Billionaire Recession Advice: Stop Investing in THIS (2023)

Summary

• I've shifted my investment strategy due to changes in the economy, like inflation and market crashes.
• I realized keeping cash in the bank is equivalent to giving a low-interest loan to the bank, which isn't the best use of money.
• Banks usually pay around 0.1-1% interest on your money but can make more by lending it to the government or on mortgages.
• If a bank fails, your money is at risk unless it's FDIC insured, but even the FDIC is currently bankrupt.
• I discovered that U.S. Treasuries are a safer place for cash than banks, with better returns and the option to take loans against them.
• Initially, I invested in personal development, then the S&P 500, following Warren Buffett's example.
• Later, using a barbell strategy, I diversified into stocks and real estate, with my main wealth in private equity of the companies I own.
• I learned from Dave Ramsey and Graham Stephan that your investment should reflect your knowledge.
• I've seen that billionaires don't do many things, but they heavily invest in areas they understand well.
• I understood that most of my investing knowledge is not in real estate, but in service-based businesses, which is where I thrive.
• Warren Buffett's advice on S&P 500 is for those who lack expertise, but real gains are made when you have an unfair advantage in a particular field.
• Ultimately, I've gone back to focusing on what I know best, investing in private deals within my expertise, as it's "only risky if you don't know what you're doing."
• My final takeaway: Invest in yourself first, then in broad indexes, and when you're ready, heavily invest in your particular area of expertise to allow for wealth compounding.

Video

How To Take Action

I would suggest first focusing on self-improvement. Spend money and time on learning new skills, finding coaching, and attending workshops. This gives you the highest return because you're investing in your ability to earn more in the future.

After that, put your money into things like the S&P 500 index. This is a good move if you're still learning about investing. It's what smart people like Warren Buffett recommend for those who aren't investment pros yet.

But don't stop there. As you get smarter in your chosen field, start moving your money into areas where you have lots of knowledge. Like, if you know lots about houses, you might invest more in real estate. This is because you can make smarter choices when you understand your investments well.

Remember, don't keep too much cash in a regular bank. Banks use your money and pay you tiny interest. Instead, look into U.S. Treasuries. They are safer than banks and can pay you more. Plus, you can even get loans against them if you need to.

So, one step at a time: build your knowledge, start with broad investments like index funds, and when you're ready, invest big in the things you really know well. That's when you'll see your wealth start to grow a lot more. Keep focused on what you know best, and don't take big risks on stuff you don't understand. That way, investing isn't scary, it's just a smart way to use your money.

Quotes

"It's only risky if you don't know what you're doing"

– Alex Hormozi

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"The way you put your money has to shift because the economy has changed"

– Alex Hormozi

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"If you've ever heard Warren Buffett or you heard people in the news say he has x billion dollars in cash or cash equivalents, he doesn't actually have it sitting in cash, he has it sitting in something else that's better"

– Alex Hormozi

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"Invest in you"

– Alex Hormozi

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"What I am good at is we're very good at service based businesses, that is where I thrive"

– Alex Hormozi