Episode Transcript
[00:00:00] Speaker A: Welcome to Financial cures. Hi, I'm Dr. Wendy Labotte. And today we begin with Mindset Transformation. Wayne Dyer says, when you change the way you look at things, the things you look at change.
You're watching now Media Television.
Hello and welcome to the financial cures. I'm Dr. Wendy Labotte, the financial healer, and this is the show where we look at financial challenges in a way a doctor looks at science symptoms. We identify what is happening, understand the root cause, and then talk about practical steps that can help people regain clarity and control.
Today, we are talking about something millions of people quietly struggle with. Financial confusion.
Debt, inflation, rising costs, limited income, emotional spending, and lack of financial education can make people feel like money is controlling them instead of the other way around.
Now my guest is Rohit Gupta, author of Kiss, Keep It Simple Stupid and founder of Kiss Finn.
Rohit has a passion for personal financial education, especially for young adults starting their careers.
His work focuses on making financial concepts simple, useful and practical for everyday people.
Rohit is. He is not here to give personalized financial advice. He is here to help us understand the money habits, mindset shifts, and basic principles that can change the way people relate to their financial future.
Rohit, welcome to the Financial Cures. I'm glad to have you today.
[00:01:54] Speaker B: No, thank you, Dr. Lambert. I very much appreciate that. And you know, obviously you do a lot of that also in, in your Financial Cures work that you've done. So I appreciate this opportunity to spend some time with you today.
[00:02:07] Speaker A: Well, you know, it's always good to have, you know, just people that are empowering folks in these difficult financial times. But now, what first created your passion for personal financial education?
[00:02:23] Speaker B: So I guess, you know, it probably all started from my own personal experience and in a way, you know, my own personal mistakes.
I first entered the world of investing in my early 30s after our daughter was first born. These were the heydays of the Asian boom. And I invested heavily into China stocks and Southeast Asia stocks. And then we had the financial crisis of the late 1990s, where not only did the stock markets crash by 40 to 50%, but even the currencies depreciated by 50% plus. So my portfolio lost over 70 to 75% of value.
It was very simple. My daughter was not going to go to college, but fortunately I had time. I spent a little bit more time on trying to understand the basic concepts.
And over time, I was able to rebuild my portfolio. And my daughter ended up going to the college that she really dreamed of. So it's really all about learning from my mistakes.
[00:03:24] Speaker A: Those are valuable lessons and you can never underestimate the power or the value of learning firsthand from the school of hard knocks, that's for sure.
So why do you think so many smart people still feel overwhelmed by basic money decisions?
[00:03:45] Speaker B: I mean, one, I think it's unfortunate, but personal financing is not something that has a lot of emphasis in our schooling systems today.
People tend to learn and focus more on, you know, from 24 by 7, you know, news media and the financial coverage. And this actually may be a problem in itself. You know, the basic fundamentals of finance, personal finance are very simple, but they get complicated. You know, in this, in this 247 news coverage that we have, I think you covered it also in the opening. When it comes to one's personal finances, it's a very emotional subject. It's very personal, and you need to really know what you're doing so that you're comfortable to be able to sleep well at night.
Otherwise you end up making all the wrong decisions. I think Suzy Orman said it a long time ago, it's people first, then money, then things. So I think it's important to get a really good understanding of what you need to do and why you need to do it, rather than how to do. And really the last thing is what's to do.
[00:04:50] Speaker A: Yeah, I agree. And most people think that having more money will solve their problems. But if you don't understand the basic principles, the more money you have isn't going to solve that issue. You know, you have to know that's why a lot of lottery winners and, you know, athletes and people that, you know, just get a, a big influx of money, lose it within two years because they don't know what to do with it. They don't know how to manage it. So, you know, those basic principles are key. And like you said, we don't learn that in school. A lot of us learn it from the school of hard knocks. But what do you think are the most common financial sim symptoms that people ignore until they become painful?
[00:05:36] Speaker B: I mean, that's, that's, that's, that's an interesting question.
Like you said, right? It's not just about, you know, making one investment or try to, you know, you know, have one good big impact. This thing. Investment is, is not entertainment. It is a responsibility.
It is not supposed to be fun or interesting, but a continuous process.
