Passive Income Expert: Buying A House Makes You Poorer Than Renting!

If your goal is to become financially

independent at a young age, this is a

very controversial thing to say, you

probably don't want to go buy a house

because people typically buy a house

they can't possibly afford. The bank

wants you to do that cuz that's how they

make the most money. So, you're putting

your capital into that house and now

it's not going to be earning thing. It's

going to be sitting idally. And people

say, "Well, you know, I can buy this

house cuz my mortgage is the same as my

rent." Well, yeah, but your mortgage is

just the starting point. So, what comes

to mind if I want to be financially

wealthy?

>> Okay, so we've got a lot to go through.

>> J Collins is a renowned financial expert

known for his book, The Simple Path to

Wealth.

>> He's teaching millions a straightforward

and realistic avenue for achieving

wealth

>> so that anyone can have financial

security.

>> What is the simple path to wealth?

>> So, first of all, avoid debt because you

can never be financially independent if

you're carrying around debt. Next, live

on less than you [music] earn. But the

problem is the way our culture has

taught us to think about money is solely

in terms of what can you buy with it.

But the more musthaves you have in your

life, the less likely you are to become

wealthy. And then the final one, invest

the surplus. So stocks are the single

most effective, strongest wealth

building tool that's ever been created.

But the biggest push back I get is from

people who say, "Well, that's great. I

mean, if you got a big income, 100, 200,

$300,000 a year, then yeah, the simple

path to wealth will work for you."

That's not the truth. For instance, a

friend of mine and he was making a

million dollars a year and he was broke

because people have large incomes are

much more likely to be drawn into the

competing with the Joneses, whereas the

people who make less money probably

don't have those same social pressures

and are more readily able to do it. So,

>> let's talk about investing then. Where

do you think we should be investing our

money at this moment of time? Should I

buy Bitcoin? Do I need a financial

adviser? So, my advice, and this is a

little different than the more common

advice out there, would be

>> this has always blown my mind a little

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much.

[music and singing]

JL Collins,

you wrote a book, a very iconic book

that sold millions of copies called The

Simple Path to Wealth. Why did you write

this book?

>> I actually that book was an outgrowth of

my blog.

I started the blog to archive

information I wanted my daughter to have

available because if you get money

right, your life is so much better. You

have so many more options. And the world

offers so much to people who have the

resources with which to access it and so

little for those people who don't have

the resources to access those things.

And and if you don't have it, it life is

just so much harder than it than it

needs to be.

>> When you think about the average person

listening right now, what is what are

some of the fundamental sort of

misconceptions or misunderstandings or

what would you call it? Black spots that

they have as it relates to money, the

things they walk around assuming about

money that are incorrect

>> that that you were maybe trying to get

out of your daughter's mind.

>> Right? So there's a chapter in the book

called how to think about money. And the

fundamental way I think the vast

majority of people think about money

because this is what our culture has

taught us. The way our culture has

taught us to think about money is solely

in terms of what can you buy with it.

[snorts] So if you go to the average

person that lottery for instance is like

a billion dollars at the moment. So

people are buying lottery tickets. And

if you interviewed people standing in

line to buy lottery tickets and said,

"Okay, if you win this million dollar,

what are you going to do with it?" Well,

what you're typically going to hear is,

"Well, I'm going to pay off my debts and

I'm going to pay off my mortgage and I'm

going to buy my parents a house and I'm

going to buy myself a Lamborghini. I'm

going to buy I'm going to buy I'm going

to buy." That's the way most people

think about money. And that's certainly

one of the things that money is very

good at. It is a means of exchange.

But the other thing your money can do

for you is work for you. Your money can

make you more money. So you can exchange

your time and effort and labor to earn

money. And that's what most of us do.

But you can also divert some of the

money you earn into investments into

what I call buying your freedom. And now

your money is working for you. So

instead of just thinking about what your

money can buy, you can start thinking

about what can your money earn.

>> You can buy your freedom.

>> You can buy your freedom, your financial

freedom.

>> Why is that an important refraraming of

the role of money in your view? What

does that do if I start thinking about

it through that lens? Well, because as

long as you are dependent on exchanging

your effort, time, and labor for money,

you are beholden to whoever is willing

to pay you to do that. That's a limit of

freedom. It's a it's a form of, without

being too dramatic, a form of slavery.

If you are always living paycheck to

paycheck to pay the mortgage or the rent

or whatever, if on the other hand, work

is optional, you're a good example. and

you've been a very successful guy.

[snorts]

You're not doing this podcast because

you need the money. If you were still

stuck at a job that paid you a wage, you

wouldn't have the option to do this

because you'd have to devote all your

time to that job so you could pay the

mortgage, so you could pay the rent, so

you could put food on the table. Money

buys freedom.

>> How does one get out of that situation?

you know, if I I used to work in call

centers um answering phones and selling

people things.

>> How does one in your view realistically

get from that place where you are kind

of beholden to the paycheck? And I was

I'd spend my wage within the first week

or so of the month and then I'd just

suffer for the next 3 weeks. In the UK,

we have like a four week paying cycle. I

think in the US it's 2 weeks typically,

but I took a I think a reckless road out

of that life. The thing that gave me the

proclivity to take the risk is like some

kind of insecurity and trauma where like

I couldn't I didn't have a plan B

because I wanted to be I wanted to like

validate myself or something. And so I

wonder if the the skill or the thing

that I was given that I'm most thankful

for is like some kind of chip on my

shoulder,

>> some kind of drama.

>> Yeah. But but on genuinely because I

think like what would make you take a