Welcome back to another episode of The Point of View.
If it's your first time. Welcome.
Make sure you check out the first episode Today Show. I'm speaking with my good friend Jalal El Hazard, who has worked at some of the top. And I mean, top investment financial firms in the world. We talk about financial literacy, all things invested in crypto. Check out the show list. As always, I really hope you enjoy the show.
How are you doing? Well, how are you doing?
Not bad. We were supposed to do this a little while ago.
A year ago.
About a year ago. What happened? Lots of things happened, but I'm glad that we have an opportunity to do it now. Thank you for agreeing to come on the show.
Thank you for having me.
So you used to work in banking, right? Yes.
I work in the investment banking industry for about 14 years.
How did you get into banking? Why did you decide you want to be a banker?
I studied math, but my third year at University, I was looking at careers that I could go to after studying math. And what I was trying to optimize for, to be honest, is just try to make as much money as possible as quickly as possible. I mean, just being honest, right? Yeah. And so my game plan, even though, was to work for ten years in the industry, make as much money as I can and then leave it and just do things that I want. It took a bit longer than that, but that's pretty much what I did.
So you lived in France, you lived in the US, and now you live in the UK? Yeah.
I lived in France, UK, us. Also Spain and Morocco. A few places.
A real migrant story, indeed.
And actually real migrants in the sense that when I came here, I didn't need any visa or whatever. Right. It was pretty Brexit, right. But I've had to apply now for having statues to stay here legally. So, like my dad, I guess I couldn't skip the life of an immigrant.
So you moved it from France to the US.
I was hired in France, but within six months they shipped me to London after my first year of personal work was if you don't cancel for six months in France, London.
And then what was the decision to move to the US? What was that for?
Well, it was early 2000, so I don't know if anybody remembers, but back then, big deal was Matt cow here, and I love beef right over the beef. So I was like, I gotta get out of here. What can I do? And then I'm joking, obviously. But I was just interviewing just looking at the market and I wasn't expecting it. But I got an offer from a good bank to go work in New York, and they didn't need to do or say anything else. I mean for me, the idea of going to New York.
Was that the dream?
Yeah. As a kid, there were two places I want to go to New York and Hong Kong. Hong Kong for Bruce Lee.
New York, the cars. It's a very intense city. You have the best and the worst.
I was thinking, you're going to say you saw Wall Street, right?
And you want to be funny enough as to Wall Street after.
It's not the kind of movies I was watching when I was a kid. I didn't really care. I was watching more like Action flakes. Yeah.
All like, breathe.
Like, all these movies was sweet for me. Something I discovered very late.
And so when you got to New York, what was your experience? Did you live up to expectations? Was it different to what you expected?
I need to put things in context. I moved in the US, the 1 October of 2001, which was just a few weeks after the horrible, tragic events of 911. So it was a very strange time, right? I mean, obviously, when I decided to move to the US, I had no idea what was going to happen. I was hired, like a few months back. Once I was hired by the company, we applied for a visa, and I was waiting for my visa. Once we got the visa, we just decided.
You got one month and a half to sold out your first year and you start October 1. And that was obviously not knowing what I was walking into. And then 911 happened.
Yeah. That was tough. I did not want to go to ask my boss if I could delay my departure a few months. And the guy is a good guy. But he's very American in the sense that he said to me in a very simple way, there's a job waiting for you in New York. You want to take it, take it. You want to leave it, live it. The Internet double had just popped up, and then 911. I didn't feel like if I gave up that job, it'd be easy to find another job, maybe. And I had no financial savings per se to Lino anything like that. So I didn't have any financial security back then. So I went even though I didn't want to. I went. And so I arrived in America. I arrived in New York, right in the center of it all at a very popular time. In my flight, we were like six of us.
And flights had been reopened for just maybe a week. Yeah. There was a flight ban for just a week or two before that, the flights were reopened. It was a very popular time.
So then it must have been a crazy maybe couple of years in New York. Then just after the 911, it was strange.
I want to say the crisis were the first few months because honestly, people didn't know what was coming next. Everybody was scared. Everybody was scared.
Everybody was not just in New York, by the way, right. I think every major city around the world, everyone was worried.
Yeah, I think so. Obviously, 911 is terrible events. But one of the beautiful things around it was the unity of people, every country being very sad for New York. And there was a sense of unity, like worldwide. I'm not talking just the west worldwide unity in the suffering or the pain of the New Yorker. What they went through that in my memory as an adult, as an adult's memory, I don't remember when the word was so United in suffering, the pain of an issue that was beautiful. Actually.
We'Re going through a global event right now, right? But the world doesn't feel like it.
No, not like that.
In my opinion, the world feels pretty polarized at the moment.
I mean, it's sad to say, but 20 years later, the word is super polarized. I don't know if it was the peak of, like, unity in the world because I don't have enough knowledge of the story prior. I don't have enough. When I was a kid, I wasn't paying attention to much of the political scene and things I wasn't maybe so aware. But as an adult, specifically on the late nineties early 25, feels like polarization has just increased in Spain.
So one of the things then I want to talk to you about financial literacy. How can people invest their money wisely? What's the best way to make use of their money? When I was a kid in school didn't teach you about investing. They didn't teach you about tax. They didn't teach you about rentals.
The hard way.
You find out the hard way. This is how much I get taxed. So what have you learned that you wish that people would have access to a younger age?
