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Investing is the key to building wealth, but where you invest your money matters. Putting your money in the wrong places could cost you millions, leaving you with a much smaller nest egg in retirement. And I don't know about you, but I want my nest egg to be big, like T-Rex big. Egg big, arm small.
And some investments are so bad, I consider them to be a total scam. So today, we're going to look at three places you should never invest your money. Plus, you'll find out the best places to invest for building real, lasting wealth. But first, hit those like and subscribe buttons and share this with your friends to show them you're a...
Clever girl. It's a Jurassic Park reference. And yes, all of my references are from the 90s, they're vintage, and they will come back around and eventually be relevant. Just not right now. Whatever you say, old-timer. Alright, the first place you should never invest your money might come as a surprise. Because we've been told since we were kids, it was the place to keep your money. And there's even a song about it in Mary Poppins. And that place is... a bank. Fidelity Fiduciary Bank.
Most banks will offer some kind of wealth management service, but that's basically just a way for them to push you to financial products that will make them more money. Things like CDs, bonds, or worst of all, insurance products, none of which I would recommend for long-term investing in real wealth building. In fact, I would avoid them like I avoid my old personal trainer when I see him at Trader Joe's. I have missed leg day for a decade, but silver lining, I still fit into skinny jeans.
You see, banks don't just exist as your money's personal storage unit. Like any other business, they exist to make a profit. So you can bet any investment they sell you comes with the hidden or not so hidden motive of making money off of you.
Now, I'm not saying you shouldn't keep your money in the bank. I have a checking account and I even have a high yield savings account that earned some pretty decent interest. But that's different than investing. That's just keeping my emergency fund in a place where it can earn some interest while still being accessible and liquid. So even if you like your bank and it seems convenient to invest through them, remember, banks are a good tool for protecting your money, but not growing it. So do your investing elsewhere.
Okay, the next place you should never invest is unfortunately a pretty commonplace trap. And the sad part is a lot of people who put their money here think they're making a smart financial decision thanks in part to sleazy salesmen and shady financial gurus on social media. I'm talking about permanent life insurance products. Things like Universal Life, Index Universal Life, Variable Universal Life, Whole Life, and Cinnamon Multigrain Life. JK about that last one. That's actually, that last one's a good product.
Holds up. But the other ones are a type of life insurance product that have a savings or investment account packaged with them that's supposed to build something called cash value. This is what the insurance agents promote as the great investment. You'll hear them talk about things like risk-free growth and tax-free inheritance and infinite banking, which all sound great. But when you dig into the details, it becomes clear that life insurance as a wealth-building tool is just a legal scam peddled by insurance agents posing as financial advisors.
And here's why it gives them fat commissions while locking you into years of high costs. These policies often come with a guaranteed return on that cash value, but the profits are pretty low on average, and you can do way better investing on your own with mutual funds and index funds through your tax advantage retirement accounts. And get this with most policies, if, and when you die, your cash value doesn't even go to your family and loved ones. It goes to the insurance company.
No, don't like that. Permanent life insurance is a terrible product, so avoid it just like you avoid your therapist when you see him at Taco Bell. Not because you've been reaching out to your toxic ex, which you have, but because you're ashamed to be eating your feelings with a grilled cheese burrito deluxe cravings box and sweatpants at 9 a.m. on a Tuesday. We've all been there. A dark time. The rite of passage.
Who told you about that? And quick side note on life insurance. I think life insurance is awesome when you don't mix it with investing and you choose the right type. Always choose a term life policy that's 10 to 12 times your annual income on a 15 to 20 year term. It's a fraction of the cost of whole life and it keeps your insurance separate from your investing the way it should be and the way God intended.
Okay, the third place you should never invest is leveraged real estate. This is when you buy investment property with borrowed money expecting to generate income through equity or renters and thusly get rich. And people do this because by using leverage, AKA debt, you get the property without immediately paying the whole cost.
And there's plenty of real estate experts out there and finance bros in Patagonia Vest who will tell you about how leveraged real estate is the path to retiring on a tropical island in your 20s while passive income stacks up in your bank. And quite frankly, they make it sound pretty stinking good.
It's free real estate. But the reality is much different than whatever these gurus are selling you in their online courses about Airbnb arbitrage and duplex hacking and nothing down real estate deals. Infinite money hack. That is house hacking. House hacking. No money down. Leveraged real estate is a high-stakes gamble, like boarding a six-hour flight to New Brunswick after eating a grilled cheese burrito deluxe cravings box and sweatpants at 9 a.m. on a Tuesday. Alright.
that is an oddly specific detail except the stakes here are somehow even higher and that's because the real estate market is already volatile prices and rental demand are affected by fluctuating interest rates employment rates and inventory and a six-figure debt load only amplifies all that risk and missed payments or market downturns well that can erode your equity and even lead to foreclosure
And even if you think you know what you're doing, it's still super risky. In fact, this is how Dave Ramsey, the man himself, went bankrupt back in the 80s. He was playing it risky with leveraged real estate. Plus, owning and managing rental properties requires time, effort, and expertise. You got to think about things like maintenance costs, legal liabilities, tenant vacancy, payment collection, weird issues with renters.
