The 6 Layers: From Fake Rich to Real Generational Wealth

Published Sep 26, 2024, 10:01 AM

In this episode, John breaks down the different levels of wealth - from broke to generational wealth. 

 

 

Welcome The Money in Wealth with John O'Briant, a production of the Black Effect Podcast Network and iHeartRadio. Hey, Hey, this is John O'Briant. This is the Money in Wealth podcast series on Black Effect Network on iHeart By the way, we're honored to be associated with these brands and my brother Charlemagne where I serve on the board of Black Effect also and bring you this content every week and an attempt to change your life for the better. This is gonna be a very impactful episode, I believe, because I'm gonna break down something that no one really talks about. I'm gonna break down everything from fake riches to real wealth, real generational wealth, and I'm gonna do it in one episode. So let's get into this. There are six layers from fake rich to real wealth. Six layers. Now, there are subcategories in each of these areas, without question, but if you understand these six layers, you understand the basic game and how it's played. So let's get into the first one. The first layer is influencer and bling rich, which ultimately means you're broke, but in the short term, it is a form in the current definitions of how people define rich. It is in the pathyon. In fact, it is probably the overwhelming definition in most people's minds of what rich really is. And it is something I want to break down because I have a problem with people who miss represent themselves to be something they're not to have, something they're not to take from somebody who has not, and then as a result of that, has less. And you know, I can almost respect the Ponzi scheme a little bit more because at least there is some actual legitimate business activity on the way to illegitimate business activity. But this is just straight up hustling, particularly some of these financial influencers. But I'm not going to get into picking on one group or another. I'm not picking on anybody. I'm explaining what this is. Now. By the way, there are legitimate influencers, and they're the legitimate financial influencers. Ash Cash is someone who I respect who's trying to educate people. He's not saying something he's not. He does promote a certain lifestyle which is aligned with success, but he's very transparent about what he's trying to do, is best I can tell. So he's really positioned himself as an educator. There are other folks who's just straight up line. So a lot of these influencers are just straight up faking it. They are in a jet that's really a movie set. It's not even a movie set, it's a room in Hollywood. There may be other cities. I know in Hollywood you can rent a room for I think it's seventy five dollars an hour that is set up as the interior of a private jet. You can rent lambos for seventy five dollars an hour. Lamborghini's sorry, you can rent. There is a one hundred million dollar mansion in Hollywood that is well known. This is not something that is well in the influencer community that once a week you can rent this place. I think it's one hundred dollars an hour. I'm probably wrong about that. I'm doing it by memory, and you can show up and report record your weekly content in this mansion that you don't own. The shopping sprees, folks are going online and buying shopping bags. I'm not kidding. They're buying Louis Vuitton and Hermes and other shopping bags and then getting a shot as if they're walking out of not as if they're walking out of the store. Carrying the bags filled with merchandise, but really it's filled with stuff, stuffing, and the only thing real is the bag which they bought online. There are companies in Los Angeles because, in all fairness, if you're in Hollywood to day companies won't I'm told, represent you if you want to be an actor or creative unless you have a following on social media. That's the first thing that they go and check it appears. And so I understand the quandary of people then going and buying bots and buying followers and all this stuff, or doing what it takes to try to look successful so they can then get the following. Uh, I guess I can understand the hustle in that regard. And as long as you're not hurting anybody else. By the way, as long as you're not asking somebody for money, you're not playing with anybody, you're not defrauding anybody. All this is fine. I'm saying is not healthy and it's not sustainable. But if that's what you want to do, then then then all good. I mean, I've I've I've faked it until I made it. Growing up, I walked around with fake jurry on when I was in my twenties. I had a cell phone wire in my Mustang nineteen st seven Mustang. I had a cell phone cord connected to a cell phone handle that led to nowhere, back when you had phones in the car phone handles in the car. I actually went to radio shack and bought the phone cord in the phone handle and cradle, and then a antenna back when they had antennas, and put the and stuck the antenna on the car. Because I was trying to look good for the girls, I was trying to be somebody that wasn't I understand the game, but at some point you've got to grow up and move beyond it. And I wasn't trying to hurt anybody else. I wasn't trying to separate anybody from their wallet. I just was insecure and didn't understand success and what real success really looked like. And I didn't have anybody telling me, as I'm trying to tell you now, how this game is really played. Right, So a lot of folks are trying to impress people with money. They don't have to impress people they don't know, to live in places they can afford, to be something they're not to achieve something that's not real with folks who don't care about