible has to be higher than than what a standard deduction would be on on your health care plan.
And so it doesn't apply to everybody. Not everybody qualifies. And so what I do is a lot of years, like, for example, if there's a year that my wife is pregnant, um, I get off the high deductible health plan because I know we're going to have a lot more healthcare costs that year. Um, and then I go back on the high deductible health plan back and forth.
And so the HSA isn't going to be your full on retirement account, but this is going to be great supplemental tax free income that you can utilize. And I know people who have million dollar HSAs now who have been doing this over the course of, of years and years where they're paying zero taxes on their money when they pull it out.
Wow.
Justin: And is the HSA kind of same idea where you have, you can choose what to invest in? That's just more like the vehicle of what it's called.
Andrew: You can choose what you want to invest in, which is [00:08:00] why I utilize my net Fidelity because each provider has different investment options and Fidelity has some of my favorites.
Um, and then if your employer can also offer an HSA and sometimes they'll match you on HSA funds as well, which is pretty cool. This would probably be illegal.
Justin: But you got my mind, like I'm going back to the 401k match program. And I'm like, I just want to go to everyone who's not doing that and be like, Hey, like, I'm going to give you my money to invest and I'm going to pay you.
Anyway, I'm sure it's illegal, but it's just like, do that. Take advantage of that. Okay. This is awesome. So, okay. So we kind of covered those things. Like what's. What's next on the order of investing
Andrew: Roth IRA. Now the Roth IRA is probably my overall favorite account for most people because there's two ways to get into the Roth IRA.
The Roth IRA has income limits and I'll talk about this in a second, but there's a way to get around that if you make too much money. And so the way the Roth IRA works is that you put money in that's already been taxed. So [00:09:00] money that you are, you've earned, you've already been taxed on those dollars, but the money once it's in the Roth IRA and invested grows.
Tax free and then you could pull the money out tax free. So you pay taxes up front on your money when you earned it, and then it grows tax free. Why is this powerful? Well, a if tax laws change and we have to pay more taxes in the future, uh, then, you know, you've already paid your tax. You don't have to pay taxes on those dollars again, but the tax free growth.
Over time, and I'm a long term investor over the course of 10 2030 years is going to be the majority of this account. So say, for example, you max out the Roth IRA, which at the time we're recording this, you could put 7000 per year if you are under the age of 50. And if you're over the age of 50, 8000 per year.
And so let's say you max it out over the course of 30 years. Uh, you put 7, 000 a year and you invest in the S and P 500. Well, you're gonna have about 1. 1 million in that account and about 890, 000 of that is going to be completely tax free that you can pull out. So this is why the Roth IRA is really powerful is because of those tax free dollars.
Now, I'm sure we have a lot of high earners who are listening to this podcast. [00:10:00] Um, and so every single year, the income limits are starting to go up in the Roth IRA. And so if you make too much money for a Roth IRA, this is the number one question that we get. You can do what we call a backdoor Roth IRA, which means you just open a traditional IRA and you contribute your 7, 000 to that and then you just move it to the Roth IRA.
This is just the workaround if you make too much money because there's no income limits on a traditional IRA and you can move that money to the Roth IRA. So that's the first thing I do every single year is do my backdoor Roth IRA.
Justin: Okay, what is the income limits on the Roth IRA?
Andrew: So in 2025, it's a really technical number.
Let me pull it up real quick in 2025. It is if you are a single filer, it's 150, 000. And if you're married filing jointly, it's 236, 000. And so then you can just hear that kind of starts to move up a little bit just to provide for inflation and the rising costs of things. Um, but in 2025, [00:11:00] that's what the number is.
Justin: But you can just do a traditional IRA and then. Convert it to a Roth and
Andrew: that's exactly, totally fine. Convert it to a Roth.
Justin: Okay. Um, it's interesting, right? I mean it's like sometimes it feels like wrong to do stuff like that, but it's like it, they allow it. If they allow it, then they allow it and you don't need to ask questions.
Andrew: And IRA's very aware of backdoor Roth IRAs. They're very aware that that happens. And it's something that, who knows how long it's gonna last to be able to, to continue to do that. But they know how powerful the Roth is and that's why they have these income limits.
Justin: Okay. Yeah. That's good to know. We, I mean, I don't know, we, we used to really get into like retirement accounts and once our income got up to that high six, seven figure amount, it's just kind of like, okay, we don't qualify for those and some of the stuff.
I don't totally understand it at the time. We, we were still pretty young. We're getting a little older now. I'm like, Hmm, some of these retirement accounts don't like too bad. Now that retirement's like 20 years out instead of. You know, 30 years
Andrew: and for someone who has a really high income, if you're investing in businesses and real estate and stuff, this is just [00:12:00] a great additional backup plan.
It's just a little, yeah, yeah,
Justin: just do it kind of quick and easy. So, um, okay. So you max out your 401k you do. Is there a limit to the, um. The, uh, what's it called? The medical, what's
Andrew: the HSA has a limit to like filing jointly. It's about 8, 500. And then if you're a single filer, half of that. So, um, typically on the HSA, it does have these limits.
And so each one of these is going to have a limit. So there's, there's a certain amount that you can invest. Um, and they do that because the tax benefits, but it adds up,
Justin: right? Is they just say that you say it's like a Roth where you're not taxed on it over time. Like it's
Andrew: exactly
Justin: grows
Andrew: tax free for the HSA.
It's gonna it's gonna actually go in tax free. It's gonna grow tax free and you can pull it out tax free as long as you have that qualified medical expense. And then once you get to age 65, it has the same rules as a traditional IRA, meaning that Uh, if you start to take money out, you just pay, you just pay on the, the amount that, uh, you're pulling out, you pay taxes on that amount, [00:13:00] but it's not, you didn't pay taxes going in.
So it can grow faster, essentially.
Justin: Okay. Here's a question I have, which I might be have the car before the horse here. But we're going to start, we're going to talk about, like, just investing straight up here in a minute, if I invest in a stock or a stock portfolio and that stock gets gains, aren't I not paying taxes until I pull it out?
Or do you pay tax? Cause if you don't pay tax until you pull it out, my question is, isn't that like a Roth IRA kind of.
Andrew: So, yeah. So when it comes to, um, something like a taxable brokerage account, for example, you are gonna pay capital gains tax on those gains when you sell it. Mm-hmm. So let's say for example, you sell Oh, when you sell it.
Yep. Exactly. And so, um, that's gonna be a point in time where you will pay anywhere. If you make less than like 40, 000, you pay 0%. If you make anywhere 40, most people are gonna pay between 40, 000 and it's like 436, 000. I can look the exact number, but in that range, that's gonna be 15 percent [00:14:00] tax. And then, um, above that is 20%.
So the max you can go on a taxable brokerage for long term capital gains, meaning you held that investment For over a year is going to be those numbers. Now, if you held it less than a year, if you're kind of day trading stocks or anything like that, your tax rate is going to be much, much higher.
Justin: Yes.
Okay. So I guess what I'm, what I'm getting at is if I were to invest in the stock market and I didn't pull it out for like 30, 40 years, it's kind of similar to a Roth IRA though, right? Cause it's going to grow tax free. The, the, the taxable event triggers when I do pull it out as to where, if it I could pull it out.