And if you're the landlord, you have to take care of those things or pay someone else to do it and manage them, which might be tough. I mean, nobody wants to be the guy who has to evict Kevin because he's ignored the five previous notices that his pet lizards are in violation of the rental agreement. The relationship made in heaven. And look, if you want to invest in real estate, good, that's great. But do it the right way and do it when you're ready. And what does that mean? This is controversial. Buckle up, save up and pay cash.
Yeah, I said it. Come at me, bro. Easy, tiger. Will it take longer? Absolutely. But it will also lower your risk, lower your stress, and increase your cash flow and increase your peace. I'm a poet and I didn't even realize it. Wow.
You're like Shakespeare, yo. Real estate can be a wonderful blessing in your wealth building strategy when done right and a terrible curse when done wrong. And don't believe the hype from real estate influencers. Go slow, do your homework and pay cash. And I know it sounds crazy, but it's even crazier to be leveraged up to your eyeballs and just hope that everything works out somehow. Okay, I know I said we're going to talk about three places you shouldn't invest, but I'm going to throw in a bonus for you because I'm all about outrageous generosity.
Don't do your investing through an app like Robinhood, M1 Finance, Cash App, Webull, or Acorns. Here's why. Investing apps are designed to take your money, not make you money. More rhyming, baby. You have a great gift for rhyming.
These apps make playing the financial markets as easy as swiping right on Hinge, but they can also leave you feeling duped. Like that time you got catfished by the guy who was, ironically, holding a catfish in his profile photo. Hey, all I can say is you knew things were fishy from the start. That's on you. He got you hook, line, and sinker. But you know what? Don't give up. You keep casting that rod, girly, and eventually you'll catch a catch.
Fish puns.
Basically, they're the s'mores of the investing world. And they do this through gamification, promos, push notifications, constantly luring you back for another trade, only to smack you in the face with hidden fees and taxes. And they might even tempt you with higher risk investments like margin trading, with very little guidance, leaving you flying blind. Plus, they've got social features that can trigger some serious FOMO and lead you to chase whatever the hot stock they think is next. And you don't have to worry about all that crap if you scrap the app and avoid the trap. No cap. I'm a good chap.
Well, that sounds like the world's worst Dr. Seuss book. All right. So those are just three or four of the places you shouldn't invest your money. But the question remains, where do you invest to build real wealth over time? Well, the answer is actually pretty simple. But before I tell you the best places to invest, I want to tell you about a place to save your money where it can earn some sweet, sweet interest.
And that is a high yield savings account like the one offered by Laurel Road, one of the sponsors of today's video. And right now your account balance earns 5.15% APY. Plus there's a ton of other great perks. No minimum balance required to open an account. Your deposits are FDIC insured and there's no bogus monthly maintenance fees. And best of all, Laurel Road's premium care team takes great care of you when you got to talk to a real human being. It's like roadside assistance.
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They will save your data bacon by deleting your personal info, including your phone number, from these sketchy data broker websites all over the internet. And according to my latest report from Delete.me, they've already saved me 33 hours of time it would have taken me to find and remove that data myself. That's almost enough time to watch Babe, Pig in the City 20 times. And with my special code, you can join Delete.me for less than $9 a month. So go to joindelete.me.com slash george to protect those little pigs from the big bad data wolves. That'll do, pig. That'll do.
Okay, back to the original question. Where should you invest to build real wealth over time? Well, like I said earlier, it's pretty simple. Believe it or not, all you need to build wealth are tax-advantaged retirement accounts like your company 401k and a Roth IRA. That's it. No life insurance hacking, no arbitrage, no debt, no addictive apps, just a good old-fashioned retirement account.
And once you're maxing out those accounts, you can sprinkle in some index funds and paid for real estate if you like. But don't get distracted by shiny things, because if you fall for the trends, you'll fall for the traps. And here's a good rule of thumb. Don't invest in anything you don't understand. And if it sounds too good to be true, it probably is. And if it looks like get rich quick, you will go broke even quicker.
The tried and true boring stuff is what's going to win and give you the most peace along the way. The tortoise beats the hare, the crockpot beats the microwave when it comes to wealth building. Now, if you want to know more about how to invest the right way, be sure to check out this video for the proven principles of building wealth. I'll also drop a link in the description. And don't forget to like and subscribe and share this with your personal trainer so you'll have something to talk about when he sees you at Trader Joe's buying those dark chocolate peanut butter cups. In my defense, there's one gram of protein per peanut butter cup, and that's why I eat 20 at a time.
Thanks for watching. We'll see you next time.