November 7, 2024 • 47 mins
In this episode, John gives several examples on how to build wealth practically. You don't always have to come from money to make your own. These tips will help you build wealth - not just for yourself, but for generations that follow!
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Speaker 1 (00:00):
Welcome The Money in Wealth with John Hobryant, a production
of the Black Effect Podcast Network and iHeartRadio. Hey, Hey, Hey,
this is John Hope Bryant and this is the Money
in Wealth podcast series coming to you every Thursday on
(00:22):
the Black Effect Network and iHeart Radio. This is my
weekly ministry of finance, coming to you with a message
that will uplift your life and empower you to make
your own decisions. It is possible, to quote a friend
Chris Gorman, who's the CEO of Key Bank, which is
(00:44):
with him a few weeks ago in Cleveland, Ohio, It's
possible that the only true freedom is financial freedom because
every other form of freedom can be taken from you.
Think about that. Think about political freedom, more religious freedom,
more societal freedoms. Even the right to vote has been
threatened recently for some. So once you have financial freedom,
(01:08):
unless you screw it up, no one can take that
from you. It is yours. You are free to be.
All money is is freedom, that's all it is. And
you are buying your own freedom, you are paying for it,
you are ensuring it in the future. This podcast this
week is around creating a legacy of generational wealth that's
(01:33):
right a legacy of generational wealth. I'm gonna give you
three strategies to build at least a million dollar net worth.
I'm gonna start with kids, and if we have some time,
I'm gonna give you a bonus track that I think
will also excite you. So let's see how we go.
(01:55):
Here we go. If you have a child, or when
you have a child and don't be in any rush
to have a child, your life will change. Once that happens.
Your priorities, if you're a good parent, becomes theirs. Okay, so,
but if you have a child already, congratulations, you're doing
(02:15):
one of the most important jobs in the world, giving
life and creating a world changer, potentially a world changer.
But you're going to need to put that person in
a position to be a transformational force in this world,
which means they should have resources. As you've heard me say,
(02:35):
if you hang around nine bro people, you'll be the tenth.
You don't want to be the two guys. This is
a Reverend Jesse Jackson joke. You told me you don't
want to be the two guys. The two hobos sitting
at the train track. They've been kicked off the train
for nonpayment, and they're upset. And one of the hobo
(03:01):
looks at the other hobo and says, you know, I'm
really upset. We were kicked off this train and people
were rude to me, and I'm not gonna take it.
I'm so upset. I'm gonna buy this here train system,
this whole train set up, the train network, the train company.
I'm gonna buy it, you know. The hobo turns to him,
(03:21):
looks at him and says, you know, I'm upset too.
I'm so upset, I'm gonna sell it to you. And
both of them are so broke they can't pay attention,
so poor they can't afford the Oh, are all right?
I don't want you to be that guy, right are
those guys? I don't want your children to even get
anywhere close to that conversation. I want them to hit.
(03:43):
I want you to be able to hit somebody with
your American Express black car without putting, without physically touching them,
just put it down on the table or whatever credit
card you use. But in this example, I think you
understand people understand and emerg spress black card knock somebody out.
You don't you don't you don't need to argue with them,
Just just don't. Don't argue with the weight or the restaurant.
(04:06):
Buy the restaurant. If that is your preference, I can
do it if I want to. If somebody was rude
to me, I could buy the business, uh and put
them out of business and run my own business, assuming
the business was for sale or sellable. But resources is not,
are not the issue? Isn't that a wonderful place to be.
Let's put your child now, right now, in a position
(04:27):
to be that person by the time they become an adult.
So let's run through the numbers. I like math because
of that doesn't have an opinion. Example number one, put
your pen, take your pens out and pencils out, your
pieces of paper or your digital device, and let's jot
this down. So if a child invest two hundred dollars
(04:56):
a month, starting in this example at age two, by
the age of about forty, with a seven percent return annually,
they'll reach a million dollars. So by the time they
get married and are beginning their family, because of the
(05:18):
setup that you've put in place at an early age,
they're going to get the payoff of becoming a millionaire.
For life that'll have a million dollars in principle, and
not not any to do with the income that they make,
the future income or other things that they do other investments.
I'm talking about the efforts that you make. In this example,
(05:39):
when they're two years old, you're going to invest for
them two hundred dollars a month. I mean, you spend
that on you know, Starbucks and cigarettes or you know,
probably just a Starbucks budget. Right, Just think about the
things you spend in a month two hundred dollars on.
So you're going to invest two hundred dollars a month
(06:00):
in the stock market on a conservative basis, and you're
going to do that over a forty year period. Well,
you're going to do the first part. Then you'll hopefully
to raise a child who can finish that on their own,
(06:21):
or if you're just really benevolent, you set them up
on auto pay. Right. But by the time in this
example that you started to and by the time they
are forty to forty five years of age, they're worth
a million dollars at an your return of seven percent.
By the way, Operation Hope, the organization I found it
now has an account, a bank account, a Hope Child
(06:44):
Savings Account thanks to the leadership of Mayor Keisha Lance
Bottoms when she was in office and now Mayor Andre
Dickens and his administration, who's really amplified this and made
it truly successful in the City of Atlanta City Council
and the Atlanta Public Schools because of these working together
institutions working together, who initially funded two million dollars into
(07:06):
the Future of Kids, Operation Hope in partnership with the
bank that domiciles our account, City Group, we now have
a bank account for every kid in kindergarten in Atlanta
Public Schools, and statistics have shown that if you give
a kid an account in kindergarten and put a modest
amount of money in that account, there's seventy five percent
(07:29):
more likely to graduate from college. Did you hear that?
Seventy five percent more likely to graduate from college. So
we're setting them up to connect education back to aspiration.
The light is on in the kid's head. They now
plugged the socket in the back of the wall that
connects education with aspiration. They got the memo on free enterprise,
(07:51):
capitalist and economics and ownership at a young age, and
they understand why they're being asked and inspired and told
to go to school. So in this one example I'm
giving you, I want you to think about opening this
account at two years old or five years old, ten
years old. Okay, So you say you started when the
kids ten years of age. You're going to put two
(08:13):
hundred dollars a month in that account, right, and by
the age and you know, they get married whatever, let's
say it's thirty right, Uh, they'll they'll be halfway to
their mark by that time, maybe even more if the
markets do better certain years. Right, but let's just say
an average seven percent return. And you and as a
you know, as a gift to them, their wedding gift,
(08:34):
you say, I'm going to I'm going to put you
on auto pay right for you know, the time that
you're raising your children, their children, or you arrange with
your your children to continue that two hundred dollars a
month investment through auto pay. Don't You shouldn't do it manually,
just just come out of your paycheck or their paycheck
(08:55):
on a regular basis. But if I were you, I
would just set this account up and just have it happening.
And then when I retire from my job, not me,
but if you were working a job retired for your job,
you would make sure that the folks handling your finances
your money knew that two hundred dollars a month would go.
You won't even notice it. We're go on auto pay
into this stock account. It'll just keep compounding and compounding
(09:18):
and compounding. You can start at birth, Okay, you can
start at the year two, you start a year five,
year ten. Yes, you can start at year twenty. Yes,
you can start when the kid is twenty years of age.
Two hundred dollars a month it will be about sixty
three years of age when they become a millionaire in
that particular case. So that's why I'm suggesting do it early,
(09:40):
because you want to give them the majority of their
mature life. People are now living to eighty years of age.
If you're and better, if you're in good health, you're
giving them really the second half of their life to
absolutely transform their life with these resources. We had a
(10:02):
kid that went through our financial literacy program in Detroit.
His name was Derek, and the program back then was
called Banking on Our Future and as part of what
we now call Hope Inside for Kids, where we taught
financial literacy as you money. Many of you know. I've
got my first financial literacy course when I was nine
years old in Compton, California. Banker came to my classroom
(10:23):
and taught me financial literacy. And I remember asking the
banker what do you do for a living and how
did you get rich legally? And I was dead serious.
The banker had a red tie and a white shirt
in a blue suit. Six ' to two issue was
with the banker was from Bank of America. I remember
(10:45):
all that, and they didn't want to be there. We
didn't want them there, right, but their employer sent them in.
It's part of the Community Reinvestment Act federal legislation that
requires banks to reinvest in communities, which, by the way,
I opporation. He participates in CRA today as so it's
full circle for me. Anyway, banker comes to our classroom
(11:08):
once a week for four weeks, six weeks. I'm sorry
for forty five minutes each. First week, we didn't want
him there. He didn't want to be there. We made
it clear, he made it clear. The energy was like
not was not positive. Second week, you're like, you know,
you can't sort of remind me of my children you're
not so bad. You're not so bad for a white guy.
So we started a conversation and built a relationship. And
(11:30):
I'm like, well, look, you got a suit on. But
every only the person I know who's white with a
suit on before you as a detective. And it wasn't
a good suit. It was polyester. Your suit is Italian design,
It's got a nice, beautiful stitching. Your Egyptian cotton is
your shirt. You know. I didn't say that then, I
know it now. I mean, it's just beautiful. You have
a car in the garage in the parking lot. It's
(11:51):
got tags on it. It's legal. No one's chasing you.
You have a business card that says sixteenth floor on it.
There's nothing in compton Y on the sixth or eighth floor.
That's the courthouse. Everything else is one or two floors.