And my point is it's not about money per se, but the financial security that allows you to pursue dreams and allow you to live life on Your terms.
Financial security isn't about getting rich.
It's the ability while having options. The ability to leave a job that's making you miserable. The ability to take a risk on something you believe in. The ability to sleep at night when a gig dries up for a month because you got a buffer, not just about money, but about the financial security that will allow you to live life on your terms. So it's really important to think long term of why you are doing what you are doing and then how to do it and then what to do.
[00:06:46] Speaker A: Because, you know, there was a point in my life where I made a lot of money, but I hated what I was doing, you know. But then when I became an entrepreneur, I wasn't making any money at first, but I love what I was doing and that's what kept me in it. And that was my passion, that was my calling. So eventually I did make the money. But, you know, like I said, I find that happiness and satisfaction within what you're doing is more important than money. And a lot of people, you know, don't look at it that way. A lot of people want to, you know, work overtime and do all that other stuff and just keep going and, you know, miserable and hating to go to work every day. So I, you know, I empathize with those folks. But, you know, sometimes, you know, God is telling you I'm shutting this door, so stop trying to go through it and open it up.
So, you know, it's really kind of crazy that, you know, people think that way.
Now you were saying you had said that money is a means to an end, but what does that mean in real life?
[00:07:51] Speaker B: Like I said, and I think you covered it a little briefly in your previous section. So it's not about how much you make, but really how much you can put aside and save and then invest for the long term.
My daughter is an artist. Her friends are extremely talented, but they're not very familiar with money and financial concepts. So I actually wrote my book, you know, for, for them to give them an understanding of how to manage money and how to have some security in their lives that allows them to kind of follow their passion and, and do the what. What they really want to do. Right?
And, and so that's really what it's all about. It's, it's, it's not about how much money you make, but, you know, how much you can save aside and then how you can invest for the long term.
And also, you know, it's on savings. I mean, the, the core Principle is, you know, don't say what's left after spending, but spend what's, you know, left after savings. And, you know, you, you, you're right, it's very difficult for the current generation, the gig economy, the rising prices, you know, the, the uncertainty in the employment market. So it's not easy for them to, to, to save. Right? They're living paycheck to paycheck. But at the same time, there are some very simple tools that they can follow. And, you know, if they can get an understanding of that and how to do that, I think that really benefits in the long term.
[00:09:10] Speaker A: The key, you know, is the mindset transformation. They need to understand you have to make your money work for you and not you work for your money. And, you know, most people think that they have to work for their money. So we, you know, we want to make sure that they change that thinking because, you know, without the change of thought or mindset transition, they're going to keep doing the same thing.
So I'm really excited about, you know, just your book. We're going to talk a little bit more about that and what that means. Keep it simple, stupid. Because, you know, if you do need to keep it simple and that's really important to do. But most people, you know, want to complicate a simple process, you know, because they don't want to make those mindset transformations and the spending habit changes. And, you know, I tell, I give my clients the spending challenge because that's where you find the money to pay for things you think you can't afford. You know, people say, you know, I can't afford that. I can't afford this. But then when you look at how you're spending, you got the money, you just need to redirect it to where it needs to go and not just go, wow, you know, willy nilly on how to spend.
We're going to talk a little bit about your book in the next segment and we want to show how people can begin separating financial facts from financial fear. Now, this is such an important starting point because financial stress often looks like a money problem, but underneath it may be a clarity problem, a habit problem or an education problem. When we come back, we're going to talk about the cure. Rohit is best known for keeping money simple.
We'll be right back.
We'll be right back with more financial cures to help heal your financial ills so you can become financially free. So stay tuned. And we're back. I'm Dr. Wendy Labotte, the financial healer and this is the Financial Cures on NOW Media Television. Let's continue your financial healing experience.
Welcome back to the Financial Cures. Stay connected to this show and every NOW Media TV favorite live or on demand, anytime you like. Download the free Now Media TV app on Roku or iOS and unlock non stop bilingual programming in English and Spanish. If you're on the move, catch the podcast version at www.nowmedia.tv.
from business and news to lifestyle, culture and beyond, Now Media TV is streaming around the clock. Ready whenever you are.
