How To Become A Millionaire Feat. David Bach

What If Becoming Financially Free Is Simpler Than You've Been Told? I have been waiting for this conversation for a long time because David Bach is one of the people who fundamentally changed the way I think about money. Years ago, I read The Automatic Millionaire, and I can honestly tell you that the principles in this conversation have had a direct impact on my own financial life. In a world where everyone is chasing the next hot investment, David brings us back to something much more powerful: timeless principles that actually work. If you've ever felt like financial freedom is out of reach, this episode will show you that wealth is built through systems, not luck. David breaks down why there are now more millionaires than ever before and why the next decade could create even more wealth than we've ever seen. But he also explains why so many people are still falling behind. We dive into the simple concept of paying yourself first, why automation beats willpower every single time, and how even small daily decisions can turn into millions of dollars over time. We also talk about the hidden cost of subscriptions, lifestyle inflation, and why so many people are unknowingly working for everyone else before they ever pay themselves. One of my favorite parts of this conversation is our discussion about financial freedom versus simply looking wealthy. David shares the story that completely changed his life, when he met an ordinary couple who retired in their early fifties with complete financial independence by following a simple system. We also tackle one of the biggest debates happening today around home ownership, debt, retirement investing, and why so many young people are being given advice that could cost them decades of wealth creation. If you've been wondering whether it's too late to start, David has an incredibly encouraging message that proves today is always the right day to begin. This conversation is not about getting rich overnight. It is about building real freedom. Freedom to make choices. Freedom to spend time with your family. Freedom to retire when you want instead of when you have to. Whether you're twenty-five or fifty-five, these principles can change your financial future if you're willing to take action. Sometimes the biggest breakthroughs don't come from making more money. They come from making one better decision and repeating it consistently for years. Key Takeaways: Why paying yourself first is the foundation of lasting wealth How automation removes emotion and makes investing effortless The surprising amount of wealth hidden inside small daily spending habits Why financial freedom is far more valuable than simply appearing wealthy The truth about home ownership and why it remains one of the greatest wealth-building tools available Why it is never too late to start building wealth, no matter your age How small, consistent actions compounded over time create extraordinary financial results If you've ever felt overwhelmed by money, confused about investing, or wondered if it's too late to change your financial future, this conversation will give you a simple roadmap you can start following today. Your future self will thank you for making the decision to begin. Start improving your health with real data from Tiny Health. Get $50 off your first at-home test kit at https://tinyhealth.com/mylett 👉 SUBSCRIBE TO ED'S YOUTUBE CHANNEL NOW 👈⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ → → → CONNECT WITH ED MYLETT ON SOCIAL MEDIA: ← ← ← ➡️ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠INSTAGRAM⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ➡️⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠FACEBOOK⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ➡️ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LINKEDIN⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ➡️ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠X ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ➡️ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠WEBSITE⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ed Mylett?

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• 0:42Ed Mylett?

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• 1:03Speaker 01

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• 1:36Speaker 02

  This is the Ed Miliband Show.

• 1:39Ed Mylett?

  Welcome back to the show, everybody. I am really grateful my guest is here today because I have to tell you, his work has made a huge impact on me. I was telling him off camera, I want him to hear it on camera during the interview. But what we're going to talk about today, you guys, is money, is financial peace, is freedom, is having a system to get your act together financially. And I can tell you that I'm not going to be the one giving the financial advice today, he will be. But it's something you should lean in and listen to very closely. You're going to learn a bunch of things today. He's a 10 times New York Times bestselling author. But more than that, he's a tremendous financial educator and the things he teaches are time proven. They're not just for the last two or three years. They're not the most recent flashy

• 2:22Ed Mylett?

  thing that you should do with your money. They're time-tested principles. And I want you to know, I attribute what he teaches, the vast majority of any wealth I've accumulated, and the financial freedom in my family. In a book I read about 15 years ago, it's called The Automatic Millionaire. And he sort of, it's a renewed, it's having a resurgence now, as he's sort of like, I guess he'd call it a re-release, but it's always been out. But there's been some updated data in it. And this is going to be outstanding today, you guys, with David Bach. David, welcome to the show.

• 2:53Speaker 03

  Well, Ed, thank you. I'm super touched because I'm a fan of yours. So you had to use him back on my son, as I was telling you before the show. And I'm just grateful to be with you. So thank you very much for having me. I know you have a huge audience. People love you and it's an honor to be with you.

• 3:08Ed Mylett?

  Oh, thank you so much, brother. Like, I told you right when we, before we recorded, I said, some of my concerns are the things we're going to cover today ironically are almost counterculture now. And I have to tell you guys, the things that David teaches in this book, I started doing before I read the book, but it validated what I was doing. And then I took it to a new level after I read the book. I want to start with just some context. I want to lean right in. You updated the book a little bit. And so the beginning, there was a stat in there that sort of blew my mind, because this idea of becoming a millionaire for most people, including me, when I was younger, that's just impossible. Right? I'm just trying to pay my bills every month, and if there's something left over, I would go to a nice dinner, which is a lot of the mistakes people make. You say in the updated version of the book, this is

• 3:51Ed Mylett?

  staggering, just to kind of demystify the concept. There are 24 million millionaires just in the United States today. Is that correct?

• 4:01Speaker 03

  That's correct, and the number's higher now, right? Because I just, the book just came out in January as an update. But the reality is, that number just keeps growing. And we're about to go into the greatest decade of wealth building that we've ever seen in our lifetime. Right? The ability to make money is just getting easier and easier and faster and faster. And so millionaires are being created at a record number. But like you have to be honest, Ed, you know, I launched this book 20 years ago on Oprah, and there were about a little over 7 million millionaires in America. So to go in 20 years from 7 million millionaires to 24 million millionaires, and that number is expected to double in less than 10 years.

• 4:42Speaker 03

  What's happening is when you look around, and not everybody's there, right? Not everybody's millionaires. But as you look around, it seems like everybody's getting rich, except for a lot of people feel like everybody's getting rich but me. And the reason I decided to put this book out one more time is I've got young kids. I know Max is producing, your son, you've got two kids that are similar ages. And I wanted to make sure that my kids learn the same lessons that I learned at their age. And I wanted to make sure the next generation learns, because I know you have a lot of people listening to you between the age of 25 and 35. And that's like the golden decade for many people. Because if you can start investing and saving and doing

• 5:23Speaker 03

  all the right things automatically when you're young, the rest is easy.

• 5:28Ed Mylett?

  Yep.

• 5:29Speaker 03

  And I'm worried that we're leaving people behind. I think we're leaving a generation behind right now.

• 5:33Ed Mylett?

  We are. There's no question about it. And one of the biggest culprits of it, there's a lot of good things about social media, but everyone's driving a Lambo, it feels like. Everyone's on vacation in the Caribbean. And even this idea of being a millionaire, you know, guys, David and I, at our age, being a millionaire was a pretty good thing and a big deal 25 years ago. 20 years ago. It's not that big a deal now. It's meaning that, I'm not saying it's not an achievement, but it's sort of a minimum if you're ever going to get free, is to get to that status and beyond it for most of you. And so I want David to kind of cover some of the things I learned in my life young, that most people, it's just not taught anymore. So the first thing, David, that is in the book that stands out to me, this is huge, everyone, because

• 6:15Ed Mylett?

  you're, most of you aren't doing it. And I love you, and I want you to begin to live like this, or at least begin to teach your children this, okay? And that is the notion, when I was young, my first job out of getting blown out of baseball, was I went to work at an orphanage, a group home, a big one, on like a campus called McKinley Home for Boys, David, and I was making minimum wage. But I had just been introduced to the concept of paying yourself first. And so what I did was, I had an apartment that I had to pay rent on at the time. I was not living at home anymore. My dad had sort of said, get out of the house, you got a job now. So I'm paying rent every month. I had a car that I had to take care of. I had, first time in your life, you know, you're out of college, I'm responsible for my auto insurance, I'm

• 6:58Ed Mylett?

  responsible for car repairs. And I was on minimum wage. But I started a $20 a month automatic payment into a mutual fund when I was 22 years old, starting to pay myself first. I want you to talk about that concept and what it means and why it's so important to do even when you're not making a lot of money.