No problem. And it's not gonna be taxed
Andrew: with the, yeah, so with the Roth ira, you're paying the income tax right up front. 'cause you already, you know, it's, it's the amount of money that you earned. You pay the income tax upfront, you put it in the Roth, but it grows tax free and you never pay tax again. Yeah.
Oh, you
Justin: never pay tax again even when you pull it out. That's right. That's what I'm missing. Okay.
Andrew: You still pay taxes?
Justin: Okay. That was, yeah, that was [00:15:00] kind of a dumb question. That's okay. Cause maybe someone out there is, uh, anyway, I was gonna say he's dumb like me, but that sounds insulting to our listeners.
None of you guys are dumb like me. So, uh, all right, moving on before I dig myself a hole here. Um, okay. Now moving on to the next step, but let's, okay. So what's the next with the investing? What are we doing next?
Andrew: 401k. So go going back to it and then maxing it out as a way that we look at it. So we get the match first.
Then we kind of go to the HSA and got it because they have some cool tax benefits. Then we go back to the 401 K. And if you're a high earner, the 401 K may want to, you may want to have it come before the Roth because you get the tax deduction prior to putting in the 401 K. So if you need a tax deduction this year, then putting money into a 401 K is gonna be really, really powerful because you get it up front.
Um, and so that's something where, you know, if you work in a corporate job and it goes in the 401 K, they're not paying taxes on on the money that goes in there and then it grows. And then once you pull it out, then you have to pay taxes on that money on the, um, increase exactly. And so what happens is, um, is [00:16:00] when you put money in the 401k, since you're not paying taxes up front, you get that deduction.
And then, um, and then once you have it invested over time, then you're having obviously more dollars in there that can help, you know, help grow. And then from there, you pull the money out and you pay taxes.
Justin: You're actually paying taxes on all of it because you didn't pay. Upfront.
Andrew: Exactly. So you're paying.
I said the increase, but that's that's
Justin: inaccurate,
Andrew: which is why we put it a little bit later. Um, some people, if you're a high end or you need the deduction now because you anticipate paying, you anticipate being in a lower tax bracket later. Um, so if you're earning a lot now, um, then you can pay less taxes later.
Justin: Okay. I love
Andrew: it. Okay.
Justin: Next. This is
Andrew: fun. And then lastly, we talk about a lot of different things. So um, usually at the 401k level, that's also when we start to kind of in rest and real estate and stuff like that. If you prefer real estate. So we kind of go back or back and forth with which I know you talk about a ton on this podcast.
Um. And then beyond that, then you go to the taxable brokerage account like you're staying. So this is just opening a regular old brokerage account. What this does is it just gives you extra flexibility. Uh, if you want, or you can start doing wealth building things for your [00:17:00] kids, like a five 29 plan or doing something like a custodial Roth IRA where your kids get a Roth IRA.
There's a lot of cool things that you can do after the 401k level. Um, but we talked about all of those different things too. So there's a lot of really cool wealth building. What are for the kids? Like what are. Where do those like max out at? So for the kids, it's the same thing, but they have to. So like if you have a custodial Roth IRA for your kids, they could put 7, 000 per year in that account, but they have to have earned income up to that amount.
So they have to at least earn 6, 000 a year to put that in. If they earn 1, 000 per year, then you can put 1, 000 in that account.
Justin: So that's essentially like you give your kids a job or something like that. And it's got to be legit, right? Or
Andrew: do stuff on the side. You can absolutely utilize that, uh, income.
And if you have young kids like me, I have a six year old, a three year old newborn. What I do for them is I set up the regular old tax for brokerage accounts. I make them beneficiaries. Um, and then I just start investing for them very early. And I invest. This is one of the coolest things that we do is I, you know, when they're born, I invest 1, 000, then I put [00:18:00] 100 every single month in their accounts.
And then we put 250 every birthday and every Christmas. And if they left this alone, like we could put it in a trust and make sure they don't touch it. If they left it alone, by the time they reach retirement age, they'd each have 7. 6 million just from, if I stopped when they were age 18. So if I did all of that a hundred dollars per month, 250 twice a year, and I stopped doing it by age 18, it would still grow to 7.
6 million.
Justin: That's insane. You, are you looking to adopt? I'm
Andrew: available. Exactly. And this is all because they just have so much time for this to compound. Time is everything when it comes to investing, uh, specifically in the stock market. And so when you have that time for this money to compound, it just is amazing what the results can be.
That's insane.
Justin: But once again, you got to do all these things that we're talking about, right? You got to increase your income. So you're not, you know what I mean? So you're not like just trying to, how can I make the X, get the extra 100 to invest this month? Right? So
Andrew: exactly. And we always talk about when it comes to your kids, like saving for college or any of that stuff, you got to take care of your retirement first before [00:19:00] you do all that other stuff.
Only because there's no, there's no loans for retirement. You got to have that covered first and then you can help your kids later.
Justin: Yeah. I love my kids. The death, but it's like, you know, anyway, we won't get into that. I always tell them, we'll see if they're, if they're listening to this, this is their bonus.
I always tell him, I said, you weren't just, you know, you're getting nothing. Cause I don't want them in their mind to be like, Oh, like we're going to inherit a bunch of money or whatever. Or they're like, you're not getting anything. It's all going to charity. My goal is to spend it all before I die. But the problem is it keeps getting higher.
I'm like, I tell my wife, I'm like. You know, we're trying to grow our net worth, but I want to die, like, not with nothing, but I know there's the book Dive Zero. I've never read it, but. Yeah. But, uh, um, anyway, I kind of have this thing on and it's like, I want to, I don't know, it's like, you want to have money for your kids, but I also like want them to figure it out on their own.
But, and that's the big thing I always
Andrew: have too, is I go back and forth. And I think what I've kind of landed on, I'm going to see how their personalities kind of shape out is either telling them about it, but this is why you can keep it in a taxable [00:20:00] account is that taxable, it's still in your name and so you can kind of go back to yourself if you want to.
Justin: No, I think it's I mean the fact Oh, you can move it back to yourself. Oh, that's very interesting. I didn't know that talk
Andrew: about things like U. T. M. A's or U. G. M. A's. If you've ever heard those terms, those ones you have to give to your kids when they turn 18 or 21, but with taxable, it's flexible. So you pay a little more in taxes, but I like that flexibility more so than having to give it to him.
Justin: Okay. That's very interesting. And I'm not, I'm not like super opposed. I see the pros and cons of it. You know, it depends on them and their personality and their situation, but. That's just kind of where we're at in our, our life. Like, it sounds like your kids are a lot younger. You're making anyway,
Andrew: our kids were
Justin: a little older when we started making pretty good money.
I feel like anyway, whatever. I feel bad now because I'm not hooking my kids up like you are.
Okay. Um, this is awesome. Okay. So let's talk about like just general investing. We've done all the tax savings that we can. What do you, what's the max 401k amount that [00:21:00] you can put in most. With most employers.
Andrew: Uh, so in 2025, it's $23,500. Okay? It's slowly picking up every year over the course of last year.
So just kind of check what every year you're listening to this in. But in 2025, it's $23,500. And then, okay, if you are over the age of 50, you can put an additional $7,500 in, in the account. Um. And there's also like, if you're a self employed, you could do a solo 401k, which that's a whole different animal.