So I'm back with Rohit Gupta. He's the author of Kiss Keep It Simple Stupid and founder of KISS Finn. In this part of the conversation, we're talking about simplicity.
Not simplistic thinking, but simplicity as a financial cure.
The financial world often makes money sound so complicated.
There are headlines, market noise, predictions, products, formulas and opinions everywhere. But most people do not need more noise.
They need clear principles they can actually use.
So Rohit's work brings this conversation back to the basics. Why financial security matters, how compounding works, why savings comes before chasing returns, and why emotional discipline matters as much as the information.
So Rohit, tell us, you know, why did you build your message around the phrase keep it simple, stupid?
[00:13:05] Speaker B: Thank you for that. So, absolutely. I mean, really, the financial and, you know, personal finance investment concepts are very simple. They just get complicated in this 247 financial news coverage, right? And I keep telling people, do not confuse simplicity with stupidity. Right? I mean, simplicity is really should be a goal in itself.
You know, surprisingly the the concept of KISS Keep it Simple actually was came from the US Navy.
And they said that it's a concept developed by the U.S. navy. And we basically said the systems work best when simple. Simply city should be a goal in itself and not an end result. And it was based on the fact that they were designing jet planes so that it could be repaired anywhere in the world, even when they did not have the best facilities or infrastructure.
So that was critical for the Navy to that extent.
And you know, it actually works very well in the world of finance and personal finance also.
[00:14:10] Speaker A: Okay, now let's talk about compound interest. That's something that I, you know, have in my course as well because people don't really realize the impact. You know, if you don't understand how compound interest works, you're going to pay it versus earning from it. So let's talk about the rule of 72. A lot of people haven't heard of that and they don't know what it is. But that's a crucial rule that really helps make decisions on how you invest and how you pay your bills. You know, with that are involved everything that wraps around compound interest. So can you explain what the rule of 72 is?
[00:14:52] Speaker B: No, absolutely. And that is absolutely critical. I cannot agree with you more, right? I mean, Albert Einstein called compound interest the eighth wonder of the world. But it is very difficult for people to understand it and fully grasp for it as you know how geometrically it kind of grows. Right? Rule of 72 is a very simple rule which basically allows you to see how long it takes for your money to double. So if you take 72 and divide it by your expected rate of return, it gives you the number of years that it will take for your money to double. Double. To take a very simple example, let's just assume for the sake of simplicity that you earn 10% a year, right? So 72, 10 is seven. That means your money doubles every seven years.
Over a 35 year working life, your money will double five times. And this is where the magic happens, right? Because basically what it means is your money multiplies 30 fold, right? 10 becomes 20, 20 becomes 40, 40 becomes 80, 80 becomes 160 and 160 becomes 320. That's doubling five times. So 10 has become 32, right? By just nothing, you know, just 10% a year. Simple. It's just a question of compounding and dying. So I think that's, that's the most critical thing. Of course, it's the last few doublings that are, that are critical, right? When you go from 80 to 160 and 160 to 320. So the important thing is to start early.
You know, even if you start small, start early because that's really when you'll get the maximum benefits.
[00:16:37] Speaker A: Now that's on investment. Explain how the Rule of 72 works on debt. You know, because that interest compounds the same rate as it does on your debt. You know, a lot of people, when they pay off their credit cards and they want to pay that minimum amount, and I kind of emphasize this because, you know, for one, I recommend that you pay your credit card debt off when the bill comes. But if you can't do it, pay the most amount. Because if you pay that minimum payment, you're going to end up stretching that debt out for 10 or 15 years and you don't even know what you bought. So do you kind of explain to your clients how that compound interest impacts their debt, especially credit card debt?
[00:17:21] Speaker B: No. So you're absolutely correct, right? I mean, compound interest Works not only on your earnings, but also on your debt and equally on inflation. You know, so $1,000 today is going to be a lot less 10 years from now or 20 years from now, just given inflation. And even if inflation is 2 or 3%, you know, it compounds over a long period of time. And most of us are going to be, you know, even if you work for 30 years, you're going to be in retirement for another 30 years. So we need our money to last for a long time. And the compounding impact, particularly in inflation and particularly on debt is exactly the same. It's as exponential as that. And I think you've given a good example. I mean credit card debts tend to be, the interest rates tend to be a lot higher than 10%, right? So the compounding effect of that is, can be, can be absolutely crippling, right? So I think most financial advisors, most banks also obviously recommend to their customers to pay their debt the credit card bills in full every month, in which case you're paying 0% interest and you're getting the advantage of a 30 day or a 45 day free rate of free interest.