you. So how are influencers that fake these lifestyles? How are they doing it where it's actually producing something. Here's a quick summary. The ones that are really smart have sponsorship in brand deal. Now, the short answer in this is views. By the way, a lot of folks are trying to make money on getting paid on views, which is why you increasingly will see on credible platforms like YouTube, you'll see you'll see these clickbait titles where a title will bring you into a video, but you go to see the video it has nothing to do with the title, or it is an outright lie and the person that they're saying said something didn't say anything of the sort. They're just trying to get you to watch it long enough to record as a view so they can get paid. The legitimate approach to this sponsorship and brand deals, where brands might pay them to promote their product to their following, and then they can create content that I aligned with those those brands, typically luxury brands or products. Influences can then attract paid partnerships making it seem like they live in a fluent lifestyle. And earning money from the deals at the same time. Affiliate marketing. Influencers can make money through affiliate marketing, where they promote products or services and earn a commission for sales generated through their unique referral links that are tied to them and their name. You'll see that on many influencers pages. This can include everything from fashion and beauty products to high ticket items that fit the luxury image they project. Nothing wrong with this either. By the way, you won't see that on any of my pages. Just to be clear, you know, I don't have to talk about stuff because I'm doing stuff. I don't have to profile or floss because I've built businesses, grown businesses, run businesses, and run them today, have a payroll at seven figures every two weeks and four hundred employees. So when I tell you something, I'm telling you from experience, and you need more and more people who are who are successes in their areas that you can then model them as an influencer, because well, they influence you with their influence. They impress you because they're you want to follow people who are the leaders in whatever industry they position themselves in. They're there, they're the best in Class and the Michael Jordan of their Space. Sponsorship content and ads. Platforms like Instagram, YouTube, and TikTok offer monetization options for creators who with significant followers influencers learn through ad shown on their content, especially on YouTube. It's like advertising agencies. You know, you're getting paid to bring in an audience, and that then allows advertisers to put themselves in front of that audience. And as a creator, this is completely legitimate, you get a portion of that. So this is again an example of how a legitimate example of how creators can get can get paid. Fake itty you make it already talked about about that, courses, ebooks, and merchandise. I don't have a problem with that at all, as long as you fess up that that's what you're doing, Be legitimate about it, be straight up about it. Tell people that you're making. You know, you're an educator, you know, don't profess an act like you're something you're not. If you never You can't talk about real estate unless you've been in real estate. If you're going to do that, say you're a professor, Say you're an educators, you know, say you're going to educate people in real estate. You can do that, but you're not the professional in real estate. You can educate people on technology, but don't say that you've done in our venture capital. Don't say you've built businesses or it's tweasy to check stuff out these days, you're going to be found out right, you can. You can confirm whether somebody is who they say they exactly are. You can find that out in twenty eight seconds these days, So don't lie about it. Just there's nothing wrong with being an educator, an inspire or a motivator. In fact, it's something very credible about that. Just say who you are. So courses, ebooks, and merchandise, crowdfunding and donations. Some influencers ask their followers for donations or use platforms like Patreon to generate monthly and from their most loyal fans. They might offer exclusive content or perks and change for financial support. Again, full transparency. Nothing wrong with the leverage. Uh, they're leveraging credit and loans. I think this is crazy, but they're getting lines of credit and loans to try to look the part that's going to really blow up in their face. Okay, now let's we're gonna run through the rest of these quicker. I'm not going to go in the deep dial dive I did on on the influencer in Bling Rich Peace, but I thought it was really important to break that down and get into detail. If you're gonna do that, do it. You know, for most people, this is just a short term. This is just this is what you're doing right now. This is this. I'm gonna do a whole thing about why this is such a rage, such a craze, Why do people Why what happens when people turn on the camera, They just they just change. Most people, most people just completely change as a human being. And I'm gonna do a separate podcast and some straight talk live just on that, but that's not for today. But I really wanted to get into this because this first layer of rich is fake rich, straight up fake rich, and ultimately, unless you use that to transition into something else, you're going to be broke, which then leads to my second level of rich, which is transactional rich. This is luck. Something you're doing with influencer. Influencer in the bling bling situation, put you in the right place at the right time. You influence somebody, You press somebody the right place, right