• 7:18Speaker 03

  Because if I were there with you live, I would just, I would high five you right now, right? Because the secret to building wealth, and it's really not a secret, it's a system, is those three words. You have to pay yourself first when you get a paycheck. And you have to understand how money actually flows in the real world. So in the real world, when you earn a paycheck right now, who normally gets paid first is the government, Uncle Sam, right? So you go to work at, if you have a job, you go to work at nine o'clock, and most Americans pay work, pay taxes on the first three hours a day of their income. They actually work until 12 o'clock for taxes. They should kind of want to come to work after lunch, right? I always joke about this. Then you pay everything else. You pay your, your rent or your mortgage, you pay,

• 8:03Speaker 03

  you know, eating, healthcare, car bills. And what happens is most people hope that there'll be a little bit of money left over at the end of the day to then save and invest.

• 8:16Ed Mylett?

  Correct.

• 8:16Speaker 03

  And what happens is the end of the day, there's not anything left to save and invest. And then they live paycheck to paycheck. So the secret to building wealth, and it's not a secret, it's a system, is that on any income, you have to make a decision, and that's the key, to make a decision that the first person who gets paid is you.

• 8:38Ed Mylett?

  Yep.

• 8:39Speaker 03

  That's single decision change in your whole life. Now, when I go, now, when I break it down, you're going to break it down like what that looks like?

• 8:45Ed Mylett?

  Yeah, sure.

• 8:46Speaker 03

  You know, you saved $20 out of each paycheck. Typically, what I teach is, you need to keep the first hour day of your income. So whatever you earn an hour, it could be a minimum, it could be minimum wage, you could be making $20 an hour, $30 an hour, $50 an hour, whatever you make an hour, the first hour day of your income's got to get saved right off the top. Now, the, the best way to do that, to get paid, pay yourself first, is that you automate it. So if you have a job with a 401k plan, you automatically move, and the percentage is 12.5% of your gross income. That's one hour day of your income. I let out my kids, I don't want them to save 12.5%. I actually want them to save 15% of their gross income. But at a minimum,

• 9:31Speaker 03

  you need to save at least 10, right? So keep it simple, one hour day of your income automatically goes right off the top into a 401k plan or retirement account. Now, this is super important. It's all about automating it. Meaning, the money has to move automatically. From your paycheck into these retirement accounts and you talk about mutual funds into mutual funds into investments because if you require discipline, if you need a habit, if you need psychology, these things don't work. These things don't work long term. What works long term is automation. So when you look at how do, how are there 24 million millionaires

• 10:11Speaker 03

  in America right now? And here's the next number that's staggering and there's 45 trillion dollars now, that's with a T in retirement accounts. That's all got there in the last 40 years. Now, the bulk of it's got there in the last 20 years. It all got there through automation, meaning people aren't thinking, they're not spending time on this. Money's being moved in the background while they sleep, while they work, it's being moved without them touching it. And here's, you know, I'm gonna hold my phone up here and I don't know, you know, this will be on YouTube, but also on, on audio. What I talked about today and I talked about it in the update is that we are living in an automatic economy. Okay, an automatic economy, it has never been easier to

• 10:55Speaker 03

  automate your financial life. In a matter of minutes today, you can open up an app with a financial service company and we can list a whole bunch for you and you can automatically save for retirement, save for emergencies, save for dreams, and you can save your change today automatically. When you went to save $20 a paycheck, it was actually not that easy to find a mutual fund that could take $20 a paycheck. You know, you had to find the few funds that would take a small amount of money. Today, there are firms that are designed to help you invest your change. One of them is a company called Acorns. You can literally open up the app, in less than 10 minutes, automate everything. You go to Vanguard, Schwab, Fidelity, Coinbase, Robinhood, like I'm giving

• 11:40Speaker 03

  all these firms names because people are like, well, I don't know what to do. I don't know where to go. There's no excuse anymore to not get saving and investing. But when I held up the phone, what you need to know is this. Everyone is taking money from you automatically.

• 11:59Speaker 03

  Everyone, the government takes your taxes automatically. Every single bill you have today is automated. Netflix, let's use Netflix as an example because so many, everybody's got Netflix. Right. Netflix doesn't say, hey, Ed, pay us today. And then in 30 days, if you want to watch another show, then write you a check. No, they debit your credit card. Everybody's taking your money automatically because it's all about the lifetime value of a customer. So everyone's on your payroll, but you. You have to let that like sit and sit, you know, let that sit for a second. Everybody's on your payroll, but you pay yourself first says, wait a minute, hold on, hold on, hold

• 12:41Speaker 03

  on. I'm not doing this anymore. I'm not paying everybody else first. You know, you know, open up, open up your phone if you've got an iPhone, go to settings, click on settings, go to subscriptions, and look at how many people you're paying right now automatically for stuff you don't use. Your lotions and your potions and all your, on all your subscriptions. I just did this on another show. I won't say who the host was, very big show. And I brought my son to go see this show. And he does it, he goes, he starts scrolling through his phone because I walked him through how to do this. He's scrolling and Eddie's scrolling and he's scrolling. I'm like, how many subscriptions

• 13:21Speaker 03

  do you have? He's like, I have 23. I go, okay, how, how many do you use? He goes, scrolls back and goes, David, I'm only using three of these. And I go, how many of these, but what are the ones that you're using costs that you're not using? He's like, it's like four to $500. So then, so then while we're on the air, he starts running the numbers on what this would be worth in 20, 30 years. And he, he's like, it'd be worth millions of dollars. And I get back in the car with James and I go, because he was in the studio area watching this. And I said, um, did you catch that? Yeah. Okay, that was, that was the money shot. Because I go that if that shot gets put on clips. That's the clip. That's, that's the clip. It's going viral. He goes, well, why wouldn't it

• 14:04Speaker 03

  be put on clips? I'm like, because you never know until the show airs, you could edit it. You know what he did? He edited it. Now he left it in, but he changed the math because he didn't want everybody to be mad about the fact that he had 23 subscriptions. So he did, so he did, he did simpler math. But, you know, the message is, we're, not everybody, but for the most part, Ed, lots of people are studying money unconsciously and someone has signed up for your paycheck and shouldn't, you need them, you need them off your payroll.

• 14:33Ed Mylett?

  You do. And can I add one thing to this, everybody? And then I want to, I, I know some of you are listening going, okay, wow, 20 bucks, 30 bucks, 40 bucks. That's not going to do anything. Uh, hang on. You might be surprised. We're going to talk about compound interest and the rule of 72 here in a second. But before we get there, guys, I know what you're thinking. See, it, which is that when I make another, if I get my next raise, then I'm going to do that. Or if I get my next this, here's what I have found with my friends. Now that I'm an old guy, right? I'm 55. My friends who didn't develop this automatic quote unquote habit. See, habits are what get you wealthy. I don't believe it's your income. I don't believe it's hitting the holy grail on, ooh, I bought XYZ at 12 and it's now a hundred dollar stock, or I timed the market on Bitcoin. I don't think it's

• 15:17Ed Mylett?

  any of that. I think it's habitual. And what you're going to find is, is that if you can't do it on your small income now, you won't do it on the next raise and you won't do it on the next one. You're going to want a little bit larger latte. You're going to want a little bit nicer pair of shoes. You're going to lease a little bit more expensive car. You're going to upgrade that apartment or that home you're in and you never get around to this habit. So it's more important that you establish the habit than even the dollar amount for right now, or even, even the vehicle, if you just start the habit. Let me prove to you how small, well, David, you were on another show, friend of mine, I won't say who. And this clip came to me and I should know this math, but I didn't. Talk about the power of $27.40 a day.

