You Made a Bunch of Money. Now What? | Ep. #592

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In episode #592, Eric and Neil discuss what you should do with your profits. Tune in to hear in what you should be investing.

TIME-STAMPED SHOW NOTES:

  • [00:27] Today’s Topic: You Made a Bunch of Money. Now What?
  • [00:45] If you make six figures, pay your expenses and live a minimalist lifestyle.
  • [01:05] Put all your money back into your business.
  • [01:28] Ray Dalio’s book has been helpful for determining what to do with your money.
  • [01:54] Ray is a hedge fund manager; his book discusses the benefits and diversifying.
  • [02:18] Warren Buffett typically makes ten to twenty investments at a time.
  • [02:37] Invest back in yourself!
  • [02:50] Invest back into your business!
  • [03:22] Neil would take his profits and invest in more businesses.
  • [03:40] He lost a lot of money this way. Focus on your core business.
  • [03:44] Neil spoke with Brian Lee, head of Shoe Dazzle and Legal Zoom. He told Neil to have laser-sharp focus on his core business.
  • [04:14] Only consider expanding when your core business has leveled off.
  • [05:23] Eric watched a video about how to get richer.
  • [05:45] He learned that taxes are 30-50%.
  • [06:06] Eric recommends starting an LLC to run your expenses through.
  • [06:21] That’s all for today!
  • [06:25] Go to Singlegrain.com/Giveway for a special marketing tool giveaway!

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The post You Made a Bunch of Money. Now What? | Ep. #592 appeared first on Marketing School Podcast.

Full Transcript of The Episode

Speaker 1: Get ready for your daily dose of marketing strategies and tactics from entrepreneurs with the guile and experience to help you find success in any marketing capacity. You're listening to Marketing School with your instructors Neil Patel and Eric Siu.

Eric Siu: Welcome to another episode of Marketing School. I'm Eric Siu.

Neil Patel: And I'm Neil Patel.

Eric Siu: And today we're going to talk about, well, you've made a lot of money, what do you do now?
So Neil, curious to get your thoughts on this. What happens after you make a lot of money? What do you do?

Neil Patel: I don't know if I've actually made a lot of money. But, let's define what a lot of money means to most people, is it six figures? Start with six figures maybe?
All right. If you made six figures, I would take all the money, pay your expenses, make sure you live a very minimal life. You don't want big homes, huge property tax, you don't need fancy cars. Still hate Eric for buying that Tesla, he didn't need it, could've just drove a Honda Accord.
Take all your money, and dump it back into your business. Heck, if you're at six figures, seven figures, even figures, I'd probably say the same thing. Just dump it back into what you know. You could end up saying "Hey, invest this in hedge funds, or real estate, or diversify," and that's good, and I'm not saying you shouldn't, I diversify a bit here and there. But I normally just stick with what I know.

Eric Siu: Yeah, so I mean Neil and I operate in the same boat here. I've been reading Ray Dalio's Principles book recently, and, again, even though he's got one of the worlds largest hedge funds, if not the largest ...

Neil Patel: I think Apple beats him. Apple has more money.

Eric Siu: Yeah.

Neil Patel: Technically, if you're looking for a non corporate hedge fund, or a non internal company hedge fund, I think his is the largest. But if I'm not mistaken, Apple manages more money.

Eric Siu: Well yeah, that goes without saying.
So, Ray Dalio, I mean he's got this all weather portfolio. Tony Robbins talks about it in his book, Money, as well, but basically it's the concept of diversifying, right? And even if you look at Warren Buffet's rule one ... well his rule one first, I guess I'll give you that because I talked about it, so rule number one for him is do not lose money. Rule number two is just look at rule number one.
But anyway, I digress. So, Warren Buffet, if you look at how he goes about investing, and people that follow his methodology, they typically have maybe 10 or 20 investments in their portfolio at any given time. They're not trying to really go beyond that. And there are some people that follow that methodology, but it's the same thing I think when it applies to what do you do after you've made a lot of money?
So A, like we've talked about this in the past, A, you can invest it back in yourself. It's learning, knowledge, going to conferences, throwing events. Whatever it is exactly, or just studying, buying books too, that's all in yourself, nobody can ever, ever take that away. That's going to be with you forever.
Now, number two, I can just go down the list here, but Neil and I just talked about this, is the concept of putting that money back into your business, because you have the most control over that. Instead of 5 or 10% returns a year, maybe at your own business you might get 40%, 50%, maybe a really good year it might be triple digit growth, or even more than that. But you can kind of control ... you probably have the most control over that, versus anything else you might be putting money into. I'm not saying don't diversify, I can go down the list, but I going to pass it over to Neil right now.

Neil Patel: When I first started as an entrepreneur, as I started making money, like 20, 30, 40, 50,000, 100,000 a month in profit, I would take that money, and I continually started more businesses. As I did that, I found myself continually losing more and more money. My main core business was doing well, when your business is still growing, don't invest in new businesses, dump it back in.
I was sitting down with a guy named Brian Lee the founder of ShoeDazzle, Honest Company, he did Legalzoom. And this was years and years ago, maybe six, seven years ago. And I asked him "Hey, once your business starts growing, what should you do?" And he's just like "Have razor thin focus, or laser sharp focus. Don't do anything else other than your core business. Once your growth rate starts slowing down, then consider expanding your business into other areas, or maybe even investing in new businesses. But, as long as your business in your core one is growing, just have laser focus, and don't do anything else."
And that's where most people get it wrong, when they start making some money or a bunch of money, they start doing 10 different things. Not only do those other 10 different ... 9 things you put your money into start dwindling down and not doing as well because you can't focus on them, but your main core business that made you most of that money will also start suffering.

Eric Siu: And Neil, when you're making 50 to 100 grand a month in profit, where were those profits going? You were just basically investing them? What percent were you keeping? How did that framework work?

Neil Patel: Yeah, I would start new businesses with other people, I would try to take at least 20, 30, if not 50%. And I would try to do them in quantity. But, in most cases, I always lost money from doing that. Every once in a while some of them ended up working out, or making me a bit of money. I still would've been better off if I just took all that money and put it back into my core business.

Eric Siu: 100%, and this is video ... when I eat lunch, or when I eat dinner, I watch YouTube videos sometimes on TV. And I was watching this video about how the rich continue to get richer, and how taxes were supposed to balance everything out. Now, the hack that the rich have, is, well, most of them have businesses, or they have some kind of entity, where ... the thing is, when you're working for somebody, when you are an employee of a company, the government, the Uncle Sam ... or I'm sure even if you're out of the US the government's the same way, they take that money, they take the tax immediately. So that's anywhere from 30 to 50%, right?
But when you think about it, from a business perspective, you can run those expenses, and then at the end of the year you pay taxes afterwards. So that's such a huge advantage because you get to control that, and most people don't get to do that because, well, most people don't have businesses.
So, I recommend, I think Grant Cardone talked about this in the past too, just even if you're getting started with this stuff, if you're starting multi level marketing, and I'm not suggesting that, but his things was to just start an LLC or something like that to help run expenses through, that's going to help you.
That's pretty much it for this episode, thank you guys for listening, and for our daily marketing give away, go to singlegrain.com/giveaway. We'll see you tomorrow.

Speaker 1: This session of Marketing School has come to a close. Be sure to subscribe for more daily marketing strategies and tactics to help you find the success you've always dreamed of. And don't forget to rate and review, so we can continue to bring you the best daily content possible. We'll see you in class tomorrow, right here on Marketing School.

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