Do you know who Mr. Beast is? (If not, he’s a YouTuber who makes outrageous videos where he gives away tons of money). I think Mr Beast’s target demo is middle and high school boys, so I’m a little embarrassed how fascinated I am with his videos. In one of his videos he literally gave away a million dollars. Then he took the winner on a shopping spree to spend it all. They went to electronics stores and loaded up carts with TVs, gaming systems, etc. And then Mr. Beast said something along the lines of “we’re not gonna waste it all, we’re gonna invest in some sensible things like cars and a house”.

And I yelled at the screen, “THOSE AREN’T INVESTMENTS!”

This image demonstrates that. Looking at the rates of return over the last 40 years we can see the MASSIVE difference between buying something that depreciates (like a car) vs merely keeping pace with inflation (like a house) vs actually building wealth (like an index fund).

To pre-respond to the comments I’m about to get:

• “I can get more than 2.5% today in a savings account!”: True, but also for most of the last 15 years savings accounts paid close to 0%.
• “But you can’t live in nor drive an index fund!!!”: Yeah I know. The message is to minimize those costs to focus your investing dollars elsewhere.
• “11% return is crap, I know a guy who can get 80%/week with crypto”. At that rate it would take less than 7 months to turn $10K into more than Jeff Bezos has. Is the guy you know Jeff Bezos? Reflect on that.
• “11% return is unrealistic. No way the market returns that!”: It’s the actual number for the last 40 years! And that last guy thought it was too low!

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎

-Jeremy