So where did you come from? And you're in the
middle here in the middle of the day. My mother
could not show him in the middle of the day
(12:12):
because she worked an hourly job with two fifteen minute breaks.
One Nita Smith, who died a millionaire by the way,
passed away a millionaire millionaire net worth when she passed
away a year ago. Last month, she's been promoted and
had died with a credit score of eight fifty four
last time when we pulled their credit So she wasn't black,
she was green. When she went to the computer, the
computer just said yes. So this banker you know, was
(12:36):
there in the middle of the day and they were
on a salary. I didn't know what a salary was,
and they had a business card. Sixteen floor, sixteen floors,
Like I met a Marsham. Who are you? Where'd you
come from? Like? What do you do for a living? Again?
And how'd you get rich? Legally? He said, I'm a
banker and I finance entrepreneurs. I said, sir, I don't
know what an entrepreneur is, but if it's legal and
(12:57):
you're financing it, I'm going to be you know. I've
told the story in other ways. You can read in
my book Financial Literacy for All, which by the way,
is number one continues to be the number one business
finance book in the country eight months in a running.
So everybody who bought the book, thank you. If you
bought the book, signed the book, well mark it up,
underline scratch. You use it as a work book for
your family to co ovid. The plan I've given you
(13:19):
now and the plan we continue to give you in
this weekly podcast. And when you're finished with the book
or buy an extra book, put your family name in
the book and donate that book to a title I school,
a struggling school in your a resource struggling school in
your neighborhood, and or the public libraries. And then go
in and teach financial literacy after making a Hope commitment
(13:39):
on the website for Operation Hope to show us so
we can brag on you in the world that you're
in your community making a difference. Register that Hope commitment
with us. Back to the story. So I'm in the class,
and this banker's inspired me to become an entrepreneur, teaching
me financial literacy. And I started my first business at
(14:04):
ten years of age, neighborhood candy house. Again, it's in
the book Financial Literacy for all this whole story, so
I won't tell it now, and I do well. I
made three hundred dollars a week on a forty dollars investment,
put the liquor storeut of the candy business. Found girls
lost a business recurring theme in my life. But I'm
married changed for but it changed my life. This whole
(14:25):
mindset shift changed my life. Then I asked this banker,
going back to the class, excuse me, so are there
any more like you? Like? Just are you the only banker?
And he said, well, of course not there. You know,
there are a couple hundred thousand bankers at Bank of
America alone. And I said, wait a minute. Your job
is to lend poor people money, and all I have
(14:47):
to do is prove to you I can pay you
back based on the stuff you've been teaching me the
last six weeks in this financial literacy course. He says, yeah,
that's right, and I don't get dead if I don't
pay you back. Excuse me, yes, you know, you go
on the street behind me and get that and get
a loan from Pooky and them. You don't pay that back,
you'd be dead. Our neighbor was prison, probation, parole, and death.
(15:10):
Those were your alternatives if things went wrong. And he said, no,
young man, I'm not gonna No one's gonna harm you.
You're going to notice a default. I said, wait a minute,
to slow down. You're gonna send me a piece of paper, right.
I didn't realize the credit score. These were so important things.
You don't want to default on obligations. Clearly you want
to honor them and follow you for the rest of
your life. But I was a kid, I'm like, wait
(15:30):
a minute, I'm using people dying around me. I saw
two murders before I was nine years old. The worst
thing's gonna happen to me is you're gonna put something
on my record. Yes, okay, I now would have to
know what I'm gonna do for the rest of my life.
I'm gonna become an entrepreneur, and I now know ultimately
what I'm gonna do for the rest of everybody else's life.
(15:52):
I'm gonna teach them how this game works by making
them bank qualified, showing them financial literacy, showing how to
get access to credited prime rates. And I didn't really
at ten years of age, had already preordained my destiny
of what I was going to be could be my
contribution to society, which is Operation to Hope. Today, we're
the larges on the ground delivery system for financial literacy
(16:13):
in America, fifteen hundred offices forty two states for to
have billion dollars invested in underserved communities, millions of clients,
countless impacts that started when I was ten years old,
nine years old in that classroom, and one of those
impacts with this young man Derek in Detroit Public Schools.
And so Mary Haggarty, now Mary Ayerson, who's our president
(16:35):
for partnerships back then, was I think in charge of programs.
We land Strigs runs programs. Today. We were in this classroom,
We're in the school and the young man Derek, and
this is really Mary's story, but I'm going to put
myself into this story because I'm the storyteller here. Same thing,
marry me saying, opreat show, same thing. We're there in
this classroom, teaching financial literacy, and Derek is coming out
(16:58):
of the classroom. He's wearing a suit just like me.
And Derek's you know, you know, applauded for being taught
financial literacy and paying attention and modeling the volunteer banker.
He's been modeling this banker banker every once a week
for weeks, just like I did. And as he's walking
out the classroom, his friends quotation marks Dart teasing him, Man, Derek,
while you're wearing that dumb suit. That's a dumb suit.
(17:18):
Why would you wear what you're looking like that banker.
You need to come over here, and you need to
dress like us. You need to hang out like us.
And so we go over and say to Derek, in
the midst of him being sort of emotionally jumped on
the bully, look, you need to take this seventy dollars
to make a decision about Nike. You and your boys.
We're going to give you all a chance to make
a decision about Nike. And mind you, this is a
(17:39):
long time ago. This, you know, probably twenty years ago. Okay,
so you know, make a decision about mikey here, Nike
here seventy dollars, which back then would have brought you
a share of Nike. So, Derek, you know this is great.
I want to buy a share of Nike stock. The
friends say, oh, man, what are you doing. That's stupid. Well,
here's another stupid thing you're doing. Heck, would you want
(17:59):
to buy some stupid stock? You want to buy you
some Air Jordans. That's right, everybody know air Jordan's. Look
look around, there's folks with future air Jordans on even leather,
air Jordans, canvas, air Jordans, black, brown tan Air Jordan's
multi colored air Jordan's special limited edition Air Jordans. Don't
weren't you at the store with us when everybody's walking
around standing around the corner and get there the latest
(18:21):
edition air Jordan's. You need to get you some air Jordans.
You're not coolest, you've got some Air Jordans. They're just
pololing this kid with their information with sometimes with friends
like this, who needs enemies? So we stop them, Hey, hey, hey, hey,
we go to defend Derek's honor. And Derek says, no, no, no,
no, no no no no no no no, it's cool. I
(18:42):
want them to buy those shoes because when they do,
they're making me money. Boom, drop the mic. So Derek
got the memo. Derek understood that he's a shareholder. Do
(19:04):
you know that Black America, as an example, is one
of the largest consumer spending forces in the world one
point six give or take trillion dollars, But ninety plus
percent of that is consumer spending consumption, not consumer spending.
Consumption is not going in. Anything that renews itself or
investment itself is consumption. Right, We're just feeding the beast, right,
(19:28):
And ninety six percent I believe it is off my
memory of all black businesses are sole proprietorships. Right, you're
not compounding, not building that, You're just a self employment project. Right.
We're not dumb and we're not stupid. Is when the
rules of publishing plain fuels level, we kill it. We
become experts. And where's that happened? Professional sports and the arts,
(19:54):
faith in community, faith, church politics were the rules of
publishing the plainfields level. We absolutely kill it. We succeed,
but no one taught us the lessons of free enterprise,
capitalism's economics and opportunity. And Derek Young, Derek may be broke,
but he'll never be poor. There's a difference between being
broken being poor. Being broke as economic. Being poor is
a disabling frame of mind, a depressed condition of your spirit.
(20:16):
You must vow never ever, ever to be poor again.
It's okay if you don't like me, I like me,
I really respect me, and learn to like me. Then
like me and never respect me. Or as Quincy Jones
once told me, not went out to My self esteem
depends on your acceptance of me. Derek is an eagle,
even if he's surrounded our buzzers and turkeys. He may
(20:36):
be broke occasionally, that happens in life, but he will
never be poor because he's been empowered with the civil
rights issue of this generation financial literacy. Now he's become
a stockholder. Do you know when you own one share
of stock of any publicly traded company, please listen to me. Now,
one share stock of any publicly traded company, you have
the right to get financials and all the inside information
(20:58):
from that company. One share of stock. So now we're
gonna switch switch from the story of Derek and the
story of the kid who has become who started as
a as a young investor with the help of their
parents and maybe their part time job, and became by
(21:19):
middle age a millionaire. And if, by the way, if
you want to double it up and put four hundred
dollars a month in compounding seven percent, you can cut
the time in half that that young kid of yours
becomes a millionaire. But four hundred dollars a month is
probably a heavy clip that's a car note for somebody,
(21:40):
or a part of a car note. So I'm trying
to be sensitive to the fact that he's are working families.
So two hundred dollars a month is probably something you
could probably do. Let's now switch to a working class family.
Then I'm gonna now switch to the big baller option
to build real wealth before we re stop this podcast episode. So,
(22:02):
now you're a working class person, right. The family makes
fifty thousand dollars a year, and there's somebody in your
family that you get along with who makes thirty five
thousand and thirty eight thousand dollars a year with three kids. Okay,
so slow down. This is the average family, by the way. Okay,
working class family. So you make fifty thousand dollars a year.
