3 Insane Money Mistakes Rich People Make
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Today we discuss 3 very silly money mistakes rich people make. These 3 financial mistakes happen to rich people all the time and you need to avoid them.
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Oh my goodness, rich people can be very very dumb with their money. Today I want to share with you guys the three huge money mistakes that I see rich people make all the time guys, it goes on all the time.
Now first, we got to get out of this notion, okay? There’s this notion out there that if you’re rich, you’re smart with your money, you got to be rich, you’re smart with money. And that could not be further from the truth.
The truth is, like the vast majority of rich people are still dumb as a box of rocks when it comes to money. They made countless huge mistakes with their money, okay? Just because you can throw a mean left hook does not mean you’re good with your money.
That just means you’re probably going to be a damn good boxer. And you’re probably going to make a ton of money fighting for pay per view fights, right? Just because you you have the voice of an angel and you get with the right person who knows how to market you the right manager.
And next thing you know, you’re a famous singer, doesn’t mean you’re good with your money. All right, so many people go broke after they become rich, because the A lot of them get there because they have one thing worked for them, right.
But they never really understood how money works. All right. So I want to give you guys three huge financial mistakes average people make all the time. And by the way, you might be watching this video right now you might be under the age of 30.
And thinking to yourself, man, I’m not rich, I’m not even, like even close to rich, I got no money, you might be watching this thinking that right now. Well, the fact is, if you’re a young person watching this video right now, and you watch, you know, you’re into financial subjects.
You’re you’re into learning about investing in business and all this stuff, and you’re actually gonna apply it out there in the real world, I’m just going to tell you, there’s a very, very high probability that you’re going to be rich at some point in your life.
All right, some point in your life, there’s a very high probability because you got to understand the segment of the population. That’s actually like learning about investing in business and entrepreneurship and personal finance at a young age is a super.
Super small percentage of the whole population guys, it’s all like mind boggling to like even think about how few people are really into this stuff at a young age. So and some of you guys who are you know, doing a little better in your life, maybe you’re a little bit older.
Just avoid these three mistakes by all means, guys, these just cost rich people a lot of money and they don’t even realize it and it ends up sending them down the wrong way. So I hope you guys really enjoy today.
But wait, make sure you follow me on Instagram if you have not already I’m posting a ton of content on Instagram now it’s it’s incredible, really on especially on Instagram stories and whatnot.
So make sure you follow me on there. If you have not, let’s get into this third biggest money mistake that rich people make out there that I see if they think they’re good for life. Okay, they acquire some wealth.
However, they did it Okay, maybe they, you know, had some fame. Maybe they were a sports star, maybe they’re a musician. Maybe they figured out how to make money online or something like that.
Maybe they built a small business like a software business and whatnot, they grew it and then they sold it to a bigger company and made like 5 million bucks off that 10 million bucks.
And they think I’m good for life. Man. I’m rich, I got five mil 10 mil in the bank. And the truth is, that does not work that logic never ever works. Okay. You know, you make some money, and you think you’re good for life, right.
Maybe if you’re 70 or 80 years old. Yeah, maybe you’re good for life, because maybe you only got 10 2030 more years left, right. But when you’re in your let’s say, 20s 30s 40s, and you make that kind of money, and then you think you’re good for like, it’s just doesn’t work.
Okay, here’s why it doesn’t work. It’s there’s two reasons why it doesn’t work. The first is, if you’re rich, right, you got a lot of money, you’re gonna want to live a rich lifestyle, a rich lifestyle eats into all that money, okay.
And guess what else happens? There’s this thing called inflation, and that destroys your money. So you got your rich Lifestyle, Eating your money, and you got inflation, destroying your money each and every day. Okay, now there’s times when inflation is worse than others.
But generally speaking, like that house you might have looked at last year is probably 10, or 20, or 30,000. More expensive this year, right? In that stock you looked at a few years ago, you know, Apple stock A few years ago.
It’s probably more expensive now than it was three, four years ago, right? Google stock is a lot more expensive than it was a few years ago, Amazon stocks a lot more expensive than it was a few years ago.
