Wealth building: why small monthly investments fall short

0:00Here is a brutal truth that Wall Street doesn't want you to know. 95% of people who start investing will still be broke in 10 years. Even if they're putting money away every single month, even if they're following all the traditional advice. And right now, as inflation is crushing the middle class and the wealth gap is exploding wider than ever, millions of Americans are making the same fatal mistakes that guarantee they'll stay trapped in financial mediocrity.

0:30If you don't understand what I'm about to show you, you could waste the next 20 years of your life thinking you're building wealth while you are actually running on a financial hamster. In the next 20 minutes, I'm going to expose exactly why traditional investing strategies are usually a trap and show you the 3 wealth levers that actually separate the rich from everybody else.

0:51I'm Felix Prehn. I'm a former investor and banker. That was Winston down there. This is our head of research, Rose, and we've seen firsthand how the financial elite actually build wealth, and it's nothing like what they tell you to do. I'm also the founder of Code Academy, where I've taught over 20,000 students so far, and the co-founder of Trade Vision, where we give you access to Wall Street level news and data. My mission is simple. Teach a million people the strategies that the wealthy use to build real wealth. What you're about to learn will completely change how you think about money and invest.

1:31Let me paint you a picture that probably sounds familiar. You download Robinhood, maybe it's Fidelity, whatever app you choose to use, and you start putting 50 bucks, 100 bucks a month, maybe more into some index fund. You're feeling like a financial rockstar, thinking, "I'm crushing this money game." But then months pass. Your account creeps up a few bucks and then dips. You're still grinding the same job, drowning in the same bills, living paycheck to paycheck. And that's when it hits you. Investing alone won't actually save you.

2:08But here's the math that nobody wants to talk about. You're investing $100 per month. Congratulations. That's $1,200 a year. And that's going to grow at say 10% per year. That's the average return of the S&P for the last 30 years, which means you make but $120 extra the first year. That isn't really moving you that much closer to financial freedom. It's barely enough for dinner.

2:39And even after 10 years, you're looking at maybe $20,000. That's not financial freedom. That's a used Honda Accord with questionable brakes and tires. It's technically progress, but you're basically running on a treadmill. So here's what they don't tell you. The stock market rewards what? Not effort. Nope. The market does not care how hard you work. Couldn't care less. What it rewards is capital. If you're starting with pocket change, your returns will be precisely that, pocket change. This isn't a glitch in the system. That is the system. It's designed to keep you busy while your real goals slip further away.

3:17Now, before we dive even deeper into showing you what the wealthy do differently, some of you might be further ahead. Some of you might already be serious investors and you're serious about your portfolio. So if that is you, I've made a 15 minute free training video for you which exactly shows you how Wall Street finds their winning stocks, their actual rules. It's free. You can get access to it at felixprehn.get free. It's the first link down below in the description.

3:42Let me show you the game the wealthy actually play. Most people scatter a few seeds here and there and they hope for a lush harvest by next week. The wealthy, they plant entire freaking orchards and they build irrigation systems. They don't just invest consistently and cross their fingers for some compound interest. They focus on scaling their capital first.

4:06Here is how they do it. This is the 3 step wealthy system. What's step number 1? They prioritise growing their income over pinching pennies. More money in rather than, "Oh, let me skip that latte."

4:37And then step 2. All these wealth investing gurus out there always tell you, "Save 15% of your money and you're going to be fine." No, you won't. It's just the truth. You just won't be. But they don't want to tell you that because it's not popular and then nobody watches their videos. The wealthy save aggressively. We're talking a minimum of 30%. If you can do 40% or 50% and once you actually get to the top of the mountain, it's going to be way more than that. But that's what they focus on. How do I get my investment percentage, my saving percentage up?

5:10And then number 3, they take that extra income and they invest in great big bigly chunks of money because the market is not fair. Unfortunately, let's walk through 2 hypothetical people here about pretty similar numbers. 2 students of mine. We're going to call the first chap Taylor and he makes $100,000 a year. And then we have the second chap who's called Alex and he makes $40,000 a year. Same market, same 10% return, 10 years later. That's what we're looking at here. So we're assuming here 10% return, 10 years.

5:50Alex, how much did he invest? Well, he invested $200 a month. Taylor invested $2,000 a month. This is really important. Write this down. Honestly, you're going to want to explain this to somebody. Same market, same 10% returns. What did Alex get out? Well, he got $40,000, which is much better than a kick in the teeth or in the groin. But Taylor, you see, he got $400,000. Well, isn't fair, is it? Same savings rate, same market, same time frame. Taylor has 10 times more money, not because he's smarter, but because he had more capital to work with.