• 15:59Speaker 03

  So let's talk about this. What does it take to blow $10,000 in a year per day?

• 16:06Ed Mylett?

  Just blowing it 10 grand. Yeah.

• 16:08Speaker 03

  What does it take to go through $10,000 in one year? What kind of spending does it take a day? And the answer is $27.40 a day.

• 16:18Ed Mylett?

  Shocking.

• 16:19Speaker 03

  So like, if you do the math one more time, $27.40 a day at the end of the year is $10,000. Now, why is that such a, an important number to look at? Well, the math is, and I have, you know, I don't know if we sent you the latte factor month, uh, but the math in the book is, if you save $27.40 a day, and I started with the big number, in 40 years, if you invested in the stock market with reinvested dividends, you could potentially have over $4,424,000. And that's in 40 years. If a person did this over 30 years, they have $1,644,000. It's an astronomical amount of money. And now the question I ask, you know, anyone who's listening is, do you know

• 17:02Speaker 03

  somebody who's wasting $27.40 a day on nothing? Like literally eating out, Uber, one cocktail at the hotel bar? Look, think about where are you spending your money? The average person's got two, three, $400 a month now in subscription fees. The average American's car payment is $700. Is it possible, not everybody, but is it possible that there are tens of millions of people that are wasting $27.40 a day and they're not investing? What do you think?

• 17:35Ed Mylett?

  A thousand percent yes, including 93% of my beautiful friends that are listening or watching you and I right now. Yes.

• 17:42Speaker 03

  And, and actually, you know, on another show I was on, another show I was on, the host, ChatGPT did, because he asked the question, and how many people do you think could afford this money? And you know what? The number came back to somewhere between 45 to 55 million Americans. Yeah. Have, have a disposable amount of money that they could actually save $27.40 a day. Now, why did I use that math of $10,000? The reason is what I've seen, having done this for 33 years, is that most people think they need a million dollars to change their life. And in fact, for most people, the beginning step is 10,000. Because when a person has saved nothing and you get them to save 10,000, it's like going to the gym. You've never gone to the gym and then you finally start

• 18:25Speaker 03

  working out and then at the end of the year, your whole body has changed. When a person goes from zero to saving $10,000, they realize like, this is totally doable. Yes. I actually can make this happen. And that's what changes their life. Also, it gets the average American out of credit card debt. It helps people leave jobs that they don't, that they don't want anymore. It helps people get out of abusive relationships. It is a number that is a great starter number. And, you know, you keep saying the word habits, but if it's automatic.

• 18:55Ed Mylett?

  Correct. It doesn't have to be.

• 18:57Speaker 03

  You don't have to make a decision and then the habit's over. You're done. You have to make one decision.

• 19:01Ed Mylett?

  Really valid point. That, by the way, what I love about the book too, is it's a powerful one step system. One step system. You can implement a one step system. And I know everybody listening going, Ed, I know this sounds easy at your stage of your life or whatever. Well, guys, I'm just telling you that went all the different stages of my life, I found a way to pay myself first. That's all I can tell you. And it's, it was a mindset and a way I looked at the world and it was automatic. I had it on automatic deduction, just like what David's describing. This episode is sponsored by Row. A lot of people assume GLP-1's cost a fortune and that assumption keeps them from even looking into treatment. Row helps people find a more affordable path to FDA-approved GLP-1 treatment. Row wants to help people lose weight. That's

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• 20:30Ed Mylett?

  So when I end, when I ended up buying the island, we had to do all of our outdoor decorating and I spent a fortune in the first half of the place. And I'm like, I don't want to do this anymore, but I want the best stuff. And that's where Wayfair came in. My wife wanted to get this new garden bed and Wayfair was the place that offered the perfect solution. Wayfair also helps you create a home that stands up to real life with quality products, great value and trusted reviews. Wayfair verified products are hand vetted by product specialists. They use a 10-point quality inspection system. Here's all I can tell you. The stuff has lasted over time. It looks great and I get compliments on it. Shop thousands of products across every style and budget, whether you're trying to refresh your space for fall or transform your space for Halloween. Use filters, custom photos and reviews to find the right fit for your home. More than 20 million verified five-star reviews, 20 million. So transform your space with the

• 21:15Ed Mylett?

  pieces that hold up to real life. Join Wayfair Rewards today and get 5% back on every purchase. Head to wayfair.com or shop the Wayfair app for all things home. That's W-A-Y-F-A-I-R.com.

• 21:31Speaker 04

  Wayfair, every style, every home.

• 21:34Ed Mylett?

  You know, it's counterculture what we're talking about right now. And what's more vogue right now, there's two paths to getting wealthy. Well, there's multiple ones. You could exit your company, you could make a fortune. But the one that's promoted most of the time right now is they're a little bit anti this in the sense that, hey, you got to use leverage, you got to use debt, you know, so and so became a billionaire by leveraging debt and going into debt. And I want you all to know something. I do have friends who have utilized debt to become wealthy. I do. And they've become very wealthy doing it. I have more that went broke though, doing it that way.

• 22:15Ed Mylett?

  I just want my audience to know, I have more that lost everything doing it that way. And when your way of getting wealthy is leveraging debt, and by the way, I've leveraged debt before, but I want to be really clear with all of you. Most of my friends who tried that path, flamed out and went broke. It works until it doesn't. It works until the market goes crazy the wrong way. And then you hear all these people, oh, oh, wait, I got wiped out, but I'm back now. Oh, nine 11, I got wiped out, but I'm back now. Oh, 2000 COVID, I got wiped out, but I'm back now. You only have so many of those. But let me tell you this, the process of saving money, eliminating consumer debt, reducing your household debt, saving money in a systematic monthly deposit type fashion. I've had no friends go broke doing that. And then people

• 23:00Speaker 03

  No, no, no friends will ever go broke doing that.

• 23:02Ed Mylett?

  They can't.

• 23:04Speaker 03

  It's not possible.

• 23:04Ed Mylett?

  That's right.

• 23:05Speaker 03

  If you, if you live below your means, you can't go broke.

• 23:10Ed Mylett?

  Do you think, David, I want to, I want to kind of lean in on, by the way, let me tell you the other thing people will say. Well, that's how you become like the millionaire next door. I watched a clip yesterday, a guy say, well, I don't want to be the million next door. What's the point of having a million bucks if I still drive a seven-year-old truck? I still live in a average home. And I'm like, it's a huge difference, dum-dum, because you'll be free living in that place as opposed to someone else owning that place. It's a huge difference, just so you know. And the vast majority of people aren't going to be billionaires and don't even want to be. Their priorities are their family or making a difference, or their vocation, or their church, or their hobby. But what they would like to be able to do is to get financially independent. Maybe not totally wealthy, whether we're 50 million or 100 million.

• 23:52Ed Mylett?

  But I also want you all to know, and I'm going to ask David a question, I promise. I've become mega wealthy, hundreds of millions of dollars of wealth, this way, without using debt. In fact, the times I've used debt, I've lost money most of the time. Because I understand the process in something called dollar cost averaging. I don't have to time the market. Would you at least explain to them why just get started is most important in your mind as opposed to timing when they start making these automatic payments?

• 24:20Speaker 03

  Absolutely. I want to talk about, and I'll come back to that. The biggest myth is if I make more money, then I'll be rich.

• 24:28Ed Mylett?

