Top 5 Wealth Killers to Avoid If You're Under 40

[00:01] reflection of mine. So, for 10 years, I thought I was being smart with my money when in fact, there were five things I was doing subconsciously that ended up costing me a lot of money. I just did the math this morning and some of these

[00:13] $750,000 or more over the course of my career and avoidable. So, I'm sharing this with you today in order for you guys to learn from my mistakes. The first thing that I was completely unaware of was from the

[00:27] ages of around 21 to 26, I had fallen victim to this mentality of if I can't get rich fast, then why even bother? I grew up in Silicon Valley, California that's when Facebook had come out and it was a completely new website at that

[00:41] time. We were still using things like MySpace and AOL Instant Messenger. I just starting to grow, but it wasn't so ubiquitous that, you know, Facebook and every single news article on the Wall Street Journal or CNBC just yet. Fast

[00:55] forward to around 2010 to 2012, that's when I moved home from going to college in Los Angeles. For those of you that don't know, Facebook IPO'd in 2012 and time. In fact, I knew a lot of acquaintances were working at startups

[01:08] because they were able to get a really good exit or they just got acquired by another company and they happened to be an early employee of the company that early 20s, I thought, well, there's really no point in trying to build

[01:21] wealth slowly. I'm just going to try to join a company that's really hot, try to be an early employee and then try to get an IPO or an exit. I literally thought wealth, that or starting your own business. But, what I completely

[01:33] neglected from the ages of 21 to 26-ish was investing in index funds. I thought little bit risky. I didn't really understand that 8% was quite a lot and I thought it was a little bit boring, so I wanted to get rich faster. Now, fast

[01:46] that Gen Z is having a hard time with this same idea. I think there's this general sentiment that I usually find on TikTok or Instagram Reels that suggests to me that Gen Z has given up on the traditional way of investing slowly and

[01:59] going for these one-off moonshots, trying to invest in a cryptocurrency and hit a 100x, or doing stupid things like sports betting, or even worse, betting on things like if there's going to be a government shutdown, or

[02:13] literally the high temp of the New York City area on a random Wednesday. So, cost me quite a bit of money. So, from the ages of 21 to 26, I just never invested into the market at all. I wasn't making a ton of money at this

[02:26] age. I would say my average salaries were around $40,000 per year, but I was lot of it. Even if I had just invested $500 a month, so roughly $6,000 a year, that would have been around $31,000 in total for those five years that I wasn't

[02:40] investing. Now, when I just ran the numbers this morning, it was pretty crazy. I think that $31,000, if I just left it alone in a basic S&P 500 index fund, by the time I'm 65, it would be worth anywhere from $750,000 to over a

[02:54] interest rate that you use. So, because I chose to not act in my early 20s, the a lot. Even if you think you're waiting for the perfect opportunity, that's still a decision, and the cost of that decision is deciding to earn 0%. So, 0%

[03:11] I do think that these days it's still possible to budget well and get wealthy cohort, please let me know in the comments how you are feeling. The second subconscious thing that I was doing that cost me a lot of money was that I had a

[03:25] even up to just three years ago. Growing up, my dad liked to keep a certain amount of money in his checking account at all times. It was around $35,000, and that much money in his checking accounts, he would always just say,

[03:38] extra cash, and you want this money just in case." Now, my dad was obsessed with wouldn't actually spend it on things that could actually improve our lives. meals at home when he could afford to eat out. We would leave the heater off

[03:54] comfort and experiences in order to it's because he grew up in a war-torn time in China, so he grew up very poor. mentality whenever he did start to make money. Now, what people don't tell you

[04:07] online is that a lot of your beliefs and behaviors around money are inherited me and my dad, I just inherited his scarcity mindset and I kind of just went this mindset until a few years ago. This mindset also contributed to the fact

[04:21] age of 26 because my dad wasn't the biggest investor and he liked to keep a did what my dad did. Once I educated myself more on personal finance though, I realized that the bigger opportunity cost was simply not investing. When I

[04:35] that the market on average returned around 8 to 10% per year since 1926, but I had to actually learn to trust that data. So, it was around my 26th birthday that I decided to start investing in the market and also abandon number one,

[04:49] which was the get-rich-quick mentality. So, that felt really scary at first, but in ways that cash sitting in a checking account never could. So, I want to share with you guys one of my favorite charts ever. This shows the results of the last

[05:02] 20 years investing $2,000 a year with four different investing styles. The stocks, but you can see that investor D kept it in cash. As long as you invest, even if you have bad timing, perfect

[05:14] once, even in the worst-case here, you will still have way more money than investor D who keeps their money in cash. So, don't make the same mistake that I did. I would say just build an emergency fund of 3 to 6 months, put

[05:27] really learn to trust the data with a diversified portfolio. The third subconscious thing that I was doing that I had no idea of was that I had zero just told you earlier that I didn't start investing until the age of 26, but

[05:42] I did start, I only invested a small portion of my total savings. I still irrationally. Of course, you could probably say this is also attributed to that one thing that plays into this is that I didn't have any intention for the

[05:57] some context, I remember having around 55 to $60,000 saved up at the age of 26, were quite cheap. My 6-month emergency fund I calculated was around $12,000.