Netflix, like you know what I mean? Like everything kind of generally goes up as far as assets over time, maybe not every single day, maybe not every single month, maybe not every single year, but the majority of time these assets increase and increase in value.
And the the money you need, you need more and more money to buy that asset. Okay, that house needs more and more money, the car is getting more and more expensive. I remember when an expensive car was like, you know, 38 when I was a you know.
Let’s say an elementary school 30 or $40,000 car was an expensive car. Like that’s pretty expensive. Now, like most cars start in the 20s. And like 30 to 40,000 is not like nothing, right? expensive cars are really like 80,000.
Plus, nowadays, that’s what people would consider, you know, getting up there now, and 80,000 plus, so everything gradually gets more and more expensive. This inflation eats your money and you’re living a rich lifestyle.
Like who who you know, let’s say your your, you know, you do something and you become rich and you’d like a big house and more than likely, right you want to live like the finer lifestyle right.
That I’m very few people I’ve ever met. They’re like, Oh, I’m going to make money and I’m going to live in a one bedroom apartment like I have yet to meet a person in real life. Who says that or would actually go through with that, right.
You make money, you want to the finer things in life, you want to go to the expensive restaurant, you want to drive the expensive cars and live in an expensive house and go on expensive vacations, all this stuff, you got that rich lifestyle, man.
If you got no money coming in, you think you’re five or 10 Mills gonna last you, it’s just not gonna last year, okay, that money’s gonna get eaten into and not only will it not last you the rest of your life.
It’s probably not going to last you a decade, okay, and probably won’t even last year, a decade because you will eat in that money like crazy, things are gonna get more expensive and you’re, you’re the buying power of those dollars is gonna go down, or those euros or whatever it is.
And that’s just how it is guys the logic that you can make some money and get rich, I can make 510 million bucks, you know, $10 million. Now I’m good for life. It just doesn’t work. Okay, maybe if you made 100 mil plus, maybe then that could work.
But even sometimes, you know, people that make that kind of money, then their lifestyle they want to live is even more ridiculous, right? And so it still leads in their money. So that’s something to keep keep in mind there, guys.
Just because you made some money doesn’t mean you’re good for life, you probably need to still figure out something else to make it make some more money and whatnot. So something to keep in mind this get in number two, the second biggest mistake.
It was really close between this one a number one on which one made number one, but the second biggest mistake is a massive one that Unfortunately, most rich people have all right. And what this mistake is, is basically they have money, all right, they have money.
And sometimes this money is coming in and you know this money is coming in, but they don’t even know where the money is coming in from right. You could you could take the majority of musicians out there.
The majority musicians actually have no clue where their money’s coming in from, okay, those money is coming in. But they don’t really know like, what like, Where’s that money coming from? Is that coming from? Is that from tour sales there.
Is that from merchandise like where where did this money come from? That’s a huge issue. They don’t know where the money’s coming in from. They don’t know where their money is going after he gets into their accounts and whatnot.
Also money starts going here and there. And they don’t know if what tax rate am I and why? Why is this money going over here and things like that they don’t know where their money’s going.
And then also, they don’t know where their money’s being invested. Alright, the majority of rich people out there, they have no clue where their money’s even being invested. And these are three huge issues.
If you don’t know where your money’s coming in from, you just know it’s coming in from somewhere. That’s a big issue, guys. Okay, that’s a big issue. But these two are ones that, you know, a ton of wealthy people would fall into these categories.
Okay, where’s the money going? So many, so many rich people out there, their their money just goes places because they they hire all these people out, they trust these other people running their money for the.
Right and doing this and they got an accountant and they got a manager managing this money and things like that. And there’s their money’s going all over the place. But they don’t even know where it’s going.
How can you figure out who’s siphoning money here? How can you figure out that somebody is not stealing some money here and there? Like, if you’re not on top of these things, like like, eventually, some bad things are probably going to happen to you. Right.
They have no clue where their money’s being invested. I mean, you hear a lot of these, you know, rich people and whatnot. And they’re like, Oh, yeah, my money’s in real estate. And if you actually ask them, oh, yeah, what real estate properties.