  Right.

• 24:29Speaker 03

  Right? If I make more money, then I'll be rich, then I'll stay and invest, then I'll make, then I'll do the things I'm supposed to do. It's just not true. You know, I didn't, when I start, when I came out of college, I wasn't like you. I didn't actually save $20 in paycheck in my first job.

• 24:42Ed Mylett?

  Most don't.

• 24:43Speaker 03

  I was, you know, I was making $50,000 a year and I had never made any money. And I thought, oh my God, $50,000 a year, I'm rich. And then I spent more. I wasn't rich. So I thought I need to make $75,000 a year, spent more, wasn't rich, thought, well, I'll make a hundred, a hundred's the number. Everyone thinks there's always a number. It was at $150,000 a year in income, when I met the McIntires, Jim and Sue McIntyre, the automatic millionaire book is based on. This ordinary couple comes into my office, able to retire at 52, having never made, that year they made a little over $50,000. Their average income had been $40,000 a year. And he comes into my office and he's able to retire, he has two homes paid off,

• 25:23Speaker 03

  and his net worth was $1.8 million. And I was so blown away by this that I asked them, well, what, what did you do? How did you do this? And they looked at me, you know, in my office and working, saying, like, David, we did all the stuff you talked about in your class. Cause they had taken a four-week class with mine. And I'm a young kid then. I go, well, not everything. Like you talked about budgeting, budgeting totally doesn't work. We tried to budget. We almost got divorced because we were fighting over the budget. You talk about discipline, we got rid of discipline. We just automated everything. We did the pay yourself first thing. We just put everything on autopilot. So that we didn't have to have, put time into it. We didn't have to have discipline. We just automated it. And it just worked in the background. But

• 26:08Speaker 03

  they said we had a goal. And our goal was to be free in our 50s.

• 26:15Ed Mylett?

  There you go.

• 26:16Speaker 03

  And they lived in a neighborhood called San Leandro, California. It gives me chills. And they said, you know, we live in a blue collar neighborhood. And, you know, a lot of our friends are policemen and they're teachers and they're garbage men. And, and we have a lot of really good friends on our street. And we all had this goal to be free in our 50s when our kids went off to college and not need to work and hang out together. And they're like, we had mortgage burning parties. You know, and I'm like, what's a mortgage? You know, back, because this is, you know, we're, we're old now, but this, this is a while ago. They were, they were our age. And they're like, mortgage burning parties where you like, you're done with your mortgage and you actually burn the last statement and you throw a party.

• 26:55Ed Mylett?

  Wonderful.

• 26:56Speaker 03

  And I was like, wow. And they left my office and I said to myself, I want that.

• 27:03Ed Mylett?

  Yeah.

• 27:04Speaker 03

  I want, I want the freedom that they have.

• 27:07Ed Mylett?

  Yes.

• 27:08Speaker 03

  And I realized at that moment in time, Ed, that I was one of these, you know, today, one of these people, like, I was trying to look wealthy before I was. I mean, I tell these stories in the book. I had my Jaguar convertible, my gorgeous apartment in San Francisco, I had my Rolex watch. But I have assets. And I didn't want to be a big hat, no, no cattle guy.

• 27:28Ed Mylett?

  Yeah, yeah.

• 27:29Speaker 03

  And so that meeting changed my life.

• 27:32Ed Mylett?

  That's

• 27:33Speaker 03

  Because they left my, they left my office and I'm like, I went home, I opened up a journal. We talked about Tony Robbins before this, got caught in here live. I went to a Tony Robbins seminar. I had my journal. I opened up my Tony Robbins seminar. I'm like, today's the day I changed my life. When I go back to the office tomorrow, I'm going to change everything. I went back into the office, I signed up for my, my, I was already using my 401k plan, but like so many people just putting two or 3% away. I ripped off the Band-Aid and increased it to the maximum. I started forcing money into a stock purchase program. I started building net worth. And, you know, fortunately, then I started making more money too. And by the time I was 30, I was financially free.

• 28:15Ed Mylett?

  By 30.

• 28:15Speaker 03

  Now financially, by 30. Now, financial freedom's relative, right? Cause you can always keep spending more.

• 28:20Ed Mylett?

  That's right.

• 28:21Speaker 03

  But I, but I made a decision, and I still make this decision. I want the feeling that comes with being free. I don't need the stuff.

• 28:32Ed Mylett?

  Yep.

• 28:32Speaker 03

  Like, and, and, you know, once you get to a certain age and a certain level of success, you actually realize you don't need the stuff at all. It's ironic.

• 28:38Ed Mylett?

  It's really ironic. By the, can I jump in and say something about what you just said? I want everyone to rewind about 40 seconds ago. I want you to have the feeling of being free financially. I don't know that I care whether or not you own an island or a jet or any of that. A lot of the times, everybody, those things begin to own you when you have too many things. What he said though, about being free, you know, it makes me emotional because the world is so counter this right now. And the work you do is so profound, David. I just want to acknowledge you because we need your voice in the world. You know, just for my audience's edification, I grew up when I was really little, poor, we were on welfare. Then we were kind of lower middle class and I think we probably made it to middle class. And then personally, I got to where I live paycheck to paycheck. And then I got to the

• 29:23Ed Mylett?

  stage of being financially free. And then I got to extremely wealthy. And I can tell you extremely wealthy is overrated. Right? It's not that great.

• 29:32Speaker 03

  More complicated.

• 29:32Ed Mylett?

  It's more complicated. But you know, if you can get there, do it. Being poor is really terrible. It's hard to live that way when you can't help and you live in fear and you've got anxiety. And what is underrated more than anything on this planet right now is getting financially free. That tear up your mortgage party. That be free in your 50s or 60s. That is the most underrated thing in the world. David, right now, you guys, is doing this podcast from Florence, Italy. And what appears to be a very nice place. And he got to make the decision, if you don't mind, it's not bragging, but when you're financially free, you also get choices and freedom.

• 30:08Speaker 03

  Completely.

• 30:09Ed Mylett?

  And so how'd you end up there? Just for the record.

• 30:14Speaker 03

  Well consciously, right? Like you can live a conscious life for an unconscious life. And I was building if another financial service company. So I was, I was built, it's still there. It's called A Wealth Management. It's one of the largest registered investment advisors now in America. And I committed three years to my, my two co-founders to get the business up and off the ground. And I came home one day and I said to my wife, you know, at the end of three years, um, we've got one chance to take these kids abroad, our kids to live abroad before they go to college. And if we don't go on at this specific point in time, we'll never do this. So let's move abroad. Let's take these kids and put them in international school and let's go live abroad for a year.

• 30:58Speaker 03

  And she's like, where do you want to go? Like, well, let's just play the game. Where do you want to go? And so like, I love Florence. Let's, let's start in Florence and take a look at Florence and see if this could be the right city. And we landed in Florence and we walked, I live actually right by the Ponte Vecchio. So we walked on the Ponte Vecchio on a perfect night. There's this, there's a color to the sky in Florence. It's unlike anything you've ever experienced. This is pink color on the perfect night. It was a perfect evening, evening. And my wife turned to me, we have a picture of this. It gives me chills. And she's like, this works for me. Does this work for you? I'm like, totally. So she's like, so if the school looks good tomorrow, then let's just, we don't have to go look at some other cities. Let's just come here. And we did. So we planned it out two years in advance.

• 31:40Speaker 03

  And we worked with the schools and we moved our kids and we came for nine months. And here, this is actually an interesting thing. So we came for nine months. That was the intention. And because that was the intention, we moved to an apartment with basically two bags each, right? Just clothes, furnished apartment, plug and play. Dropped our bags and started being tourists, only tourists for nine months, right? And ended up having the absolute time of our life. And 90 days in, my older son, Jack said, God, this is incredible. Like, do we have to go back to New York City? Like, could you run the business from here? Cause I'd like to stay.