But even if you can't pay, if you do a one time big investment, you're buying white goods, which is expensive and you can't pay your bills in full for that month. Pay whatever the maximum you can pay over the minimum payment due such that you can pay down that debt as quickly as possible.
So absolutely, I think a lot of people get into trouble for something which is actually, you know, provides a lot of flexibility and a lot of help to people, which is a credit card. You don't have to carry cash. You can book online, you can make advance payments, but you need to make sure that you pay your, your bills in full or at least more than the minimum payment due every month so you can draw down the balances as quickly as possible.
[00:19:18] Speaker A: Now what would you say is the difference between saving, investing and speculating?
[00:19:26] Speaker B: That's a good one, right? I mean, in my book I actually have a chapter which says savings is different from investments and investments are different from speculation. Savings is obviously step one, right? I mean, you can't start investment unless you have savings, right? And even if you are small savings, you need to start small and then build your savings so you can go into investments for saving. What I basically say is just like companies have annual budgets, it's critical for individuals and families to also have annual saving goals, right?
Budget to save between 10 to 15% of your take home every month.
But if you can't do that. You can start smaller, you can even start at 5%. Anything is better than zero. And the simple rule of thumb there is pay yourself first.
Do not say what is left after spending, but spend on what is left after savings. So set up a, you know, monthly standing instructions and save that small 5%, 10% the day you get your salary, check in and then have a budget, you know, discretionary spending, non discretionary spending. As to how you know you will manage your, your, your, your expenses after you set up that, set aside the small amount of money right up front.
I think that is, that is a core, core kind of principle and concept that, that I, you know, promote heavily to the young people starting their careers, particularly as they start earning some income.
[00:20:58] Speaker A: Yes, I agree because, you know, once you start spending, you say, I don't have enough to say. But if you save first, then everything else kind of is adjusted to that, you know, what's left and that's the way you want to go.
[00:21:11] Speaker B: Which is, which is on investments.
And again, like I said, investment. You need to know why you're investing. What is your end goal? Right. The goal is to set up a portfolio for your retirement that provides you a second source of income or passive income versus active income. The goal is not to, you know, double your money on a investment or to beat the market on this investment. Right. So like I say, investing is not entertainment.
It is a responsibility.
It is not supposed to be fun or interesting, but a continuous process.
So just like you save every month, you should also set up a standing instruction where you invest small amount of money in diversified, low cost investments for the long term.
[00:21:59] Speaker A: Yeah. In the next segment, we're going to talk about that speculation factor that we mentioned earlier.
But the cure here is not magic. It's clarity. When people understand simple principles, they stop reacting to every headline and start building habits that they can that can serve them for decades. After the break, we'll go deeper into behavior because knowing what to do and are not the same thing. So we'll be right back talking about that.
We'll be right back with more financial cures to help heal your financial ills so you can become financially free. So stay tuned. And we're back. I'm Dr. Wendy Labotte, the financial healer, and this is the Financial Cures on NOW Media television. Let's continue your financial healing experience.
Welcome back to the Financial Cures. I'm continuing my conversation with Rohit Gupta about personal financial education and the simple principles that can help people build more financial security.
Now before the break, we left off talking about speculation and we don't want to emphasize that, but give people, you know, an understanding of what you mean by speculating with your investments.
[00:23:25] Speaker B: No, thank you. So basically what I meant there was not looking at investments on each investment or each transaction or market timings or non traditional investments. But to look at it in a total portfolio approach, your goal should be to maximize your total portfolio value to build a second source of income via passive income rather than maximizing individual trades or timing the market.
Right. Like we said in the previous segment, investing is not an entertainment. It's not supposed to be fun. It's actually a responsibility that you need to do on a monthly basis, just like your approach to savings.
[00:24:10] Speaker A: Good point. Because a lot of people do want to do that, get rich quick investing where they think they're going to invest in one stock or one trade is going to bring them their life savings that they've been trying to accumulate or over their lifetime. But so let's talk about behavior, talk
[00:24:31] Speaker B: about you more example of that. So you know, like Warren Buffett's rule number one is don't lose money.
