So You Just Got Rich... Great... Now What?! - How Money Works - YouTube

so you just got rich maybe you buy gamestop  at five dollars or bitcoin at a thousand  

maybe did it the good old-fashioned way and won  the lottery but by one means or another you have  

found yourself with millions of dollars looking  back at you when you open up your bank account  

congratulations you've won capitalism now what you  might have thought that making the money was the  

hard part but in many ways holding on to it can  be even harder friends you haven't heard from in  

years will suddenly spring back into your life  strangers will send you threatening letters and  

even family members will have a sob story about  why they suddenly need money and ironically enough  

multi-million dollar windfalls from inheritances  gambling or gambling and denial investing actually  

increases the likelihood of being declared  bankrupt by over a thousand percent so hang  

on to your lucky windfall and stick around to  learn how money works and if we end up securing  

your fortunes for many generations to come make  sure to give us a like and subscribe to understand  

what to do with your newfound fortune you have  to start off by understanding what not to do  

believe it or not coming into life-changing  amounts of money in a short period of time  

can inflict upon people what psychologists call  sudden wealth syndrome and while that might sound  

like the best mental health problem to have it is  still a serious problem according to the american  

psychologist dr stephen goldbart the symptoms  of this affliction include anxiety isolation  

and paranoia brought about by the perceived guilt  of receiving money that wasn't earned it's kind  

of like the imposter syndrome turned up to 11.  now this study was specifically conducted on  

lottery winners but the same effects can be seen  on most individuals that come into wealth quickly  

whether they earned it or not it's easy to see why  a lottery winner might feel a bit uncomfortable  

about their newfound fortune but at the other end  of the spectrum successful entrepreneurs that sell  

off their business can often fall into the same  mental trap and suffer the same consequences  

this is where the three major threats to your  wealth come into play they are in order from most  

dangerous to least dangerous gambling getting sued  and conspicuous consumption gambling is ironically  

the biggest threat to overnight fortunes this  might sound dumb to onlookers after all you just  

made a crazy amount of money why are you trying  to make more in such a silly way but this strange  

pastime of overnight millionaires is partially  because of selection bias just think the types of  

people who make tens of millions of dollars within  a short period of time by their nature tend to  

be risk takers these risks could be anything like  buying an irresponsible amount of lottery tickets  

loading up your entire net worth into a failing  company or simply choosing to start a business  

in an up-and-coming field rather than becoming  a good little employee with a stable salary and  

health insurance the one problem with gambling  here though is that it's limitlessly scalable  

you might actually be surprised how hard it  is to spend the quantities of money we're  

talking about here just think if you had 100  million dollars and only 24 hours to spend it  

what would you do buying houses planes cars and  mega yachts actually takes a fair bit of work  

there's a lengthy transaction process involved in  all of these plus they tend to actually maintain  

their value if you spend your 100 million dollars  on a mansion you're not broke you've just shifted  

your assets from cash to real estate however take  that 100 million dollars to vegas and play hard  

over a weekend and you will lose it the highest  limit blackjack table open to the public in the  

city is that caesar's with a cap of 500 000 per  hand assuming you play perfect basic strategy over  

a day and you have a dealer that offers 50 hands  an hour you would expect to lose 1 million dollars  

every 60 minutes now of course you might win  but you also might lose a lot more than this  

perfect little statistical assumption as well  what's more is that if you are playing a normal  

game and betting 500 000 a hand i bet you that  just one click of the like button you would be  

offered a private table where you could bet just  as much as your little heart desired so yeah  

gambling is a big no-no you have made your money  with good fortune don't push your luck the next  

big no-no is getting sued unfortunately if you  become a high-profile overnight millionaire  

you've become a high-profile target for litigious  individuals this can range anywhere from  

ex-business partners to ex-wives now you do have  one advantage here which is that you can of course  

afford good lawyers but unfortunately they might  end up doing more harm than good at the two and a  

half thousand dollars an hour that top law firms  charge you might end up paying out more in legal  

fees than you do in settlements finally there is  over consumption now you might have thought this  

was the biggest trap people fall into after all  there are a lot of expensive things out there  

but as we alluded to earlier it's actually  really hard to spend money at this scale  

a german billionaire once lamented that money  gravitates to those with money if he bought a  

limited edition ferrari it wouldn't depreciate  in value like most cars it would actually demand  

a premium year on year amongst collectors he  purchased multiple holiday homes and they all  

appreciated in value his jets got written off as  business expenses and his super yacht ended up  

turning up profit running charter gas while he was  not on board oh and by the way you can actually  

basically airbnb yachts like this one off charter  brokerages this particular example will set you  

