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Finance: How to Stay Rich 91 Views
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How do you stay rich after you...get rich? The focus: index funds, mutual funds, way more stocks than bonds. Three words: don't be stupid.
- Social Studies / Finance
- Finance / Financial Responsibility
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Careers
- Terms and Concepts / Credit
- Terms and Concepts / Education
- Terms and Concepts / Ethics/Morals
- Terms and Concepts / Financial Theory
- Terms and Concepts / Index Funds
- Terms and Concepts / Insurance
- Terms and Concepts / Investing
- Terms and Concepts / IPO
- Terms and Concepts / Marketing
- Terms and Concepts / Metrics
- Terms and Concepts / Mutual Funds
- Terms and Concepts / Retirement
- Terms and Concepts / Stocks
- Terms and Concepts / Tax
- Terms and Concepts / Trusts and Estates
- Terms and Concepts / Wealth
- College and Career / Personal Finance
Transcript
- 00:00
finance a la shmoop. how do you stay rich after you get rich ? spend less than you
- 00:08
make. how's that sound yeah genius. well but pretty obvious and
- 00:12
easy to do if you earn enough money to do so, right? so if you're watching this [man sits down to eat]
- 00:16
video you're either rich or you plan to be, and you want to stay that way pretty
- 00:21
much forever until your doing you know the backstroke Six Feet Under.
Full Transcript
- 00:25
well the way in which you got rich in the first place here matters a lot. for
- 00:29
many a long successful corporate career got them to the nice houses the
- 00:36
convertible Ferrari the private school for the kids the custom golf club set
- 00:40
and the wine collection. their wealth just accumulated slowly over time but
- 00:45
likely in two forms. in America most senior executives receive nice cash
- 00:49
salaries half a million a million a few million dollars a year. they live off
- 00:54
that pay and save some of it. but their real wealth usually comes from partial
- 00:59
ownership in the big corporations they run in the form of stock options. well at
- 01:04
the end of a career the options might have compounded for decades and be worth
- 01:08
tens of millions of dollars or more. typically the executives slowly sells [stock chart]
- 01:13
off those options in retirement and looks back on an awesome corporate life
- 01:17
optimizing the sale of soap or lawn fertilizer or car tires or whatever they
- 01:22
did to get rich in the first place. not a bad way to go if the corporate gig is
- 01:26
for you and you don't read about these people going bankrupt very often because
- 01:30
a well let's face it they're probably pretty boring. or at least their career
- 01:34
selling soap was, and B they got rich slowly accumulating wealth quietly
- 01:39
almost hidden to them and to their friends over long periods of time. they
- 01:44
were technically probably rich in their mid 40s or so and they just continued to
- 01:48
dance the dance that brought them to the party in the first place.
- 01:51
so that's the get rich slow plan and it is time-tested it works. but what about [people throw a party]
- 01:56
the get-rich-quick plan you're a 260-pound runner with a four point four
- 02:00
second forty. you can read so you were accepted to Alabama where you don't
- 02:05
graduate. you're drafted by the Jaguars and you get a
- 02:08
million dollar signing bonus. your buddies ask you hey pal what time is it
- 02:12
you look confused they say Ferrari time and ah here's
- 02:17
where our story gets sad. you forget a whole bunch of things mainly that it's
- 02:21
likely your NFL career will be short and when it's done you will likely have the
- 02:26
earning power of a high school football coach. like you know 50 60 grand a year
- 02:31
or something like that not terrible just not rich. oh and there's this other thing
- 02:35
called the taxes. that million dollar signing bonus was really nine hundred
- 02:40
fifty grand after agent lawyer fees travel and other stuff then he paid [equation pictured]
- 02:44
taxes of three hundred fifty grand and netted six hundred K in your pocket. but
- 02:48
you just went out and spent four hundred fifty grand buy that Ferrari so now you
- 02:53
have just one hundred fifty grand left in your pocket to buy that home how's
- 02:57
this shoebox look. so you wait hope your rookie seasons a hit and as you drive
- 03:02
around in your Ferrari you wonder if people will laugh at you if you happen
- 03:06
to flame out and you realize too quickly that if you go to sell the car in two
- 03:10
years that'll maybe bring you 200 grand. and yeah Ferraris depreciate fast. sad
- 03:15
story but way more interesting than the soap seller. in fact most NFL players
- 03:19
like eighty percent of them go fully bankrupt. which means that another ten to
- 03:23
fifteen percent of them end up just really really really not wealthy. how can
- 03:28
this be if they played in the NFL at least at one point wouldn't you have [pie chart]
- 03:32
considered them to be rich or at least rich ish? no but something bad clearly
- 03:36
happened here. well in almost every case at least one of three things happened.
- 03:40
they spent too much money spent on junk they didn't need or couldn't afford like
- 03:44
that Ferrari. B they invested their savings into restaurants or bars or
- 03:48
other things where the odds of success were vastly stacked against them winning.
- 03:53
or see they got divorced. yeah always a financial killer there. well want the to
- 03:57
long didn't listen version don't spend your money like you're gonna make your
- 04:02
current salary for the rest of your existence.
- 04:04
stuff happens enjoy life but protect yourself by holding on to enough savings
- 04:08
as should things take the ugly turn. invest wisely and all that and maybe see
- 04:13
a marriage counselor. if you want to know what it all boils down to, keep making
- 04:17
money yeah you never have enough because you know
- 04:19
what's gonna happen. that doesn't mean you need to pound the pavement selling[man goes through air port]
- 04:22
vacuum cleaners till you're 95 but you also shouldn't call it quits at 45
- 04:26
because you're finally a millionaire yeah a million bucks just ain't what it
- 04:30
used to be.
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