Like I, yeah, 63, 000 a year in that one. That's a whole different story. Um, but there's a lot of cool things you could do there.
Justin: I should talk to you about, cause I know we have a solo 401k and for a while we were investing in it and then we stopped, but I think it's. I don't know, our accountant said something like we couldn't anymore.
Cause you have to have like a certain amount of employees or something like that, right? Is that,
Andrew: yes. So there's like, there's the SEP IRA. There's a solo 401k. So if it's just, if it's just you and your wife working in the business, you can do a solo 401k, but once you start to have employees, then you have to move it to other options, essentially.
Okay.
Justin: Anyway, there's probably all kinds of stuff we can do, but. I don't know. I'm just go out, make as much money as I [00:22:00] can. I do, we do big things like invest in commercial real estate and get K ones and like the whole, anyway, we do like big things to save a bunch of money. I'm just not good at all the little details.
I'm like, ah, I'm just going to go figure out how to make another, whatever, a few hundred thousand dollars or something.
Andrew: No, and that's the stuff. I mean, you're already getting your great tax deductions, just even investing in real estate.
Justin: Yeah, but there are a lot of low hanging fruit that I think, okay, I may as well do that as well.
So this is, this is good for me. There's all kinds
Andrew: of stuff that you could do, even if you have employees, you could do simple IRAs or even your own 401k and your company. There's a lot of cool things you could do.
Justin: Okay. So I've maxed out all my retirement accounts, saved all the taxes. I can kept as much as I can from uncle Sam, even though, you know, I, I like America, I like uncle Sam, but Hey, you gotta, I want to have more control over this money, right?
Um, so now I have more money that I want to invest. I want to keep growing this money. Where do I start? But, and I know you talked about real estate, but maybe let's, I feel like, and [00:23:00] this is what you kind of, I agree with your perspective on this. I think if you want to do real estate, like you, there's a little more education that goes behind it, right?
There's a little more people say it's passive. Like if you're buying a rental, like there are absolutely, we've talked about ways to invest in commercial properties. We have a lot of money invested in commercial properties, but it's very passive. I know the people that I'm investing with. I like them. I trust them.
I like the deal. I understand how to see the deal. And then it's very passive. But if you're buying rental properties, like you probably want to learn a thing or two, if you're currently working like 70 hours a week, you're trying to find more time, you're making good money. Maybe it's not the route to go right now is, is what I would say.
Would you agree with that?
Andrew: I would. And even when I started investing in real estate, I spent, you know, three years trying to educate myself. It was probably a little analysis paralysis, but I would spend a lot of time educating myself first.
Justin: Okay. So real estate is absolutely something you can do at this juncture.
Um, but let's talk more about like, uh, the, the stock market, I guess, for, for lack of a better term. I [00:24:00] mean, like, right. That, like, that's a, that's, I hear you talk about that a lot in your show and that's something that. I mentioned to you that we just recently started investing in the stock market literally last week.
So, um, but anyway, let's hear your take on how to go about investing the stock market, stock market, what you would not advise. I know you're not supposed to get financial advice, but what you would do if you're in someone choose or however you word it.
Andrew: Exactly. Yeah, exactly. You're right. This is not a financial advice, but the way that we think about this is we want to look at, hey, how can we get?
The least amount of effort for the highest return and to want to think through, Hey, do I want to start looking at financial statements and all these different quarterly reports and do all this stuff in order to start an invest? Or do I just want to figure out, Hey, I just want to buy a basket of a bunch of stocks that are really well diversified and be able to start investing those dollars.
So the things that we look at. Is I, at first on my investing journey, I would invest in things like penny stocks, for example, and the first time I did that, I was a teenager. I lost all my money in one day. It was just this horror story. You're saying
Justin: that's what you did at first. I thought you were saying that you would [00:25:00] recommend people do that at first, but no.
Okay. So penny stock, they're higher risk. I
Andrew: would invest in penny stock. It was the worst thing I ever did. Lost all my money in one day. Um, and then I started to invest in individual stocks and slowly over time starting to learn more about investing. And I started to study this guy. I'm sure everybody here listening is, has heard of him called Warren Buffett and Warren Buffett, I started to read about him early on as a teenager.
And so he teaches this thing about value investing and buying individual stocks. And so I started to do that a little bit, but then over time, I realized very quickly that, uh, there is something that I'm way more interested in that is kind of learning how to invest passively. And so there's these things called index funds and ETFs.
And what they are is you are buying a basket of stocks. So you can think of, you know, a standard basket and all a bunch of different companies inside of this basket, you're buying it all in one trade. Now, the reason why this is so powerful is there's a bunch of statistics out there. In fact, if you invest in something like the S and P 500, for example, the S and P 500 outperforms.
Mutual fund managers 90 percent of the time every [00:26:00] single year. And of the 10 percent of mutual fund managers that outperform the S& P 500, they are not the same year in and year out. Meaning that none of the professional money managers out there can outperform passively. So why do I think I can? They have an entire team of Harvard and Yale people.
They have high rises on Wall Street and they can't outperform just the standard market. So why do I think I can? And so what I started to do was then I started to invest in index funds and ETFs. So one example that I just gave was the S& P 500. Well, if you look at the S& P 500, it is the 500 largest companies in the U.
S. stock market. So basically what you're doing is you're betting on the U. S. economy. This is Apple. This is Amazon. This is Tesla, Microsoft, NVIDIA. This is all of these companies all in one specific trade. Now you can also do the ETF version, which is just, it's basically the same thing as an index fund.
It's just trades like a stock instead of a mutual fund. And so this is what I look for is things like index funds and ETFs, because a, they are passive B they're really well [00:27:00] diversified. See, they're more tax efficient because they're not trading in and out like a mutual fund would be a standard mutual fund makes a bunch of different trades every single year.
ETFs. All they do is they mirror the index. So they mirror the S and P 500, or if you're. investing in a Dow Jones that's just mirroring the Dow Jones, or you can do a total stock market one. And that just mirrors the entire stock market. And so it's beautiful to be able to do this because you don't have to think a lot.
You can automate right into them and be able to invest in a really well diversified asset. And the S and P 500 historically over the course of the last 50 years has returned 10 percent to investors. So it's one of those things that has a very, very long track record. And the things that I like about it.
Also, or, you know, if a company is struggling, say, for example, Enron would be in the S and P 500 back in the day. Anybody knows what Enron is? It was this company that, you know, uh, had all this fraudulent accounting and it went, you know, out of business within, you know, a couple, you know, a couple of months and it was a multi billion dollar company.
Well, if Enron was in the S and P 500, you wouldn't even take a hit in your portfolio because Enron would be [00:28:00] removed and the next best company would be added in. And so it's one of those things that it cycles through all these companies, but always, always, always has the strongest companies. And
Justin: I mean, you probably would have taken a little hit right when it went out of business, right?
Because it was in there.
Andrew: Probably a total market fear thing would have happened like short term where it would have, it might have come down and been reduced and then it would just kind of shop back back up again. Yeah, yeah. But it's
Justin: not
Andrew: like you
Justin: lost everything.
Andrew: Exactly. And typically, if you are investing in index funds and ETFs, you are thinking long term.
