First 100k savings plan: three systems that work together

0:00You do not need a high income to hit $100,000. You need one of these three paths. And if you start from zero today, you can still beat the person or the kitten who started 5 years ago but is doing it wrong. Because most people think you need to earn 6 figures to build wealth. That's Wall Street's biggest lie.

0:26I'm about to show you exactly how a gas station clerk making $15 an hour accumulated $100,000. And it didn't take him a lifetime. It took him 4 and a half years. And why the third method I'll share with you today, well, it's the same strategy that turns your first $100,000 into $1 million.

1:05I'm Felix Prehn. I used to be an investment banker. I'm now retired and the founder of the Goat Academy where we've helped 20,000 regular investors already. I'm also the co-founder of TradeVision.io where we make Wall Street's data available to you. And you know what was going on in my mind when I was a banker? I was watching the wealthy get wealthier while regular investors, well, they got fed scraps.

1:28And that is exactly why I'm doing now what I'm doing as my retirement plan, because our mission here is very simple. Give you the same tools, the same strategies that Wall Street uses, but in plain English. Here is what they don't want you to know about building your first $100,000. It's not about some complex trading strategy. It's not about crypto or some other moonshot. It's about three simple systems that anyone can master.

2:02And if you stick around until the end, I'll show you how to spot the exact same winning stocks that Wall Street finds before they explode. In fact, let me do one better for you on that one because that will probably make this video an hour long. I've actually recorded a separate video on that. It's only 15 minutes long. I'll walk you through the three steps, how to find better stocks, winning stocks, the same three steps Wall Street uses, and you can get access to that at phoenix.org/getfree.

2:26But let's start with our number one. This is about maximising your earnings, and money has to come in to the bucket before it can grow. Every extra dollar of income is rocket fuel for your wealth building journey.

2:54And there are three paths. The first gear is get a raise. There's a statistic that'll blow your mind. Pay Scale data shows that 70% of people who ask for a raise actually get one. Yeah, most bosses are not very good negotiators. And most raises are between 5 to 10%.

3:16And here is the maths that matters. Let's assume you're really young. Maybe you're a little bit older than that. I know many of you are, but let's just say you're 25 years old right now and you're making a pretty low starting salary, like $36,000, right? That's your salary. Now, you're going to get an 8% bump because you asked for one. Well, guess what? That is $3,000 per year.

3:41Now, if you do this every 12 months, you want to know how to do it? Well, let me show you how to do it. I was literally thinking about making an actual app for this to give you the steps. Do you want me to do that? Let me know if you want me to do that. We're thinking about doing that. What you want to do is you want to pull up your last 6 months of achievements, results at work, problems solved, money saved for the company, all that stuff.

4:06And maybe you can't remember. Well, then start writing it down at the end of every day in a document that you shan't lose. And by the end of the quarter, you'll have tremendous ammunition to go into that meeting with some confidence. The more precise, the more concrete, the more examples, the better. And you could literally share that document with your boss in a couple of months. You want to present your case like an investment. You say, "Here's what I've delivered. Here's the value I created." That's gear number one. Get a raise.

4:46The gear number two is what most people mess up. They try to become world class at one thing. Smart money says combine two average skills until employers see real rare value. What do you want to do? You want to get another skill. It's much easier to do than you think.

5:04Maybe you are in customer service. Well, guess what? Customer service right now wants to be automated, right? So why don't you learn about the latest AI tools and become an expert at implementing this? Now you're a technical support specialist. Or maybe you work in graphic design. Well, why don't you add some data analytical skills to that? Because now you become a marketing analyst. Or maybe you are writing copy for your company. Well, why don't you learn about social media, Instagram, and so on? Because now you become a content marketing specialist. It's actually going to bring in money.

5:39There's a very simple rule that is a proven rule. It is the 15-minute rule. If you spend 15 minutes a day right before you go out or at night, I do it in the morning, and you keep doing that and you do that for 365 days, guess what? You are now in the top 95% of people that have that skill. That's all it takes. How do you learn? Well, start with the free resources, YouTube, courses and all that kind of stuff out there. And that'll get you so far. Then you're going to get to a level where you want to get further and you might want a firefighter coach because that'll accelerate your learning.