time. I've been right place, right time. I got lucky, and now I put myself in that place. You can read that in my book Up from Nothing, or my book to Memo. How I went to you know, Malibu, California, and worked as a waiter, not a very good one at Jeoffrey's restaurant, and put myself in position to be to meet somebody would be a billionaire today. But he was worked two undred million dollars back then Harvey Baskin, and he hired me as his personal assistant. And you know, I was rich in spirit at rich in knowledge, rich in insight because I had access to him. But anyway, you can be actional rich because you luck up right, you get a deal, you get a hookup, you won the lottery. Here's a great example. You won the lottery. Now people are gonna say, all right, John, well how is this transactional rich? Because I'm saying this is a broken time. First one is broke, broke period, broke in real time. This has broke in time. Now somebody's gonna say, well, wait a minute, I won the lottery. How can you say I want to be broken time? Isn't that presumptuous? John seventy percent give or take of those who win the lottery are broke within five years. Because it's not about the money. Somebody wants to ask me, like John, why don't we just why are you teaching all the financial literacy stuff. Just take everybody's money, all the rich people's money, redistributed equally to everybody in the world, and that's it. Well, I'll tell you if you do that in three to five years, the top three percent, which include me, that you took the money from to distribute to everybody else, we'll all have it back. Because financial literacy is real, because it's not about the cash. Is just simply a means of transferring value. It's it's the insight, it's a knowledge, it's it's it's how to build that that's really important. That's when that's what I'm trying to teach you in this Money in Wealth series. You just be broke in time, which then leads to my third level of riches. Now you started getting into again, mind mind you, I note a difference between rich and wealthy. Okay, rich, it's a contract, it's a it's a it's a thing. It's an upgrade on making a living right. But you're not necessarily making a life. You build wealth in your sleep, please write that down. You make money during the day, you build wealth in your sleep. It's compounding, right, it stocks, bonds, investment, business, real estate, any other other forms of assets. Music publishing is isn't is an example of those who love the music business. But doing the entire podcast just on the future of the music business, particularly the black music business. To watch out for that one. But contract riches is the first real entry to the big game. What's an example of contract riches? An NFL contract, National Football League, an NBA contract, National Basketball Association, baseball, hockey, soccer, NASCAR. These professional sports areas, they find the best of the best talent and then they give them these incredible contracts. And these players often have never seen this kind of money before in their lives. And in most cases, particularly the those who come from underserved neighborhoods like where I came from, the first year I have received of that contract is rather predictable. The money's gone. They just spend the money. By the way, I did a podcast on professional athletes, I specifically drilled down on that. Go back and listen to that podcast. For those who aspire to be a professional athlete out of high school, college, or you know you or you have a child that you want to be a professional athlete. You need to really take time and listen to that. I want this entire podcast series to be something that as a as a whole, you know, network of episodes, fifty plus episodes. You can take this and give it to your child right as they go off to college or whatever. Give it to somebody who just got married, Give it somebody who just standing off in life, somebody who's resetting their life. You listen to these while you're working out, while you're going to work or going home whatever. Listening to you know, as a series or persodically meaning the ones that interest you at that moment, and they can transform your life. So contract Riches is not wealth. My friend Tony Wrestler owns the Atlanta Hawks. He's a principal owner. He has other investors in the Atlanta Hawks basketball team, Tonysworth, you know a lot. I won't get into his business, but it's public information. And that's my brother from another mother. I love Tony. Tony dresses in jeans and Polo showed her something. His beautiful wife, Jamie Gertz is I think to this day the wealthiest woman in Hollywood. She's an actress and producer, etc. They just dressed normally. You would never know. They drive normal cars. Relatively speaking, they're not blinged out. But when you pull in the Atlanta Hawks are any by the way, professional team parking area for the players, it looks like an exotic car lot. And I mean I mean blinging, slinging, slanging, you know, gloss and floss. And then when they get out what they got on it makes the car look shame to shame because now they just draped, right, and the girl is draped, and of course everybody's got to be on the front row so that I guess they can be seen. That's the presumption I'm going to make. I sit with Tony and Jamie, my wife Shatra and I when we're go as guests and we're up at the I don't know, we're not on the floor. So we're going back. We're in that first row, probably six or eight rows back, so you know, we're fifteen eighteen rows back from the court, and nobody knows who Tony is. Doesn't say owner's box or owner's seat. He just sits down and he buys a hot lock up dollar everybody else, but he's paying those players who are profiling with his petty