I'm going to show you how to become a millionaire
(22:22):
in about five to eight years. Okay, So I want
you to do what my mother did. My mother died
got wrestler, so a millionaire when she passed away. She
had worked an hourly job when he dismissed. She's in
the book for the Introlusory for All read about her
high school education, got her high school equivalency when she
was sixty plus years of age, walked with those with
cap and gown in eighteen years of age, just to
(22:43):
prove she could do it. This is a bad woman.
Credit Grady fifty four okay, hourly job Now, So I
want you to buy a home. Number one way you
build wealth in America is home ownership. Don't buy a
many man. She don't buy something fancy. So I'm trying
to depress people. You don't know what money. You don't
have to discuss it and brag it by things that
don't matter. With people you have no clue if you'll
(23:06):
ever see again, and it doesn't really care. It shouldn't
matter to you whether you impress them or not. Right,
I want you to buy a home, and I want
you to live in it. Right, and after a couple
of three years, I want you to take a modest
line of credit out and buy another home in a
working class neighborhood. I want you to buy the worst
house on the best block. And now your cousin or
(23:32):
sister or brother, somebody you know makes thirty eight thirty
five thirty eight thousand dollars a year with three children,
I want you to cut a deal with them and
start a limited liability corporation. Document this business is not personal.
Keep it business. You're going to say to them, do
you know about the EITC. They're going to say, what's
that you're going to say congratulations. You've just got to
check because if you have never heard of EITC, and
(23:54):
you make less than sixty thousand dollars sixty five thousand
dollars a year, the government owes you a check for working.
In this example, i'm hitting us sweet spot of thirty
eight thousand dollars a year in income and three children.
Thirty five thirty eight thousand dollars a year in income
and three children, that person gets a check between six
and seventy five hundred, six thousand and seventy five hundred
dollars cash. It's called the Earned Income Tax Credit. My
(24:19):
coaches at Operation Hope can help you through the VITA
sites and through Operation Hope to amend or file your
tax returns so you can get this payment and make
sure it goes into a bank account, an FDIC insured bank. Okay,
Now you turn to your cousin and you say, no,
you never heard of EC before. Nope, never heard of it. Great, congratulations,
(24:41):
because it's retroactive for three years, so if you've never filed,
to get up to three years of that. So three
years time. Let's keep a simple number, six thousand dollars
that's eighteen thousand dollars rounded up to twenty thousand dollars,
you know, just under twenty thousand dollars, and you're going
to use that as a down payment for this house.
In this South east region, you can buy a house
(25:02):
that needs rehab for you know, sixty thousand dollars. Still,
even if it's one hundred thousand dollars, you have more
than ten percent to require for a down payment, you know,
buy the house. You're gonna get a rehab loan hopefully.
Are you going to use this earned income tax headed
money for credit money I'm talking about, and there are
other funds that are available to you that through financial
livercy education you'll learn about when you talk to my coaches.
(25:24):
You're gonna take this money and you're going to you're
going to read in you and and members of your
family hopefully on the weekend. Or you're gonna and or
you're gonna get a proper construction loan and get vendors,
proper vendors, not your cousin Jojo right, somebody who's qualified
to rehab this property with minority vendors. So you're reinvesting,
reinvesting in the neighborhood. You're going to rehabit and you're
(25:45):
gonna rent it and make a long story short over
a period of time six years in an example, you're
gonna do that twice. You own your own home, and
you're going to buy two properties in the worst house
in the best block. You're going to rehabit and rent
that property and hold it, do not sell, and you
get a will. A one page will is a nice
(26:06):
is a good place to start. And you can get
a life insurance policy. As a young couple or a
young person doing this, you get a life insurance policy
if you're in decent health. For a term policy, you
can get a whole life. But a term policy will
cost you ten dollars twenty five dollars a month, even
as much as a million dollar policy. You can get
(26:27):
for less than hundred dollars a month, probably more like
fifty dollars a month if you're in decent health. I've
heard as low as twenty five dollars a month. Somebody
and really young person in good health, and you don't
know all long you're go on live, but you dang
sure to know you're gonna die. What's the mystery? So
you're gonna make a million times too, because you're gonna
be a mid worth a million dollars of networth irrespective
of the job you're working, based on the real estate value,
(26:49):
the appreciation and net equity in the properties that you
accumulate over time. Right, So within a decade, without question,
you'll be a millionaire. And when you pass on the
glory at some point, you will because you have a
life insurance policy and a will you're going to bestow
upon your children or those you love, a mother or
(27:10):
whoever you're trying to hook up, life etc. A husband
a million dollars of life insurance policy in this example,
generational wealth. I've even gotten to the good part. So
I've given you now two three strategies, right that are
very practical. This is the power of financial literacy. Now
here's the last one. And I want anybody who's really
(27:34):
those who I really want to pay attention to this
are the strivers, those who want to be small business owners,
those who want to be entrepreneurs, those those with high
ambitions to not just you know, have live a middle
class life. They want to build. They want to write
the check, not just cash it. Somebody making six figures
who has been able to put a little bit aside.
They don't want to work for the man anymore. Are
(27:56):
the one man? Right? I want you to hear what
I'm saying. There's a silver tsunami coming your way. Listen,
now write this down, a silver tsunami. You've heard me
talk about the silver rights movement, from the streets to
the suites, from civil rights to silver rights. This is
(28:16):
a different kind of silver. By the way, did you
know that the first backer of currency in America was
not gold? The first backing currency was silver. A little
factoid for you. It went from silver to gold, and
then it went We got off the gold standard, and
now US currency is backed by the full faith in
currency the US government, which means America, which is the
(28:37):
only flight to quality currency in the world, is a
big baller shot collar. Everybody wants to invest in America
and have American currency. I don't care what anybody tells you.
We are what China and Russia. Everybody's complaining about US.
They want to be US, and they're buying. Once the
TV cameras turn off, Putin and all those people are
buying assets in America. And I want you to understand
(28:57):
the value of the thing that everybody else once and
we're looking right past. So here you go. Please write
this down. I've written this extensively, about this extensively in
the Business Plan for America. You can look it up online.
All the statistical data is in there. You can download it.
Read my Time magazine op ED where I talk about
(29:18):
inclusive economics as a software upgrade on DEE and I
here we go with it. Is generation you're going to
have for the first time in history, a majority of
individuals adults over the age of sixty five. It's never happened.
(29:40):
These are baby boomers read white, wealthy and trying to retire.
They're all heading out the door at the same time.
They all want to go play golf and vacation at
the same time. Seventy is seventy five million baby boomers
are coming of age. They are tired, they're exhausted, they're
(30:01):
worn out, They're just they want to change their scenery,
change their mind. They may not want to retire, but
they want to rewire. They want to go do something else.
And those folks who the vast majority of those who
created wealth and have high incomes who are retiring, all
at the same time, in this demographic bomb that is
about to go off in the next decade, This is
(30:22):
happening in the next ten years. And also, I say
in the Business Plan for America, forty percent of this
country today as black and brown, and within ten years
it'll be a majority of minorities. And if we want
to continue to be the sole superpower in the world
and the biggest economic force in the world, those two
things have always gone together. By the way, you never
had a superpower that wasn't the economic power in the
(30:45):
history of the world. If we want that to happen,
then our rich friends need make sure that our poor
friends that don't do better if only this stay rich.
I said that in my book How the Poor Can
Save Capitalism. I think that was my third book. My
rich friends need my poor friends to do better if
only to stay rich. I'll go one step further. The
racist even needs black people to succeed, if only because
(31:07):
GDP grows, domestic product rises, lifts all boats. Even the
racist benefits and wins when black people succeed. So why
is that important? Because this demographic shift is happening in
a way and at a time where everybody who's built
wealth and it's created great incomes. Are sort of walking
off the stage at the same time, and the people
coming on the stage haven't been given the memo on
(31:30):
money and wealth creation. You make money during the day,
you build wealth in your sleep. Have not been taught
financial literacy, the civil rights issue of this generation, have
not been given the tools to go from the streets
to the suites, have not been empowered to become owners
of things that actually generate real wealth. You can make
more money on money than you can ever make on labor.
(31:52):
That's a word, as my friend t I would say
say less. You can make more money on money you
can ever make on your labor. So that's a podcast
for another time, when I will appeel that back. The
silver tsunami is this. Please tell all your friends, please
write this down. Seventy to seventy five million millennials retiring
(32:16):
all the same time. The America has about one hundred
and fifty trillion dollars of combined wealth, more wealth than
any place in the world. One hundred and fifty trillion,
fifty traine of that created in the last twenty years.
Please listen to me. So in the history of America,
one hundred and fifty trillion dollars of combined assets of equity,
(32:38):
of net worth of wealth. Okay, one hundred and fifty
trillion dollars of wealth, and fifty training of that one
hundred and fifty trillion was created since the year two thousand,
so the last twenty four years a massive increase. And
at the same time, you've had this huge wave of
(33:01):
millennials who are reaching the age of sixty five years
of age and they're about to walk off the stage
at the same time, and it's going to be a
tsunami of sixty eight trillion to one hundred trillion dollars
of wealth transfer in the next decade. When that happens,
(33:23):
those who own this wealth, who hold it, my guess is,
are going to bestow through inheritance the house or homes,
the stocks, the bonds, the cash, and to give it
to those that they love. When they turn around to
say and here's our business, the kids are gonna say, no, no, no,
we're good. We don't want that. That's work. It's an
(33:46):
old saying that applies. First generation makes it, second generation
spends it, third generation loses it. This is the second
generation and they want to spend it. They don't want
(34:08):
to work. I'm not saying they're lazy. I'm saying they
want to benefit from their parents' activities. They want to
enjoy their lives. Most of them are not going to
want to run these businesses. Occasionally they will, but that's
going to be fifteen to twenty percent. Please listen to me,
This is a gold mine. Fifteen to twenty percent of
this tsunami of one hundred trillion dollars, just put the
(34:33):
number right in the middle. Are going to be businesses
that are going to transfer, that want to transfer, and
there's no place to transfer them. To listen to me. Now,
they have cash flow, they are profitable, they have employees,
they have a customer lists. Many of them own real estate.