• 32:16Ed Mylett?

  Yes.

• 32:17Speaker 03

  And I walked into my wife's bedroom. I'm like, honey, Jack wants to stay. She's like, well, I want to stay.

• 32:23Ed Mylett?

  Oh, great. And it's six years later. You're bits in six years, right?

• 32:27Speaker 03

  It's six years later. And I'll tell you a funny story. It's just, it's a random story to tell you at the moment, but it happens to be related to yesterday.

• 32:34Ed Mylett?

  Okay.

• 32:34Speaker 03

  There's an article in the Wall Street Journal yesterday about the storage industry. How much, how, how insanely large store, the storage industry to become in the United States? And I think it's like 16% of Americans, I'm trying to remember the quote, have stuff in storage. And I talk about this all the time. Like people have got so much

• 32:55Ed Mylett?

  Yes.

• 32:55Speaker 03

  That they had to put it in storage. And now they're paying two, three, four, 500, a thousand dollars a month. And the article starts off with this guy's story about how he's spent a hundred thousand dollars on storage. Over 20 years, I think it was, and how he finally just threw in the towel. He's like, I don't need this stuff. And, and so again, people are just not always protecting the wealth that they're earning. And I've fallen into this, when, when we moved to Florence, we stuck our stuff in storage.

• 33:26Ed Mylett?

  Yeah.

• 33:26Speaker 03

  Cause, and so the next thing I know, we're staying and I'm saying, I said to my wife, because the bills are coming in. What are we going to do with this stuff in storage? She's like, well, I don't know. Maybe we'll go back to New York eventually. But like, like it's too much work to figure out what to do with them. Like, now the bills are going up, they're going up, they're going up. I finally go, honey, I don't care anymore. I want you to throw everything in storage away. She's like, it's everything we had in New York. I'm like, I don't care.

• 33:50Ed Mylett?

  Don't need it.

• 33:50Speaker 03

  She's like, okay, I'll go, I'll have somebody go through it. And she, she had stuff sent here. Um, and then we closed up the storage. But like, if you've got storage.

• 33:58Ed Mylett?

  Yep.

• 33:59Speaker 03

  Storage could help. Just cutting out your storage bill can help you start saving and investing.

• 34:03Ed Mylett?

  All the, the reason I wanted you to tell that story is that's what freedom can give you, the freedom of choice. I mean, yours is extreme. Let's go visit Florence for nine months, but it might give you the choice, everybody, that some point in your 50s to go visit Florence for two weeks. Or just to have some experiences of your life. And so if you get an automatic system in place, you can begin to live like this. Now here's the hard question. And I don't have the answer to it. So I'd, I'd love to hear yours. Someone's listening to this and they're not in their twenties or thirties, or their parents aren't who haven't done this. And they're 46, they're 46 or 56 or whatever it might be, and they really feel behind. What do you say to them, David? And I don't, I don't have the answer for that one. So I'm hoping you do.

• 34:45Ed Mylett?

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• 35:30Ed Mylett?

  Download the Quince app for app exclusive offers or go to quince.com/ed for free shipping on your order and 365 day returns. Now available in Canada and the UK too. That's Q U I N C E dot com slash ed. So you know, I've been trying to take my health and my morning routine to the next level. And I used to do a whole bunch of different stuff, tons of different supplements. And then I found all in one in a drink with IM8. IM8 is the way to simplify your supplement routine. Finally, once and for all, 16 supplements replaced 90 ingredients across nine major organ systems in one drink. You can have all these supplements for $2.61 a day. I've changed my mornings. The whole IM8 routine has changed my mornings. I feel great.

• 36:14Ed Mylett?

  And I bring energy to the entire day. Go to im8health.com/ed10 right now, or click the link in the description and use code ED10 for a free welcome kit. Five free travel sachets plus 10% off your order. That's code ED10 at im8health.com/ed10. Code ED10 at im8health.com/ed10. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, prevent any disease.

• 36:46Speaker 03

  So I was telling you about this podcast that went, this clip that went viral in the last 24 hours. So I did something you're probably never supposed to do. I started reading like the 4,000 comments.

• 36:56Speaker 03

  And, and then I also started doing, you know, so I started engaging in some of them. Um, but I, cause I really, I really care.

• 37:04Ed Mylett?

  I know.

• 37:04Speaker 03

  And I, and I tell you this because there are a lot of people hurting and there are a lot of people like, you know, David, I'm 50 now. It's divorced. I have nothing. What, what do I do? I don't have 30, 40 years. And my answer is you start today.

• 37:23Speaker 03

  You start today with wherever you are. Where are you? Can you save $5 a day? Can you save $10 a day? Can you save $20 a day? You start where your feet are planted. Now, one of the things you can do, because you got to find the money is you can start by looking at where does the money go?

• 37:38Ed Mylett?

  Yes.

• 37:38Speaker 03

  Most people have no idea. You know, it's, it's fascinating me. 33 years of doing this, like, people tell me, how'd you track your expenses? Well, no, not really. Well, what do you spend a month? Well, I'm not really sure. So how about you start there? Go, go through your credit card, go through your checking account, track your expenses for a week. Every time you go somewhere, carry a pad of paper, write it down what you're spending. Okay? Get a handle on where you're spending money. Open up your subscriptions on your iPhone, cancel some things today.

• 38:09Speaker 03

  I would tell you that today, if you're 50 years old and you're starting at nothing and you have a job, the first thing you should do is sign up for your 401k plan. If you, if you have a 401k plan, because the laws have changed now, 401k plans now, based on the new Secure 2.0 Act, are supposed to be automatically enrolling you in a 401k plan. And in most cases, about 60, 70% of plans are doing that today. But Ed, what they're doing is they're automatically enrolling you at a 3% savings rate. So there, a lot of times someone who's 50 is like, oh yeah, I'm using my 401k plan. Well, how much are you saving? Oh, I don't know. How, how do you not know? Let's open up your 401k statement right now and let's look at what you're saving. Oh, I am saving 3%. That's not enough.

• 38:54Speaker 03

  You have to up that right now. Well, how much should I up it to? We should up it to 15%. Am I going to do that? Well, if you can't go from three to 15, can you go from three to five? Can you go from three to four? Can you go 1% every 90 days?

• 39:11Speaker 03

  Do something, but do it today.

• 39:16Speaker 03

  Like, like if you're still listening to us, do it today. Like when the show's over, don't scroll to the next show. Write down the three things you're going to do as a result of this show and go do it. Because when you do that, that's how your life changes. The other thing is when you make one decision to, to make a change and you do it, you will instantly feel better. You will feel better because you've done something. But, and, and last thing I'll say, cause I know you're such a big identity guy and then I'll shut up so you can talk.

• 39:44Ed Mylett?

  I want you talking.

• 39:46Speaker 03

  You, you know, people have these identities where they will come up to me and they will say, I'm not good with money.

• 39:52Ed Mylett?

  Right. Yes.

• 39:55Speaker 03

  Wait, wait, and I go, wait, stop that. You're not good with money. Are you good at spending money? Everybody's good at spending. Well, yeah. Okay. So you can make money and you can spend money. So what are you not good at? Well, I don't know. I, you know, I, what you're saying is you're just not good at investing yet because you haven't started. Cause you don't know how. I mean, automatic, now I wrote the book. So it could be super simple. You could read in a couple of hours and it could tell you 99% of everything you need to know to build well, or life. And I just think there's no excuse anymore today to not get started today. There's no friction anymore.

• 40:28Ed Mylett?

  Yeah.