cash. He's writing the check, they're cashing it. I did a piece on one of my social media accounts about an NFL player whose father and financial advisor said, you're gonna you're gonna be an LLC, a limited liability corporation, not a person, and you're going to contract with the NFL. This I think was one hundred million dollars contract. And they're going to pay your LLC corporation, not you as a person, because they're providing you're providing your professional services, and they're gonna, you know, basically gonna be their partner and the team. You know, they didn't want to upset the guy. He was a first draft, first round, you know pick. But the work came back and they sent it up to the NFL so they could blame it on them, but everybody knew the answer was their work came back. Blah blah blah blah blah. No, no, we can't do that. You are listening to me, now, this is contract riches. You are an employee. The NFL provides your training facilities. The NFL provides your uniforms. The NFL gave you an advance on your signing, on your contract. And by the way, in the NFL, you only you may have one hundred million dollars contract or fifty million dollars contract, but really owning you really own in the NFL is that signing bonus? And how many games you play before you know? Hopefully you never get hurt. But the NFL is unique in that they you can sign a fifty million dollars contract. It doesn't mean they're going to pay you fifty million dollars unless that's what you negotiate in advance. That's a whole again, go and listen to my specific podcast I did on professional sports. Back to this topic, and by the way, all this is fair exchange is no robbery, like capitalism is a gladiator sport like there's nothing wrong with this. This is a fair exchange is no robbery, and everybody's winning here. I just want to need. I need the person cashing check to be able to win and not just a person writing the check who knows how to win already. It's why they're writing the check. So this guy wanted to be treated as a partner, but the team had to remind them the training equipment, the training staff, the coaches, the facilities, the infrastructure, the transportation, the health care plan, the pension plan. What does that sound like, everybody? That sounds like what you get when you work at a corporation, doesn't it a highly paid executive. That's right. You're an employee. So you can't be a partner taking risk and sharing the risk and being an employee at the same Well you can if you're the owner of the company, but you cannot have it both ways, right, So this guy wanted it was financial literacy people. And by the way, he was doing this because he was trying to avoid taxes. This is a whole other conversation. You want to get deeper in that, going to my social media account. I think you can find it easier on my Instagram account at John O'Brien everywhere, and watch that episode. You'll see it because that the operational logos in the in the background, so you can find it very easily. It's very popular conversation. But the guy was trying to avoid taxes, or his father was, or his agent was, whatever, And I'm glad that it didn't work out because he would have gotten arrested and gone to jail because that's a felony. So contract riches last three to five years in professional sports on average, right, and most people aren't making tens and tens one hundreds of million dollars. They're making, you know, high six figures if they're lucky, low seven figures most players. And you're going to play three to five years on average, and you'll get you know, injured, or you're not top of the game anymore, you know, and they trade you or they buy out your contract or whatever. But on average, the contracts are not very long. The careers are not very long. If you have a ten year career in professional sports, you're doing amazing. But life is long. If you lived at eighty years old on average, and you went into the professional sports at twenty years of age, eighteen years of age, you do the math. By twenty five, twenty eight, you're done. You're retired. But what happened to the money. Your bills now have stacked up to a level, but your revenue has just dropped. So now you've got Bentley's on lease and Ferrari's on lease and houses in two or three places, and you got a lifestyle you and your family has gotten a ground accustomed to and private jets and all that kind of stuff. By the way, I'll do a whole piece on private jets. The people who actually own these jets don't pay for him personally. Hello, Hello, Hello, the mansions, the jets, all this stuff is. It's a system, and I'll explain to you how that works in another episode. I hope you guys like how I stay focused on the topic at hand, so I can give you the lesson that I promised you, the sharing that I promised you. So in this example, you go broke in the end because seventy percent of all NFL players, and I believe NBA players about seventy percent sixty to seventy percent its majority, are bankrupt in five years and worse, divorced five years after retirement. The partner tends to find no interest or other interests, and whatever the answer is, they leave them, or they break up, or I don't know the circumstances. Of course, I'm not getting people's lies. I'm telling you that this is just not coincidental. So now let's get into real wealth. So we gone on the influencer and bling rich broke transactional. Rich broke in time, contract rich broke in the end. So now let's talk about the first stage your wealth. It's a liquidity event. So you've built a business, or you're a rapper, or you're a singer, and you have publishing rights that you own, or writing rights that you own. You are a professional athlete, and you have taken stock or share of ownership in a