So you're thinking in decades instead of just thinking through, you know, day to day, week to week. In fact, Warren Buffett has this great quote, um, that said in the short run, the stock market is a voting machine. But in the long run, the stock market is a weighing machine, meaning that he's a long term investor.
He looks at, you know, the stock market in decades and he In fact, he puts his family's money. So his wife's money and his kids money, he puts his family's money in S and P 500 index funds. So that's how he invests his family's money. Um, and it's the greatest investor of all time. So he said, he basically says, you know, if you're not a professional investor, then you need to look at things like index funds and ETFs because they are passive investments.
Justin: So [00:29:00] there's an ETF can be in the s and p 502 or no? Exactly.
Andrew: So an ETF, the only difference between an index fund and an ETF is an ETF trades like a stock. So you could kind of trade an ETF in the middle of the day if you want to. Whereas an index fund and the way that mutual funds work is that you trade in and out of 'em at the end of each trading day.
So that's the only difference between the two. Oh, okay. For the most part, everything else is pretty much the same.
Justin: So it doesn't really, I mean, just
Andrew: you can do either or now to get into them also, like you can't go into like buy a fractional share of an index fund, but you can get into, to ETFs at a much lower rate.
So if you are just starting out, you're like, I just want to test out with a couple of hundred bucks. Uh, is a great way to go.
Justin: Now you already mentioned this kind of, you alluded to this, but I've heard you say this time and time again, don't pay unneeded fees, right? Like you don't need to go get a financial advisor.
Hope my cousin isn't listening. Yeah, like that's your like, at least your perspective on it because you're saying [00:30:00] they're not going to most likely outperform like the S and P 500 anyway.
Andrew: Exactly. So, so you can go out and what a lot of people will do is they will find, uh, an advisor and I have nothing against financial advisors in terms of, um, in terms of what they do.
I think if you can find an advisor who either has a really low rate, uh, and we'll talk about what that is in a second, or an advisor who will charge at an hourly rate instead of a percentage of your portfolio. That is the way to go. Okay. But if you have an advisor who charges a 1%, typically, like the standard for most financial advisors is 1% of your portfolio, like 1% In addition, they'll put you in something like a mutual fund that has half a percent or a 1%, uh, fee, just a 1% fee alone.
Just that you pay for the advisor will reduce your portfolio by 25% over the course of 30 to 40 years. Wow. So if you build up a portfolio of, say. You know, a 6 million portfolio or an 8 million portfolio. If you have an 8 million portfolio, it would actually be a 6 million portfolio just because of a 1 percent fee.
This is why it is so [00:31:00] incredibly important to make sure that you are looking at fees where index funds, like let's just say you go out and you start investing in index funds, they have a 0. 03 percent expense ratio. And so this is where the big, big difference is where you're paying pennies on the dollar of what you'd be paying for a mutual fund.
Um, and so you just want to make sure that you're always, always, always monitoring fees. Now, if you have a financial advisor right now, you just want to ask them the question, Hey, how much am I paying you and how much am I paying in fees towards my mutual funds or my investments? And it kind of just get the whole picture on that because I mean, it's 1
Justin: percent just for everyone listening per year,
Andrew: per year, exactly.
And so the more, yeah, so it's just like we're going to be paying.
Justin: Yeah. So if you have like a million dollars, it's like big chunk of money. And that keeps growing. That's another chunk of that chunk of that. And yeah, it just kind of erodes it
Andrew: because if
Justin: you're. If you're that year, the market's averaging 7%.
Well, you just got 6 percent because you gave 1 percent to them.
Andrew: Exactly. And man, I'm going to go be a financial advisor. Exactly. [00:32:00] Take 1%. And then the 1%. So that's a 2 percent total is what you're, what you're, wow. Is a 40 percent reduction in your portfolio over the longterm. And so really, really important.
This is a multimillion dollar decision just to make sure that you know what those fees are.
Justin: Okay. So. So let's say I'm not going to want, I don't want to pay the fees, like tell us a step by step. I know there's different account managing platforms. Like I think we're with Fidelity, like, I don't know, my, my wife did it, or we had to do it because of another startup that we're invested in.
They made us, we had an open account, you know? And so when we were buying our, you know, we bought some Tesla stock, which. I know there's half the people out there saying, yeah, and half the people like, oh, boo, you know, but anyway, it is what it is. We'll see what happens in 20 years. I don't know, but I won't, I won't get into the details of why we chose to buy Tesla right now.
But, um, so she just did, it was really easy. And it's like, oh, that was super easy, [00:33:00] but what do you do? Like step by step you go to like fidelity. com or what? What's the one that you like that you would recommend the most? My,
Andrew: my top two are Fidelity and Vanguard. Fidelity is probably number one, only because it has more, like you can open an HSA there.
It has more options than maybe some of the other ones. And so what you would do is you would go there and you would open an account. When you click open an account, it's going to list all these accounts. We just talked about today. It's going to say, you know, a traditional IRA. It's going to say Roth IRA.
It's going to say health savings account. It's going to say brokerage account and brokerage account. If you just wanted to kind of get started is, is one that you can look at as well. So you choose your account, you put in all your information when you open that up. And then once you have that account open.
Uh, then you go out and you can start to trade. And so usually at the top, it's either going to say transact or it's going to say trade. And so you go and you, you click that button and then you utilize what is called the ticker symbol. So you may have seen, you know, apples as a APL Tesla's as T S L a. Uh, if you look at, uh, the S and P 500 ETF for, for Vanguard, it's V O O.
And so there's all these different ticker. Ticker symbol. So [00:34:00] you go and you choose your investment, you put the ticker symbol in, and then you just fill out the rest of the information, how many shares or how much do you want to invest, and then you just click a button and you say, okay, and it's going to make that transaction happen.
Now, the best way to do this though, is once you get the hang of this and you understand, Hey, this is my investment plan. I'm going to start to put two, three, 400 per month into the S and P 500. Well, if you start to do something like that. You can start to automatically do it, meaning your money goes from your checking account after you get paid, automatically contributes into these accounts and it'll automatically invest for you.
So you don't have to think about it anymore. Automate the process and it removes willpower from the equation and the opportunity for you to say, Hey, I'm not going to invest this month. I'm just going to, I'm just going to kind of use this money and spend it on something else. It avoids that problem and just allows you to automatically invest every single month.
Justin: Okay. So two, two questions. Let's say you have, I get the invest every month, but what if you have like a hundred thousand dollars right now that you want to invest, [00:35:00] would you just invest it all or what would you recommend doing like parts at a time? Or what, what do you think? That's, it's a great
Andrew: question.
And there's two parts to this. So historically, if you look at studies, what they show is that lump sum investing, if you have a big chunk of money, that lump sum investing usually will outperform dollar cost averaging mate, meaning taking pieces of it every single month, 78 percent of the time. So 78 percent of the time, depending on what the market conditions are.
Historically, uh, it will outperform. So for me specifically, if I had a big lump sum of money, I have a financial education now when it comes to the stock market. So I am not scared or worried about what would happen that money. So I would just invest a lump sum. But if you are someone who is kind of thinking about this and you're like, I just want to kind of get the feel for this or I want to get used to it.
I'm not comfortable investing the full hundred thousand and there is nothing wrong whatsoever with dollar cost averaging, meaning just putting a set amount every single month. Into, uh, markets just so you can get the feel for it. And just
Justin: in
Andrew: case, like we're on a high and then it
Justin: like
Andrew: dips, right? I mean, exactly.