• 40:28Speaker 03

  But you have to start. So change your story to yourself. If your identity is I'm not good with money, that was the old you. That was the you before you listened to Ed's podcast today.

• 40:41Speaker 03

  And the last thing I'll say is this, please think about this. Imagine you're seeing yourself in 10 years. You're literally meeting yourself in 10 years or 20 years or 30 years. You're meeting an older version of you.

• 40:56Speaker 03

  Do you want to have to explain to yourself in ten, twenty, thirty years why you didn't do anything? Or do you want to meet yourself in ten, twenty, thirty years and go? Good job. He took care of us. You did it. You took care of us. Thank you, David, for doing this at thirty, because now you're sixty and you did it all. I'm fifty-nine, actually. I didn't want to, I didn't want to meet myself at this age, having not done it.

• 41:21Ed Mylett?

  I hear you.

• 41:22Speaker 03

  I didn't want to be that person, right? And, and, and I think for anyone who also is older, if you have younger kids and maybe you're not where you wanted to be. And you're meeting yourself at sixteen, you're like. Oh, I didn't want to be here. You've got kids, then tell them, tell them what you did wrong so that they don't do it too. Because kids learn by what they see you do. Not just what you say, but what they see you do.

• 41:50Ed Mylett?

  That's right.

• 41:50Speaker 03

  And then let them see you make changes. You can change it, you know, you have, you have a whole audience that's over the age of fifty-two. I've seen your audience is broken into two pieces and, and the beauty of being in your fifties and your sixties is you're smarter. You don't care anymore what people think.

• 42:10Speaker 03

  And you can start over. You can start over today.

• 42:15Ed Mylett?

  David, this is so good. Yeah, stuff with your kids is caught, not taught, almost all of the time. How do you know, tough question, someone's listening to this and they are thirty or forty or fifty and they're like, I would like to get to where I'm financially free. Do you have a formula or a strategy, a methodology where you can calculate that you have enough to make that decision that I am going to retire, I'm not going to work anymore. In other words, even for me, I, my homes are all debt-free, I have substantial amount of cash, but my burn rate's pretty high because of the properties and different things that I own.

• 42:53Ed Mylett?

  And it's hard for me to know what's the dollar amount where I'm free, because I'm not even sure how long I'm going to live with the way technology is now, right? Like, I'm fifty-five now. If I were to stop earning income today, I know what I've got saved, but what if, you know, planning on living to what, eighty-five or ninety, but what if I live to a hundred and five? What if I lived a hundred and ten? So I think people also have a hard time knowing when they actually are financially free. Did you?

• 43:19Speaker 03

  Oh, you're so right.

• 43:21Ed Mylett?

  Right. So how do you know?

• 43:23Speaker 03

  Well, so it's interesting because how you know, meaning you specifically, Ed, right, this high net worth individual, and somebody who's just saving one hour day of their income for thirty years, how, how, how they know and you know, it's the exact same formula.

• 43:37Ed Mylett?

  Correct.

• 43:38Speaker 03

  And the formula, and the formula is you, you do a financial plan. Right? So like, you know, you, you should, you go and have a financial plan and done. Now, technology is making it today, so that you can basically do a financial plan even on ChatGPT or Claude. But you, there's a billion different software programs out there and you can go meet with a financial advisor. And what are they going to do? They're going to run all of your assets. They're going to, they're going to make a net worth statement. What do you own? They're going to go through everything. What's in a retirement account? What's in taxable accounts? What's in bank accounts? You're going to add everything up. How much equity do you have in your home? They're going to add that up. Then they're going to look at what do you spend a month and a year?

• 44:19Speaker 03

  And what do you need the portfolio to produce? To create enough income for you to live? Now, most people don't actually live just off their portfolios. They do use social security. They may have a pension plan. And they've got retirement savings and they may have equity in their home. So it's, it's just a mathematical formula. And

• 44:46Speaker 03

  these numbers today, it used to be you would go into financial advisor's office, they would print these forty-page binders with these complicated plans. Clients hated these plans, by the way, because they were so complicated. These plans have gotten simpler. Today you open up your dashboard. I, I mean, I can see what we've spent. I can see what the portfolio's produced. So I would tell anybody who's in their forties and their fifties, go meet with a financial planner. And today you can hire financial planners by the hour. You can hire a CFP by now, or you can buy software programs. It's not software, it's all online. And you can start to play with this by yourself. I think for somebody who's not super into money, that's complicated for them. It can be nice to sit down with somebody and pay them by the hour and say,

• 45:31Speaker 03

  I just want you to run a basic financial plan for me and tell me, like, do I have enough money set aside to stop working? And, and I think there's something where I want to make sure I don't forget to talk about, which is what surprised me when I updated the automatic millionaire, aside from the fact that there was so much wealth that's been created.

• 45:50Speaker 03

  The number that blew my mind away. Because I had not, I, I had not heard this before. I learned about this thing called health expectancy.

• 46:02Speaker 03

  So health expectancy is not the same as life expectancy. Health expectancy is the age that the World Health Organization and every government around the world knows what age on average is someone going to get sick in a country and have a permanent disability that affects the rest of their life. And in the United States, the age is sixty-three.

• 46:27Ed Mylett?

  Wow. Wow.

• 46:31Speaker 03

  Wow, right? Now we rank seventy-second in the world.

• 46:37Speaker 03

  So the other thing I talked about on some of these other shows, I'll talk about it here, is that everybody thinks, you know, you say we're going to live to be a hundred and ten.

• 46:46Speaker 03

  The data doesn't actually, you know, if you're into health hacking, some people are going to live that, maybe live that long. I don't know.

• 46:54Ed Mylett?

  I don't know.

• 46:55Speaker 03

  The reality is, life expectancy in the United States is going down, not up. So life expectancy is seventy-six right now. It's the worst it's been in twenty years in America, and it's worse for men than women. So I think that people should work on trying to retire sooner versus later.

• 47:12Ed Mylett?

  I totally agree.

• 47:13Speaker 03

  I think, I think too many people put off their whole life and they, they retire at sixty-five and they're not even healthy enough to enjoy their retirement years.

• 47:21Ed Mylett?

  Totally right.

• 47:22Speaker 03

  And I think it's tragic.

• 47:23Ed Mylett?

  I agree with you. By the way, I can't believe that it's sixty-three. I have to say something to everybody. There's something else in the book. Get the book, by the way, guys. Get the book. There's something else in the book, though, for this idea of projecting, because first off, I don't know how long we're going to live either, but my, I have a lot of these, you know, David Sinclair's and Huberman's and those guys on the show, and they tell me, depending on, there may be a huge difference between how someone, how long someone's going to live who's listening to this that is thirty, is going to live compared to like you and I with technology, AI and, and, you know, all the different stuff they're doing on gene expressions now. And so they may actually live that long, right? But one other thing, this may seem like a technical thing towards the end of a podcast, but I want you guys to have a gift of all of it, especially if you're new to this.

• 48:08Ed Mylett?

  But there's a, there's such a thing as risk assessment based on your financial situation. And in the book, you have the automatic, I think you call it like financial pyramid of rate of return and risk relative to age. You know the part that I'm talking about in the book?

• 48:21Speaker 03

  Yeah.

• 48:21Ed Mylett?

  Can you just address that?

• 48:22Speaker 03

  The investment pyramid.

• 48:24Ed Mylett?

  The investment pyramid. The reason that this matters, everybody, it may seem kind of like, you know, low vibrational stuff here is, but when you are making those calculations at fifty-five or sixty years old, that ten percent number that David referenced earlier should not be your expected rate of return. More than likely because of some risk assessment, as you get older, you may be more conservative with your money. So at least address the concept of rate of return based on age and all of that other stuff that's in that pyramid.