business or a brand that took off like a rocket. You were an influencer and you tripped over God's grace and you were humble and you were doing it right. And I'm gonna say that you're an influencer and you actually had a really good training program and that thing that took off like a rocket, it was incorporated and everybody's subscribing to it and they're benefiting from it. You've got now a YouTube channel that's generating all kinds of revenue. But really the thing that's beneficial is the company itself. And you sold the company. You sold the company, you liquidated the stock, you you sold the publishing rights. In my case, I sold, I built and sold a company. I've done this several times. But the example that I love to give is the promise homes company that I built over five years and sold it for over one hundred and twenty men or about one hundred and twenty one million dollars total transaction value over five years. And you have what's called in business and on Wall Street, they understand it to be a liquidity event. That's where the net worth that you have becomes liquid cash. As my friend Tony would say, the deal ain't done, Tony Wrestler until you see the wire transfer come into your account. So the first stage of real wealth, well, the first stage where you can see it experience it in a different way, is where you set it up and you paid it off. So you've bought some real estate. Now you're building wealth when you by real estate or you're building a business. So I'm I'm giving you the crib notes here because you don' want anybody get arguing about well, John, there was you know, asset value wealth creation before you the liquidity event. Yes, yes, yes, But the stage where you can breathe and sort of that inflection point on this fourth level between fake rich and real wealth, real generational wealth is this fourth level, which is the first age of real wealth. Again, you make money during the day, you build wealth and your sleep. So now you've set it up and you've paid it off. You built this business, and now somebody's bought that business from you, confirming that it had a value. Same thing with the publishing rights, whatever it is. You thought it was valuable, and somebody confirmed that it was valuable. The market did, and they paid you for it. And you take that money and you don't spend it. Now if you want to, say twenty thirty percent and go create lifestyle events for yourself or you know. I rewarded my Promise Home, my Promise my Operation Hope team. I took your Promise Homes team too, but my Operational Financial Literay mind, my Financial Literacy organization, the nonprofit. You can you can see the video online. I bought them all. I bought my senior management teams. I bought them all cars and gave them investment accounts. Because they don't have big bonuses and big salaries working for a nonprofit, they don't have stocks. They couldn't do that for themselves. So I wanted to reward them for all their years of hard work. At that point it would have been twenty five plus years, and so I used my liquidity event to guests which car each one of them would love, and I bought them each the car and surprise them again. It's a video you can you can watch it. You can search for it and watch it if you like. And the visual on their faces was prices. But I did that with my petty cash, just like Tony Resher pays salaries to his ball players with petty cash. I then make sure I paid my taxes, which was not paid cash. It was seven figures, but I was proud to pay my taxes. Always pay your taxes because that means you're making money. Don't be upset because you're paying your taxes. That is, you know, not only your obligation. You're right as as as somebody in the freener price system and capitalism. But it's it's it's confirmation that you made it and the government was your partner in your silent partner and your success because you're operating in the most valuable, most prominent economy in the world, in the United States of America. And now you feel real personal about those potholes. By the way, when you pay taxes, I paid, and you become a become an expert in taxes. But you know by the way they got al Capone, not on murder in Mayhem, the gangster. They got them on tax evasion. Is. One thing you don't mess with is the is the pub I'd say, the police is is the I R s. You just do not mess with the I R s. Never, never, never. So I did this thing for my team. Uh. I took care of my family this, you know this, this these normal situations, right of course, take cook you know, made sure I celebrated my wife and my mom, my sister and brother, you know, auntiets, et cetera. Took care of my team, took care the irs, and made some investments that would build wealth over time. What investments none of your business. But uh, some it's predictable generally speaking. It was the stock market and no, it was not cryptocurrency and all that kind of stuff. It was solid, traditional stuff that's not going that it's not going to implode tomorrow. I you know you want to put you want to this is your nest egg, Like you won't get another one of these liquidity events. This may be it. So you want to put that in something that you know is going to be there. And you really just want to if you're want to play with anything, play with the interest on those investments. But you don't want to take the principle from those investment. So there's money that's set aside that you don't touch from that liquidity event, and that's going to build moral wealth. So you built wealth the first time that was an illiquid investment in liquid investment. You then had a liquidity event you sold whatever. By the way, the purpose of the company is the is the build it, grow value, build value, you know, build a customer base