How to Manage your Money Like The 1%

How to Manage your Money Like The 1%



Let me tell you something that will change your life if you let it sink in. The richest people in the world are 75% entrepreneurs, 15% investors, 7% inheritors of wealth, 3% athletes, entertainers, and artists, 0% employees who just earn a salary. So if you want to know how to manage your money like the 1%, you have to understand what those first four categories have in common. So let's think about it. Entrepreneurs own businesses. Investors own assets. Rich kids own trusts. Finally, athletes, entertainers, and

artists own rare skills. So, it's clear if you don't own something, you are what's owned. That's the secret most people miss. So, how can you start owning things like the 1%? Well, you need to follow the 255010 rule. I designed this rule so that anyone, no matter what their income, can manage their money like the top 1%. Because the truth is, it's not about how much money you make. It's about how you manage what you make. I'm not just some YouTuber. I've actually used this rule for decades, and it's

enabled me to become a multi-millionaire, even though I started out with no money and no qualifications. So, let's get into it. The first 25% of your income should be going towards growth. This is the 25% that works for you. By growth, I don't mean some kind of mindset nonsense about growing as a person with the power of meditation. I mean using this money to buy things that increase in value. You see, when most people get their paycheck, they pay the bills and then blow the rest on useless things they

I don't even remember buying. This is exactly why 99% of people are trapped owning nothing of value. The truth is this is all by design. The system wants us rich for a week, then skint by the end of the month, waiting for the next payday, so we've got no breathing room, and then we're forced to work even harder next month just to keep up. This is effectively modern-day slavery. Just think about it. Slaves used to work every day with no pay. But they got free food, shelter, and water. Today, people

work nearly every day and get paid. However, their money is mostly spent on food, shelter, and water. The only thing that has changed is the illusion of freedom. Once you understand this, you can start fighting back by taking that first 25% of your income and putting it straight into assets. This is anything that grows in value over time and puts money in your pocket. The idea is that while you're out working, these assets that you own are working for you in the background. Eventually, these assets

could even make you more money than your day job. You might think you don't have enough money to invest in assets. However, you need to find the money because the sooner you start, the better. Let me show you something that will blow your mind. This is Billy. He started investing $200 a month at 20 years old. And this is Phil. He didn't start until he was 30, but to catch up, he invested $300 a month. Now, let's fast forward it to when they reach 60 and they both stopped investing. Now, I'm going to give Phil a walking

stick and I'm going to give Billy some glasses. Right, that's better. Now, let's add up how much each one saved. Billy put in $200 per month for 40 years. So, that's a total of $96,000. However, Phil put in $300 per month for 30 years, which is a total of $108,000. So, Phil ended up with more money, right? Because he saved more each month. Well, not exactly because they were investing instead of just saving. If we assume an average annual return of 10%, which is the average return of the S&P 500 over the last 100 years, then

the numbers start to look a little bit different. Phil's investment would be worth $678,146. Not bad. Whereas Billy's investment would be worth a staggering $1,264,816. How crazy is that? Billy invested $12,000 less but ended up with nearly $600,000 more. All because he started earlier. That's the power of compound growth. That's why you should start now, even if it's small, because waiting will cost you more than you think. But how can you actually get started? Well, step one is to select your growth assets.

There are loads of ways to grow your money, but not all of them carry the same risk or reward. So, I like to think of them as a scale from relatively safe and steady to high risk, high reward. At the lower risk end, we've got index funds. Honestly, this is where most people should start. You're not trying to pick winners. You're just buying a slice of the whole market. Like the S&P 500 I mentioned before. You don't need to check charts or time the market. You just let it sit there and grow quietly

in the background. Then there's real estate. That could be rental property if you've got the money or REITs if you haven't. REIT lets you invest in real estate without buying a property. It's kind of like buying a small share in a building with a bunch of other people. In the middle is skills. Learning a skill that makes you money is hands down the fastest return on investment you'll ever see. I'm talking about things like copywriting, editing, sales, coding, anything you can actually use to bring

in income. Unlike stocks or property, no one can take it away from you. However, it does take more time to learn and that's why it's higher up the risk scale than the other two. Further up, we've got online businesses. Stuff like dropshipping and selling digital products. These can pay off big, but they take a lot of effort and you've got to be ready to fail a few times before you find your feet. Then we get to individual stocks. I know it's tempting to try and pick the next Tesla, but unless you've done your homework and you

really know what you're doing, you're basically just guessing. So, if you're going to do it without learning the specifics, keep it small and treat it like a hobby, not your main strategy. And right up the top is alternative investments. I'm talking Bitcoin, Ethereum, NFTts, gold, wine, sneakers, you name it. Can you make money with these? Absolutely. Can you lose it overnight? Also, absolutely. I've played around with some of these, but I never risk more than I'm willing to lose. These are your moonshots. Fun to try,

but not where you build long-term wealth. So, if I were you, I'd start with the stuff that actually builds a foundation, which are index funds and high income skills. Then as you grow more confident, you can start dabbling with the rest. So now you know what to invest in. Now we've got to talk about how to invest. Because if you're doing it through the wrong kind of account, you could be handing over thousands in unnecessary tax without even realizing it. That's why step two is to set up tax advantaged accounts. Right, let me show