Rule number two is look at rule number one, right? Because it's very difficult to recover losses, right? If you make a 10% loss, you know, you need, you need to make 11% to kind of come back to, to where you are. If you make a 50% loss, you need to make a hundred percent to come back to where you are, right? So losses can be very difficult to recover and therefore it's important to kind of take a more conservative, steady, long term approach.
And you know, and that's really what I meant by speculating.
[00:25:08] Speaker A: A lot of people don't even factor that in their investments. They, you know, figure they're going to, you know, just watch the market and you know, make a big investment or an investment that's going to bring them a big windfall. And that's, you know, usually not the case.
So let's talk about behavior because many people know that they should save and avoid unnecessary debt and invest consistently, wisely and consistently. But they don't, you know, emotions get caught up and pressure and fear comparison, old habits get in the way. Let's tell me a little bit about that.
[00:25:47] Speaker B: So that's absolutely critical, right? And I think you also covered it previously about people making a lot of money but then losing a lot of money and not being able to save. So the important thing is really to understand why you are doing what you're doing, then how to do it and what to do. Most financial advisors skip straight to the what, what to buy, what account to open, what percentage to allocate. Before any of that, the important question is why? Why does this even matter to you, right? What are you trying to do? And basically what you're doing here is building yourself a long term cushion, trying to build a second source of income through passive income and therefore have a portfolio that can generate that income for you. The important things to do there is obviously savings.
Pay yourself first, spend what's left after saving rather than save what's left after spending. And even if you do small amounts, the earlier you do it, the better it is. And equally on investments, right? Have a steady monthly investment plan, invest in diversified assets, keep your fees low and don't make big investments or ad hoc investments. And don't look at investments as individual items. I mean, if I can just again come back to what you've covered so well and also cover in the work that you do in financial cures. In terms of compounding and you know, the rule of 72 right there, there's a very simple example of, you know, let's say you start saving when you're 25, save, you know, two and a half thousand a year and save till you are 35. So you save for 10 years, right? That means you save $25,000 over a 10 year period and then you invested at 10% and you let it grow till you are 65, right? Your total portfolio will be $800,000.
On the other hand, if you delay savings and start saving and you are 35 and save all the way till you are 65, that means you save for 30 years instead of 10 years. Your total savings now is $75,000.
At the end you'll be left with $400,000. That's half. So just the early 10 years were worth twice all the additional 20 years. So that's just important for people to understand the basics and to understand the concept of compounding and time.
And that is what a lot of people kind of delay or don't fully understand. And it can cost them a long over the long term.
[00:28:24] Speaker A: What lifestyle pressures or how do lifestyle pressures keep people from building real security?
You know, keeping up with the Joneses they want to, you know, have the
[00:28:35] Speaker B: big house is a reality in today's world. You know, the social media, the influencers. And therefore it's important for people to have a good understanding of why they're doing what they're doing and how they will benefit from that to build A budget, know what your expenses are, both, you know, discretionary and non discretionary expenses.
Try and have a goal, say 5%, 10%, save it before you start spending. And therefore then you can only spend what you're left with after savings. And therefore in that one sense it kind of constrains what you can spend on or how much you can spend. And the second is obviously your point on credit card debt. I mean, don't overspend on credit card debt. Don't only continue to pay the minimum payment due, but try and pay the full balance every month. And even if you have a big one time investment and you can't do that, you know, pay a little bit more than the minimum due and try and pay down your debts in as short a time as possible. So if you have those fundamental concepts and not because somebody is telling them for you to do that, but because you understand why you're doing it, how it will cost you, what the benefits are, I think that, you know, that helps people kind of budget and get their expenses more in line. But that clearly is a problem today and we need, it's a challenge and you need to continue to work on that,
[00:30:03] Speaker A: that the younger generation thinks that a credit card is like free money. You know, if somebody, if they get approved for a credit card and they get that car and they got a $3,000 limit, it's like, wow, I got $3,000 to spend. But you know, they don't acknowledge the fact that they have to pay that money back. And if they, whatever they spend on it is not going to be, say if they do max out 3,000, if, you know, with the compound interest, if they pay that minimum, they're going to end up paying like 12,000, you know, more than, and they're not going to even know what they bought with that. So you know, they have to understand that a credit card is just that credit, it means that you, you're borrowing money and you have to pay it back. And a lot of folks, you know, not even just young folks, but a lot of people think that credit cards are just extra money, but that's not the case.