I come from a family where we had not much wealth to talk about. And then for my work, I met a lot of people. I had a lot of wealth and grew massive wealth. So I've had a chance to look at the choices and the consequences of a lot of different people. And yes, of course, because of my work. When I was investment banking, I became quite an expert in those very complex, deregulative, fancy schemancy investments product that you hear from time to time in the news, typically when it blows up. But honestly, after all these years and all these people, friends, family and acquaintances that I've observed, the first thing that comes to my mind. And the first thing I would want to tell people is actually doing simple things already. Just doing the basics gets you there 80% of the way. And what do I mean by doing the simple things, the basic things most people I think don't know how much they spend in a month if you ask them. Okay. Over the last five years, what do you think you spend on average, every month? I mean, obviously changes on month to month, but on average, most people don't know the answer to that question. Most people don't save any money at all. And you have this situation where when you're 20 to say, 45 50, if you have here, maybe 265, you really depends on your intrinsic ability to create money to solve any problem that might happen. So you'll make it up if you have to. You were selling pizza, if you had to pick up the delivery and start delivering food. But the truth is that there's a point in your life where you can't do that anymore, either because you're not healthy, you have some problems or because you're too old. You don't have the energy. I see the way some old people live, it's quite dire. It's quite scary how little they have to live on. And so the first thing I tell people is just like you need to think of your money, your cash flow as if you were a company. And companies have revenues. They go up and down and they have cost after in the business. And so they have some gross profit out of that. When you net that and from that gross profit, you have all your discretionary spending. You got a movie restaurant at the end, you look at the net, which might be positive, it might be negative. And then if it's positive, hopefully you need to decide what you do with it. And just this way of thinking about finance, personal finance. It's simple. It's measuring how much of the last twelve months, how much do I spend a month in average, just so much.
Think of your money as a business, not as just money, right? It's a company and company to monitor your company's doing your company. Yeah.
Everybody is a company in that sense. And you have revenue. You have cost of goods and services, gross profit. And then you have taxes and then you have because if you didn't keep it at track of your spending.
Of your inflow, right, of your outgoings as a company, as a business, you'd be in a dire situation.
You'd be bankrupt very easily because you don't even know where you're going.
You don't know, right?
It's not. If I had $1 million, it's not the point. You could have a million dollars spending in a crazy summer. That has happened. People were in the lottery, and within a year.
They lost it all that's interesting as well.
That's happened a lot in the UK.
Everywhere in France is the same.
People win the lottery. And then five years later, with the money I spent it. All right.
And these were people who were living on like a 2000 Euro month salary and they were able to manage life. And then they get given a 2 million Euro lump sum and everything goes wrong. They get divorced. They do the job. Everything goes wrong. It is so common.
Did you see the guy? There was a guy who just won one of the US lotteries. They do a media opportunity, right? Like, do the press and stuff promote this guy's. One, like, $200 billion. And he turns up and he has a scream mask on Scream, the horror movie The Scream Mask. And he had gloves. Right. Gloves are speaking. Your family can recognize you by your hands, taking no chances. So when you sign in that contract.
He signs left hand. Yeah.
I don't want anybody to know that I'm rich.
No. But honestly, the simple thing, consider yourself as this company who has revenue and cost of business and taxes and just know that you don't need to know exactly to the pennies, what you spend, what you make, but just rough average estimate of what comes in.
What comes something that's really simple but often overlooked.
It is the first thing that needs to be done to put somebody's personal finance in order. It's not like what's the investment that is going to make me whole. Like, that's a different thing. It's just okay. Where am I just where am I and say, okay, am I off? Am I to have so many ways? Okay. So what do I need to do now? The number of times people ask me for personal finance advice. And I know it's not a common way of thinking. So I don't expect people to think like that, but I basically ask a very leading question where it goes. Okay. How much do you think you started? A month? I don't know. Okay. Over the last year, probably different from five years ago. But over the last year, on average, how much do you think? I don't know.
Let's try it. You pay rent. How much is it?
How much do you think you spend on food? £200. And then suddenly they see a budget, like coming up and they're like, oh, and it's so simple, right? Like, I mean, it's not crazy math. It's not magic. It's nothing fancy. But it's just like knowing where you are going to say, it's so simple.
Sometimes it's too simple.
I think it's exactly what you said. They don't teach us, right? They do lots of teachers in school. You're not used to do that, right? Yeah. True.
Winston Churchill said that often people look for the truth and they stumble upon it and they get up and they carry on walking. Exactly.
Right. Because sometimes the truth is too simple. And what you said is actually a very simple thing. So everyone is told to say when I was a kid, my grandma used to say to me, save for a rainy day. She used to always say that, right?
People say things like, look after the pennies and the pounds will look after themselves. Right. So how much do you think people should save well.
First of all, they need to understand their personal business, like their cash flow in or not. They need to understand what they are. Do they have a positive net at the end of the month? Do they have a negative net? So are they losing money every month and they're getting in debt? Are they making a little bit of money extra of all the spending that they have? That's the first thing when you've done that budget, it doesn't mean you've solved your problem. It just means now at least you know where you are, right. And then potentially, once you know where you are, you can progress. How do you progress? Well, first of all, when you build that budget, there are many line items in them, the line items in the money coming in and then the line items in the money coming out. And so now the way you can do the exercise of saving instead of just saying every Penny count, they're true. But they just don't mean anything to people. Now you're going to start looking at things a bit more practical, which I think makes it easier for people from your budget, from this basis of having built your budget and just to put some numbers around. So here in the UK, what would you guess is the median income monthly or annually annually annually?