Are they in? I don’t know. I don’t know. I got somebody that you know, invest some money in real estate. He’s like, dude, you don’t even know where your money’s at. Right? You don’t even know where your money’s at.
Oh, my money’s in the stock market. Oh, really? What stocks Do you own? Ah, no, it’s just in the stock. It’s in stocks. I don’t know where the money’s at lately. These are huge issues. Okay.
And this is why a lot of rich people end up going broke. How many stories have you heard over time on a person that made tons of money, and yet 10 years later, five years later, 20 years later, they’re broke.
They’re like looking for a regular person job out there. Because literally, they like their money just disappeared, somebody stole some money here, somebody invested the money here and and lost 100% of that investment.
Because that restaurant they invested in failed or that flip they’re trying to do on that house failed, they lost, you know, 200,000 there and just all this money’s leaving them. And who knows what money was going into taxes.
There was money coming in, they don’t know. Like, if that those amounts are even correct. If somebody was safe, like, like a lot of the rich people, they just trust people too much it with their money because the what it comes down to a lot of times is they’re lazy.
They’re not really in it for the money, they did something and they kind of created a business or something about themselves, or they got some fame or they did something on social media or whatever, they make this money.
And really, they’re, they’re, you know, kinda in it for the money, but they’re not all about the money, okay? So they don’t want to figure out all this stuff. They don’t want to research they don’t want to do all the work.
They want somebody else to do all that work for them. Well, I’m just going to tell you, you trust too many people with your money. It’s kind of go away. Okay, it’s gonna go away. You need to take control of your money if you don’t know where every dime is going.
Man, that’s an issue. Okay? Especially the big money, you better know where the big money’s coming from. Okay? If a dime here, you know, leaves here in there, okay? But you better know where the big money’s out. Okay.
Let’s say you got to, you know, let’s say you’re worth $30 million. You got $10 million in real estate, you better know what properties those are in. Okay, you got $10 million in real estate. That’s a third of your wealth.
You better know where that money’s at right? In you trust this other person that you owe. Given You know, this fund manager 10 million invest in stocks, you better know what stocks that guy’s in, you better know these particulars on trust me, you’re gonna get burned.
And man, you got to be willing to do the work and the research and whatnot. If you want to trust people with your money, just make sure you know exactly what they’re doing with it, guys, so many people just lose a lot of money this way.
So huge mistake, don’t fall on that don’t trust too many people actually do the work because it’s gonna, it’s going to help protect you in a massive way. Let’s get into number one on to number one.
So I started I really started my financial life what I would consider my financial life in 2008. Okay, that’s when I really started my financial life and really start paying close attention on money.
And how to make more money and all those type of things and just kind of like money in General 2008 was really that year for me graduating out of high school that I really started pay attention to stuff, all right, since 2008.
So many rich people have made massive mistakes out there because of a few things. Okay. So basically what happens is rich people like to buy expensive things, okay, think homes.
You know, that’s the first thing that’s going to come to your mind, right thing cars, that’s the next thing is going to come to your mind homes and cars are really the first two things you think of a rich person wanting to buy, okay.
And they love to buy these who can blame them, right? You Home is where you’re gonna spend a ton of your time, right, unless you’re on the road all the time. But for the average person, like they’re gonna spend a lot of time at your home.
You want a really nice home, right? You’re going to drive that car around a lot of rich people like like nice cars, all right, I’m not going to blame him for that. That’s fine, fine and dandy, but the way they purchase these items are not the smartest ways. Okay.
So basically, since I, you know, I gave you some back backstory there about, you know, I started my financial life in 2008. Since that time, interest rates have been unbelievably low, okay, if you have good credit.
A lot of these times, you can get an interest rate of 3%, you know, 3%, somewhere around there, whether you’re talking about on a home a car or something, maybe maybe go up to 4%. Okay, but likely, if you have a lot of money behind you, and you have a good credit score.
Which most rich people do, because they just, you know, are able to pay all the things and whatnot, you probably could take out a loan for 3%, okay, on this home on this car, but what do a lot of rich people decide to end up doing.
They decide to go and buy these things, cash, and that’s a massive mistake. So they buy this home for a mil in cash, okay. And then they buy, you know, a Land Rover and you know, some other car, you know, and Aston Martin or whatever, and they spend.