(34:54):
They have inventories, they have distribution networks, they've got patents,
they've got intellectual property rights. The get excited. They have
a brand for the company they exist. It's a million
dollar business, a five million dollar business, a twenty million
dollar business, a two hundred million dollar business. Occasionally there'll
be a billion or two billion dollar privately owned business,
(35:18):
and the kids don't want it. They have got to
provide liquidity for their inheritance so they can go play off.
They're gonna have to sell that business and it is
much easier. Please listen to me, right. My people at
one Million Black Business Initiative can help you with this.
My people with HOP inside our business Hope and Side locations.
(35:39):
We have fifteen hundred locations across the country. My Hope
financial coaches can help you with this. The US Small
Business Administration, our partner can help you with this. There.
Actually they'll be part of the financing. And I'm talking
about here in a minute. But you want to buy
these businesses. If you're a black business owner, as I
said earlier, ninety six percent of all your businesses don't
have an employee. It's hard to finance that. I'm not
(36:02):
saying give up on that business. Please hear me. I'm
not saying don't start a business. I've started businesses. I
get it. If you want to start a business, then
you go and start. You want to be a startup entrepreneur,
then you go do that. You want to be a
start off small business owner, you go do that. Yes,
there's a difference between a business owner and an entrepreneur.
A business owner has an existing business plan like a franchise.
They're modeling an existing business plan. An entrepreneur is a
(36:25):
crazy person like me doing something extraordinary and different, out
of the box and normally fresh and new, creating value
out of nothing. It's a French word built something out
of nothing. That's the word I learned when I was
nine years old in financial literacy class in Compton, California,
at Elsagondo and Colin B. Kelly Elementary School. With that banker,
please hear me. It's much less risky, multiple times less
(36:48):
risky to buy an existing business than it is to
start a new one. Okay, if I haven't gotten your
attention yet, please listen to me. It is really hard
to get somebody to fund a two hundred thousand dollars dream.
You may have to use your own savings for that
startup or that restaurant or that business, or whatever it
(37:09):
is you want to do. I'm not saying don't do it.
I'm saying it is multiple times harder to get financing
a support for a two hundred thousand dollar business or
a twenty thousand dollar business even than it is to
buy a existing, profitable, twenty million dollar business. Yes, I
said it. Let's make it let's put it. Let's make
(37:30):
it even more relatable too. Maybe that brings dream was
too big for you. Listen to me. There's a two
million dollar gas station, a two million dollar convenience store,
a two million dollar restaurant, a two million dollar distribution
center business in your neighborhood. It'll be for sale two
million dollars okay. And if it has as I mentioned
(37:52):
in a recent podcast with one of my new friends
who's an investment banker or private banker, a private equity guy,
if the business has a million dollars in revenue, then
you make an offer for it by that business for
nine hundred thousand or a million dollars. Give you some
quick rules of thumb. If the business has a one
(38:14):
hundred thousand dollars of net profit, net profit, net of
ebadot anyway net profit, you might offer up to ten
times net cash flow to buy that business. But that's
getting into the weeds. An investment bank or a broker
or business broker my team can help you figure out
(38:36):
what's the best way to figure out the purchase price
for a business. But the seller is going to tell
you what they want for the business. The sellers running
the business they've gotten advice and accountant from their accountants.
They know what they want. But whatever that number is,
if it's a reasonable number, and certainly if you can
discount the number a little bit ten fifteen percent off,
you can get off that purchase price off of the
appraise value or the estimated value that business. And you
(38:59):
go to a private equity firm, you go to a
venture capital backer, a venture backer. They maybe even I
will back you inquiring that business on non recourse debt,
meaning you don't personally guarantee it. If you start that
(39:20):
twenty thousand dollars business two hundred thousand dollars startup business,
that's your cash, that's your If you get a loan,
it's personally guaranteed. I'm telling you, I'm not telling you
not to do it, and you may lose everything. I'm
not telling you not to do it. I'm telling you
that all this existing stuff is about to hit A
tsunami of opportunity is about to hit the market, all
at the same time, with no place to go, no buyers,
(39:44):
the kids don't want it, and they're profitable businesses in
Wall Street will finance it. This is where I tell
you about your credit score right. If you have a
great credit score, you've got great The word credit comes
on the lot of with word credito. Credibility is what
it means. That's when it comes credit credit. If you
have credibility, you have good credit. Right, folks will we'll
(40:05):
back you. If you have good reputation, good credit. Right,
you understand capitalism, which comes from the Latin root word
copy toask knowledge in the head, that's where it comes from,
then they will trust you with their capital. Banking is
a trust business, so if you have good credit, you
can tap capital by showing that you understand capitalism and
free enterprise financial literacy, then capital sources will then trust you.
(40:26):
And you show that you're a good manager and you
can lead an enterprise, they will trust you. Put you
right at the top of an existing business acquire that business,
which you then own. If you're interested in this, you
can check out resources like biz Buy Sale and other
industry specific brokers of businesses definement your businesses for sale.
You can you can look at financing through the United
(40:48):
States Small Business Administration. My friend Administrator Guzman who just
saw this week, who is fantastic and her team at
the SBA. You can look at CDFI's community development financialitutions
in your neighborhood who might finance acquisitions like this, and
private equity partners and private equity firms like my company
(41:08):
and others. I'm not telling you to come to me.
I tend to finance my own stuff. I'm telling you,
I'm saying that if you want understand what I do,
it's private equity, all right, Just tend to happen to
back my own things and my own businesses. And then
of course I backed Operation Hope, which is a nonprofit
and make sure you get your get into a mentoring
program engaged with minority business development organizations like Operation Hope,
(41:29):
like the SBA SCORE program for guidance conduct due diligence,
meaning check out this and do proper analysis on the
business that you're thinking about buying. Uh, and never give up.
Now I'm going to drop the mic. I'm going to
stop here. I've given you a half dozen strategies now
on how you can build wealth. Practically, I laid it
(41:52):
all out for you, but it star all starts it
with financial financial literacy. Financial literacy is a civil rights
issue of this generation. When you know better, you do better,
and when you don't know better, you can't do better.
We're not dumb and we're not stupid. It's what we
don't know that we don't know this killing is. What
we think we know is an old Southern saying. If
you don't have wisdom, then all I can give you
(42:13):
is my own ignorance. Out of love, we pass down
bad habits from generation to generation. Is what we don't know.
That we don't know this killing is, but we think
we know. So let's get in the know. Let's empower
ourselves to transform our lives through wealth accumulation, wealth creation
(42:34):
that Let's get money and have our freedom turn that
money into wealth, sustainable wealth. Let's master this game. Evil.
Money is not evil. It's the love of money that's evil.
The money is mentioned two thousand plus times in the Bible.
I think it's evil about this. You got to understand
(42:54):
this because even if you want to distribute money like
a socialist, like a do gooder, which is great first
collected like a capitalist. Drop the mic. John O'Bryant, This
is Money and Wealth on the Black Effect Network podcast
series on iHeartRadio, and I encourage you to tell your
friends to follow this podcast. I encourage you to buy
(43:16):
the book Financial Literacy for All. I encourage you to
call Operation Hope or download the Hope and Hand app
and tell them that I sent you, and get your
one thousand dollars scholarship for initial coaching and counseling through
one of my whole financial coaches. Tell them that I
sent you. I encourage you to open a bank account
for your child as early as you can. And don't
(43:38):
just buy them a toy they're gonna break at birthdays
and Christmas. Buy them a share of stock. There are
companies that actually print a share of stock and you
can put it up on your wall, on the kids wall.
It's not a painting, is not a folk it's a
(44:00):
real stock certificate that represents the stock that they own.
You can buy them a share of stock through this company,
through companies like you know, these companies that gift. We
can give a share of stock to a kid and
they will send you a frame stock certificate for their wall,
(44:23):
and that stock certificate then gives that kid a in
you rights to all the financial information information for that
company publicly traded company. Think about how that empowers that
kid and that stock which the kid now can can
can Yeah, they can trade and sell it, but they
can also track it for the rest of their life
and use that as a baseline of conversation for financial literacy.
(44:45):
All right, So I hope that you've enjoyed this. This
has been a blast. I've been honored to share a
little bit of my knowledge with you, and I've got
some special stuff coming up in the next couple episodes.
So tell all your friends about this. Get the book
Financial Literacy for All, and let's start a movement that
started in the streets with civil rights and ends up
(45:07):
in the business suites cutting deals with silver rights. The
new colors not black or white, red or blue, It's green.