So that's what a lot of people [00:36:00] will worry about. Um, so you can, if you're worried about that, you could dollar cost average into the market. But if you're a longterm investor over the long run, that's what really matters.
Justin: Okay. So I'll, I'll share a little, like we're going to invest like a hundred thousand in Tesla and maybe more over time or whatever.
But it's like I told, but I'm like, we did 25, 000, like right away, just so we're in, I'm like, okay, we're, we're in. Right. But I, but as I look at the charts, I'm like, the average of the week is like a little less or a little more. So I had, uh, Tara said, uh, we know some of this from like cryptocurrency, right?
Like. We just set a thing that when it goes down to like the low for the week, if it does, excuse me, then we invest another 25, 000. And then I looked at like the low for like the month or the low for like six months. Right. And I'm like, you know, if we end up not investing the full a hundred thousand or let's say it resets.
Like the new high is like a hundred dollars more than there's now, then I'll be like, okay, if it goes back down, then we'll buy. So the goal for us is kind of like [00:37:00] buy at the dips, not, um, which it's overall, it's down to its total peak. But I do see when I look at the all time or like over several years, I'm like, Oh, it could dip a lot more.
So we're kind of trying to like, get in, like have some diversification, have nowhere that we're in. But also try to take advantage of some dips and we might miss out by doing that. Like maybe it'll never go back down again. Right. Or, but we're banking on the fact that it probably will go a little bit lower at some point than it is right now.
But anyway, it's just kind of makes it fun, like a game, but that's just kind of. My thoughts on it. I don't know.
Andrew: It's one of those things that you can, you can definitely do that if you want to and kind of just kind of watch it and monitor it and kind of go through that process. And then for us, I always just talk about this too, is it's more about like time in the market instead of timing the market.
It's more of a phrase than anything. Totally. I think for like a lot of young investors, if they are looking at this and saying, Hey, I'm just trying to figure out how to get started. I would definitely just kind of just keep your dollars investing as much as you possibly can over time. But exactly what you do, like once you get, once you start to get experience and you've done it [00:38:00] in crypto, you kind of get a feel for, for the market that you can absolutely do that.
Justin: And I think part of that is we're investing all of it into one stock. So the, the risk is higher. So it's in a way it's like to mitigate that because if we invest and then like it goes down, like, you know, 20%, like the next day, it's fine. Like we know over time it will recover. It was like, Oh man, if I would invest in that next day.
So it just diversifies, we get in, we know we're in anyway. All right. Let's just a little side for fun. You know, I've heard you talk about this before, but like making money, it's like a game, right? So it's a game that you don't want to like lose as in like playing Mario brothers and you jump into a cliff and game over, like you don't want to hit game over, but It's a game, you know, make it fun.
Uh, but you also want to play not to lose,
Andrew: which is what we talked about. Each of these things that we talked about today, these are like levels like you're hitting each level of financial independence and you're trying to get to the end. Uh, and that's what I love so much about it.
Justin: So next question in this regard is [00:39:00] kids like I have kids right now that want to invest in the stock market.
Can they open up their own Fidelio account or do they need to do that through me or is there a different way? They can do that.
Andrew: Yes. So you can, you can kind of open up one with your kids and usually you'll have to be kind of like a like a signing on there as well. I opened my first one when I was 16 at Fidelity.
Um, and so you can absolutely do that. And it's a great It's a great teaching moment for them a lot as well. So if you have really young kids and you want to open up one up with them, what I do with mine is I'll talk about like stocks like Disney, or I'll talk about Mattel and say, Hey, here's where your toys are made.
Those types of things. Um, and then if you have like teenagers like yourself, um, then you can talk about things that they're interested in and kind of talk about, Hey, you're a part owner of this company. This is actually owning a piece of this company and kind of go through that process as well. But you can absolutely do that with teenagers.
Justin: Okay, but also you got me thinking, too, because I'm thinking, why not like we do sometimes pay our kids, but why not pay them through? And this is different. I'm not opposed to like paying them from the time they're young and they end up being [00:40:00] like rich, you know, before they can even talk and I'm just kidding, you know, that works sometimes.
But my kids are older. They're teenagers. So it could be kind of this thing like, hey, Okay. We're paying you. We may as well pay you in a better tax environment, but then they have to wait until they're retired. Did I miss that part or, or no, no, they don't have to wait till they're retired for that. How
Andrew: is they allowed to compound over time?
So the real work happens because yeah, because it's small amounts of money over time is going to grow to large amounts of money.
Justin: Yeah. Yeah. Okay. Okay. You got my wills turning pretty good.
Andrew: So
Justin: I feel like I had one more go ahead. What's that?
Andrew: And it's, it's, it's one of, it's just one of the coolest things to, to utilize.
I think just if you want to build wealthier kids, it's just one of the coolest things that you could do is just even the small amounts of money that the amount 80, 000 total is what you contributed to get 7. 6. Wow.
Justin: That's
Andrew: unreal.
Justin: Okay. So I feel like I had another question as far as investing goes. [00:41:00] Oh, portfolio stocks, right?
So we talked about index funds and stuff like that. But you can buy portfolio stocks. Um, you just want to, I think it depends on your situation. Depends on like how bullish you are on that thing. Keep in mind, like if you're investing in one stock, the risk is higher, but if you can afford it and have the income and.
You think like I could be wrong, but I'm making a bet that I think Tesla is going to outperform the market over the next 20 years. Right. And I might be wrong, but I'm okay with that because if I lose the money, it's okay. Right. But if someone wants to buy portfolio stocks, same thing, right? They just go into one of these, buy whatever stock they want.
I heard you mention, keep in mind if you're buying S and P 500. Or one of these other funds that have like the top, isn't there a fund that has like the top eight companies or something like that? Um,
Andrew: like QQQ is a great example. There is one with, with, um, with just, you know, a select few and handful of companies and there's so many, you can even, you know, real estate wants stuff like that, [00:42:00] but QQQ top hundred and there's a bunch of different ones.
Justin: Okay. But if you're buying like just Tesla or one stock, Amazon, Apple, whatever it is, keep in mind that when you buy the, uh, S and P 500, you also are buying that. So just keep that in mind because you're buying it on both ends. Right?
Andrew: Exactly. So there's a lot of overlap happening. So for me, for example, I own a lot of like, uh, big tech stocks, so like Apple and Amazon and Tesla and Nvidia, those types of companies.
But really, those are really highly weighted inside of the index funds already. Um, and so for me, it's, it's somewhat of an overlap, but it's just companies that I've held for a long time.
Justin: Okay. And when you buy the S and P 500, you're not buying like one 500th of every company you're buying more of the bigger companies.
It sounds
Andrew: like. Exactly. So the bigger companies are weighted more, are weighted heavier. So if you look at it, a lot of times you can look at the S and P 500 and see the top 10 companies in there, uh, and they're weighted so much heavier than the rest of the fund. And so you're really buying some of the top companies because they're [00:43:00] worth so much more than the other companies.