• 48:50Speaker 03

  Yeah. And, and so the other thing is that when I talk about the book and, and maybe a lot of your listeners have heard of this, but in case they haven't, it's called a target dated mutual fund. So inside most 401k plans and every firm has these, a target dated mutual fund basically is divided among a lot of different asset classes, but it's between stocks and bonds. And you'll have global investments, you'll have large company stocks, medium company stocks, small company stocks, and you'll have fixed income. And the way it works is as you get older, if, you know, when you're young, you have more of your money in stocks and as you get older, you have less of your money in stocks. And so it automatically does what's called rebalancing each year as you age.

• 49:31Speaker 03

  And so really, people don't have to make this complicated. You can just pick a target dated mutual fund. And if you're going to retire in two thousand and fifty, you pick that fund. And then everybody's got them, Vanguard, Fidelity, Schwab, everyone's got them. And that fund will automatically change the asset allocation as you age. You don't have to do anything. It's all done for you. It's automatic. By the way, trillions of dollars now in these accounts. And they were great. Like, they were great because people leave them alone. You asked me earlier about dollar cost averaging and I sidetracked. Dollar cost averaging means that you're putting money in, in the market, in the bond, whatever you're putting in, putting it in every time you get paid, right? So every two weeks or every thirty days, you're investing. The key to dollar cost averaging is that sometimes the market goes down and you're buying it cheaper.

• 50:16Speaker 03

  Sometimes the market goes up and you're paying it more expensive, but the reality is over time, because of the consistency, the money will compound and compound and compound. What you don't want to do is try to time the market. Like, when the market goes down, you don't want to go, wait a minute, this is it. Like, we're going to war with Iran. I'm like, I got, I'm going to get out of the market. And I'm going to go to cash. And then when the market, when I'm with a war's over, just an example, because there's always things like this, when the war's over, then I'll invest.

• 50:44Ed Mylett?

  Yeah.

• 50:45Speaker 03

  Like, three days ago, the market went up a thousand points in one day. If you miss the best days of the stock market, you only need to miss a handful of them. To miss almost all the returns of the stock market, like there's a statistic and I might, might get this wrong, but I just read the statistic again, like over 20 years. That if you miss the top 10 days in the market, you're going to get a rate of return that's 5% instead of 10%. I'll go back and fact check that for you later. But you know, the point of the time in the market, timing the market just doesn't work. You have to figure, it turns out to be right twice. You have to figure out where to sell, you have to figure out when to buy, you have to pay taxes. You need to buy, invest and leave it alone. And then we haven't even talked about homeownership. I don't know if we have time to talk.

• 51:29Ed Mylett?

  We do. I actually, I got two, I got two more questions. One is homeownership too, but before we do it. I'm going to add, these are the, were the hard questions start coming in late in the interview, everybody. So those of you that are still here. So if I don't ask you, because you know this, I'm sure you do. You've recommended 401k a bunch of times in the interview, right? And so I know you know that a lot of advisors are going to be going, wait a minute. He hasn't talked about taxes. At this retirement stage. And so if you're in a 401k or a traditional IRA. And you've accumulated that money and you go, oh, I've got a million five in my 401k. I'm going to retire. You have taxes to pay when you get to the end there. So I'm wondering about your feeling about.

• 52:13Ed Mylett?

  Tax deferral accumulation. And then the taxes on the backend, because you'll have people say, well, wait a minute, do you think taxes are going up or down? And if they think they're going up, they don't know that they want to defer that money to the end of the 401k and then pay ordinary income when they pull the money out. On a larger number. So. When you're recommending 401ks, I just want this to be, you know, advisors that follow me go, you should have asked them about the tax thing. So I'm asking you about the tax thing. What are your thoughts on that?

• 52:42Speaker 03

  So let's, let's talk about the two different options that people have when it comes to a 401k plan, because the world has changed. Like this is totally different from 20 years ago.

• 52:49Ed Mylett?

  Yep.

• 52:49Speaker 03

  Most people today will have a choice to either do a Roth. Or traditional, meaning that in their 401k plan, they can elect to put money into a Roth 401k plan. Which is after tax dollars.

• 53:01Ed Mylett?

  Correct.

• 53:02Speaker 03

  And that money will grow tax free forever. And come out tax free. Or they can elect to have a deductible. Investment, right? They don't pay taxes upfront. And then it grows tax free until they take it out. But when they take it out at the age over 59 and a half. It comes out of your ordinary income.

• 53:23Speaker 03

  Which is better? Well, a lot of people today like the Roth IRA because they don't want to pay taxes later. Right? Makes a ton of sense. However, you're, you're having to save more because you're not getting a tax deduction. So I recommend a lot of times for people to split the baby. But half of what they're going to put into a Roth IRA and perhaps what they're going to put into a deductible, deductible 401k plan.

• 53:47Speaker 03

  The key thing ultimately is that you just do one of the two or you do both.

• 53:52Ed Mylett?

  Okay.

• 53:52Speaker 03

  So once, but there is a problem. Let me tell you what, because this is the problem that I've identified. We've got $45 trillion in retirement accounts right now. And what is shocking to me, and I also learned this when I updated the book with all the research. People are not taking money out of the retirement accounts who have done a good job saving. They're not using the money. They're waiting to take money out of the retirement accounts until what's called RMD age.

• 54:18Ed Mylett?

  Right.

• 54:18Speaker 03

  Acquired minimum distribution age. And that is the age of 73 or 75. Like for you and I, it's going to be 75. We won't have to take $1 out of our retirement account until 75. And by the way, we won't because we've got money outside of our retirement accounts. This is a problem that's massive because 83% of Americans aren't taking money out of their accounts until they're forced to by the government. I think there's actually a solution to this. In fact, I'm working on the solution. I, I think the government should change the tax laws on IRA distributions to a flat tax. And I think if the government were to change the taxes on IRA accounts. After the age of 60 and make, pick a number, 10%, 12% or 15%.

• 55:04Speaker 03

  More people would access their retirement accounts sooner. They could then enjoy the money. It would go into the economy. And the government would get tax dollars sooner because the government's waiting for all these RMD distributions. So I actually have a website and a white paper. And a Google notebook LM on this at IRA flat tax.com. And I'm, and I'm starting to share this idea. I have no vested interest in this. I just think we need to think about ways in which we. Stir our economy, get the GDP of America. Bring in tax revenue and help baby boomers and retirees live their best life. And so I think it's, it's time to have this conversation because the money's. Some of this money's, a lot of this money is just sitting there because no one wants to pay taxes.

• 55:49Ed Mylett?

  Um, okay. I want to finish with, this has been so productive and fruitful and detailed. I'm really grateful that we started kind of on the surface, but we've gone really deep here. And so you mentioned homeownership. And I'm, I'm just a huge fan and I've heard so many things online, people going home, owning your own home isn't an asset. You shouldn't buy a house. And I'm the complete reverse and just, it doesn't matter what I believe. It matters what you believe. But. One of my great concerns for this generation now that's in their twenties. Is ever having enough access to buy their own home. And I watched that be the centerpiece of my parents, at least financial strength was that they owned a home and.

• 56:28Ed Mylett?

  And paid that home off eventually and had that asset. I've watched that in my own life, fortunately on multiple homes and. And I worry for my kids and young people listening to this that they may not. They're, it's so difficult to get homeownership now for young people based on how much homes are and lack of income growth, et cetera. So saying that, that's how valuable I think owning a home can be. What's your advice or your counsel around homeownership just in general? For someone listening to this today?