I want you to have some. I'm out. Money and
(45:32):
Wealth with John O'Brien is a production of the Black
Effect Podcast Network. For more podcasts from the Black Effect
Podcast Network, visit the iHeartRadio app, Apple Podcasts, or wherever
you listen to your favorite shows. The Potatotempt
Welcome The Money in Wealth with John Hobryant, a production
of the Black Effect Podcast Network and iHeartRadio. Hey, Hey, Hey,
this is John Hope Bryant and this is the Money
in Wealth podcast series coming to you every Thursday on
(00:22):
the Black Effect Network and iHeart Radio. This is my
weekly ministry of finance, coming to you with a message
that will uplift your life and empower you to make
your own decisions. It is possible, to quote a friend
Chris Gorman, who's the CEO of Key Bank, which is
(00:44):
with him a few weeks ago in Cleveland, Ohio, It's
possible that the only true freedom is financial freedom because
every other form of freedom can be taken from you.
Think about that. Think about political freedom, more religious freedom,
more societal freedoms. Even the right to vote has been
threatened recently for some. So once you have financial freedom,
(01:08):
unless you screw it up, no one can take that
from you. It is yours. You are free to be.
All money is is freedom, that's all it is. And
you are buying your own freedom, you are paying for it,
you are ensuring it in the future. This podcast this
week is around creating a legacy of generational wealth that's
(01:33):
right a legacy of generational wealth. I'm gonna give you
three strategies to build at least a million dollar net worth.
I'm gonna start with kids, and if we have some time,
I'm gonna give you a bonus track that I think
will also excite you. So let's see how we go.
(01:55):
Here we go. If you have a child, or when
you have a child and don't be in any rush
to have a child, your life will change. Once that happens.
Your priorities, if you're a good parent, becomes theirs. Okay, so,
but if you have a child already, congratulations, you're doing
(02:15):
one of the most important jobs in the world, giving
life and creating a world changer, potentially a world changer.
But you're going to need to put that person in
a position to be a transformational force in this world,
which means they should have resources. As you've heard me say,
(02:35):
if you hang around nine bro people, you'll be the tenth.
You don't want to be the two guys. This is
a Reverend Jesse Jackson joke. You told me you don't
want to be the two guys. The two hobos sitting
at the train track. They've been kicked off the train
for nonpayment, and they're upset. And one of the hobo
(03:01):
looks at the other hobo and says, you know, I'm
really upset. We were kicked off this train and people
were rude to me, and I'm not gonna take it.
I'm so upset. I'm gonna buy this here train system,
this whole train set up, the train network, the train company.
I'm gonna buy it, you know. The hobo turns to him,
(03:21):
looks at him and says, you know, I'm upset too.
I'm so upset, I'm gonna sell it to you. And
both of them are so broke they can't pay attention,
so poor they can't afford the Oh, are all right?
I don't want you to be that guy, right are
those guys? I don't want your children to even get
anywhere close to that conversation. I want them to hit.
(03:43):
I want you to be able to hit somebody with
your American Express black car without putting, without physically touching them,
just put it down on the table or whatever credit
card you use. But in this example, I think you
understand people understand and emerg spress black card knock somebody out.
You don't you don't you don't need to argue with them,
Just just don't. Don't argue with the weight or the restaurant.
(04:06):
Buy the restaurant. If that is your preference, I can
do it if I want to. If somebody was rude
to me, I could buy the business, uh and put
them out of business and run my own business, assuming
the business was for sale or sellable. But resources is not,
are not the issue? Isn't that a wonderful place to be.
Let's put your child now, right now, in a position
(04:27):
to be that person by the time they become an adult.
So let's run through the numbers. I like math because
of that doesn't have an opinion. Example number one, put
your pen, take your pens out and pencils out, your
pieces of paper or your digital device, and let's jot
this down. So if a child invest two hundred dollars
(04:56):
a month, starting in this example at age two, by
the age of about forty, with a seven percent return annually,
they'll reach a million dollars. So by the time they
get married and are beginning their family, because of the
(05:18):
setup that you've put in place at an early age,
they're going to get the payoff of becoming a millionaire.
For life that'll have a million dollars in principle, and
not not any to do with the income that they make,
the future income or other things that they do other investments.
I'm talking about the efforts that you make. In this example,
(05:39):
when they're two years old, you're going to invest for
them two hundred dollars a month. I mean, you spend
that on you know, Starbucks and cigarettes or you know,
probably just a Starbucks budget. Right, Just think about the
things you spend in a month two hundred dollars on.
So you're going to invest two hundred dollars a month
(06:00):
in the stock market on a conservative basis, and you're
going to do that over a forty year period. Well,
you're going to do the first part. Then you'll hopefully
to raise a child who can finish that on their own,
(06:21):
or if you're just really benevolent, you set them up
on auto pay. Right. But by the time in this
example that you started to and by the time they
are forty to forty five years of age, they're worth
a million dollars at an your return of seven percent.
By the way, Operation Hope, the organization I found it
now has an account, a bank account, a Hope Child
(06:44):
Savings Account thanks to the leadership of Mayor Keisha Lance
Bottoms when she was in office and now Mayor Andre
Dickens and his administration, who's really amplified this and made
it truly successful in the City of Atlanta City Council
and the Atlanta Public Schools because of these working together
institutions working together, who initially funded two million dollars into
(07:06):
the Future of Kids, Operation Hope in partnership with the
bank that domiciles our account, City Group, we now have
a bank account for every kid in kindergarten in Atlanta
Public Schools, and statistics have shown that if you give
a kid an account in kindergarten and put a modest
amount of money in that account, there's seventy five percent
(07:29):
more likely to graduate from college. Did you hear that?
Seventy five percent more likely to graduate from college. So
we're setting them up to connect education back to aspiration.
The light is on in the kid's head. They now
plugged the socket in the back of the wall that
connects education with aspiration. They got the memo on free enterprise,
(07:51):
capitalist and economics and ownership at a young age, and
they understand why they're being asked and inspired and told
to go to school. So in this one example I'm
giving you, I want you to think about opening this
account at two years old or five years old, ten
years old. Okay, So you say you started when the
kids ten years of age. You're going to put two
(08:13):
hundred dollars a month in that account, right, and by
the age and you know, they get married whatever, let's
say it's thirty right, Uh, they'll they'll be halfway to
their mark by that time, maybe even more if the
markets do better certain years. Right, but let's just say
an average seven percent return. And you and as a
you know, as a gift to them, their wedding gift,
(08:34):
you say, I'm going to I'm going to put you
on auto pay right for you know, the time that
you're raising your children, their children, or you arrange with
your your children to continue that two hundred dollars a
month investment through auto pay. Don't You shouldn't do it manually,
just just come out of your paycheck or their paycheck
(08:55):
on a regular basis. But if I were you, I
would just set this account up and just have it happening.
And then when I retire from my job, not me,
but if you were working a job retired for your job,
you would make sure that the folks handling your finances
your money knew that two hundred dollars a month would go.
You won't even notice it. We're go on auto pay
into this stock account. It'll just keep compounding and compounding
(09:18):
and compounding. You can start at birth, Okay, you can
start at the year two, you start a year five,
year ten. Yes, you can start at year twenty. Yes,
you can start when the kid is twenty years of age.
Two hundred dollars a month it will be about sixty
three years of age when they become a millionaire in
that particular case. So that's why I'm suggesting do it early,
(09:40):
because you want to give them the majority of their
mature life. People are now living to eighty years of age.
If you're and better, if you're in good health, you're
giving them really the second half of their life to
absolutely transform their life with these resources. We had a
(10:02):
kid that went through our financial literacy program in Detroit.
His name was Derek, and the program back then was
called Banking on Our Future and as part of what
we now call Hope Inside for Kids, where we taught
financial literacy as you money. Many of you know. I've
got my first financial literacy course when I was nine
years old in Compton, California. Banker came to my classroom
(10:23):
and taught me financial literacy. And I remember asking the
banker what do you do for a living and how
did you get rich legally? And I was dead serious.
The banker had a red tie and a white shirt
in a blue suit. Six ' to two issue was
with the banker was from Bank of America. I remember
(10:45):
all that, and they didn't want to be there. We
didn't want them there, right, but their employer sent them in.
It's part of the Community Reinvestment Act federal legislation that
requires banks to reinvest in communities, which, by the way,
I opporation. He participates in CRA today as so it's
full circle for me. Anyway, banker comes to our classroom
(11:08):
once a week for four weeks, six weeks. I'm sorry
for forty five minutes each. First week, we didn't want
him there. He didn't want to be there. We made
it clear, he made it clear. The energy was like
not was not positive. Second week, you're like, you know,
you can't sort of remind me of my children you're
not so bad. You're not so bad for a white guy.
So we started a conversation and built a relationship. And
(11:30):
I'm like, well, look, you got a suit on. But
every only the person I know who's white with a
suit on before you as a detective. And it wasn't
a good suit. It was polyester. Your suit is Italian design,
It's got a nice, beautiful stitching. Your Egyptian cotton is
your shirt. You know. I didn't say that then, I
know it now. I mean, it's just beautiful. You have
a car in the garage in the parking lot. It's
(11:51):
got tags on it. It's legal. No one's chasing you.
You have a business card that says sixteenth floor on it.
There's nothing in compton Y on the sixth or eighth floor.
That's the courthouse. Everything else is one or two floors.
So where did you come from? And you're in the
middle here in the middle of the day. My mother
could not show him in the middle of the day
(12:12):
because she worked an hourly job with two fifteen minute breaks.