You know, 250,000 cash on those two things. And they’re like, Yes, I buy all my cat I own my home outright. I own these cars outright, and that this sounds sick, right? That does sound awesome.
Like you own a million dollar house cash. You own, you know, a quarter million cars. cash. That sounds sick, right? That sounds freaking awesome. That’s cool for you, right? But this issue, right, first off, the cars are going to depreciate over time.
So you know, five years are going to go down the road, right? And that Land Rover and Aston Martin are going to probably be worth maybe 125 250 will be generous, we’ll say it’s going to be worth you know, between those 250k total, right.
So you lost money there right off the bat. Right? The House hopefully appreciated maybe it was worth 1.1, maybe 1.2 mil, maybe 1.3 mil? Who knows. But here’s the issue, right? You could have taken out a loan and bought those at a 3% interest rate.
Right? Since 2008. It’s since 2009. Right? The stock market the Dow was around 7000. Now the Dow is around 24,000 basically well over triple up the NASDAQ’s up even bigger than that things like that. Right.
So think about it from this perspective, these if this person is decided to invest that 1.2 mil in stocks instead, you know, just wouldn’t you have to say pick the best stocks, we just say you invest in an index fund or something, right.
They could have made a massive return on investment, right? massive return and never had to tie up those huge amounts of money, right? They could have had all this money to go and invest or the majority of it.
Let’s say maybe they do $100,000 cash down payment are $200,000 cash down payment, they take out the other 800 $900 loan. And for these they do a downpayment of let’s say 25,000 each.
So maybe they they, you know take it along for 200k. there so 800k 200k they take out a loan of a million dollars instead of you know, spending that extra million just paying off those cash, right million dollars could have gone towards stocks.
If they put a mil in stocks, right? That million should be worth well over 3 million right off the bat, right right off the bat that should be worth at least 3 million. And that’s just that they are in an index fund over that time, right.
Rather than this and it’s like they still would have owned the home right, the home would still probably appreciate a great deal. So let’s say that home is now worth two mil you know, all these years later, right.
Guess what? It doesn’t matter. Like they they still made all that money. Yeah, they paid in some interest, but the money that that money made them just been an index fund in the stock market is way more isn’t even close. Okay.
And then we can get into what if they spent that money on actually a business and they try to expand that business and things like that, and maybe they make it into a 30 million $300 million deal.
That’s a little more talent involved. In a lot more work ethic, this is simple stuff like put the money in an index fund and watch it go up like that is so simple right? That is so simple. So this person they gave up millions of dollars in profit because they wanted to buy this cash.
And it’s just like if you can if you have the opportunity to take out a loan at 3% and you don’t take out that loan of 3% that just means you’re really really bad with your money okay, you’re really really bad with your money that you cannot you don’t believe in yourself or don’t know enough to grow your money at more than a 3% rate.
If you don’t know how to grow a million dollars at more than a 3% rate like like you have some issues there like you really don’t know anything about money or you’ve been brainwashed to think like.
This was a smart idea when that was not a smart idea the house appreciates over time and guess what you’re still making that profit Okay, you’re still making that profit even if the house is worth a mil more you still got to make all that profit Yeah.
You paid in some interest but looking so small compared to what you made on stocks right? Or what you could have made on something else or let’s say you took out multiple loans to buy houses or there’s so many different options out there guys that people buying cash it’s just a really dumb idea one of my companies.
I own is Toll Brothers right? average home you know that company sells there’s 800 $900,000 average right 25% of the customer base pays cash right? So you know people are buying million dollar homes cash.
Like like why young take out a loan for three or 4% interest rate you want the best credit out there you can get the loan from anybody you’re rich man like why would you pay cash for that just proves that you’re bad with your money that’s all that proves at the end of the day guys.
So anyways, I hope you guys really enjoyed this let me know in the comment section what you guys think rich people make the dumbest financial mistakes with and I would love to hear from you guys in that comment section.
As always, by the way, make sure you follow me on Instagram there it is right there on your screen. Thank you for watching. Have a great today.