I'd say it's around £20,000 a year.
$31,000. That's the median. So half publishing makes more half pushing, much less. What do you think is the median monthly saving that people do here in the UK?
Nor in pounds? I don't know.
People probably save maybe £50, £100 a month.
So these two numbers are important because now, you know, the median income is 30,000 and people who make 30,000 a year, the median savings is 180 a month. So now you got to look at where you are compared to that 30,000 people. Somebody who makes 100,000 pound a year is not going to have the same saving power than somebody who makes 25,000 panels. So at least that gives you like, an order of magnitude of what's reasonable, because sometimes what's difficult is when you don't put practical numbers on things, things that you can touch. It's very hard to have an idea of what's the right number. So now at least you have these two numbers, 31,000 a year, you should be saving.
Which means basically an average more or less 180 pound a month. So if you were to save £180 a month over a year, that gives you about 22, let's say you run up 2200 pound a year that you save. So every five years, that should be £11,000. So five years, you said the 11,000 pound. Okay. So now you make a median income in the country, so you're not rich but poor. You're right there. And you saved yourself over five years £11,000 by putting in your saving account £180 a month. So now what do you do? Because that's not going to completely change at 11,000 pound, it solves this number of problems, but it doesn't solve all your problems very obviously. So now you got to think, okay. If I really want to make most of it, I have this 11,000 thought, what do I do with it? And that's where it gets interesting. Of course, people would look at investments which can help them grow that part instead of just having the money that you put in that part have that money also work and grow a little bit. So instead of saving 11,000, you end up saving a bit more than 11,000. Maybe it becomes a 14,000 part or 15,000 part over the next five years. So that makes sense. Typically, people want to do it in a safe way. They try to buy something that is reasonably not too risky. Maybe they do it in an account where they don't have to pay tax on the gains to optimize their after tax savings. But investing in things that are not too risky. So that £11,000 becomes a 15,000 pound is also not going to change your life. It's going to be great if you have any sudden urgency that you need a bit of cash, it's going to make a big difference in your life, but it's not going to change your life in a massively positive way. Right. So then the thinking becomes, okay. Well, I need more than that. That's not enough. So now you have two, mainly two Lake. Now let's say three levers. Really? You have three levers. So the first thing is like this £11,000 up to five years. Suppose that you only save £180 a month. To be fair, any night you go out, you could spend that money just drinking. So maybe you could actually save more, like $300 a month as opposed to drinking, right?
But you could say I stopped drinking for five years and then I drink like a crazy man again. But you could say for the next five years I have to save money. And that's where the budget comes in. Because now you're going to look at all the line items of your budget and you're going to see where you can like. And it's silly things. I'll give you an example. I did the math one with my brother. He's a big smoker. Smokes two packs of cigarettes a day. That's something like €30 that goes down the drain every day. Wow. And it's not like it takes a break on Saturday and Sunday. So 365 times 30. Boom. That's 11,000 pound. Wow. Somehow he found 11,000 times a year to smoke cigarette to smoke.
And he literally smokes the money, literally. Right. Right. So then you go back to your line item and you see where you can make some cuts, some sacrifices so that maybe that 180 a month is more closer to, like 300 or 350 Panama. But you don't do it for the rest of your life. I mean, the point of living is to have fun. You don't want to live like a Monk for the rest of your life. That's not the point of life, but you give yourself a budget, like for the next five years. This is my budget. As long as my revenue doesn't increase. This is where I'm going to reduce the expense so that I can put I can put in my part my seven part, $350 a month. If I increase my revenue, great, then I don't need to decrease my spending. I can keep it the way it is and just put a bit more in the pot. Now you're talking 300. So you start with £1000 and say, you really go crazy and you put £500 a month of saving you scrap like you do some extra work. You cut like restaurants. You only go like maybe once every other week, you cut on the drinking massively, or you drink home much cheaper. You do all these things for five years. Now those five years, just by putting away £500 a month, you get to a nice spot of about £35.05 years. Five years is a very short time. Five years is yesterday.
It feels like it's a long time ago.
I can't go out for five years. No, you can't. But maybe your budget only allows you to go out once a month or maybe twice at most. And now this five years has passed. You have more than £30,000 and keep in mind that you still have your job. So you still have money coming every month so that you have 30,000 times you have to live on it. That's your seven part and you have income that's going to come in the future. What do you do now? So now that's where the budget measuring your spending and adapting it to how much you want to save. That's when you have to stop doing that a little bit, because now you have enough of a pot that an investment will have a sizable impact. And so another question is, what do I do? Well, equities in the long term and average, they bring you 7% and then you have, like, fixed income. Maybe it's going to bring you an average, like 3% in the long run. Otherwise, now rates are so low that it's going to be hard to even get 3%. But these are the kind of numbers you're looking at. So 7% means that basically you double your money every ten years. So like, if you put that 30,000 pound in stocks and you just sit on it, you just forget about it. You could reasonably expect to double that money every ten years. So after ten years, that 30,000 pound is 60,000 years is going to be 120,000. Of course, in the meantime, you could have a massive drop and come back. So you need to have some time of skill. But it's a long term average of stocks at 7%. So now you're talking okay. After 20 years, that 30,000 pods has become £120,000. Well, that's pretty nice because you have £120,000 after the 20 years and you came back to spending as much as you were spending before going out and drinking and everything. Well, now the £120,000 on top of your pension and you can go live in Spain and have very nice life. It's a nice part. But of course, people might think too, like, okay, if I sacrifice for five years and then put that money in stock market and just sit on it for the next following 20 years. Now I have a pot of 100 and 2130 thousand pounds. Okay, that's cool. But that's not enough to change my life. I'm not going to do all this exercise for that. Fair enough. Now, even before we go to some investment, what do you think is knowing that equities in the long term in the very long term? Because any year it can go up and down a lot. But in a very long term, even the equities give you a 7% yield, which basically means you double the money every ten years. What would you think is the next best investment that actually can probably destroy at 7% and make you maybe 15 20% property?