One Nita Smith, who died a millionaire by the way,
passed away a millionaire millionaire net worth when she passed
away a year ago. Last month, she's been promoted and
had died with a credit score of eight fifty four
last time when we pulled their credit So she wasn't black,
she was green. When she went to the computer, the
computer just said yes. So this banker you know, was
(12:36):
there in the middle of the day and they were
on a salary. I didn't know what a salary was,
and they had a business card. Sixteen floor, sixteen floors,
Like I met a Marsham. Who are you? Where'd you
come from? Like? What do you do for a living? Again?
And how'd you get rich? Legally? He said, I'm a
banker and I finance entrepreneurs. I said, sir, I don't
know what an entrepreneur is, but if it's legal and
(12:57):
you're financing it, I'm going to be you know. I've
told the story in other ways. You can read in
my book Financial Literacy for All, which by the way,
is number one continues to be the number one business
finance book in the country eight months in a running.
So everybody who bought the book, thank you. If you
bought the book, signed the book, well mark it up,
underline scratch. You use it as a work book for
your family to co ovid. The plan I've given you
(13:19):
now and the plan we continue to give you in
this weekly podcast. And when you're finished with the book
or buy an extra book, put your family name in
the book and donate that book to a title I school,
a struggling school in your a resource struggling school in
your neighborhood, and or the public libraries. And then go
in and teach financial literacy after making a Hope commitment
(13:39):
on the website for Operation Hope to show us so
we can brag on you in the world that you're
in your community making a difference. Register that Hope commitment
with us. Back to the story. So I'm in the class,
and this banker's inspired me to become an entrepreneur, teaching
me financial literacy. And I started my first business at
(14:04):
ten years of age, neighborhood candy house. Again, it's in
the book Financial Literacy for all this whole story, so
I won't tell it now, and I do well. I
made three hundred dollars a week on a forty dollars investment,
put the liquor storeut of the candy business. Found girls
lost a business recurring theme in my life. But I'm
married changed for but it changed my life. This whole
(14:25):
mindset shift changed my life. Then I asked this banker,
going back to the class, excuse me, so are there
any more like you? Like? Just are you the only banker?
And he said, well, of course not there. You know,
there are a couple hundred thousand bankers at Bank of
America alone. And I said, wait a minute. Your job
is to lend poor people money, and all I have
(14:47):
to do is prove to you I can pay you
back based on the stuff you've been teaching me the
last six weeks in this financial literacy course. He says, yeah,
that's right, and I don't get dead if I don't
pay you back. Excuse me, yes, you know, you go
on the street behind me and get that and get
a loan from Pooky and them. You don't pay that back,
you'd be dead. Our neighbor was prison, probation, parole, and death.
(15:10):
Those were your alternatives if things went wrong. And he said, no,
young man, I'm not gonna No one's gonna harm you.
You're going to notice a default. I said, wait a minute,
to slow down. You're gonna send me a piece of paper, right.
I didn't realize the credit score. These were so important things.
You don't want to default on obligations. Clearly you want
to honor them and follow you for the rest of
your life. But I was a kid, I'm like, wait
(15:30):
a minute, I'm using people dying around me. I saw
two murders before I was nine years old. The worst
thing's gonna happen to me is you're gonna put something
on my record. Yes, okay, I now would have to
know what I'm gonna do for the rest of my life.
I'm gonna become an entrepreneur, and I now know ultimately
what I'm gonna do for the rest of everybody else's life.
(15:52):
I'm gonna teach them how this game works by making
them bank qualified, showing them financial literacy, showing how to
get access to credited prime rates. And I didn't really
at ten years of age, had already preordained my destiny
of what I was going to be could be my
contribution to society, which is Operation to Hope. Today, we're
the larges on the ground delivery system for financial literacy
(16:13):
in America, fifteen hundred offices forty two states for to
have billion dollars invested in underserved communities, millions of clients,
countless impacts that started when I was ten years old,
nine years old in that classroom, and one of those
impacts with this young man Derek in Detroit Public Schools.
And so Mary Haggarty, now Mary Ayerson, who's our president
(16:35):
for partnerships back then, was I think in charge of programs.
We land Strigs runs programs. Today. We were in this classroom,
We're in the school and the young man Derek, and
this is really Mary's story, but I'm going to put
myself into this story because I'm the storyteller here. Same thing,
marry me saying, opreat show, same thing. We're there in
this classroom, teaching financial literacy, and Derek is coming out
(16:58):
of the classroom. He's wearing a suit just like me.
And Derek's you know, you know, applauded for being taught
financial literacy and paying attention and modeling the volunteer banker.
He's been modeling this banker banker every once a week
for weeks, just like I did. And as he's walking
out the classroom, his friends quotation marks Dart teasing him, Man, Derek,
while you're wearing that dumb suit. That's a dumb suit.
(17:18):
Why would you wear what you're looking like that banker.
You need to come over here, and you need to
dress like us. You need to hang out like us.
And so we go over and say to Derek, in
the midst of him being sort of emotionally jumped on
the bully, look, you need to take this seventy dollars
to make a decision about Nike. You and your boys.
We're going to give you all a chance to make
a decision about Nike. And mind you, this is a
(17:39):
long time ago. This, you know, probably twenty years ago. Okay,
so you know, make a decision about mikey here, Nike
here seventy dollars, which back then would have brought you
a share of Nike. So, Derek, you know this is great.
I want to buy a share of Nike stock. The
friends say, oh, man, what are you doing. That's stupid. Well,
here's another stupid thing you're doing. Heck, would you want
(17:59):
to buy some stupid stock? You want to buy you
some Air Jordans. That's right, everybody know air Jordan's. Look
look around, there's folks with future air Jordans on even leather,
air Jordans, canvas, air Jordans, black, brown tan Air Jordan's
multi colored air Jordan's special limited edition Air Jordans. Don't
weren't you at the store with us when everybody's walking
around standing around the corner and get there the latest
(18:21):
edition air Jordan's. You need to get you some air Jordans.
You're not coolest, you've got some Air Jordans. They're just
pololing this kid with their information with sometimes with friends
like this, who needs enemies? So we stop them, Hey, hey, hey, hey,
we go to defend Derek's honor. And Derek says, no, no, no,
no, no no no no no no no, it's cool. I
(18:42):
want them to buy those shoes because when they do,
they're making me money. Boom, drop the mic. So Derek
got the memo. Derek understood that he's a shareholder. Do
(19:04):
you know that Black America, as an example, is one
of the largest consumer spending forces in the world one
point six give or take trillion dollars, But ninety plus
percent of that is consumer spending consumption, not consumer spending.
Consumption is not going in. Anything that renews itself or
investment itself is consumption. Right, We're just feeding the beast, right,
(19:28):
And ninety six percent I believe it is off my
memory of all black businesses are sole proprietorships. Right, you're
not compounding, not building that, You're just a self employment project. Right.
We're not dumb and we're not stupid. Is when the
rules of publishing plain fuels level, we kill it. We
become experts. And where's that happened? Professional sports and the arts,
(19:54):
faith in community, faith, church politics were the rules of
publishing the plainfields level. We absolutely kill it. We succeed,
but no one taught us the lessons of free enterprise,
capitalism's economics and opportunity. And Derek Young, Derek may be broke,
but he'll never be poor. There's a difference between being
broken being poor. Being broke as economic. Being poor is
a disabling frame of mind, a depressed condition of your spirit.
(20:16):
You must vow never ever, ever to be poor again.
It's okay if you don't like me, I like me,
I really respect me, and learn to like me. Then
like me and never respect me. Or as Quincy Jones
once told me, not went out to My self esteem
depends on your acceptance of me. Derek is an eagle,
even if he's surrounded our buzzers and turkeys. He may
(20:36):
be broke occasionally, that happens in life, but he will
never be poor because he's been empowered with the civil
rights issue of this generation financial literacy. Now he's become
a stockholder. Do you know when you own one share
of stock of any publicly traded company, please listen to me. Now,
one share stock of any publicly traded company, you have
the right to get financials and all the inside information
(20:58):
from that company. One share of stock. So now we're
gonna switch switch from the story of Derek and the
story of the kid who has become who started as
a as a young investor with the help of their
parents and maybe their part time job, and became by
(21:19):
middle age a millionaire. And if, by the way, if
you want to double it up and put four hundred
dollars a month in compounding seven percent, you can cut
the time in half that that young kid of yours
becomes a millionaire. But four hundred dollars a month is
probably a heavy clip that's a car note for somebody,
(21:40):
or a part of a car note. So I'm trying
to be sensitive to the fact that he's are working families.
So two hundred dollars a month is probably something you
could probably do. Let's now switch to a working class family.
Then I'm gonna now switch to the big baller option
to build real wealth before we re stop this podcast episode. So,
(22:02):
now you're a working class person, right. The family makes
fifty thousand dollars a year, and there's somebody in your
family that you get along with who makes thirty five
thousand and thirty eight thousand dollars a year with three kids. Okay,
so slow down. This is the average family, by the way. Okay,
working class family. So you make fifty thousand dollars a year.
I'm going to show you how to become a millionaire
(22:22):
in about five to eight years. Okay, So I want
you to do what my mother did. My mother died
got wrestler, so a millionaire when she passed away. She
had worked an hourly job when he dismissed. She's in
the book for the Introlusory for All read about her
high school education, got her high school equivalency when she
was sixty plus years of age, walked with those with
cap and gown in eighteen years of age, just to
(22:43):
prove she could do it. This is a bad woman.