6:19Now, the third gear to this is what most people don't want to do, but the smart people do it smartly. It's the dreaded side hustle. But Felix, I work so many hours already. I haven't got time for this. Well, hear me out. There are fun things you can do. If you're like me and you got a golden retriever lying around somewhere, I think he's hiding with the cats, if you dog walk on the weekend, you could make 40 bucks a walk. Depends a bit on where you live. Might be really fun. Might be really healthy for you. Just do two or three of those on a weekend.

6:47You could do other stuff, pressure washing and that kind of stuff. You could flip items from flea markets and sell them on Facebook or sell your services on platforms like Upwork where you tend to get higher salaries. I hire a lot of people on Upwork. We spend millions of dollars on Upwork, by the way. We pay some people $500 or more per hour on Upwork.

7:08And why am I making you do this? Because this will generate more money that goes into the bucket. And the beautiful thing is what I've seen, that people who actually do this, this often leads to the real freedom. The people who do this often are able to quit and still continue to bring in income while looking after their investments and their money. And now they have a beautiful life. They got the income, they got the investments, and they got the time free.

7:31So this money here goes where? It goes to your first $100,000 account. As Charlie Munger says, "The first $100,000 is a bitch. After that, it's much easier." God bless his soul.

7:47Now, the next step is the most important section for most of you watching. Big income is completely useless if it just leaks through the holes drilled by impulse buying and social pressures. Because remember, you have your money right now. You got some extra money and both of it goes into this big beautiful bucket which is filling up with money till it hits that $100,000 mark.

8:12But guess what? There is a little devil in the detail and he's drilling little holes in the bottom. And what are those holes doing? Well, those holes are leaking that money that you've just earned and it's coming out down here and it's being wasted. So how do we fix that? We do one simple thing. It takes 5 minutes. It is the 5-minute money audit. All right, write this down. I literally want you to grab your phone. I want you to open your banking app.

8:51Literally, they murder people's freedom. The first one are subscriptions. Have a look in your iOS app or in your Google app how many subscription services you pay for from your phone that you don't use. I'm going to give you a clue. Most people have 5 that they don't use. Bring zero long-term joy.

9:11Now, the second one is what I call social wastage. Social wastage is stuff that you do because it's driven by FOMO. You feel you need to have that drink or the cocktail or the dinner or whatever to keep up with the Joneses. You feel you need to buy something, a watch or a latest iPhone model 2683 which is slightly different in terms of colour than the last one, so you look like someone with money.

9:42Let me tell you a little secret. I've got a lot of friends nowadays who are very wealthy. I mean, decamillionaires, hundreds of millions of dollars, billionaires. They have iPhones that are like 5 years old or older because they don't care. Already proven to themselves what they do.

10:00The gym and you have a gym membership, it is not going to make you any fitter. So cancel the bloody thing and work out at home.

10:06All right. Name something you'd gladly give to your spouse if you decided to get divorced. I'm going to go with debt. Show me debt.

10:15Let me walk you through again a low-income example why this happens. Here's a chap. We shall call him Matt because he's called Matt. And he takes home after taxes $33,000. That's his basically income after tax income.

10:34Now the problem is that he spends $29,000 just to live. That means he is saving just 12%. And there's a lot of financial gurus out there say put 10 to 15% into investments and you're going to get your freedom. No, you won't. Wage slavery for life is the result. If you save 12%, you are going to have a hard time.

10:56So what do we do? Well, two things. We cut some of those subscriptions. You know what his social waste was? Lunch. Spend extraordinary amount of junk food every lunchtime. So what did he do? He packed some lunch. He was really happy about that. He made slightly larger dinners and he took them with him. And that alone saved him $4,000.