So we want to make that money work for you and not have you working for money.
Pardon me.
[00:30:58] Speaker B: Well, that's a very good example. And you know, like, like in one sense I say a credit card is actually a really, really good, you know, financial instrument, a really innovative financial investment. You know, when it came out 30, 40, 50 years ago, it's not really extra money or a loan for you. Right? It actually Gives you a lot of flexibility. It gives you a lot of security. Security.
And it allows you to manage short term, you know, short term requirements. So you're absolutely right. You should not look at it as extra income or a loan, but more as a convenience. And it also gives you a lot more security rather than carrying a lot of cash around. Right. Or being able to pay in advance for things. Today, you can't really live without a credit card. Right. You want to book an airline ticket or you want to check into a hotel or you want a holiday. So, you know, but, but it's more of a convenience and a flexibility and a security rather than a loan or additional income. So. So I absolutely agree with what you said there.
[00:31:57] Speaker A: And you can make credit cards pay you. You know, I talk about that in my financial cure system, you know, living the VIP life. I'm about to go out to California and, you know, whenever I fly over two hours, I want to go first class, but I don't want to pay for a first class ticket, use my points and re, you know, sky miles and things I get from the airlines and from my credit cards to pay for that. So I'm going out there first class and I'm just paying a little processing fee. So, you know, that's what I'm talking about. I have no check bags. I have a Platinum American Express. So I go into the Delta Lounge, eat and, you know, drink and be merry before my flight. And those are the kind of things that you want to build up to. But that does take discipline and does take, you know, strategy and does take you paying off your credit card when the bill comes to earn those points. But now we're going to talk a little bit more in the next segment about, just wrap up and summarize whatever it is that we didn't cover the first three segments. So this is where financial healing becomes personal.
The numbers matter, but the habits behind the numbers matter just as much or more than just as much.
When people stop hiding from money and start learning from their mistakes, they can begin rebuilding confidence.
And when we return, we're going to close with the practical steps viewers can take to live life more on their own terms and not be embarrassed or, you know, shy about their financial situation, even if it isn't the best. So when we come back, we'll be talking about that.
We'll be right back with more financial cures to help heal your financial ills so you can become financially free. So stay tuned. And we're back. I'm Dr. Wendy Labotte. The financial healer. And this is the Financial cures on NOW Media Television. Let's continue your financial healing experience.
Welcome back.
Stay connected to this show and every NOW MEDIA TV favorite live and on demand anytime you'd like. Download the free Now Media TV app on Roku or iOS and unlock non stop bilingual programming in English and Spanish. If you're on the move, catch the podcast version at www.nowmedia.tv.
from business and news to lifestyle, culture and beyond, Now Media TV is streaming around the clock. Ready whenever you are now. I'm here with Rohit Gupta Gupta, the author of Kiss. Keep It Simple, Stupid. And in this final part, we are bringing the conversation back to the bigger purpose of money.
Money is not the goal. Financial security is the tool that allows people to pursue their dreams, protect their choices, support their families and live with less fear.
So the question becomes, what does healthier, a healthier financial life actually look like and how can viewers start moving toward it in one practical step at a time? So what does it mean to live on your own terms financially?
[00:35:27] Speaker B: Well, thank you very much. And I think that's a good way to kind of round up our discussions today. So like I said, in this new environment of the gig economy, of AI, of short term employment contracts, some of the inflationary pressures, it's extremely important for people to get some financial security. And financial security is not just about money per se, but the freedom and the flexibility to live life on your terms. You follow your passion and live life on your terms.
Right? It's, it's, it's about, you know, not worried if you're, if a gig economy of a gig kind of job dries up or you are doing a job that you're not, you know, that makes you extremely uncomfortable or unhappy, or you, there's some small business or a passion that you want to follow. All those things you can do if you have a little bit more of financial security that you know that allows you to follow your passion and live life on your terms.