Credit Grady fifty four okay, hourly job Now, So I
want you to buy a home. Number one way you
build wealth in America is home ownership. Don't buy a
many man. She don't buy something fancy. So I'm trying
to depress people. You don't know what money. You don't
have to discuss it and brag it by things that
don't matter. With people you have no clue if you'll
(23:06):
ever see again, and it doesn't really care. It shouldn't
matter to you whether you impress them or not. Right,
I want you to buy a home, and I want
you to live in it. Right, and after a couple
of three years, I want you to take a modest
line of credit out and buy another home in a
working class neighborhood. I want you to buy the worst
house on the best block. And now your cousin or
(23:32):
sister or brother, somebody you know makes thirty eight thirty
five thirty eight thousand dollars a year with three children,
I want you to cut a deal with them and
start a limited liability corporation. Document this business is not personal.
Keep it business. You're going to say to them, do
you know about the EITC. They're going to say, what's
that you're going to say congratulations. You've just got to
check because if you have never heard of EITC, and
(23:54):
you make less than sixty thousand dollars sixty five thousand
dollars a year, the government owes you a check for working.
In this example, i'm hitting us sweet spot of thirty
eight thousand dollars a year in income and three children.
Thirty five thirty eight thousand dollars a year in income
and three children, that person gets a check between six
and seventy five hundred, six thousand and seventy five hundred
dollars cash. It's called the Earned Income Tax Credit. My
(24:19):
coaches at Operation Hope can help you through the VITA
sites and through Operation Hope to amend or file your
tax returns so you can get this payment and make
sure it goes into a bank account, an FDIC insured bank. Okay,
Now you turn to your cousin and you say, no,
you never heard of EC before. Nope, never heard of it. Great, congratulations,
(24:41):
because it's retroactive for three years, so if you've never filed,
to get up to three years of that. So three
years time. Let's keep a simple number, six thousand dollars
that's eighteen thousand dollars rounded up to twenty thousand dollars,
you know, just under twenty thousand dollars, and you're going
to use that as a down payment for this house.
In this South east region, you can buy a house
(25:02):
that needs rehab for you know, sixty thousand dollars. Still,
even if it's one hundred thousand dollars, you have more
than ten percent to require for a down payment, you know,
buy the house. You're gonna get a rehab loan hopefully.
Are you going to use this earned income tax headed
money for credit money I'm talking about, and there are
other funds that are available to you that through financial
livercy education you'll learn about when you talk to my coaches.
(25:24):
You're gonna take this money and you're going to you're
going to read in you and and members of your
family hopefully on the weekend. Or you're gonna and or
you're gonna get a proper construction loan and get vendors,
proper vendors, not your cousin Jojo right, somebody who's qualified
to rehab this property with minority vendors. So you're reinvesting,
reinvesting in the neighborhood. You're going to rehabit and you're
(25:45):
gonna rent it and make a long story short over
a period of time six years in an example, you're
gonna do that twice. You own your own home, and
you're going to buy two properties in the worst house
in the best block. You're going to rehabit and rent
that property and hold it, do not sell, and you
get a will. A one page will is a nice
(26:06):
is a good place to start. And you can get
a life insurance policy. As a young couple or a
young person doing this, you get a life insurance policy
if you're in decent health. For a term policy, you
can get a whole life. But a term policy will
cost you ten dollars twenty five dollars a month, even
as much as a million dollar policy. You can get
(26:27):
for less than hundred dollars a month, probably more like
fifty dollars a month if you're in decent health. I've
heard as low as twenty five dollars a month. Somebody
and really young person in good health, and you don't
know all long you're go on live, but you dang
sure to know you're gonna die. What's the mystery? So
you're gonna make a million times too, because you're gonna
be a mid worth a million dollars of networth irrespective
of the job you're working, based on the real estate value,
(26:49):
the appreciation and net equity in the properties that you
accumulate over time. Right, So within a decade, without question,
you'll be a millionaire. And when you pass on the
glory at some point, you will because you have a
life insurance policy and a will you're going to bestow
upon your children or those you love, a mother or
(27:10):
whoever you're trying to hook up, life etc. A husband
a million dollars of life insurance policy in this example,
generational wealth. I've even gotten to the good part. So
I've given you now two three strategies, right that are
very practical. This is the power of financial literacy. Now
here's the last one. And I want anybody who's really
(27:34):
those who I really want to pay attention to this
are the strivers, those who want to be small business owners,
those who want to be entrepreneurs, those those with high
ambitions to not just you know, have live a middle
class life. They want to build. They want to write
the check, not just cash it. Somebody making six figures
who has been able to put a little bit aside.
They don't want to work for the man anymore. Are
(27:56):
the one man? Right? I want you to hear what
I'm saying. There's a silver tsunami coming your way. Listen,
now write this down, a silver tsunami. You've heard me
talk about the silver rights movement, from the streets to
the suites, from civil rights to silver rights. This is
(28:16):
a different kind of silver. By the way, did you
know that the first backer of currency in America was
not gold? The first backing currency was silver. A little
factoid for you. It went from silver to gold, and
then it went We got off the gold standard, and
now US currency is backed by the full faith in
currency the US government, which means America, which is the
(28:37):
only flight to quality currency in the world, is a
big baller shot collar. Everybody wants to invest in America
and have American currency. I don't care what anybody tells you.
We are what China and Russia. Everybody's complaining about US.
They want to be US, and they're buying. Once the
TV cameras turn off, Putin and all those people are
buying assets in America. And I want you to understand
(28:57):
the value of the thing that everybody else once and
we're looking right past. So here you go. Please write
this down. I've written this extensively, about this extensively in
the Business Plan for America. You can look it up online.
All the statistical data is in there. You can download it.
Read my Time magazine op ED where I talk about
(29:18):
inclusive economics as a software upgrade on DEE and I
here we go with it. Is generation you're going to
have for the first time in history, a majority of
individuals adults over the age of sixty five. It's never happened.
(29:40):
These are baby boomers read white, wealthy and trying to retire.
They're all heading out the door at the same time.
They all want to go play golf and vacation at
the same time. Seventy is seventy five million baby boomers
are coming of age. They are tired, they're exhausted, they're
(30:01):
worn out, They're just they want to change their scenery,
change their mind. They may not want to retire, but
they want to rewire. They want to go do something else.
And those folks who the vast majority of those who
created wealth and have high incomes who are retiring, all
at the same time, in this demographic bomb that is
about to go off in the next decade, This is
(30:22):
happening in the next ten years. And also, I say
in the Business Plan for America, forty percent of this
country today as black and brown, and within ten years
it'll be a majority of minorities. And if we want
to continue to be the sole superpower in the world
and the biggest economic force in the world, those two
things have always gone together. By the way, you never
had a superpower that wasn't the economic power in the
(30:45):
history of the world. If we want that to happen,
then our rich friends need make sure that our poor
friends that don't do better if only this stay rich.
I said that in my book How the Poor Can
Save Capitalism. I think that was my third book. My
rich friends need my poor friends to do better if
only to stay rich. I'll go one step further. The
racist even needs black people to succeed, if only because
(31:07):
GDP grows, domestic product rises, lifts all boats. Even the
racist benefits and wins when black people succeed. So why
is that important? Because this demographic shift is happening in
a way and at a time where everybody who's built
wealth and it's created great incomes. Are sort of walking
off the stage at the same time, and the people
coming on the stage haven't been given the memo on
(31:30):
money and wealth creation. You make money during the day,
you build wealth in your sleep. Have not been taught
financial literacy, the civil rights issue of this generation, have
not been given the tools to go from the streets
to the suites, have not been empowered to become owners
of things that actually generate real wealth. You can make
more money on money than you can ever make on labor.
(31:52):
That's a word, as my friend t I would say
say less. You can make more money on money you
can ever make on your labor. So that's a podcast
for another time, when I will appeel that back. The
silver tsunami is this. Please tell all your friends, please
write this down. Seventy to seventy five million millennials retiring
(32:16):
all the same time. The America has about one hundred
and fifty trillion dollars of combined wealth, more wealth than
any place in the world. One hundred and fifty trillion,
fifty traine of that created in the last twenty years.
Please listen to me. So in the history of America,
one hundred and fifty trillion dollars of combined assets of equity,
(32:38):
of net worth of wealth. Okay, one hundred and fifty
trillion dollars of wealth, and fifty training of that one
hundred and fifty trillion was created since the year two thousand,
so the last twenty four years a massive increase. And
at the same time, you've had this huge wave of
(33:01):
millennials who are reaching the age of sixty five years
of age and they're about to walk off the stage
at the same time, and it's going to be a
tsunami of sixty eight trillion to one hundred trillion dollars
of wealth transfer in the next decade. When that happens,
(33:23):
those who own this wealth, who hold it, my guess is,
are going to bestow through inheritance the house or homes,
the stocks, the bonds, the cash, and to give it
to those that they love. When they turn around to
say and here's our business, the kids are gonna say, no, no, no,
we're good. We don't want that. That's work. It's an
(33:46):
old saying that applies. First generation makes it, second generation
spends it, third generation loses it. This is the second
generation and they want to spend it. They don't want
(34:08):
to work. I'm not saying they're lazy. I'm saying they
want to benefit from their parents' activities. They want to
enjoy their lives. Most of them are not going to
want to run these businesses. Occasionally they will, but that's
going to be fifteen to twenty percent. Please listen to me,
This is a gold mine. Fifteen to twenty percent of
this tsunami of one hundred trillion dollars, just put the
(34:33):
number right in the middle. Are going to be businesses
that are going to transfer, that want to transfer, and
there's no place to transfer them. To listen to me. Now,
they have cash flow, they are profitable, they have employees,
they have a customer lists. Many of them own real estate.