whatever, and sell it right to monetize it, shall I say, you have different ways to monetize it, but that is the purpose of growing a company like this. Don't get emotional about it, and then you can you know, you can build another company, by the way, or buy that one back. People have bought their own companies back over time. But you got to find a way to to to pull the register, to pull the cash register, to pull the you know, the I made it stick, right, they call it clip clipping a coupon on a wall street. Don't get emotional about it. Right. Whenever you make a bad decision, it's an emotional decision in business. Do not be become emotional in business. It's just business, right. So, uh, I made some investments which I can confirm already have done with their job. So you know, one piece of real estate I invested in is almost doubled in value. That's and that's building that that's happening without me. It is growing in my sleep. Right. So you when I say about wealth, you build wealth in your sleep. Now this, I've built fifty businesses, right, fifty business and fifty enterprises. I'm just telling you about one that's public information. Uh, it's you know, it's searchable, it's on the internet. I got. I signed a two hunred millon dollar credit facility. Me and my partners on the new company. I'm still an owner of shareholder in the new company. Even though I sold the company. I was an officer of the company for a bit and chairman by resigned from all that because you got to know when to walk away. You got to know when you know you've done your job right. And I had fluence, but not control. You know, it didn't have any power. So it's fine. I sold the company. The person who who bought the company again not emotional. They've got the power. Now, all good, I'm gonna do something else. But way, that's searchable. Twenty million dollar credit facility, another one hundred millillar credit facility recently on that non recourse debt, which means sign personal guarantees. But anyway, so that's the first, the first one, then the number five. The second stage of wealth is where you're not living on your principle. Now, this is a mistake that people who get that contract rich. This is why they go broke in time is they they didn't they thought they did. They forgot that money has velocity, and they thought that money's gonna be there forever. They figured they got a million or five million or ten million, and twenty million, thirty million, forty million, fifty million, asked him c Hammer. They thought that money's gonna last forever. No, it will go. Money has velocity. You can spend it. I've known I don't know him personally, but I know of billionaires who went broke. There's a famous boxer will mention his name. But the way he's spending uh planes for all of his friends, for him in one private plane, and his boys in the second private plane, his family in the third private plane, he's gonna go broke. I mean, you know he would buy wear one pair of shoes, won't wear it again. People who got real wealth and real money don't do craps do stuff like this is nuts Anyway, I'm jumping around here, but I'm trying to give you context. So people who have contract riches number three, they think that they're in number five. So number five is you're still spending according to your lifestyle you've become accustomed to. Right. The difference is when you lock in on number five, the second stage of wealth, you're spending money that's new money is not tied to the liquidity event. It's not tied to that contract you had. Okay, contract's gone, but you keep spending like you still have a contract. You're going to go broke when you're outfloaks, you're inflowed and your overhead or be your downfall. But if you are lucky enough to build a business and sell it, but now you have a reputation in that industry and now you can go get a contract. So now you've sold the company and you put that money aside. If you're a couple listening to this and you're saying, what, I don't have all that fancy stuff, John, what can we do on both people are working. One person makes the money and they use that to pay their bills. The second person makes the money and they use that to invest. Okay, do you hear me. One person's doing contract riches, contract aspiration, and the other person's doing a version of wealth creation. Okay, So person number one is paying for the is making a living. The other, the second person, is helping to build a life. Please, if you don't listen to anything else, tell your friends to go to number to minute thirty six or thirty seven on this podcast and listen to this. One person making a living, one person building a life. One person's paying the bills and you're living within the means, and that one person the second person. My friend Bernard Kinsey and La did this with his wife and they have a beautiful mansion overlooking the ocean in the bever Hills and player deray Yas I think it's playa Delray in southern California, and he worked at IBM as a corporate executive. But they have a huge art collection. They just did it right. They lived on his salary or maybe her salary, and then his salary was used for investments, and they got really smart on the investments they made, they really paid off well for them. So you got an expertise now in something because you built this company and you sold it, and other people are now willing to pay you based on that expertise. And you take that income and that's what you live on. That's your lifestyle money. You're not touching the principle. Please tell me you understand what I'm saying. Again, you sew that company, or you took that contract income and you put it aside, didn't You lived on a fraction of it. Now you're no longer in the NBA, NFL whatever, or you're no