[06:10] So, that means at the time I had $40,000 plus an extra cash that I wasn't using. just mean I had literally no plan for it. It wasn't earmarked for a down business one day, but even then that wasn't a concrete plan. So, that money

[06:25] sitting in the checking account earning basically nothing. So, the problem here actually work for you. It just sits fixed this was that I had to start being more intentional about where my money

[06:38] should be allocated. So, first I went on to the subreddit of personal finance, months of emergency funds saved up, and that was around $12,000. So, I set aside that $12,000. I then set aside an arbitrary number at that time in my

[06:51] checking account. I set aside $5,000. I just felt like that was a number that go below that number. I don't know if that was completely rational at that like a good amount to have in a checking account for any types of expenses I

[07:04] might have. Then, the remainder of that money was going to be my bucket for slowly invest into the market. I didn't really have a plan though. I didn't dollar cost average or lump sum the entire thing. I would just put chunks of

[07:16] 1,000, 2,000, even 5,000 dollars into the market whenever I felt like it. So, really there was no system. It was just on vibes, and now looking back, I know choice. So, if this is something that you do, like you have no intention for

[07:29] do. So, I think number one, you want to figure out what your emergency fund is, actually spend, and what should be in there. And the second is to ask yourself, "What is every dollar for?" Just in case should not be an acceptable

[07:42] for a down payment on a house in two or three years, that would be acceptable. should be invested or at least sitting in a high yield savings account, and job. You want to pretend like you're running a company and that each of your

[07:57] and each of them needs a job in order to think you'll be a lot better off in the long term. The next thing I realized in my early 20s that was killing my wealth was simply my friend group. I had

[08:09] friends in my early 20s and we did not care about investing. The conversations never revolved around business or entrepreneurship or how we were going to were just kind of lost. We wanted to play video games during the week, we

[08:22] there was really never any education or knowledge sharing among my friends. I would call this a money ceiling and it's invisible. So, when no one around you is normalizing investing, it doesn't even register as an option in your head. Now,

[08:35] in my early 20s, I would say that young people still weren't really talking tell you what changed. Basically, when I became a financial advisor and started working in that industry, suddenly I became surrounded by people all day

[08:49] in or what ETFs they were going to put different clients in. I would get today?" or, "Hey, I'm thinking about rebalancing my portfolio. What do you think?" All these types of things I was hearing was causing me to be more aware

[09:02] you're watching this video right now, you're already kind of surrounding yourself in an environment where we're talking about wealth and investing. So, credit. And I also want to say, try taking a look at the people that you

[09:15] are talking about wealth building or investing, you might want to look at different online communities or in person where people are having these a part of. Now, I'm not blaming any of my friends for anything. They were all

[09:28] this day. But, the environment that we created was just not conducive to wealth wealth killer that I experienced for 10 years was that I was risk averse in the of the things that I was afraid of when it came to investing was simply losing

[09:44] money. I had just graduated right after the financial crisis, so having the idea that the stock market could go down 35, 38% in such a short period of time, that risk averse when it came to investing as you can probably tell and understand

[09:58] completely blind to a different type of risk, which was inflation risk as well as opportunity cost and that was the actual wealth killer. Inflation erodes your purchasing power about 2.5 to 3% every year. So, in about 24 years, that

[10:12] means you will lose about half the value of your purchasing power in dollars. And money isn't invested in anything, well, that money could be working for you so that's the opportunity cost I'm talking about. So, if you're sitting on

[10:25] a pile of cash right now because you're waiting for the right time or because understand that you're actually not really avoiding any risk by doing so. What you are doing is just choosing a different type of risk. That risk is

[10:38] cost of that money. So, that's the last subconscious wealth killer that many resonated with any of these things today, please let me know in the topic or thing that you want to know

[10:51] comments too. I'll be reading every single one of them. In the future, I'm videos about my own life as well as finances, so make sure to subscribe to to my video on how much money you should be keeping in your bank account right

[11:05] video too. It will give you way more insight into what is the actual right here. I'll see you in the next one. Peace.