6:28And that's the brutal truth that nobody talks about. So before you can invest like the wealthy, you need to earn like them. The investment game is rigged in favour of those who bring the most money to the table. So if you want to actually escape the 95% who stay broke, stop obsessing over which ETF to pick, stop arguing about whether it's VOO or VTSAX or whatever ETF there is out there. Focus on these 3 wealth levers that actually move the needle. These are the levers that separate the wealthy from the 95%.

7:01So lever number 1, it's income. And it's an uncomfortable truth, isn't it? The fastest way to build wealth isn't cutting out Netflix or brewing your own coffee, although it'll help a little. It's making more money. Period. Learn a high income skill that the market desperately needs. I know copywriters who write advertising or email copy who make $20,000, $30,000, $40,000 a month. They're in their 20s.

7:26You could be a great sales guy or girl and you could just be really good at that and you've done some training and you could again make tens of thousands of dollars a month. Or maybe you're good at digital marketing stuff, running ad campaigns, or maybe you're good at AI automation. You can streamline processes and you don't even need to quit your job. You can get a side hustle on those.

7:44Where would I get the side hustle? There's a website and it is not an affiliation. I don't care about those guys and no one ever pays me, which is the way I like it. Upwork. Go and get yourself a side hustle job online. And even if you live somewhere where salaries suck, the side hustle jobs, the Upwork jobs, where you can get a job from somewhere that pays a lot. And now, yes, you could drive an Uber or DoorDash or that kind of thing. It's a really hard way to make a living. If you enjoy pain and misery then go and become an Uber driver. Much, much easier to do something at home from the comfort of your sofa with a laptop. You're going to get paid a lot more as well.

8:19But all you need to do is add the extra $500 a month or the extra $1,000 a month and that extra income is going straight into your investment account and then you're outpacing what most people are investing in a year. Let me give you a nice example. It's actually very close to the truth. Here's a teacher and I've taught many a teacher making $45,000 a year, which is a crummy salary nowadays. Sorry, but it is.

8:44What did that teacher do? He spent evenings learning video editing for free online and within 6 months he was freelancing. Not for some local business that was going to pay a local salary but no, for some guy online, business online, corporate, he was paying him real money. And by the way everybody needs promo videos. It's estate agents, every business out there, everybody needs videos.

9:06And that generated a whopping $2,000 per month. And he invested not all of it. No, he actually rewarded himself. But $1,000 of them, that $1,000 a month is what got him there. And it got him to a place where he could actually ditch the 9 to 5 and go purely in on the side hustle and is now making 3, 4, 5 times what he was making as a teacher. Yes, I'm sorry. We lost a good teacher there, but he's going to have a much better life. So sometimes you got to be selfish and then you can actually start giving back. That's kind of how it works.

9:43Lever number 2 is ownership. The wealthy don't trade time for money forever. You might have to start that way, but they then build assets that

9:53Work for them while they sleep. You could teach your expertise to others. You could have a rental property that generates monthly cash flow. You could have some sort of online business that runs without you. You could become the video editor and you could hire video editors. Ownership is the shift from chasing paycheques to actually building a wealth machine.

10:11Now, by the way, your investment portfolio is also a business. It's also a wealth machine, which will grow faster and faster than what you put into it. For example, I've got a fitness coach. He charges me about $150 an hour. He's a very good guy. And what he's actually doing is he's building a membership where you pay, I don't know, $20 a month or something.

10:33And he's getting people into that, lots of people into that. So he's going to get a multiple on that. Say he has 100 people in that. Now he's getting $2,000 per month and he's doing nothing at all. Doesn't have to put up with me. Hopefully he'll put up with me for a little bit while longer because he's very good.

10:49But that's of course the real business. That's the freedom. So he's turning his sweat literally into a money-making machine that works 24/7. And then he's got to figure out the marketing and that kind of stuff. But that's the key thing here.

11:00How much did we make today? $5 million. And yesterday? $4 million. We're really rich.

11:09And then lever number 3, the wealthy pull, is reinvest. Once you've got money coming in and you put that into assets, say stocks or real estate or something, well, what is it going to do? These assets are going to generate more dollars. Don't blow the dollars. Don't buy a new iPhone or a PlayStation.

11:33What are you going to do? You're going to take that money and you're going to buy more assets with it. Reinvest them. Start outsourcing your lower value tasks. Hire a virtual assistant so you have more time for your higher value work. Buy better tools, better software, run ads, learn better skills, scale what's already working instead of starting from scratch.