longer running the business running running the shoe shop or the Neil salon or the tech company or whatever it is you built. Okay, but you have an expertise and a brand and a reputation that people value, and now other people will hire you as a board member, an advisor or consultant or maybe even a joint venture partner on a new enterprise that gives you cash flow that pays for your lifestyle. And you're going to listen to me, now live on that cash flow. You're not going to touch the principle unless you're going to make an investment another investment with that principle, or you have some shock event that happens your life, like a tax bill that shows up that you can't absorb in your cash flow, Or there's some capital expense. Capital expense is using capital to again for pay taxes or make an investment or something, but you're pulling from the capital. When you pull in the capital, that stack of money you have gets smaller, and it's not going to replenish itself, at least not on the level that you're taking from it. That's why people make a lot of money go broke. They think the cash flow is capital and capital will always be there. Know, your cash flow created a stack of money, and the second money is going to go away unless you replace it or you or you live a lower standard of living, either in the real time or when you get beyond your professional career as an athlete. In this example, you got to step down significantly your expenses. The sixth stage of wealth, which is where you enter generational wealth. And by the way, there's a joke amongst the wealthy. The first generation makes it, the second generation spins it, the third generation loses it. You can make enough money where it's hard for people to screw it up. But we're talking I think that I think you're talking about several hundred hundreds of millions of dollars and really safely billionaire status still easier to screw it up if you work hard enough at it. But if you just reasonably saying billions of billion dollars will last generations and generations generation. In fact, billion dollars will make one hundred million dollars if you invest intelligently and think about this now, if you have billion dollars in cash or investments, earning ten percent, you'll make one hundred million. If you have one hundred million of investible assets, you'll make ten million dollars a year, eight to ten million dollars a year on a mix of investments with smart investment advisors who are proven, by the way, and you'll never touch the principle. Please listen to what I just said again. You don't want to touch the principle. So on every stage before this, on some level, please listen to me. Now, slow this down and listen again. On some level, and on these first five stages, labor was king. Okay, labor was king your hands, your mind, your heart, your brain, your thought, your looks, your your your you know something, your your hustle, your heart, work, your genius, something about labor generated income and wealth and opportunity for you, and you got paid. But the baller alert here, the drop the mic, the big baller shot call a statement of it on this podcast as we wrap up, is the third stage of wealth. Number six. This is real wealth. This is generational wealth. This is where your money makes you money. Wooh, I love making smart sexy. We've been making dumb sexy for way too long. We've dumbed down and celebrated. Its time to make smart sexy again. I love making smart sexy. And I know that you're smart, and I know that when when when you get it, the light comes on you go, oh yeah that. So, up until this point, labor made your money. But for true wealth, money makes more money than anything else can. So now you've got X dollars set aside, and those that money is invested in all the right places, and the return that it gets on the money that you have sitting there is unmatched. And maybe if you want me to go into this and give examples, I mean private equity is an example of this. Venture capital as an example of this joint ventures. You know where your money is making you more money than your labor ever could. Now you're building wealth and making money in your sleep. I have friends who have and this is where you start a family office. Actually, you can start a family office after the level four, after that first stage of wealth, a liquidity event. Okay, And if you don't know what a family office is, look that up. But it's basically an office dedicated to managing your family's wealth and opportunity. It manages the trust, it manages the wheels, It helps the kids to plan financially, financial planning, credit lines of credit, and loans, and it manages the stocks that it is. It's staffed, and these folks make sure that you don't go broke, and that you actually be on going broke. They make sure that you you're building in accordance with your mission statement, your plan. Family office. Do you know what that was? I want at some point I'd love to create a coalition of wealthy people of color to create a family office. I have a family office Rockefeller Capital Management, the Rockefeller family out of New York. But so you have this family office and it's managing your generational wealth and Uh, I guess his story. I was gonna tell was I have a friend of mine who I can't tell how much money he's worth, but it's billions. And he's got a family office, a manager of his family office who's got to find a place to shove one hundred million dollar dollars one hundred and forty million dollars a year. And uh, I'm gonna do a separate podcast, and that's passive income he doesn't have to make. He actually told me one day he end upset with me and said, uh, this friend of mine, he upset with me. He's like, so I brought him a business deal, not something