Justin: Oh yeah. Oh yeah. Making it rain, making it rain, making it rain. This ends part two of our three part series, seven rules of creating wealth. Thank you again, Andrew Giancola of the personal finance podcast. Tomorrow we will continue with part three. Remember, we are also testing out publishing two episodes per day during these three days, so it will not be episodes in a row, but you'll see it on your pod player, it should be obvious.
Remember to share this series with someone that you think could benefit, which is everybody, because these are things that people just don't teach in school or talk about in the home that often either, but lessons everyone needs to know and understand. So until tomorrow, keep kicking some bootay in your business or your job.
Get that raise, invest that money, put it to work for you. And most importantly, love your life because that's what really counts. See you tomorrow. [00:44:00]
Part 3
Justin: [00:00:00] Seven rules for creating wealth part three. Money, money, money, money, money, money, money, money, money, money. What's going on a welcome to the million university podcast. All you crazy money making maniacs out there. This is the podcast where you graduate rich, not broke. And while I like that, you guys are comfortable talking about money with me.
I mean, I don't know that we need to be like chanting it at the top of our lungs, right? But it's fine. I get it. Trust me, but we'll keep working on that. Today is the last in a three part series that we are doing with the personal finance money, man, himself, Andrew Giancola seven rules of creating wealth, if you have not yet listened to parts one and two, go back and listen to those First and then get your booty back here to finish it up.
And without further ado, let's get to it. Ladies and gentlemen, I give you part three of seven rules of creating wealth. [00:01:00] Let's do this. Okay. Are we ready for number six? We're definitely doing two episodes out of this, by the way. So number six, I'm pretty open with my audience. Like they know that like, It's a business.
I'm running a business. They're running businesses. Like we try to create win wins. I, my goal is to put out great content, but also like, and Andrew and I were talking about this cause we're both podcasters, like we'll make more money if we put out more episodes. Right. So I'm going to turn this into two, we'll get more ads.
You know, like my hourly rate per hour just went up by like 500 bucks, you know, by doing two episodes. So, okay. So let's get into number six. This is where I get really excited. Although I, that was really, everything we talked about has been really exciting because it's kind of new ish different to me. So number six, opera entrepreneurial opportunities.
My mind was blown. During this interview, when you said you had a hundred employees, I know we talked a couple of [00:02:00] weeks ago and you mentioned that you've bought like a couple of pickleball businesses, which I think is cool because I like playing pickleball, but I had no idea that you had a hundred and like.
Talk to me about entrepreneurial talk. Let's talk about entrepreneurial opportunities in general. I know you mentioned like different side hustles people can do. So let's, let's talk to our audience as well, but then also I want to hear about some stuff you have going on and we can tie that all in anyway.
Let's, let's get into
Andrew: it. Absolutely. So, um, entrepreneurship is now like a huge part of what I do and it's one of my biggest passions and, and kind of, kind of growing wealth over time. And, um, so a while ago we had on, on the podcast, we had, um, Cody Sanchez on and she came on about two or three years ago, um, And when she came on, she was talking about buying these businesses and some of the cool things that she was doing with that.
And that really inspired me to kind of look and start to get more interested, um, in buying businesses. So we had this, we have a media company now, and I've done real estate and those types of businesses. But I was really interested in, Hey, you can go out and buy a business that already has cashflow and already has revenue, um, and you can go out [00:03:00] and.
From day one, start cash flowing, so I loved the idea of that. Um, and so we were out looking for businesses. I was looking at things like laundromats. I was looking at, um, things like other small businesses. We, we got pretty close to a couple of car washes. We almost closed on this huge flower company that supplies the flowers to Disney World.
There was all these different things. And, um, what it came down to was just finding the right deal. And eventually my dad got really into pickleball and like he got me into it and we started to try it and then this indoor facility opened up and I live in Tampa in the Tampa Bay area here. And so we eventually got talking to, um, the original owner and started to have conversations and we finally came to an agreement.
Hey, we want to partner up on this. And so we bought into, um, this pickleball business. And the cool thing was our original intent was just to kind of, you know, own this business and be able to, to just. Have some cashflow generated from this one facility. But then we started to, to figure out the business and kind of unlock some of these revenue secrets inside of the [00:04:00] pickleball facility and realize pretty quickly, Oh, we want to expand this thing.
And so we started to, um, started to lock down new locations and now we are at a six location sign. We're on our seventh one. We'll probably happen. And, um, and so we're really excited about that. We're actually doing it across the country, which is, which is not exactly what I planned on, but we, we have a couple in Atlanta, we have one in Greenville, South Carolina, we have one in Savannah, um, and then a couple in the Tampa Bay area here.
Justin: That's amazing. I mean, how I don't want, I'm sure there's things you don't want to talk about and this is your business, right? But what can we get into? Like, can you talk about some of the numbers or. Um, yeah, we can take any angle you want, whether it's like helping other people know what kind of businesses they can look for, or if you're going into some specifics, what, anyway, we'll take as much as you can give us, you've already given us so much, you know, we don't want to.
Ask for everything, but, but we're going to
Andrew: for sure. Absolutely. So the way that we look at the pickleball business now is we are probably the way that we operate [00:05:00] them is there's these new facilities that are coming out and they're the super fancy, they have bars, they have all these, uh, expensive restaurants inside.
They have, you know, smoothie shops. They look like they came out of like Disney world. They were just like pristine pick up facilities. That is not us. So the way that we operate. Is we just have specific courts, uh, and we put in courts, we put in lights, we put in a C and basically it's a place that you can come and play indoors and get out of the heat, the rain, all that kind of stuff.
And then what we try to focus on is community. So we build all of these different community, different organized events that allows people to come in and play with people just like them. And what I mean by that is when you play pickleball, you want to kind of play with people at the same level as you, because it's not that fun.
It's very social. Yeah,
Justin: you're really
Andrew: good. Yeah. Okay. Yeah. Level and social. Yeah, go ahead. Yeah, exactly. So that's the two big things that we try to facilitate. And once we realized, Oh, if you start to facilitate those types of things, that's what's going to draw people in. So I actually don't even want to be the place to play every single day.
I want to be the place that you come with your friends to kind of [00:06:00] socialize and come to these specific events. And so we put on leagues, we put on tournaments, we put on these things called robins, where people come and play every single day. Uh, we put on a lot of classes and training. That's a huge thing that we do.
Um, and so with each of these things, we don't have memberships at all. And so with each of these things, we have people come in and they pay as you play. And so. This allows us to get, um, people from all over the place and all across Tampa, uh, to, to kind of come in. Now it's a lot of work to maintain a schedule like that.
Cause our schedules, we try to jam it in. It's all jam packed with all these activities. Um, but it is something that has increased revenue dramatically just to be able to do that. And so, um, and so over time with our, with our first facility. Um, you know, myself and my business partners that are in this now, we've been trying to kind of tweak and figure it out as we've gone on and really been able to, we almost look at each court as like a little rental property because it's something that you can kind of try to maximize revenue in each one.
And so that's kind of how we look at it now.
Justin: That's what I was going to ask you. Like, what are you, what kind of numbers are you looking at? [00:07:00] And this could be, this might tap tape taper into like general businesses that someone might be looking to buy. Right. But. Um, so you're purchasing, are you purchasing the property or leasing the property?
You're indoors, so you have a building. Okay, so you're leasing the property.