11:19So he got an extra $4,000 which meant his savings rate is no longer 12%. It was now a more respectable 22%. Why does that actually matter? For a very simple reason. For him to get to the first $100,000 saved on his original savings rate, it was going to take him 9 years. 9 years of slavery. At the new rate, that's now cut to 6 years. That is 3 years of actually retiring early. Not saying you can now retire on 100k, but he's going to get there 3 years early.

11:56You and me start working at the bank and then 20 or 30 years later, we walk out the front door like nothing even happened. That's called a job.

12:09Now, the next one is what is holding most people back, and it is debt. Not any old debt, but it is high-interest credit cards. They're like termites eating through your wooden house. They literally eat through your gains faster than any investment can ever replace them. If you have a credit card and you don't pay off the full balance, you're probably paying something like a 25% interest. You can't expect the market to deliver that for you. So your first priority is pay that off. Cut out the bloody card if you can't be trusted.

12:44Now, how do you get out of debt? Let's do a quick approach. The logical way of doing it is you write down all your debts, whatever they are, mortgage, car payments, the dreaded credit card, and whatever else you might have, store cards, all sorts of stuff. And then you sort it by the highest interest rate. So maybe your credit card is 25%, your car is, this is a month, right? What's your car a month?

13:15I have no idea what that is. I drive a 12-year-old Toyota. I could buy a new car. I could buy it and I pay for it in full, but I drive a 12-year-old Toyota because it's perfectly fine. I'm perfectly happy with it. I'm very comfortable in it and it costs me very little. So I don't know what your car payment is. Your mortgage is probably 5% or something, right? So you're going to want to prioritise this and then probably the car and then probably the mortgage, right? Do it in whatever order that makes the most sense.

13:42The new owners are expected at any moment. Where do you think you're going? Inside. Bought the place.

13:49And then the next step to actual wealth is you need to set up an automated investment. Why do we automate this? Because this replaces willpower. And when do you automate your investments? The day you get paid. And you decide in advance how much you're going to invest because if you say well I'm going to do it at the end of the month, well you're going to waste this money on something else. And your lifestyle is going to adjust to what's left and you're going to be very happy.

14:24And all of this is driven by and leads into something which is called compounding and it is the 8th wonder of the world. That's literally what Einstein called it, where the magic happens. And it's why starting today will beat tomorrow every single time.

14:42Let me give you two identical people. I've got two people. One is called Lily. One is called Jade. Lily invests $400 a month for 10 years, but she starts at age 22. Some strange reason. At age 32, she stops doing her investing, babies or something. Jade also invests $400 a month also for 10 years, but she starts at age 32.

15:21What's the outcome? If you fast forward and say they're now both 62 years old. What do you think happened? Lily has two times the money compared to Jade. Why? She started 10 years earlier. Same amount of money, same investing period. Lily has double the money. Those extra years of compound growth are literally worth more than 10 years of extra contribution.

15:53So how do you want to invest this money? Look, you want to start off simple. That's what I always say. I say investing is essentially a game of 3 buckets. The first bucket is your index ETF. I don't promote any particular stocks. I don't get paid for pumping anything. I don't do that. There's never ever any sponsoring on here. But look at something like VU, which is a ticker symbol. It's very, very low fees. That should be the majority of your money if you're starting out, maybe even everything. I would generally say this should be 50 to 100% of your investments.

16:32Now, the second bucket would be either particular sector ETFs. So if you understand a little bit about how the money flows around the market, then as I'm recording this for example I'm putting my money into gold, into biotech and uranium and energy stocks and things that are at the moment outperforming in a predictable way. You want to learn how to do that? Well watch the masterclasses, felix/getfree. So that could be some part of your money and I would say that could be 10 to 50% or even zero if you just want to keep it simple. This is simple.