I wanted to invest in, but I thought something that he would be good for him. He cursed me out, John, I don't bring me any more business deals. I don't want to make any more money. It's a headache. He just you know, if you want me to meet somebody to do something, let's do it, because I like you, I don't need to make any more money. And that you should be scratching your head right now, like what what did you just say? Because if he makes money, if he earns money, traditionally he's going to be taxed at the highest rate possible. As an example, First of all, it's a hasshole. It's got to he's got to organize the business, going to manage the business. He doesn't want to do all that stuff. He's through that days of his life. But he's also gonna be paying the highest tax rate possible, Whereas if you keep your money in passive investments, wealth creation, in vehicles, you're going to pay capital gains tax, which is twenty twenty one percent versus thirty eight percent or higher, thirty eight thirty five percent or higher. And if you maybe I'm going to do a whole piece on taxes, but you know, people just don't understand the tax structure. Like I think, I'll drop the mic, leave it here. Warren Buffett, who I've been blessed to meet, actually stayed next to him at a conference where I made sure that was always in the elevator when he's in the elevator by the way, listening to him talking to him. Nice guy. Warren Buffett is famous for saying that his secretary pays more taxes than him and that's not fair. And he I believe I'm not in his head, but I believe he was just trying to make a point because he understood why he wasn't paying taxes. It's not like he's a bum or the taxes is just so screwed up where he's not paying his fair share. In fact, the fact, the reacting. The reality is that most taxes this country you are paid for by the wealthy. I think it's seventy percent of the of all taxes the country paid for by those who are quote well to do the top ten percent. Check it out for yourself, Which doesn't mean they shouldn't be paying more in certain in situations, by the way, but that's the reality. Seventy percent of all taxes to paid by the wealthy. Anyway, Warren Buffett is not paying more taxes than its secretary because its secretary is paying taxes on income. She's paying an income tax. He wasn't talking about more taxes in a literal dollar sense. He's talking about a percentage of taxes. So a percentage of her income thirty five, thirty eight percent, whatever it is. I don't or a tax bracket, but whatever it is was more than twenty percent. She was because she's a W two employee, a W two employee, and I mentioned this with the contract, which riches the professional athletes. They are W two employees, right, somebody else is taking the risk, but they're paying you a salary to do a job. Somebody else taking the entrepreneurial risk, and so they get the entrepreneurial rewards. So this person comes in nine, leaves it five, you know, gets health insurance, all that stuff. She's she's a W two employee, and she gets tax at X rate. And he was saying that, you know, why does he only get taxed at a much lower rate? Something wrong with that system. Well, he's paying a crap loan more in taxes than anybody in his town, so let's start there. But he was trying to make a compassionate point that those who were wealthy need to pay a little bit more for the greatest country in the world in spite of our problems and challenges. My second great grandfather was George Young. He was a slave and he fought in the Union Army and amongst the black troops in Tennessee. And my second my grandfather was RB Smith, who was a sharecropper. So I my mother's mother, my mother's mother was God rest her. So both of my mother and her mother at Wadia Smith and her mother, Missus Murray. My mother's mother was a slave. My mother's my mother's mother, and you know my mother's mother's mother and my mother's mother on the shotgun shock. So literally came from nothing and built some thing. So it's just compassion for those who work really hard, who have too much month within their money, and those who have done really well in this light on the hill called America should be happy to give back where they can, whether it's through philanthropy or through smart investing in taxes where we know is going for good causes and so on and so forth. But that's another conversation another day. But I hope this has been helpful. This is six layers from fake rich to real wealth to even generational wealth and even get your little bonus on the tax system. Okay, is John O'Brien tell all your friends to this is my ministry of finance. Every Thursday is downloading new episodes to help them to subscribe to Money and Wealth with John O'Brien on iHeart Radio and the Black Effect Network and you'll get your podcast downloaded automatically every Thursday and follow me on all social media platforms at John O'Bryant, where I do my Straight Talks Live series and get my book financially was he for alls number one in business and finance. My major platforms USA Today, Publishers, Weekly, Amazon, et cetera. Soon be featured at Walmart EA. The CEO Walmart did the cover. And most importantly, we scholarshiped you into financial coaching through all my partners who've funded the budgeted Operation Hope, so we can get financial coaching for you for free at Operation Hope. Download the Hope and handapp and get your appointment today. This is John O'Brien is Money and Wealth, and this is a silver rights movement. Love and Like Money and Wealth with John O'Brien is a production of the Black Effect Podcast Network. For more podcasts from the Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows. P

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