you the smart way to legally save as much money as possible. Before we dive in, remember I'm not a financial adviser. I'm just sharing what I've personally done over the years. Okay, let's start with the UK. One of the best options is the stocks and shares ISA. You can invest up to £20,000 a year and anything you earn is tax-free. You can set one up on platforms like Trading 212. All you have to do is select the stocks and shares ISA when you sign up. Since I was planning to talk about Trading 212 anyway, I reached out to see

if they'd be interested in sponsoring this portion of the video. They agreed and are also giving away a free fractional share worth up to £100 to anyone that uses the code Tilbury when they create an account. You can also invite your friends and once they fund their accounts, you'll both get a free fractional share. If you're working a 9 to5, you've probably got access to a workplace pension. Usually, you'll put in 5% and your employer will match with 3%. That's basically free money. You don't pay any tax on the money it

earns while it's growing. You only pay tax when you take it out later on. If you're in the US, your setup's a little bit different. The Roth IRA is one of the best accounts you can open. You invest money you've already paid tax on, but every penny it earns grows completely tax-free. And when you retire, you can take it out with zero tax. The limit on this account is $7,000 a year if you're under 50. Even billionaires use this account. Peter Thiel, one of the guys behind PayPal, reportedly turned his Roth IRA into over

$5 billion. He did this by investing in early stage high growth companies, including PayPal and Facebook, which then increased in value significantly. Then there's the 401k, which is basically the US version of a pension. The money you put in comes out of your paycheck before tax. It also grows over time without being taxed while it's invested. And if your employer offers a match, definitely take it. Now, I know a lot of you aren't in the UK or USA, so here's a list of all the tax advantage accounts I could find. Hopefully, you

can find an account in this list that lets you take advantage of the tax savings your country offers you. The problem is lots of people open up these accounts, put their money in every month, and don't actually invest in anything. That brings us on to step three, actually start investing. All right, so now you've picked your growth assets and you've set up your account. Whether you're on Trading 212, Vanguard, or something else, it's time to actually put your money to work. The best thing you can do is set up a monthly transfer

that goes straight from your bank account into your investment platform, ideally on payday. That way, you never even see the money sitting in your account and get tempted to spend it. Once it lands, you don't need to mess about with charts or try to time the market. Just look for some index funds. One of the most popular methods is to build a free fund portfolio. The first fund is normally a US stock index fund, which basically invests in lots of US-based companies like Apple and Amazon, for example. The second fund is

an international stock index fund, which is similar to the US-based one, but instead covers companies outside the US. And the final fund is something called a bond fund, which helps provide stability as they're generally less volatile than stocks and can help smooth out the ups and downs of the market. Let me show you how to set something like this up on Trading 212. If you haven't already signed up, then I'll leave a link in the description. If you've already signed up within the last 10 days, you can head

over to the promo code section of Trading 212 and enter the code Tilbury to get a free fractional share worth up to £100. This is a nice boost to get you started with investing. Then go over to pies and then click the plus icon. Now you can select whatever stocks you want to include in your pie. for our US stock market fund. Let's search for the S&P 500. This Vanguard one should do nicely. If you're based in the US, then you can also pick the Vanguard Total Stock Market Index Fund known as the VT Sachs.

This fund is like owning a tiny piece of 500 of the biggest most famous companies in America like Apple, Amazon, and Coca-Cola. By the way, look out for the terms accumulation or distribution in the brackets. Personally, I always go with accumulation as it reinvests your dividends back into the stock automatically. Then let's go and search for our next one which is our international fund. For this, let's select iShares MSCI World UCITS ETF with the ticker IWDA and tap add to PI. This fund is like having a collection of

companies from all around the world. It includes big businesses in places like Europe, Japan, and Canada. Now for our bond fund. Let's search for iShares USD Treasury Bond for 7 to 10 years. UCITS ETF with the ticker IBTM and tap add to PI. This fund is like lending money to the US government. They promise to pay you back with a little extra which helps you keep your money safe and steady even if stocks go up and down. Right now those are added. We can click the arrow to go to the next step. On this page, you can

adjust the percentage allocation of your money to each fund. If you go with an aggressive approach, this involves investing more in stocks, which can grow faster, but can also go up and down a lot. For example, you might choose an investment mix where 90% of your money is in stocks and only 10% is in bonds. This setup is the potential for big returns, but also comes with sharp ups and downs in the short term. If you prefer slightly less risk but still want a chance for high returns, then a slightly less aggressive approach might

suit you better. With around 80% in stocks and 20% in bonds, don't get put off by the terms aggressive. It's all down to your age. As a general rule of thumb, the older you are, the more bonds you should have. So, let's make the S&P 500 60%. The is shares world fund 30% and the bond fund 10%. And click next and then auto invest. This value projection is really awesome as it shows you how much money you could make based on historical averages. Of course, when you invest, you can get back less than you

invested, as investments can rise and fall, but it's still a great way to get an idea of how much you could make based on data back projections. Once your investing is automated, your job is simple. Stop fiddling and go and make more money. Because the truth is, the people who build wealth aren't the ones picking the fanciest stocks. They're the ones consistently putting in more over time. That means your focus should now be on increasing your income so you can increase your investments. This is where