Property. Very good. Now, do you see why does that mean that historically properties go up 20% a year, 30% a year?
Historically, don't they don't.
So why do I tell you you can potentially have 1520. 30% of your return by investing in property in the long run to smooth out when clearly the prices don't do that.
It's like you might not make sense, man, you got to go back to school. Well, here's the little dirty secret. It's leverage. So what happens in housing is you don't buy a house with cash, the house £30,000, you put down £30,000, 10%, then 90% you borrow, right? What does it mean then? Okay, if that house, which is worth £300,000, if it goes up only 10% to £330,000, well, you double to your 30,000 pod already already. So that's how a 10% increase in the housing market can mean a doubling of your investment.
Which is what people don't think about.
This is what people don't think about is the power of leverage. Now, leverage also goes both ways, like housing goes down to upsets you just lost all of your money. That's the dangerous thing where people do it a bit too much like some people have made fortunes and lost it like all by speculating in real estate. But my thing for people is saying the first thing you need to focus on is maximize leverage in a safe way. And what is it if you buy ten properties because you're trying to make a cleaning, that's one thing and you might go broke. Because if house prices go down just a little bit, you lose everything okay, fine. But you're paying rent, man, right? You're paying rent anyways. So if you buy a place that you're going to live in, the rent money is just basically your mortgage. You pay monthly. Then even if properties go down 20%, you don't care, you're not going to sell. You're going to sit on it because you're living in it, right? And that property price is going to go back up. Which means with time, the power of leverage will work in your favor. And like speculator by ten properties. And when the price goes down a little bit, he cannot afford anymore to make his monthly mortgage payment. You can because you've measured you bought a house, which you know, you could afford with basically the rent that you pay now. And so that £30,000. You sit on it for 20 years, as if you were paying rent. In your mind, you're just paying rent. You pay mortgage, you're just paying rent. 20 years has gone now the property is yours. There's been some inflation. Property prices have probably gone up a little bit. Maybe a lot of it depends on the time. So now that house, maybe instead of £300,000, maybe it's worth £450,000. And that 30,000 pound pop that you put in 20 years ago as a deposit. Oh, man, it's worth £450,000 now, and you can cash it out. You can sell a house, and now you have half a million pound. You can go live way better in Spanish. Whatever is your deal.
I think the problem is for a lot of people, they don't have the long term view. I agreed they have a very short term picture. Like, I want to make money and I want to make money in a year.
I agree. The thing is so what I described to you is like the most safest and most guaranteed road to wealth. Make your budget adapt to your spending, to how much you want to save every month, save for five years, seven years, five years, seven years. It's a very reasonable effort. When you go to College, you in for five years. It's not a crazy ask for people to commit for something for five years. It is a crazy ask to ask them to come in for 50 years. But for five years, it's very reasonable for you to achieve your goals. You get there, you get your initial deposit, you buy a house and you build wealth in your house. And naturally, over a full period of 20 years. Now you sit on a really nice path. And by the way, if you have not done all of what I just said, you would have spending in alcohol, paying rent. And at the end of it, you'll have nothing to show for all these 25 years of work, you'll have nothing to show for. And so what I'm describing is the best path to building proper wealth that will guarantee a decent life when you and your old days. And also you can think of it as like when I have kids now, I don't need a house anymore. I can live in a small flat. I sell the house and that's a part for them to start their lives in whatever they're doing. Maybe they do a small business or maybe they need the home is a place and it's to put them on the property later. What? I just described the budgeting, the adapting the spending to the amount of money you want to put on the side. And then after you build a small spot after five, seven years, buy the place and live in it not as a speculation, but living that place. So you replace rent by building wealth, you build tremendous wealth. We're talking like ten times 15 times what you put initially, that's a huge.
But people don't see it.
They don't see it.
Now, the trick, though, you actually very quickly you picked up on it, is it takes a long time. It takes a very long time. So it's the five, seven years of discipline to build in your deposit. And then after that, it's the discipline for the next 20 years to pay your mortgage. It takes a lot of discipline. I agree that's the big trick. And that's the reason why what I say is simple. So why isn't everybody doing it? Because human nature don't have that discipline if you want things right. I'm sorry to tell you, but you have to do the hard work. You have to have that discipline. Yeah. Now, what I described to you is the best, most guaranteed way to build very sizable wealth. I'm talking somebody on a 50,000 pound salary, building like a part of a million pounds after 25, 30 years. I mean, it's real money. We're not talking like some extraity that we're talking proper money, but it takes a lifetime. It takes a long time right.