Andrew: Our goal is to purchase in the future. It's a very unique property. Maybe you and I can talk about this too. But it's a very to
Justin: say, let's
Andrew: Yeah, I'm always looking for investments. For sure, because I think this is one Um, that's a little more unique.
We're trying to find these unique buildings that are, you know, Anywhere from 12 Usually they're around 14, 000 square feet or above and we do them in warehouses. So some people will say, is that like a warehouse size? Probably some people will do them and like we looked at old L. A. Fitnesses and stuff like that.
But what we realized quickly is that you got to maximize the square footage with the court. So you got to get as many courts as possible in there to maximize every single inch. And so that's why we like to do them in warehouses are a little easier to fit the courts in so you don't have wasted space that you're just paying for square footage that you'll never use.
Okay,
Justin: [00:08:00] so what kind of numbers and let's just maybe we could take this to like general business, like when you were looking at car washes, like so for anyone listening, let's say they first of all, who would you recommend should start a business versus buy one? So I've heard Cody talk. I mean, I think it's like anything you can debate it all day long.
Right. But what are your different thoughts and perspectives on buying versus starting your own? And then let's get into like the numbers of what people would be looking for if they are buying. Cause we talk about starting business all the time on this show. So.
Andrew: Perfect. So, um, I think for most people, if you're brand new to business and you've never owned a business before, it's probably best to start one and try to get to profitability first, not for every single person.
I think some people can buy them. If you understand just how businesses operate, there's so much nuance, right? Yeah, there's a ton of nuance, but I think for people to get that experience to be a business owner, there is. A lot more stress and a lot more pressure on you than it would be in the corporate world.
So in the corporate world, you can kind of go and show up every single [00:09:00] day. You do your work and you go home in the business world. It never turns off. You are always, always, always on. And so I think a lot of people need to learn the skill of even dealing with that stress and that pressure. I remember my first business kept me up every single night for weeks on end.
Sometimes I felt like just because the stress and the pressure now I'm so used to it and callous to it. Like it doesn't even bother me whatsoever.
Justin: Yeah. So your perspective is. Start it because you can start small versus if you, as to where some people say, buy it because then it's already running and it's easier, but you're saying start your own so you can start small, get some things figured out versus take on this big business that you may not know what hit you upside the head type thing, I
Andrew: think for some people now for some who kind of understand the numbers and how to run them, they can go out and, you know, a business and be able to get a small business going pretty quickly.
And you have that instant cashflow. Um, that makes sense. If you could buy a business where the owner will stay on, this is my favorite, um, that we get a free education basically. So now, um, when we bought this business specifically for pickleball, uh, the owner was willing [00:10:00] to kind of stay on with us as a minority percentage owner.
So we bought the majority. He, he stayed on as a minority and then pretty quickly he realized, you know, once we started to work together, we work really well together and we figured out and unlocked a bunch of different things. He's like. I want to go all in and let's just start to expand this thing. So we actually got a free education from him on how this business works.
And then from there, now we're kind of partnered up to, to kind of really expand this thing.
Justin: Okay, cool. So what kind of like, if someone's buying, wants to buy a business, they're looking to buy any kind of, it's like, where do they look to buy a business? And what kind of numbers are they looking at?
Andrew: There's a, there's a lot of cool places to look.
Uh, the first place that I always start is biz by sell. And I'm sure you guys have been there. Or I've heard, I've, yeah, I've heard it. I think we had people on a couple of times. A lot of people know about biz by sell. So it's a little bit more competitive than it used to be back in the day. Um, and so that is one place that you can look.
My personal favorite way to do it, um, is to try to find off market businesses. That's what I did with this business. Business specifically. Um, and that's what I tried to do with some of these other business. [00:11:00] Because the reason, the reason behind that is you could do things like seller financing, uh, and set up all these structures that are some of the best ways to, to actually go out and buy a business.
But BizBuySell is a great one. I've seen them on Craigslist. I've even seen them lately, which there was one that I was seriously looking at over the course of the last couple of months. I'm like, I just don't have enough time. But there, even if you look at Facebook marketplace, there are some actual wildcard businesses on there that are pretty interesting.
Um, So those are a couple of different places. I think Cody now has her own marketplace as well. Um, it's probably going to get a lot of traction here in the next couple of months and you just look for some online business marketplaces, but biz buy sells my favorite place to start because most businesses that go for sale are going to get put up there.
Um, and you could buy anything from laundromats to pool routes to big electric or plumbing companies, or there's so many different cool businesses on there that I just love even scrolling through there if you're just getting started.
Justin: And so when we think about numbers and we think about investing. Like if I'm investing in the stock market, if I invest a hundred thousand, I know I'm trying to make seven to 10%, right.
On average, I know it goes up and down [00:12:00] if I'm buying a business, right? Like, what am I shooting for? And I know there's nuance here, but just for conversation sake, like what.
Andrew: For sure, there's a lot of nuance here for conversation sake, but if I'm putting my time into something, so if I'm really putting my time into a business like this, I want to at least be making 25 percent or more on my money.
Uh, and 25 percent is kind of like the bare minimum for me specifically on how I look at this. Um, and so that's kind of where I want to be is once my money goes in, I want to be able to first make my money back. I want to make sure it's coming back to me, but then I want to make sure that I can grow that money over time.
And so this is why I love. You know, a couple of different things about buying businesses because you can finance these businesses. Uh, like say, for example, you go out and you get an SBA loan. If you go out and get an SBA loan, they'll finance it at 90%. Uh, so you put 10 percent down, they will finance 90 percent of this business.
So you could literally buy a million dollar business for 100, 000. And so that is a really powerful way to utilize leverage, which is what. Earlier, we talked about good debt and bad debt. That's an amazing way to [00:13:00] do it. Another way to do it. Like what we did was we did seller financing. So we found this off market business, the seller financed it to us.
And so what we did is we just made payments to the seller as if he was the bank every single month. And the payments just came from the business. So you find a cash flowing business from day one and make the payments to the original owner. And so he's making a portion of that money every single month.
And then the rest of the cashflow you can keep. And that's how I sold my business,
Justin: honestly. It's an amazing way to do it for, it's great. Cause I was ready to move on and I had the guy and he didn't have all the money, but he had some of the money. I'm like, dude, like I will sell our finances cause then I pay less taxes up front.
Right? I just make more money over time. Anyway, it's been, it's worked out really well, but, and
Andrew: it's amazing. And the, and the cool thing about that is, is then you can really, um, you can get into the business, you can get instant cashflow if you want to, and really be able to. To, you know, have a win win situation.
And if you default on the business, if for some reason it doesn't go well, then it goes back to the owner. So there's a lot of pros and cons there, depending on how your contract's written, obviously. But, [00:14:00] um, but I love seller financing for businesses, but the hard part is you got to make sure that you find the right person for that.
Justin: Okay. We can go down all kinds of rabbit holes with this. Um, and I'm sure we'll have you on again and we'll talk more about this. Uh, but let's go ahead and move on to, but I guess the point is entrepreneurial opportunities. Because we're kind of like going this like in it just to kind of tie everything all together Um, and you, you actually, you also mentioned something about side hustles.
Like, so we kind of went off on a rabbit hole a little bit about like just buying businesses and your pick up all business, but we're getting back into this flow. It's like, okay, you got, you got to have a plan. You got to make more money. You want to reduce your debt and expenses and you want to start saving money to have, you know, the one, three, six month plan.