The skill building I talked about in step one really starts to come into play. If you haven't yet, learn something valuable. Do it as a side hustle. Bring in more cash. Then feed it straight back into your investments. The next 15% of your income should be going towards stability. This is the 15% that keeps you in the game. A lot of people don't realize that not all your money should be thrown into growth investments or spent. Some of it needs to be set aside to protect your progress. I wish someone had told me

that when I was younger because I had to learn it the hard way. I didn't grow up around money. So, when I turned 18 and needed a car to get to work, I didn't have any savings set aside. So, I did what most people do. I took out a loan and bought myself a solid little German whip, a VW Golf. I even got a new stereo with the extra cash the bank gave me. And for about 3 months, I felt like I was on top of the world. Then out of nowhere, the engine blew up. I had no backup, no safety net, and no clue what

to do. And on top of all this, if I didn't get the car fixed, I'd lose my job. So, I borrowed even more, which piled on more debt, more pressure, and more stress. To me, that car didn't just break down. It broke my finances and it set me back a whole year. If I just had 15% tucked away for stability, I'd have been in a completely different position. Most people don't have a money problem. They have a stability problem. One unexpected bill and it all falls apart. Even if you are investing, you'd be

forced to sell your investments at a bad time, which may lead to a loss. That's why you need a margin for error built into your life. Let's get into how you do it. Step one is to calculate your stability fund. To do this, you first need to list out your core expenses. These are things like your groceries, rent, utilities, transportation, and any essential services like your internet connection, which you might need for work, not for Netflix. All of those things combined should give you a total.

That number is called your monthly baseline. Let's say that adds up to $1,500 per month. Now take that number and multiply it by five months. This will equal the ideal stability fund that you should be aiming to save. So in this example, that should be $7,500. So each month when you get your paycheck, 15% of your wages should be going towards building up this figure. You might be thinking this is quite extreme and I admit it is on the more cautious side. However, I know from experience that when life hits, it

usually comes all at once without warning. So, if you only have a couple of months saved up, then you won't be as bulletproof. Step two is to store it correctly. Now that you've worked out your stability fund, don't make the mistake of parking it in the wrong place because where you store this money is just as important as having it in the first place. And for that reason, I've got three rules I always stick to. Firstly, it must be easy to access. This money should be available within 24 hours max. So, don't lock it up in some

account that penalizes you for withdrawing early or won't let you touch it for 5 years in return for a bit more interest. I've seen people lose their jobs and still not be able to access their stability fund. That defeats the whole point. When things go wrong, you need speed, not some nonsense waiting period. Secondly, it must be zero risk. This is not money you invest, gamble, or chase returns with. Whatever you do, and I mean whatever you do, do not put your emergency fund into the stock market.

Not even the safe stuff. Because when an emergency hits, the market might be down. The same goes for crypto, long-term bonds, or anything else that's meant to grow over years. Thirdly, it must always earn. Although this isn't your growth pot, that doesn't mean it should sit in a dead-end account doing nothing. You want it somewhere that earns a bit while it waits without any risk. This is because if you leave it somewhere with zero interest, then it will be eaten away by inflation as money gets less valuable over time.

That's where high yield savings accounts come in. As of filming this video, you can get savings accounts with 4 to 5% interest rates and with no penalties if you need to dip into it. I'll leave some banks in the description. I'd recommend checking out SoFi, Ally, and Marcus by Goldman Sachs as they're offering decent rates and they're FDIC insured so your money's safe. Step three is to stack it quickly. Most people think it takes years to scrape together a decent stability fund, but if you play it smart, it doesn't need to take anywhere

near that long. When I was building up my savings, I used three tactics that stacked on top of each other. Using them all together helped me really accelerate how fast I could save. Tactic one is called the paycheck sweep. This is when you take 15% of your income the second it lands and move it straight into your emergency fund. You can automate this with a direct debit or scheduled transfer. So, it's completely hands-off, just like we did with the 25% that goes towards growth. Tactic two is the

replacement promise. This is a promise you make to yourself that if you dip into your stability fund, you immediately replace it. Let's say you knock off your wing mirror and it costs $250 to fix. That's fine. That's what the fund is for. But the next time you get paid, you top that $250 straight back up like it was never gone. Tactic three is the save by spending hack. This one might sound a little bit crazy, but you can do it by using roundup apps. These round every purchase up to the nearest dollar and drop the difference

into your savings. So, if you spend $360, it rounds up to $4 and puts that 40 cents away. It sounds small, but it adds up fast and you won't even notice it. The other way to do this is with cash back. So, if you're using a cashback credit card and paying it off in full every month, then take those rewards and put them straight into your stability fund. Once your stability fund is fully stocked, you've got two options. You can either roll that money in