People don't like that. People don't like that. Oh, I got to work 25 years. You got to work 25 people don't like that. So the truth is because at life, I'd say that's the only way to build proper wealth. The truth is, there are other ways to build because I've just described something where you made, like, 15 times initial investment. It's huge. Obviously, if you initial investment instead of £30,000 is £200,000, you can do. So if I tell you, this is the only way. This is the proper way of building wealth. That's one thing. But it's not true. The truth is that there is a way to build massive, super fast, crazy wealth by speculating. And it's extremely dangerous. But it works for some people. And it burned a lot of people. And that's investing in something. So once you have that 30,000 pot to invest it in something that is very speculative. And right now, that's crypto, right? I mean, 15 X ten X. You could do that in a year. Forget about 2025 years. And that's extremely alluring right. Because if you really rationally, sit down and think through. I think what I described, most people would agree that it's a reasonable way to build wealth, very reasonable.
It's not very attractive, very reasonable.
And more importantly, it's true.
It is true.
Most people. I think if you sit down and go through the motion, the math and budgeting and do all that, I think that's it. If they're halfway in the wife don't see it, they still don't like it. But don't see it. Now. I can totally understand the enduring of crypto because all of that work, that five years of saving and 2025 years of mortgage payment, all of that work can be done in a year in a year. And that's, like, for your average outcome, some people may have time forget about ten times. So I understand how alluring the crypto species. And so I won't let anybody don't do it because I wish I put, like, 30 grand crypto, like, a year ago. But the thing to understand about leverage is that leverage cuts both ways.
So the thing can go up ten times. It can also be divided by ten, which is what people have experienced. But people who are pro crypto don't give you the both. They don't give you the full picture. They only give you the positive picture. Yes.
But it always goes up and it's going to go up again.
And if you think, oh, but there are some risks, then they think, okay, start like, attacking you on other things, not on the facts. So what I would describe, because I'm sure most people who think about personal finance and they're thinking about like, okay, I want to change my life by building a nice saving pot, for sure. Most people have considered crypto. I mean, it's just so much fun of us.
I mean, it's what is sexy at the moment. Everybody's talking about crypto. It's crazy.
But we're talking about crypto, but not only right. Like, look at Tesla stock last year. He did, like over ten X as well.
But even Elon Musk is talking about crypto.
The company barely makes money. I mean, it's crazy. They are from time to time in history, because back to the tulips.
Let'S set this scene. The success of the Dutch economy meant that the middle class had cash to drop on luxury items. And tulips were one of their favorites.
Why in the world were flowers a luxury item?
Well, tulips were new to the Netherlands and hard to get, which made them a status symbol.
As you can see, this man is very rich and powerful. Many tulips, this family is doing pretty well. And this woman, oh, no, she has but one Tulip.
It's best not to look her in the eyes.
And rarer tulips with multicolored petals commanded the highest prices. They were basically the Dutch version of a limited edition Beanie Babies.
Rare tulips for sale going fast.
Folks in the 1630s to prices began to rise.
Oh, brother, I can't keep up.
And then prices went from highs to completely insane.
I must have that tolerance. I'll give you 500 builders now and you give me a contract. I can redeem in six months.
That sounds like a perfectly harmless solution.
This is what's called a futures contract. And here's the important part. Once you had the contract, you could resell it to someone else, potentially for a lot more money. And that little feature brought out the financial speculators.
If he paid 500 Gilders for a single flower, I bet I can find someone willing to pay even more. I'll buy that contract for $1,000. Did you just make a 500 Gilder profit of a single flower? I've got to get in on this.
The prices in this rickety market took the heck off. And the result was.
Through the history of humans. We just don't want to make the we don't want to do the work. We don't want to make the effort, and we don't have to wait for 25 years. That's crazy long time. We've always been attracted by like, crazy speculation, not to say they don't work because, sure, a lot of people can actually call in and tell us I'm at $10 million with $10,000 this in Israel, and I'm not disputing. A lot of people made a fortune. What I'm saying is that in crypto because it moves so much and it can really move as fast up as down, almost depending on when you get you invest, you'll find that you could make a lot of money, or you can lose a lot of money. And that has happened in both ways.
It's the allure of getting rich quick.
Yeah. And it's not something say specific to crypto.
It's just crypto is just the newest iteration.
Exactly. And some people in crypto think they've just found the optimal way of getting up. There's always been schemes to get rich quickly, and they'll always be very leery. And then the question is, if you answer early enough, you can bundle if you don't, you can lose a lot. Whereas what I described is you were paying rent anyways, right? You're going to live in the house, right? Just pay your rent.
In fact, what you described is so reasonable that you could do both.
That's exactly where I wanted to go. I don't know if you read in my mind because we've done each other for so long. I used to think of speculate for the longest time. I used to think of speculative investment to be stupid, because it's not a controllable risk. So in my mind, it's like it's like jumping from a plane without a parachute. No, man. I'll jump with a parachute. I know I can die, but it's like 0.5% chance. I like my heart because I like jumping in from planes. I wouldn't jump from planes. And for me, getting to the house was like doing something risky, but you could reasonably expect to actually come out good.
Whereas for me, speculative assets. And I'm not talking about crypto and pathway, for me, it was stupid because it was just like doing the Russian roulette.
It's interesting, considering that you worked in investment banking that you're saying that.
Maybe because of my roots of like, maybe valuing the fact of not worrying about meal at the end or maybe because of what you saw firsthand. Right.
I'm sure you saw people making incredible amounts of money, but I'm sure you saw people losing money as well.
I saw people lose a lot of money.