(34:54):
They have inventories, they have distribution networks, they've got patents,
they've got intellectual property rights. The get excited. They have
a brand for the company they exist. It's a million
dollar business, a five million dollar business, a twenty million
dollar business, a two hundred million dollar business. Occasionally there'll
be a billion or two billion dollar privately owned business,
(35:18):
and the kids don't want it. They have got to
provide liquidity for their inheritance so they can go play off.
They're gonna have to sell that business and it is
much easier. Please listen to me, right. My people at
one Million Black Business Initiative can help you with this.
My people with HOP inside our business Hope and Side locations.
(35:39):
We have fifteen hundred locations across the country. My Hope
financial coaches can help you with this. The US Small
Business Administration, our partner can help you with this. There.
Actually they'll be part of the financing. And I'm talking
about here in a minute. But you want to buy
these businesses. If you're a black business owner, as I
said earlier, ninety six percent of all your businesses don't
have an employee. It's hard to finance that. I'm not
(36:02):
saying give up on that business. Please hear me. I'm
not saying don't start a business. I've started businesses. I
get it. If you want to start a business, then
you go and start. You want to be a startup entrepreneur,
then you go do that. You want to be a
start off small business owner, you go do that. Yes,
there's a difference between a business owner and an entrepreneur.
A business owner has an existing business plan like a franchise.
They're modeling an existing business plan. An entrepreneur is a
(36:25):
crazy person like me doing something extraordinary and different, out
of the box and normally fresh and new, creating value
out of nothing. It's a French word built something out
of nothing. That's the word I learned when I was
nine years old in financial literacy class in Compton, California,
at Elsagondo and Colin B. Kelly Elementary School. With that banker,
please hear me. It's much less risky, multiple times less
(36:48):
risky to buy an existing business than it is to
start a new one. Okay, if I haven't gotten your
attention yet, please listen to me. It is really hard
to get somebody to fund a two hundred thousand dollars dream.
You may have to use your own savings for that
startup or that restaurant or that business, or whatever it
(37:09):
is you want to do. I'm not saying don't do it.
I'm saying it is multiple times harder to get financing
a support for a two hundred thousand dollar business or
a twenty thousand dollar business even than it is to
buy a existing, profitable, twenty million dollar business. Yes, I
said it. Let's make it let's put it. Let's make
(37:30):
it even more relatable too. Maybe that brings dream was
too big for you. Listen to me. There's a two
million dollar gas station, a two million dollar convenience store,
a two million dollar restaurant, a two million dollar distribution
center business in your neighborhood. It'll be for sale two
million dollars okay. And if it has as I mentioned
(37:52):
in a recent podcast with one of my new friends
who's an investment banker or private banker, a private equity guy,
if the business has a million dollars in revenue, then
you make an offer for it by that business for
nine hundred thousand or a million dollars. Give you some
quick rules of thumb. If the business has a one
(38:14):
hundred thousand dollars of net profit, net profit, net of
ebadot anyway net profit, you might offer up to ten
times net cash flow to buy that business. But that's
getting into the weeds. An investment bank or a broker
or business broker my team can help you figure out
(38:36):
what's the best way to figure out the purchase price
for a business. But the seller is going to tell
you what they want for the business. The sellers running
the business they've gotten advice and accountant from their accountants.
They know what they want. But whatever that number is,
if it's a reasonable number, and certainly if you can
discount the number a little bit ten fifteen percent off,
you can get off that purchase price off of the
appraise value or the estimated value that business. And you
(38:59):
go to a private equity firm, you go to a
venture capital backer, a venture backer. They maybe even I
will back you inquiring that business on non recourse debt,
meaning you don't personally guarantee it. If you start that
(39:20):
twenty thousand dollars business two hundred thousand dollars startup business,
that's your cash, that's your If you get a loan,
it's personally guaranteed. I'm telling you, I'm not telling you
not to do it, and you may lose everything. I'm
not telling you not to do it. I'm telling you
that all this existing stuff is about to hit A
tsunami of opportunity is about to hit the market, all
at the same time, with no place to go, no buyers,
(39:44):
the kids don't want it, and they're profitable businesses in
Wall Street will finance it. This is where I tell
you about your credit score right. If you have a
great credit score, you've got great The word credit comes
on the lot of with word credito. Credibility is what
it means. That's when it comes credit credit. If you
have credibility, you have good credit. Right, folks will we'll
(40:05):
back you. If you have good reputation, good credit. Right,
you understand capitalism, which comes from the Latin root word
copy toask knowledge in the head, that's where it comes from,
then they will trust you with their capital. Banking is
a trust business, so if you have good credit, you
can tap capital by showing that you understand capitalism and
free enterprise financial literacy, then capital sources will then trust you.
(40:26):
And you show that you're a good manager and you
can lead an enterprise, they will trust you. Put you
right at the top of an existing business acquire that business,
which you then own. If you're interested in this, you
can check out resources like biz Buy Sale and other
industry specific brokers of businesses definement your businesses for sale.
You can you can look at financing through the United
(40:48):
States Small Business Administration. My friend Administrator Guzman who just
saw this week, who is fantastic and her team at
the SBA. You can look at CDFI's community development financialitutions
in your neighborhood who might finance acquisitions like this, and
private equity partners and private equity firms like my company
(41:08):
and others. I'm not telling you to come to me.
I tend to finance my own stuff. I'm telling you,
I'm saying that if you want understand what I do,
it's private equity, all right, Just tend to happen to
back my own things and my own businesses. And then
of course I backed Operation Hope, which is a nonprofit
and make sure you get your get into a mentoring
program engaged with minority business development organizations like Operation Hope,
(41:29):
like the SBA SCORE program for guidance conduct due diligence,
meaning check out this and do proper analysis on the
business that you're thinking about buying. Uh, and never give up.
Now I'm going to drop the mic. I'm going to
stop here. I've given you a half dozen strategies now
on how you can build wealth. Practically, I laid it
(41:52):
all out for you, but it star all starts it
with financial financial literacy. Financial literacy is a civil rights
issue of this generation. When you know better, you do better,
and when you don't know better, you can't do better.
We're not dumb and we're not stupid. It's what we
don't know that we don't know this killing is. What
we think we know is an old Southern saying. If
you don't have wisdom, then all I can give you
(42:13):
is my own ignorance. Out of love, we pass down
bad habits from generation to generation. Is what we don't know.
That we don't know this killing is, but we think
we know. So let's get in the know. Let's empower
ourselves to transform our lives through wealth accumulation, wealth creation
(42:34):
that Let's get money and have our freedom turn that
money into wealth, sustainable wealth. Let's master this game. Evil.
Money is not evil. It's the love of money that's evil.
The money is mentioned two thousand plus times in the Bible.
I think it's evil about this. You got to understand
(42:54):
this because even if you want to distribute money like
a socialist, like a do gooder, which is great first
collected like a capitalist. Drop the mic. John O'Bryant, This
is Money and Wealth on the Black Effect Network podcast
series on iHeartRadio, and I encourage you to tell your
friends to follow this podcast. I encourage you to buy
(43:16):
the book Financial Literacy for All. I encourage you to
call Operation Hope or download the Hope and Hand app
and tell them that I sent you, and get your
one thousand dollars scholarship for initial coaching and counseling through
one of my whole financial coaches. Tell them that I
sent you. I encourage you to open a bank account
for your child as early as you can. And don't
(43:38):
just buy them a toy they're gonna break at birthdays
and Christmas. Buy them a share of stock. There are
companies that actually print a share of stock and you
can put it up on your wall, on the kids wall.
It's not a painting, is not a folk it's a
(44:00):
real stock certificate that represents the stock that they own.
You can buy them a share of stock through this company,
through companies like you know, these companies that gift. We
can give a share of stock to a kid and
they will send you a frame stock certificate for their wall,
(44:23):
and that stock certificate then gives that kid a in
you rights to all the financial information information for that
company publicly traded company. Think about how that empowers that
kid and that stock which the kid now can can
can Yeah, they can trade and sell it, but they
can also track it for the rest of their life
and use that as a baseline of conversation for financial literacy.
(44:45):
All right, So I hope that you've enjoyed this. This
has been a blast. I've been honored to share a
little bit of my knowledge with you, and I've got
some special stuff coming up in the next couple episodes.
So tell all your friends about this. Get the book
Financial Literacy for All, and let's start a movement that
started in the streets with civil rights and ends up
(45:07):
in the business suites cutting deals with silver rights. The
new colors not black or white, red or blue, It's green.
I want you to have some. I'm out. Money and
(45:32):
Wealth with John O'Brien is a production of the Black
Effect Podcast Network. For more podcasts from the Black Effect
Podcast Network, visit the iHeartRadio app, Apple Podcasts, or wherever
you listen to your favorite shows. The Potatotempt
Host
John Hope Bryant
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