back about five hundred thousand dollars per week  which does go to show you can still consume your  

way to being broke though you really need to put  a lot of effort into it you can't buy things you  

need to buy experiences that don't retain any  value after they're experienced well you know  

apart from a fulfilled life and all so yeah avoid  these three traps and your wealth should serve you  

for generations to come but maybe that is easier  said than done and now that we truly understand  

what not to do it's finally time to actually lay  out a game plan for unexpected millions which is  

totally for entertainment purposes only so don't  sue me mystery internet millionaire anyway step  

number one don't [ __ ] open your mouth and  tell any mother or anything about anything  

alright in all seriousness though keep everything  as low profile as possible at least until such a  

time as you have finished everything else on this  list if you're a lottery winner stay anonymous if  

your lottery doesn't allow for anonymous winners  get a lawyer to pick it up on your behalf if they  

don't even allow that do what the still mysterious  a campbell did in mask up to collect your prize  

somewhat easier to pull off these days so  you're in luck if you have made your money  

through a more conventional means like gambling  on robin hood rather than on your state lottery  

then try to avoid bragging about massive gains  to your friends and family bragging anonymously  

on the internet is actually fine so long as you  are confident nobody will take you seriously and  

or trace the account back to you step one ensures  that you don't invite all the nasty attention that  

will draw you into these three traps step two is  to get good legal assistance there are actually  

law firms that specialize in things like lottery  winnings and they have decades of expertise in  

setting up systems to ensure that you and your  money are protected legally which leads us on to  

step three protect your assets set up a company  in trust structures that legally separates you  

from your money the reason why you hear rich  people talking about trust funds so much is for  

precisely this reason trusts are legal entities  that can hold assets like a pile of cash let's say  

or they can be more complex and hold assets like  shares in a company which in turn holds a pile of  

cash this is likely what the lawyers in step two  will recommend this type of trust will have two  

important people the trustee who decides what the  trust fund does and the beneficiary which is the  

person who gets paid the money from the trust fund  oh and by the way these two people can be the same  

person and that person can be you what this  means is that if you get sued you can just say  

oh well i don't have any money oh that over there  you mean the trust that owns a company that has  

millions of dollars sitting in it well i don't  own that i just control it and benefit from it  

now you might ask why would you add a company on  top of this trust fund and that's a great question  

trust funds are awesome but they can't hold on  to cash for very long they are legally required  

to disperse a large percentage of their cash every  year to their beneficiaries this is to prevent the  

trustees you know the people that actually make  the decision in the trust from holding out on  

giving the beneficiaries any money wouldn't want  the trust fund babies missing out on the third  

trip to aspen this winter would we the problem  with this rule for you though is that it means  

at the end of the year you would have to pay out  a good chunk of that lovely trust fund money and  

you would be right back where you started holding  on to a big pile of money that could be sued right  

off you whereas if you give all that money to a  company that just so happens to be owned by the  

trust then the company can decide if it's going  to pay dividends this year and if so how much that  

then gets given to the trust which then gets given  to you to not gamble with congratulations you are  

now getting paid like every rich person ever and  you got to learn how trust funds work along the  

way now step four is actually putting that money  to good use money loses its value over time thanks  

to inflation and if your money is not making more  money then you will eventually spend it all even  

if it does take a lot of time so go find some good  investments nothing too crazy remember you're here  

to preserve the money not double it overnight  that no gambling rule applies to the stock market  

as well step five is setting up a budget where you  can live indefinitely off these investment returns  

the conventional wisdom on this is that this  budget should be anywhere between two to five  

percent of your total invested assets economics  explained in a video on the financial independence  

movement that established these rules last year  and i will leave a link to that video which  

describes this investing rule in much more detail  and finally step six find a new place to call home  

we have covered nationless elites on this channel  before and now it's your turn to become one  

you need to pick and choose a country that  will offer you a good quality of life without  

infringing any of those nasty taxes upon you  popular choices amongst so-called financially  

independent nomads or global elites depending on  who you ask include monaco lichenstein singapore  

the bahamas and bermuda and don't worry if  these nations sound a little bit cramped to you  

you only need to live there for six months and  one day out of the year to avoid those taxes  

and then you are free to travel around the world  with your money which is now safe productive and  

practically limitless now i'm assuming for most of  you watching that the real step one would actually  

be making a million dollars and a great way to  do that is starting a company look at people like  

steve jobs who made billions in his lifetime after  founding the most valuable company to ever exist  

although his billions were not actually made  from that company to learn about the company  

that really made steve jobs a billionaire  go and watch our video on the topic  

and while you're at it please consider liking and  subscribing to keep on learning how money works