I saw people ruin their life, and it doesn't have to do with the amount. It's just like when you lose everything, whether that everything was 100 grand or 100 million, it's a very dark place to be. And I've seen it. That's why I used to really be very I used to be very unresponding to speculative investment, because for me, it was just taking stupid risk. I mean, it was literally for me taking stupid risk. I like risk. And I think taking risk in life is one of the only way you can actually progress. Like you go to a new country. It's a risk. You start dating somebody and you get married. It's a risk. Everything in life that is worth anything is you're taking a risk. But there is calculated risk, which I'm very much pro calculated risk. And then there's, like, silly risk. Down luck. And I don't want to count on down luck because I'm not a lucky guy. I want to take control risk. And so for that reason, for the longest time, I've always been against and I've been presented in my life, I've always had people come to me because especially when I was investing banking, they knew I had a bit of cash offering me, like, different speculative investment schemes. And I never even consider them. And most of the time, it was the right thing to do.
Did you ever miss some?
Oh, yeah. I missed Bitcoin.
If you had a chance to have gone into the Bitcoin Arena, when would have been the best time?
Well, I went into it because I built the company. No.
But I mean, from its inception, right. Like, when do you think was the right people are getting into Bitcoin now, right. And other digital currencies, right. Which now is probably the last time it might still work. You never know. But when do you think was the ideal plan to hit that?
Well, I think it was 20, 15, 20, 16.
So we missed the boat by about five years.
But I'll tell you why I say that.
Up to 2013, Bitcoin was like, this funny thing, like extremely speculative and even more volatile than it is now. And it was really very few people heard about it. Very few people heard about it. And one of the biggest institution in that space was this, like mongogs. This exchange believes in Japan. And of course, the finger was a scam and the ceiling court now, like swapping out and trying to recover some of the funds. And the exchange blew up. And so that should have been the end of it.
Like this tiny, tiny, speculative thing goes up. It's a very niche thing. Only a few people know about it and playing it. It's very hard to get in and get out like, it's such a weird thing. And then the biggest company around that space just blew out. And it was just a shame of management and fiduciary responsibilities. So that should have been the end of it. That meant when something really bad happens through an asset and it doesn't disappear, then it means that asset has some potential, right? And that's when it would have been the time to gain because you'd be like, well, this mongoxy should have ended Bitcoin, and it didn't know it's worth a risk. It was much higher than, like a few years prior. But I think the risk reward was best at that time. That's my personal opinion. But the thing with going into those very highly speculative investments is, as I said, I'm always against very speculative investment. And then my mind has evolved, especially after building a company in that space and looking at it from the inside. I think the optimal thing is to still do the house, but maybe take 5% of your wealth and stick it in something script to change it. And I'm not saying crypto. It could be crypto, could be on something else. It could be whatever is the next thing. Crypto field has been played out. Let's just see what's the next thing. And I believe if I had that mentality of, like for 95% of my financial decision, do things that I controlled with, and then for 5% or 10%, go for the crazy things I would have probably lost several times. But then I would have cut on something and maybe 100 X on it. And that would happen. So now my personal finance opinion of very speculative things has not changed in the sense that people who put hold their wealth or half their wealth in it. I think they're making a big mistake. But people who put zero in highest discipline. Now I'm coming to the after all these years of observing different. I believe now that actually, if you're not involved in something highly speculative, you potentially need to know potentially. And if you look at, for example, tech products, visas, that's exactly what they do when they spread around million dollars here. Million dollars there in different companies. They know most of them are going to zero. So if you have a calculated, reasonable risk taking hat you'd say, oh, these guys are crazy. What are they doing? Well, they make billions of dollars. And you know why it's because if they invest in a hundred of speculative startups because any startup is very speculative than they were. I mean, most of them are going to fail. 90% goes to zero five, rapidly break even. Just bring back the money that you initially invested. But five of them are going to just the wins on those five are going to completely overdo all the losses on the other one. And then some and observing building a startup like getting into the VC world and trying to understand the way they work and talking to them and trying to raise funding. And what have you initially very naively and maybe a bit arrogantly. I thought they were a bit silly the way they were giving away money. But then after the fact, after seeing followed like a few of them and what they've done, I can see the value in having a VC approach to things where sprinkle a little bit on those crazy things just sprinkle a little bit. But I am of the opinion that when you sprinkle in very speculative things, you don't do it with half your wealth or even a quarter of you. You do it with lemon that you lose it. It's going to hurt a bit, but it's like a mosquito bite.
Yeah, the first thing is to get your house in order, treat it like a company. It's much safer to take the sensible route. And if you can afford, if you've got a little bit to play with a little bit, you can afford to take a slight risk. You can take it. But do it sensibly.
That's what I think. I think that combination of going towards owning your own home and maybe if you can afford buying two, it's even better in a way, but trying to build wealth that way budgeting, knowing what you spent saving, adapting your expense to your income and using the leverage of real estate to multiply your gains, I think that's the right way to do it, being it for the long haul, because even if you think 25 years is a very long time.
It will come and go.
The you in 25 year will thank you for doing the right thing.
You'll get there soon and.
Now, I believe also the last few years I've changed my mentality where I sprinkle a little bit in the crazy stuff.
You're at the point in your life where you can afford to take a little bit of a gamble here. So what you're saying is you would have not said to a younger self. Yeah, man, just go and go for the risks. Right. Take the safe approach, because this is guaranteed in 25 years, you're going to be in this position. But once you've got to a position where you're like, okay, now I know I've got a safety net. Now I can use 5% here.
I disagree. I actually would tell my 20 year old do what you did. Save money, try to build your place. I would tell him that was the right path. Just keep going. But now and then put two, three, 5% in something crazy. You never know because you don't know when crazy things happen. And so if you wait sometime or if you wait until you're super comfortable to these boats always come and go. But the thing is that they don't come every year, right?