• 56:59Speaker 03

  Well, you and I are on the same page. And I think what happens, this is what I've experienced with this book launch. I've always talked about the power of homeownership. Always for 33 years, right? Because all my, I worked in mortgage, all my clients who came in who built. They're ordinary millionaires, right? They built. Million dollar wealth on an ordinary income. All they did was two things, bought a home, paid it down. And paid themselves first automatically using their 401k plan. That's all they did. Those two things. And they live below their means in order to do that. Today, young people are being told, and there's a lot of financial influencers telling you, your house is not an asset. It's cheaper to rent than own.

• 57:41Speaker 03

  You should take all that money that you're going to waste on buying a house and you should put it in the stock market. You should put it in Bitcoin or whatever they're telling you to put it in. And what people don't realize is that you can't live inside Bitcoin. You can't live inside a mutual fund.

• 57:55Ed Mylett?

  That's right.

• 57:55Speaker 03

  You, you, you have to live somewhere as long as you're alive and rent, even if it's cheaper today. I promise you in 10, 15, 20, 30 years, it's not.

• 58:05Ed Mylett?

  Yep.

• 58:06Speaker 03

  Rents have skyrocketed across the United States and so has the value of homeownership. So, you know, 20 years ago, homeowners were worth. 40 times more than renters. Today homeowners are worth 43 times more than renters.

• 58:20Ed Mylett?

  Wow. What a stat. Wow.

• 58:22Speaker 03

  You know, you know, the, the, the stat, the average renter is worth less than $10,000 and the average homeowner is worth over $430,000. There is $37 trillion in home equity. Like, like people go. Success to these clues. Yeah. You want to know where the wealth is? You can see where it is. It's in two places. Homes. And the stock market. Those are the two primary escalators to wealth. You have, ideally you're on both. Now, the problem is the average age of homeownership today is 40.

• 58:55Ed Mylett?

  Gosh.

• 58:56Speaker 03

  First time home buyers are now 40. Why is that? They've got student loans. They're living, you know, a lot of people making a hundred thousand dollars a year, still being paycheck to paycheck. How do, and people think, oh, it's, it's so much harder today to buy a home. The Wall Street Journal did a study on this too. Like, is it, is it actually harder for people today than it used to be? And they, one of the things they talked about is like, it was in the eighties, you know, mortgage rates were 18%. People talk about mortgage rates being high right now. It's six and a half to 7%. There was a time they were 18%. So I know homes are harder to buy today than ever, and yet there are lots of places you can buy them. Someone will go, so you know, the top 50 markets aren't affordable. Well, then you'd have to go live in one of the markets that are not. On the top 50 markets.

• 59:40Speaker 03

  You, you just have to realize that if you don't buy. Really one of the things you need to know, and here's the truth, but here's what's happening. You don't create generational wealth unless you own a home.

• 59:52Speaker 03

  Generational wealth is created through homeownership. When you look at who doesn't own homes, it's family after family where they didn't buy a house. Renters stay in a rent trap. So what's going to happen actually is there's about $120 trillion is talking about being transferred from one generation to the next ultimately. Maybe, depends if they spend their money. And their wealth is going to transfer to the next generation. And those people, the first thing they're going to do who are renting is they're going to go out and buy a house.

• 1:00:18Ed Mylett?

  That's right. That's exactly right.

• 1:00:20Speaker 03

  Everybody's like, I don't want to buy, I'm going to rent. But as soon as mom and dad die, and they hopefully leave them some money, which came out of their house, then they're going to go buy a house. I think I would do it sooner than that. I think I would really, in my twenties and my thirties, it's less important to own at our age ironically.

• 1:00:35Ed Mylett?

  It is.

• 1:00:35Speaker 03

  Right? Because if you, because once you build your wealth, you don't need to have the equity in your house. You can put the equity in all of the other assets.

• 1:00:41Ed Mylett?

  That's right.

• 1:00:42Speaker 03

  But when you're starting, homeownership is forced savings.

• 1:00:46Ed Mylett?

  Yes.

• 1:00:47Speaker 03

  Because you're spending money every month to pay your mortgage, and it's paying your mortgage down. And you just turn around and, you know, 10, 15, 20 years later, you've built huge equity in your house.

• 1:00:57Ed Mylett?

  Yeah.

• 1:00:58Speaker 03

  And I get these stories all the time from people like, you know what, I saw you on Oprah 20 years ago, and I went and bought a house, and now I've got three of them, and just like you said, I'm set.

• 1:01:06Ed Mylett?

  You're, you're, you're, I'm so glad someone's on my show saying this, because I, I understand the argument, you guys. Your home is the one asset you have that you also get to use, as David said earlier. And I know the argument, well, you got to pay property taxes and repairs. Yeah, you do need to do all that. And at the same time, that usually adds value to the home when you're making the repairs or the improvement to the home. And so I just want you to know, I don't have a lot of wealthy friends that don't own a home, and I have a bunch of wealthy friends who do own their home. And there's a reason why BlackRock's buying all of them. Because it's a great investment, and where they're doing it, maybe you could get your hands on one. So please, listen to what he's saying.

• 1:01:41Speaker 03

  Also, what you just said about BlackRock, and there are a lot of companies doing this, they're actually creating a generation of renters intentionally.

• 1:01:48Ed Mylett?

  They are. That's right.

• 1:01:49Speaker 03

  Right. You've got an entire generation that, that are being misled that renting is the solution, because it's the ultimate way to build wealth. I just looked at some investment properties yesterday. What's the first thing I want to know? What are the expenses? What's going to cost me to buy this property? What am I to rent it for?

• 1:02:06Ed Mylett?

  Right.

• 1:02:06Speaker 03

  And anything, any investor is going to buy to rent, I'm not taking anything less than a four cap. Like, those four cap, five cap, six cap. So people who buy homes and rent them, or apartment buildings, they're not doing it for charity.

• 1:02:19Ed Mylett?

  That's right.

• 1:02:20Speaker 03

  And the first thing, and the first thing they're going to do is raise the rents when they can raise the rents, because they want to return on their money.

• 1:02:25Ed Mylett?

  Exactly.

• 1:02:25Speaker 03

  It's not a gift to you.

• 1:02:27Ed Mylett?

  Not a gift. By the way, everybody, success leaves clues. And just think about this, if, let's just take BlackRock. They can deploy capital anywhere they want. Why are they choosing to own homes? And so they could, it ought to tell you what a good investment it can be, if you do it correctly. If a firm that behemoth in size is deploying their capital, part of it, there. So you ought to get a little bit of yours there as well. Don't listen to someone who'll tell you you shouldn't own a home. It's silly advice, in my opinion. This is one of the best conversations I've ever had on money, like, in my life, not just recorded, but in my life. And the reason is, is because these are principles, and it's automatic, and it's a one-step system.

• 1:03:06Ed Mylett?

  And I know, when we do this, there'll be comments saying that you and I are two older guys with old information and all that other stuff. What it is, you guys, if you just really want to know the truth, is just two men who have accumulated wealth that would love to help you, and have no vested interest otherwise, and believe strongly in a lot of these principles. I just think it's cool that I agree with you on it. Now, the tax thing on the 401K, that's all for you to do with your advisor and all that, you guys. But this idea of being an automatic millionaire, of owning a home, of not being stupid with your money, of having it come out automatically, of understanding your risk assessment, of all the things we've talked about today, of compound interest, of paying yourself first, these are time-tested principles from the beginning of time.

• 1:03:47Ed Mylett?

  If you don't agree with David, ask Warren Buffett. He'll give you the same exact advice that we've talked about today. So David, thank you for today. It was awesome. Like, truly awesome.

• 1:03:57Speaker 03

  Yeah, thank you. I really, really enjoyed this. I appreciate you. This has been great.

• 1:04:01Ed Mylett?

  It has been so good. The Automatic Millionaire, David Bach, everybody. Share this episode with anybody you care about in terms of their money and their financial peace. God bless you. Max out.

• 1:04:14Speaker 02

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