Where Do Billionaires Store Their Wealth?

Most people assume that being rich means you have a big bank account. But if you ask a wealthy person what it means to be rich, they’ll tell you something completely different. Wealthy people do is that they use the cash in the bank account as a means to an end.

They use the cash as a means to get other assets, which is what they actually want to own.

They use the cash to buy stocks.

They use the cash to buy real estate that’s producing rental income.

They use cash to buy businesses, or they use cash to buy other hard assets, things like physical gold.

For the majority of people’s, the goal is to have a lot of cash.

Their goal is to have a big bank account because we think that if you can have a lot of cash in the bank account, you’re financially free. And I’m telling you this from experience because growing up in our traditional Indian house, the whole concept of financial education was you work to earn a big salary, and then you work to spend no money.

That way, you can save as much money as possible so you don’t spend money, but then you just store this cash in the bank because now you hope and pray that this cash in the bank is going to make you financially free.

Now it’s better to have cash in the bank than to have no assets and no cash in the bank, but there are better things that you can do. This is for all of you Indian uncles and aunties out there that are listening and trying to figure out what to do with their money.

What you have to understand is that the cash in your bank is losing value for the last number of decades. And I’m not just talking about what happened post-2020.

Even if you look back for the last 5 decades, our cash has been losing value year after year after year. The reason why is because of inflation.

Now, sure, you can try to grow this cash by putting it into a high savings account, but at the end of the day, you’re going to be losing relative to people who are investing their money into these assets.

So what wealthy people want to do is they want to take the cash and use this cash as a tool to then go out and buy stocks, real estate, businesses, or other hard assets.

Why You Need Save?

Now I want to clarify this. This doesn’t mean it’s bad to have cash. You want to make sure you have cash for 3 reasons.

Number one, you want to have cash to protect you against an emergency.

To Protect You Against An Emergency

So for that, maybe somewhere between 3 to 12 months worth of expenses saved up to protect you against an emergency. And this is going to depend on your risk tolerance.

If you’re 25 years old, you don’t really have any liabilities, you’re okay taking on more risk, you don’t need 12 months’ worth of expenses, maybe you only need 3 months’ worth of expenses.

If you’re 47 years old, you got a couple of kids you got to take care of, you got liabilities you got to take care of, and you don’t have a very high risk tolerance, now maybe you need 9 to 12 months’ worth of savings built up that way you don’t have to feel so stressed about money.You find what the number is.

To Make Purchase

The second reason why you save cash is to make a purchase. You want to buy a home, you want to buy a car, you want to buy something. Well, you need cash to do that, so you save up cash to make that purchase or you save up cash to buy one of these investments.

Warren Buffett talks about his huge multi-billion dollar stockpile of cash because he’s waiting for the perfect investment opportunity to deploy his cash.

Now, this doesn’t mean that you need to wait to find the perfect investment opportunity to start investing. Not everybody is Warren Buffett, but what this means is you have to understand what is the purpose for your cash, and you have to come up with the right investing strategy for you. And I’ll tell you what I do. I don’t recommend what I do to anybody else, but I tell you what I do just for educational purposes.

I have a system where every Wednesday cash leaves my checking account, and it’s automatically invested into stocks. And it does not matter what’s going on in the world, this is going to happen every single Wednesday. But in addition to this Wednesday investment into the stock market, which is going into, by the way, ETFs which give me exposure to the broader stock market.

So I’m not investing in individual companies with the Wednesday Investments, but in addition to that, I also have money individually going into stocks.

I have money individually going into real estate.

I have money individually going into businesses, and I also have my money going into physical gold. But this happens automatically once a month.

Now when I say individually into businesses, real estate, and stocks, what I mean by that now is I am working to build up cash piles that way I can go out and find Investments to actually invest in. This is because I enjoy doing this; this is something I want to do. You don’t have to do this, but now what I do is when I have this cash pile built up I will look for a place to invest it.

Maybe it’ll be in a startup, maybe it’ll be in my own business, maybe I’ll go out and find a rental property for me to invest in or an apartment complex or a single-family home.