And some of them sink.
Right. So that's why I would tell my young self you're doing the right thing. You have the right approach, but loosen up a little bit. I mean, not with half what you have, but loosen up a little bit.
Don't be too fast and loose.
But loosen up because truth is like 5% of what you own if you lose it. But it doesn't really change material, right? I mean, half a lot. Half. It's hard to come back from half simple math thing that it's not obvious, but like, people thinking like, I make 50%, I lose 20%. But that's not the right way of thinking. You have to think in compounding. What do I mean by that? If you start with 100 and you make 50%, that's $150. Now you lose another 50%. If you go, I'm back to 100 now because 50% of 150 is 75. So now you're at 75. So we're up 50 down 50. So you're thinking average. I should be up zero. I should just be like, flat. No, you're down 25%. And so the compounding effect in your life of your decision is something people usually don't realize. That's why that is the main reason why you never want to have at some point in your life losing half what you want. It's very hard to come back. You lose half of what you want. If you lose 50%, it's not making 50% that are going to get you back where you work. You have to make 100% just to go back to where you started the zero.
That's why in life it's okay to make more mistakes just to explore in case you never know the optionality of doing something crazy. But you don't want to put such a situation where you lose half. That's very hard to come back for. And if you needed 20 years, initially, 90 years, something I really, really hard to commit to.
Did New York live up to expectations? It's more than that because there's an image that is perpetuated with money and banking and finance and New York.
The crazy party, the extravagant lifestyle. Was it like that, or is it a little bit different?
What I've experienced was very different. So I don't want to say that it didn't exist.
You are destroying people's dreams.
Now. I'm sorry, guys. Well, first of all, I was a bit of a nerd. My job industry was, of course, basically spend time building models and implementing them to price financial policy. It's very nervous environment. So maybe not as extravagant sales people more like outgoing people. When I moved into trading, I saw more of the party side of things. They were great parties, but I have personally do not experience the kind of craziness you see on the Wolf of Ocean. When I watched the movie, I was shocked. I'm sure it happened.
You're saying that you missed out?
No, not really. Because if you look at I don't think they were happy and they screwed up their lives by doing what they did.
I think the moral of the story, right is that money doesn't buy you happiness.
No, money is an enabler in my mind. I don't like people who say money doesn't make you happy because usually it has a judgment to it. So I don't like that kind of line. When I think about what money does, at least for me, is that when you have to make choices in life, very often you constrained by natural things, how much money you have, how old you are, where you live. There are a bunch of constraints anybody likes at any point in time. And a lot of silly constraints are just money. And so the way I see money is if you have money, a lot of the city constraints are completely disappear. They're gone. And so then you still have the edge constraint and a whole bunch of constraints. Nobody is completely free. But at least you've minimized the number of constraints. And so your space of choice is much larger, much wider. So that's what I see with money for me is an enabler. It'd be so easy to be happy. All you have to do is make money. Actually, it'll be great because it'd be so easy to be happy. Then you just make money. But being happy is very difficult. It's a very complex thing.
It's very complex. People do equate money to happiness. But then there are lots of people who have money who aren't happy.
Yeah, and also the other aspects of it. That is strange is people request manage your happiness. But then you have to ask them how much. Exactly how much is it? $100,000 is it a million dollars? Is it ten? What's the amount you think is going to make you happy? And everybody obviously has different answer to that, which starts to tell you there's something wrong with it. And also, more importantly, I don't have the status. I'm pretty sure if you ask anybody who has reached Moniko, they wanted more. Of course I don't have the proof of that statement.
I agree. How much money is enough money is an interesting question. I don't think there's ever a limit.
I agree with you. I don't think there's a limit, and I think it's mistaken. What's the real challenge? What I mean by that is I think sometimes it's easier to express your goals in terms of money or when I can buy a house or I can buy a bigger car when I can because it's material, which means you can actually vision it and you can touch it and you can work towards it. It's like in martial arts, like they have this belt system. But really, there are no belt, right? You just learn and learn more as you go. But there are these belt systems. So you're looking are now my belt.
I have a stripe, two stripes. But in reality, there are no belts. There are no stripes. But it's very hard. I think, for us to focus on metaphysical objective, like happiness. What's happiness? How do you touch happiness? How do you define happiness? How do you measure happiness? I think it's much easier to strive for goals that are material, not in the money sense, but in the physical sense. Like, okay, I want to buy a house. Okay. So now I know what to do. I work, make the money, buy a house. Now I'm happy. I just bought a house and then you find out you're not happy. You're like, okay, actually, I need to buy two houses. And I think it's fundamentally because people are trying to solve the wrong problem instead of solving the how can I be a happy person and make the people happy? They're solving problems that are more physical. I'll make my family heavy by buying them a bigger house.
Obviously, literally. We live in a physical world. So the metaphysical aspects of life are difficult to grasp and understand, because happiness is a very subjective thing. It's an emotion. They do measure happiness. The United Nations, they have groups of people who go around the world and they measure happiness. But how do they measure happiness? They measure happiness, not in the sense of how much money do you have. They measure how happy a society is by, for example, the level of education in a society.
What's the literacy level amongst boys and girls? How much health care are people provided for what's the sanitation like? And that is the indicator of how happy a society is. Which is interesting because I think people tend to think if you have money, that's part of the problem solved. But when it comes to big organizations, the UA and going around measuring happiness, they don't necessarily look at the financial aspect. They look at the other thing.