And then you're going to start investing, invest all the retirement accounts that you can, the match with your employer, then you start investing extra money, S and P 500, or if you want to do real estate and stuff like that, you can do. And then we were talking about [00:15:00] entrepreneurial opportunities, but like you were mentioning like side hustles for people that you also, another thing you also mentioned in your podcast was you recommend people don't start a business until, Oh, they started on the side.
Yeah. That's for the side hustle thing. That's where it's all kind of full circle. Until they have, like, they're making the same amount or 1. 5 times as much. Let's touch on that a little bit. And then we'll finish off with number seven.
Andrew: Exactly. So there is a, uh, a massive amount of businesses that you could start that.
And the goal when, when you start a side hustle is I don't want you driving for Uber or doing like DoorDash or anything like that. If you need the money to pay off debt or something, fine. But really what I want you to focus on is thinking through what businesses can I start that can turn into full time incomes.
Because that's going to be the way that it's going to allow you to have that entrepreneurial spirit and get out of your day job. If you want to, if you're sitting in a cubicle right now and you're saying to yourself, I cannot stand coming to work every single day, this is one of the ways to do it is you look for businesses that can turn into full time incomes.
So one of the fastest ways to do that is to start some [00:16:00] sort of agency, for example, and I'm sure Justin, you've probably talked about agencies a lot or, or had worked with them or anything like that, but they make tons of money. If you can find the right agency, anything from, you know, a social media agency.
To, uh, you know, we have, we work with tons of agencies in our businesses, you know, podcast agency. We work with, um, you know, advertising agencies. You, we both have the same advertising agency. So there's all these different agencies that you can start where you can make a lot of money and you can do that nights and weekends, but there's so many other side hustles out there that can turn into full time businesses that allow you to have that freedom from your job.
And the way to think about this is you have one foot in each pond. And then eventually once your side business starts to make more than your standard business, at least, uh, at least the same amount, but usually I like to have one and a half times before I make that leap, just cause I'm a little more risk averse.
If you are willing to take the risk and you can see that, Hey, if I just had a couple more hours to do this, I can make a lot more money. Then that makes a ton of sense too. So
Justin: it depends on how much you have in savings and what your expenses are and how many kids, all that stuff. How many kids do you have?
Stuff like that, right?
Andrew: All those variables kind of [00:17:00] matter. Um, but that's, that's where I would kind of look at that. So, um, so there's a lot of different businesses that you can start and it is a really risk averse way to become an entrepreneur essentially, because you are making an income and then once your income with your side business makes more than your day job income, then you can just make that move.
Okay.
Justin: I love it. And we can talk about that all day long. That's what I love. To me, business, like creating a business, like, I don't know, it's a no brainer. Like to me, it's like, it's so doable. Our society doesn't teach us from a young age that that's the route to go. But to me, if they did, man, so many more people would have so much more wealth.
And I don't know, maybe not. Cause maybe we'd all have businesses, but I, I don't know, bottom line, at least those who do learn from young age and do start early, it's just a no brainer. Like all the returns we're talking about, if you know, and understand some basic fundamentals of business and you're taking action on it.
The returns are like insane. We're talking to like seven, 8, 10 percent returns. The returns you can [00:18:00] make are just in the hundreds, right? So in a great example of that, it's exciting
Andrew: the pickleball business that we bought. So that was originally started by a guy who's our business partner now, but him and his son started it and he was trying to teach his teenagers about business.
And so they opened this little pickleball facility, not really thinking anything of it. And they realized, Oh shoot, I got to take this seriously because people are actually coming here. And so he started as like an education. Uh, thing. And then all of a sudden now, when it, when it took off, then he's like, I got to really take this seriously.
So it's a cool way to do it is you have kids, uh, you can even start little businesses with them and see what happens.
Justin: Okay. I love it. And obviously we talk about all the time, go to episodes one through 200, whatever, and check it out and as always reach out if you have any questions. Um, okay. So let's get in number seven.
Let's kind of put a bow on this thing. Basically number seven is, okay, why are we doing all this? Like, let's talk about how to live a great life. Don't just make money. Like, what are you using it for? Don't just like you said, like the weirdos that just like [00:19:00] save all their money and never spend any of it.
Um, and like, how do you invest in life? Like that kind of stuff. Let's tell us your philosophies and thoughts on that.
Andrew: So when it comes to building wealth, one big thing is early on in my twenties, I would became pretty frugal because I was trying to get out of this situation where I wasn't making a lot of money.
But what I really quickly realized is spending as a skill and learning how to spend money over time is something that I want most people to do. I want you to be spending your dollars on things that you value. So we see money as a tool to get you the things you want out of life. And so when you're thinking about, you know, building wealth, you're not just doing this to just hoard all this cash and stuff it under your mattress or do whatever else you want to do with it.
What you want to do is start to utilize this as a tool to build the life that you want. What is your dream life? Think through that process and say to yourself, Hey, what would my perfect day be? And then we want to work through and start to build and use money as a tool to achieve that goal. Goal. And so that's how we think about money.
I want you to spend more on the, on a car, or I want you to buy the designer clothes if you want to, or I want you to go on [00:20:00] the fancy vacation, but you need to have the final, you need to have the baseline first before you do that. And the ultimate goal for most people is they want to buy their freedom.
And so putting your dollars towards these investments that we're talking about or investing in real estate or businesses allows you to buy financial freedom, which is the ultimate goal for most people. I love it. Anything else,
Justin: any final comments?
Andrew: My, my final comment, I guess, is again, just utilizing money as a tool is the number one thing that I think a lot of people need to kind of focus and hone in on and having that abundance mindset is going to be one of the best things that you can have.
Justin: Okay. You're the man, Andrew, where I know we're going to have you on more often. It's been great getting to know you just recently got to know you great guy. We'll have you on again sometime, but where can people find you in the meantime, if they want to learn more about you and what you have going on?
Andrew: Well, thank you so much for having me. This was a blast. These are topics that I love to talk about always. Uh, but you can find me on the personal finance podcast on any podcast player, or if you like newsletters, we have a newsletter. If you go to mastermoney. co slash [00:21:00] newsletter, that's a great place. We write a five minute newsletter every single week, and it teaches you something about money every week.
Justin: You just remind, I wanted to ask you more about that and your business, but it's okay. We'll have you on again. I got lots of questions. This has been awesome. Thanks so much, Andrew. And we will talk to you soon.
Andrew: Absolutely. Thank you so much, Justin. I appreciate it.
Justin: Are you freaking kidding me? That was insane. Andrew, so much. You hit it way out of the park. We will definitely be having you on again and hopefully many more times to come. Once again, if you enjoyed this series, please share it with a friend. They will thank you. This is something that is not taught in schools, not taught in homes and basic financial information that everyone should know as early on in life as possible.
Other than that, keep kicking some bootay in your business, in your investments, in your job, whatever it is that you're doing in your life. Cause that really is what it's all about. It's such a [00:22:00] fun game, the game of business, the game of making money, the game of life. But never forget why you're doing it, what matters most to you, because that is the true prize.
Until next time, this is Justin Williams, fellow money magnet and lover of life, wishing you great success in all you do. Until next time, class is dismissed.
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