Maybe it’ll be a stock for me to go out and invest in. This is much more active where number one I’m going out and I’m trying to find this individual investment, and I’m trying to find a good price, and I have to manage this investment itself, but this takes more work.

It’s not automatic; it’s not passive, but this is in addition to my automatic and passive investing strategy.

So now what you want to do is understand okay what do I need to do to become wealthy? The way you become wealthy is not just by stacking cash, that’s good that you’re saving cash, that’s good that you’re stacking cash, that’s part one, but now you want to do part two which is convert this cash into an asset that’s actually going to pay you for owning it. But then there’s also part three, and you got to understand the life cycle of an investment which is Investments don’t go straight up forever, Investments go up and they go down, and the people that actually make money from their Investments are not the people that make an investment for 6 months or 6 days or even 6 years, these are now the people that are investing their money for the long term. And now if you can become a Buy and Hold investor where now you’re holding onto Investments for the long term, maybe even forever.

Now you have the opportunity to make much more money, but this requires you to build that psychology and understand Market crashes happen, it’s a part of our economic system, you could see the value investment go down, but if own good Investments that creates opportunity for you to go out and buy even more aggressively when things go wrong, and this is where it requires that psychology because I always get these interesting comments of people saying just you know I started investing my money into the stock market but then two weeks later I saw my money go down should I sell my investments, and it’s such a frustrating thing because if you really want to build wealth it is not something that happens in 2 weeks, 2 months, or even 2 years you have to stay consistent with your Investments. I call it a decade of sacrifice, the decade of sacrifice means you got to spend that time to spend less and earn more so you can invest the difference. And the reason why I say decade isn’t just so you put your money to work for 10 years, it’s so you can start building that Foundation over the 10 years that way we can build a real Nest Egg, a real asset portfolio they could start spitting off some dividends or they can start really seeing some growth, but you got to understand markets go up, markets go down, Market crashes are part of our economic system, they’ve happened in the past and they will continue to happen in the future, yes the stock market will crash again, yes we will see a real estate crash again, but we also know that stocks are going to be around in the future, we also know that real estate is going to be around in the future, so instead of being the person that’s Panic selling and just running away, understand the way that our markets work, that way you can use this as an opportunity to go out and invest even more, guess what wealthy people want to turn their cash into Assets.

Now, some people who are more involved with their investments are going to stack cash until they see a good investment. But for the average person who’s not in the game of reading financial statements, who’s not in the game of looking at individual investments, who’s not in the game of managing their investments, who’s not in the game of valuing their investments, the way that you win then isn’t by now trying to find the best investment, because now you’re gambling when you’re competing against people that are devoting their lives to this. It’s just by finding a way to keep regularly deploying your cash into your investments.

Guess what? There are tools out there that will let you create an automatic investing system. There are apps that will let you invest in real estate.

There are apps that will let you invest in stocks that will do this automatically and passively right out of your bank account. This way, if you don’t want to worry about all the work that’s required to find a good investment and manage an investment, that’s okay.

You can just throw your money into the stock market into a portfolio that gives you exposure to the total stock market or to the S&P 500 or to the Dow Jones or to the NASDAQ. And now all you got to do is just keep funding it. And this is how most people, the average person, can build wealth without having to take on all the stress of understanding how to manage and find good investments. And this is where you got to remember what are we talking about here.

We’re talking about taking the cash that you have and you got to convert this cash into something that’s going to actually make you money because your cash in your bank account is not making any money.

I don’t care if your high-interest savings paying you 4%. If you have a high-interest savings account that’s good.

It’s better than not having a high savings account. But you got to remember why are you saving money?

Are you saving money to build an emergency savings account? If so, good.

Are you saving money to make a purchase? If so, good.

Are you saving money to make an investment? If so, good. But if you’re just saving your money just to stack cash because you think that’s what’s going to make you wealthy, that’s what I want you to change. And I want you to understand that’s the cash that I want you to convert into assets because that’s what wealthy people do with their money.

Wealthy people want to own stocks, they want to own real estate, they want to own businesses, they want to own hard assets. This is what makes wealthy people wealthy. It’s not this.