Can I rebound the metrics that you have described this organization use sanitation level of education. They all make a lot of sense, but indirectly, they link to money. Very poor country. Most likely, sanitation is not going to be great. And again, if these are the metrics of happiness, then I'm not saying it's easy to solve education. Sanitation for the word. But still, you keep yourself in this very physical world where you're like, okay, I got to build more schools. I got to build more toilets. But once you have toilets and education, all these metrics fulfilled. That's one part of trying to be happy, because if it wasn't the case if fulfilling all these metrics actually made you happy, you wouldn't see any body who comes from a fairly wealthy family doing drugs, being unhappy. And in the worst case, scenarios like meeting suicide. And yet it's common pleasant.
Fortunately, yeah, it's common place in very wealthy nations, right? Nations that do well economically, I believe.
Actually, the seaside rates are higher in the world developed country and depression is higher in the country now.
Is this because they don't get measured in countries that are underdeveloped? Or is it because underdeveloped countries have more primary problems to solve? And so they don't have time to worry about being oppressed to worry about? Am I happy in life? They need to make money to feed themselves and feed their family.
Yeah, I don't have data on that. But if I had to make a guess, I'd say the later. I don't know if we said in the trouble, but I was born in France, but my parents, both of them are from Morocco. In they're North Africa. And every summer when I was a kid, I was shipped to Morocco with my brother and sister so my parents could have some peace. And I was living my uncle in this tiny town of Morocco, very rural. One thing that stayed with me in Morocco to the point that you were just making is that because a lot of people that striving for very basic things that we take for granted in the west, they don't have time to worry about all that metaphysical. So I would tend to think that the less you have and the easier it is to make you happier relatively to the spot where you are when you have nothing. Suddenly you have food. Once you have, then you're happy, right?
When your child is sick and you combine the medicine.
You'Re happy, then you're happy.
They say money doesn't make you happy. But rather than my crying in a Ferrari.
This is very strange. Anyways, I'm not pretending that I know how to become wealthy. I'm just a Disclaimer. I'm not guaranteeing anything, but I hope I describe something that is reasonably trial path of getting two of that most people should be able to take.
I think it's been a very informative explanation of how you can make the most of your wealth. And it's been very simple as you structured out. But a lot of people miss the simple stuff because they like the fancy stuff. I guarantee now that we've done over an hour.
We did. Wow. Yeah, we did realize.
But it was good, man, it was great. It was really good. Thank you. Let's do another one. And then if people reach out and they want to kind of learn a bit more, then we'll talk about that with pleasure.
Thank you very much.
For listening to the show. As always, check out my show notes and tune in in two weeks for the next episode. Sound like Dr. Dre.
I really appreciate it.
I'll see you in two weeks.
SPEAKER A and SPEAKER B discuss SPEAKER C’s career, how they got into banking, and the decision to move to new york.
SPEAKER B and SPEAKER C talk about the unity of people during the 911 crisis. SPEAKER B and SPEAKER C overview polarization in the world. SPEAKER B and SPEAKER C discuss financial literacy and how people can invest their money wisely.
SPEAKER B and SPEAKER C talk about monitoring your company’s spending. SPEAKER C says if you didn’t keep it at track of your spending you’d be in a dire situation. SPEAKER B and SPEAKER C overview putting somebody’s personal finance in order.
SPEAKER C mentions the median monthly saving in the UK. SPEAKER C talks about how the two numbers are important because the median income is 30,000 and people who make 30,000 a year have a median savings of 180 a month. SPEAKER C notes that typically people want to do it in a safe way and invest in things that are not too risky.
SPEAKER C discusses investing for the long term and says that equities bring a 7% yield and that you double your money every ten years. SPEAKER B and SPEAKER C overview property investment and how a 10% increase in the housing market can mean a doubling of your investment. SPEAKER C talks about how the first thing you need to focus on is maximizing leverage in a safe way.
SPEAKER B and SPEAKER C talk about the safest and most guaranteed road to wealth. SPEAKER C says for five years, it's reasonable for people to achieve their goals. SPEAKER A and SPEAKER C overview building wealth. SPEAKER C notes that there is a way to build massive, super fast, crazy wealth by speculating.
SPEAKER C discusses how alluring the crypto species is and notes that leverage cuts both ways. The Speakers overview tulips, which were a luxury item in the 1630s. The Speakers discuss futures contracts. The Speakers talk about making a 500 gilder profit on a single flower.
SPEAKER B and SPEAKER C overview the allure of getting rich quick. SPEAKER C mentions that speculative investment is not a controllable risk. SPEAKER B and SPEAKER C talk about when they missed out on bitcoin.
SPEAKER C talks about how the optimal thing is to still do the house, take 5% of wealth, and stick it in something script to change it. SPEAKER B mentions that the first thing to do is to get your house in order, treat it like a company, and that’s the right way to do it.
SPEAKER B and SPEAKER C disagree on whether to do the right thing and put 2% or 5% in something crazy. SPEAKER C notes that it’s hard to come back from losing half what you want.
SPEAKER B and SPEAKER C note how much money is enough to be happy. SPEAKER C says it’s easier to express goals in terms of material, not money. SPEAKER B and SPEAKER A overview the metrics of happiness.
SPEAKER B and SPEAKER C talk about why depression is higher in wealthy nations. SPEAKER B says underdeveloped countries have more primary problems and don’t have time to worry about metaphysical things. SPEAKER B and SPEAKER C discuss how you can make the most of your wealth.