Now, to be able to do that, there's some very, very simple rules. You need to understand why you're doing it, not how you're doing it or what you're doing.
You're doing it to build that buffer, to build a long term portfolio, to get a second source of income from passive income rather than just active income, which is the job that you do on a day to day basis.
Two simple steps. Starts with savings, you know, put some money aside first, pay yourself first, you know, spend what's left after savings rather than Save what's left after spending. And two, set up a, you know, monthly investment plan where you invest for the long term. Take a portfolio approach rather than looking at individual investments and looking to try to beat the market. The goal here is not to beat the market on a particular investment, but to maximize your own own long term portfolio.
[00:37:23] Speaker A: Now, how should people think about building a second source of income over time? A lot of people think, oh, it means I got to get a second job or you know, something like that. But that's not really the only way to, you know, build that passive income. So what are some of your suggestions in getting, you know, achieving that goal?
[00:37:45] Speaker B: So I think that that's very, that's very correct. And I think it's, it's important for me to kind of clarify that when I, when I talk about a second source of income, I'm not talking about a second job, right? I'm basically trying to separate what's called active income versus passive income. Active income is something that you do where you, you know, you do on a day to day basis. You use your hands, you know, the job that you're doing, whether you're a chef or you're a carpenter or you're a banker, you know, doesn't matter. It's, it's based on the effort that you put in, the hours that you put in and the work that you put.
Passive income is something that kind of generates income on itself.
Sometimes it could be royalties, you know, from a book or from a studio recording or in most cases. And what I'm talking about in my book is to generate passive income from a portfolio of investments. And over time, you earn money on that through either dividends or capital appreciation, right?
You obviously need a lot of money, right? So I'm not trying to undermine that. And savings alone will never get you there. But savings is step one. And then over, it's all about compound interest and time, right? So, you know, simple, simple examples, right? If you save 10% a year, you, you know, earn about 7 to 10% a year. You, you invest and you keep your money over, you know, 25 to 30 years. In the long term, your portfolio will generate a portfolio which allows you to live off that just based on the earnings on that portfolio. And the total value of that portfolio, only 20 to 25% will come from your savings.
75 to 80% will actually come from earnings on those savings, right? And that's really the compound interest in the rule of 72. So it's really important to kind of understand that and your goal should be to try and get a passive income or a portfolio income that, that will fully cover your expenses in the long term.
[00:39:39] Speaker A: Now, how can families talk about money in a way that is educational instead of stressful? You know, some people, you know, grow up, you know, being taught, you know, money doesn't grow on trees or I can't afford this and we can't do that.
How can they, you know, kind of educate their children or learn for themselves, you know, how to, you know, manage their money without being under stress or feeling stress, but learning lessons, what do you recommend?
[00:40:11] Speaker B: So that's correct. And unfortunately, you know, everybody goes through different cycles in life and you know, sometimes, you know, money can be a challenge and you know, it's obviously stressful if you have a family and kids and, you know, a mortgage to pay. But the important thing is to, you know, not let that govern your life. Right. Again, going back to what Suze Orman said, people first, then money, then things, right?
And it's obviously important to cultivate the value of money in your children and in your family. You're right. Money does not grow on trees, but that does not mean that it has to be stressful. Right? So people should understand the concept of budgeting. You should be, be frank and honest with your children, you know, on, on, on, on, on the budgeting concept and what you can do and you cannot do and you know, when they are, you know, slightly older, you know, build some basic skills. You know, for example, how to build a budget. Right. What are discretionary expenses versus non discretionary expenses? How to save for something that you want, you know, in, in high school or maybe early adults, you know, how to balance a check, how to reconcile your credit card statements, right? These are things that you can learn and skills that are unfortunately not really emphasized in our schooling systems, but can add a lot of value to young adults when they're starting in their careers, when they're earning, but at the same time they also have their expenses. Suddenly they have to pay for their mortgages, suddenly they have to pay for their groceries, they have to pay for their car. So they should have the skill sets of how to be able to budget, how to be able to reconcile statements, how to be able to, you know, balance your checkbooks.
And those are some things that you can actually learn growing up and, you know, families can actually contribute to that.