17:05And then you got some hedges. I'm a fan of gold. You might want to have a little bit of crypto exposure, perhaps Bitcoin or something like that. And that could be 5 to call it 15 or 20%. Not financial advice, but just to give you some guidelines. But the place to start is always the simplest, which is just put some money into a bloody index fund. Why? Because for the last 30 years the S&P has done 10%, the last 10 years it's done like 12% or a bit more than that. And you want to look for really only one thing when you buy ETFs and that is fees. That's the only difference. So buy the one with the lowest fees.

17:44Now you need to look at chunks. If you're employed, max out your 401k only up to where your employer matches it. After that, stop adding money in the 401k because it's a terrible instrument. The other thing are Roth IRAs. I love Roth IRAs. I think it's the greatest loophole in the American tax code they ever bought. So 401k, grab the free money from the contributions. After that, put it in the Roth. The great thing about an IRA is if you need the money for education or first home, you can make withdrawals penalty-free.

18:15Man, I still don't get the difference between Roth and the traditional IRAs. What's wrong with you? The traditional is pre-tax. But let's get back to our, remember our gas station clerk. He made $15 per hour, which seems like a hard way to make a living. Here's what he did. It's an inspiring story. I think $120 every Friday because he got paid weekly. I pay all my team weekly actually. I think it's a lovely thing.

18:41He used a bicycle to go to work because he wanted to save the gas and the car maintenance. He got a side gig repairing phones on Sundays. He took home to work his own lunch. I'm going to call him cheap, but he didn't. And I tell you what, 4.5 years later, this incredible gentleman, Ed, sat there with $100,000 in his brokerage account. He does still work at the gas station, but he now goes off for like a month in the winter and he volunteers in Costa Rica and enjoys his life and he couldn't be happier. And he knows his $100,000 are growing and growing and growing.

19:21That's literally the power of 3 systems working together and I just taught you. So if you take these steps and you implement them, you can get yourself in a relatively short period of time. And you're probably in a place where you could make more than $15 an hour by the way. So you could actually do this much quicker.

19:36And do you want an exact plan? I call it the sprint plan to put this all together. Let me give it to you. Let me prepare you as much as I humanly can. Here's your plan. Month one, you're going to build a ruthless budget. You're going to list all your debts by interest rate. Remember I said that's the most important place to start. Your debts by interest rate. You're going to pick one side hustle that's going to give you a little bit of extra money. I know some people who've got not that much going on at work. They're running side hustles from work. I'm not saying that's illegal or encouraged. I'm just saying some people are doing that.

20:08Month two, get a bloody raise. Why? Because, well, at least start applying for it because that's going to accelerate everything. All those new dollars, they're going to go into your debt reduction club. You haven't got any debt, invest. Month three, you can also

20:23Do this in month one if you must. You're going to want to open a brokerage account and buy your first bit of index fund. Something like VU, some sort of S&P 500 index fund is what I would do. And you're going to promise yourself you won't sell it unless it's a life or death emergency. Why don't you go to a football game? Not a life or death emergency.

20:44And then you have months 4 to 12. You repeat and you watch and you track and you smile to yourself as you watch that balance grow. And at your one-year review, you're going to increase the amount that you invest as much as possible.

21:01You don't need a finance degree. You don't need a trust fund. You don't need some crazy startup idea. You just need 3 habits repeated until you hit 6 figures. Grow your income. Guard your expenses. Invest the gap. It's not a lottery system. It's like a muscle. You got to train it. Every time you save, earn, and invest, that muscle gets strong.

21:20And if you then want to learn how to manage that $100,000 better, go to Felix Prehn's/getfree, watch free 15-minute masterclass, and I show you the actual 3-step system that investment banks use to identify those stocks before they potentially explode.

21:35And if this video helped you see your path to 100K clearly, you know what to do. Abuse some of those buttons in front of you and share it with somebody you might benefit from. And maybe you can do this with a friend. I certainly recommend you do it with your better half so you're a team. You're doing this together.

21:48Got some value out of this, check out some of the other videos on the channel. We talk about a lot of stuff here that gives you value. My whole goal is to get you to your earlier and better retirement, better life, so you can do what you actually meant to do on this beautiful planet. I wish you all the best.