11:51Reinvestment turns linear growth into that kind of growth. Because my problem is most people take their first $1,000 in profit and they spend it. The wealthy take that $1,000 and turn it into $5,000 and the $5,000 to $25,000. That's how real wealth compounds through reinvestment, not market returns on its own.

12:12But even really brilliant, motivated people get trapped here because there are invisible mental blocks. These are psychological traps that'll sabotage your wealth building. And I see these patterns again and again and again. So let me break them down for you so you can avoid them. You can spot them and you can climb over.

12:32Number 1, there is a lie. And the lie is that investing can be passive. Just put the money in the market and just automate it all and the robo adviser will do its thing. Look, passive investing is fine if you already have wealth and you're just buying the S&P or whatever and you're getting that 10%. But passive effort gets you nowhere when you're starting out. Early in your wealth journey, you need to be active. You need to build skills. You need to create assets. You need to tweak your hustle. Passive investing comes later once you've built serious momentum.

13:07Delaying is probably actually the number 1. I'll start that side hustle later, after I get a raise, after I come back from my holiday, after I've got a bit more time. I'll learn that skill when life slows down. Sound familiar? I'll go to the gym next Monday. Never happens, does it? Wealthy people don't wait for the perfect moment. They start messy. They learn fast and they improve as they go. Progress always beats perfection.

13:29I've got a very good friend. I shan't name who she is, but she's an incredibly gifted teacher. She wanted to start a YouTube channel 5 years ago when I started this one because she actually genuinely wants to spread teaching. She was waiting for stuff, better equipment, more time, the perfect website. And guess what? She still hasn't started it.

13:49So the delay has cost her a tremendous period of time. Nobody benefited from it. She didn't get any profits from it. YouTube does pay some ad money, which if you want to teach can quite easily replace what you're doing there, by the way. But most people just delay. They want perfection. So they just don't do a thing.

14:08And then you have number 3, which is the savings trap. You can clip coupons. You can skip takeouts. You can live on ramen noodles. I actually like ramen noodles. But you can't really save your way to wealth. There's a hard limit to how much you can cut out because you think about it this way. Say you earn some amount of money, I don't know, whatever it is, $2,000 a month. You can reduce your expenses to a certain level, in theory to zero. And that's a certain amount. So what's that certain amount? Well, the max you could possibly save would be $2,000.

14:38But you could increase your income to literally any amount. Millions of dollars. Yes, people make millions of dollars per year. So there is a much, much greater upside than there is the ability to penny pinch and coupon cut. So fixate a little less on the $5 lattes and start hunting for a $5,000 opportunity.

15:00Just like that, I made $2,000. The other guys looked at me like I just discovered fire.

15:05And your trap number 4, we all copy. We all copy people that we look up to, but most of us copy the wrong people. You can copy Warren Buffett, but it works best if you've got billions. You're starting with $500. You're not in the same game. You need to create. You need new income. You need your assets. You need new opportunities. So don't play a billionaire's game on a minimum wage budget. It doesn't work.

15:27To summarise, the harsh truth here today, it's a bit of a harsh one, isn't it? $25 or whatever into an ETF is not going to get you free. It's going to take you 200 years to see some real wealth. Eventually your grandchildren would, but who wants to live for that misery for 200 years? But you are not stuck right now because you're not smart. You're caught in a loop of someday excuses.

15:49One of my great mentors, amazing investor, amazing trader, he said to me once, "Felix, someday," because I made some excuse. He said, "Someday is never." And I was like, okay, he's right. Riches don't come from penny pinching or some miracle bonus. They come from acting right now. Learning skills that pay a higher rate. Creating some offer that gives people real value. Building systems.

16:14One skill, literally like doing what you do right now for somebody who values it more, that could be all it is. One idea, one choice can shift everything. It's not about turning your life upside down overnight. It's about making small consistent decisions that build your momentum, creating a future where money works for you instead of against you.

16:36So make a move today because every day you wait is another day you're stuck with the same financial stress, the same soul crushing debt or paycheque to paycheque anxiety. The wealthy didn't get there by waiting for permission or by waiting for perfection or by waiting for time. We all have the same amount of time, by the way. It's the one thing that's perfectly equally distributed to all human beings on this planet.

17:00So if you're ready to stop playing small and start building real wealth, I'll give you a leg up, a big leg up, teaching you everything I learned on Wall Street for about 20 years in a free training taking you 15 minutes to watch. Same institutional strategies that a lot of the big money uses, and felix.org/training, and how you can apply it right now.

17:18So your decision is up to you. You can stay in the 95% who make excuses or you can join the 5% who take action and build the life they actually want. So if this opened your eyes, if it was a bit of a kick up the backside, then smash the like button, subscribe, and I'll see you in the next one.