[00:42:00] Speaker A: I was the president of PTA and my son's middle school. We partnered with a bank and I developed a program how to reward your child with an allowance and, you know, we recommended that the parents, you know, give the kids maybe $5 a week for. Or they're, you know, if they got a good progress report or, you know, and plus another $5 a week if they did their chores, whatever they were, you know, whatever they assigned them to do. And they could come into, you know, the school once a week and make a deposit into an account that the bank, you know, had set up for them. And I was surprised that, you know, the kids and the parents, too. I mean, because, you know, when you.
That's how I raised my kids. And, you know, when we went to the store, they had to take their own money, because when they're spending your money, the sky's the limit. But when they got to spend their own money, they're like, okay, well, I'm not spending. I'm not gonna get it now, because I got to spend all my money to get it. So, you know, starting young and teaching them how to earn money and to manage and save, that was really a core principle. There was one young man was trying to buy a car, and he worked for his grandfather, and he ended up. He was bringing in, like, $50 a week, you know, to put in his little account. I'm like, shoot, I need to be on. On his payroll and getting, you know, some of that money. But, you know, starting young is really key and getting them into the habit of, you know, earning and learning that their money, you know, they got to be frugal with your money just like they're frugal with theirs. So that was a real good program, and I'm really pleased with that now.
[00:43:40] Speaker B: I mean, those are really good examples. Really. Those are really good examples, and I'm kind of happy to hear that. And I'm really appreciative of the fact that you're doing that in the community and with the PTA and school kids. So, again, congratulations.
[00:43:54] Speaker A: Thank you. And it worked pretty well. I know my kids. They're out of my pocket, thank God. You know, the college tuition was high enough, but, you know, they understand how to make money, how to spend their money, and not mine. Now, before we. We wrap up, what do you hope readers take away from Kiss? Keep it simple, stupid.
[00:44:15] Speaker B: I mean, you know, one. I'm hoping, you know, you know, they can buy the book and read it. It's. It's. It's a very simplistic book. It's a very simple book. It's available on Amazon. But more importantly, you know, just to understand that in today's gig economy, in today's AI driven economy, it's very important for people, people to build some financial stability in their lives and to long term work towards, you know, building a second source of passive income. Right? And, and you know, it's very important to understand the concept of compounding and the rule of 72.
And two key, you know, outputs of that is start early. You know, when you start at 25, it's a big difference than if you start at 35 or 45. But for people who, you know, who are not able to start early, doesn't matter.
The best time to start is early, but the second best time to start is now.
Don't get concerned if you delayed it or if you think it's too late. It's never too late, but you have to start now. And the second is savings alone will not get you there. Saving is a step one, but you need to invest and you need to invest on an ongoing basis, you need to invest in a steady basis and you need to invest in such a way that you're maximizing your long term gains, which also includes minimizing your fees and your expenses, which also compound by the same rule of 72.
So that by the time you're 60 or 65, you have that income portfolio that can generate a second source of income for you and cover your expenses. But equally you're building a buffer over time. So you have a three month buffer for emergencies, you have a six month buffer for some big investments you want to make. We have a 12, 12 month buffer in case, you know, you're going through a challenge on your job or you lose your job. So that at any, every point of life you have a plan and you have a bucket of money set aside to kind of manage those, those problems. Because unfortunately, you know, you know, life, everybody goes through cycles and you know, everybody goes through ups and downs. You know, that is just part of life.
[00:46:20] Speaker A: Thank you so much for being a guest on the show and could you tell the audience how to get in touch with you?
[00:46:28] Speaker B: So like I said, my book is called Case. It's available on Amazon. I hope you can log into Amazon and just look at Kiss. Keep it simple. Stupid by Rohit Gupta. I also have some YouTubes and you know, a Facebook and a portal where I just provide some of this information more as information basis, more as, you know, education for the community. It's called kissfin.com I hope you log in and please drop me a message or a mail in case if you like something there or there's something else that you like covered there. I continue to provide blogs updates and I'm happy to clarify and provide any information or details that you may require
[00:47:13] Speaker A: for everyone watching. Remember, when you think right, speak right, and do right, things will flow right to optimize your financial health. Thank you for watching. I'm Dr. Wendy Labotte, the financial healer. See you next time.