Original subtitles

hello and welcome to penny investor where we teach you how to invest with pennies so today we'll be

talking about what is financial independence why a house is not an investment how to pay less taxes

while you're losing money when putting in a bank and how to become financially independent today so

open your ears because i'm about to open your eyes so that you can open some doors in your life okay

firstly what is financial freedom or financial independence

financial independence is the status of having enough income to pay one's living expenses

for the rest of one's life without having to be employed or dependent on others

now notice here that it doesn't say enough money or enough savings what it says is

enough income meaning what the return in money from one's business labor or capital invested

especially on a regular basis here's where it gets interesting according to m1 finance

an investment is a purchase that is completed with money that has a potential to produce income

or a profit things that naturally lose value over time and with use are not investments for example

if you buy just a new coat to keep you warm for the winter you didn't invest in it you bought it

an oven for better cookies at night is bought and a new car definitely isn't an investment

in other words if it is not putting money straight into your pocket each month then it

is not an investment some examples of investments are a share of a company also known as a stock

a rental property and a business that grows in value what most people don't realize though

is that buying a house for yourself to live in even if the house appreciates meaning

increases in value is not an investment it's not making you money each month quite the opposite

anything that takes money out of your pocket is called a liability the first thing that you

must be able to do for financial independence is recognize the difference between an investment

and a liability this will save you a lot of money in the long run what are the benefits of financial

independence it allows you more freedom of travel a wider selection of choices in your day-to-day

life more flexible work hours going overseas to visit family it reduces stress and the negative

impact of unforeseen events it reduces your taxes significantly and it keeps your earnings

valuable i'll come back to the last point but first many people do not understand why taxes

are reduced for a business and taxes are minimal for money and through investments

let's start with investments does it make sense to keep paying more for what you already own

no but jobs does it make sense to keep paying for what you take from someone else's pocket

when they could have multiplied that and returned it with interest through an investment

definitely this highlights a difference between earning from a job versus earning

from an investment since companies taxes can be reduced as employees pay high taxes but mainly

because companies use leverage to earn money also known as good debt if you want a video on leverage

drop a comment down below similarly employees work for money business owners make money for

themselves and others and investment or asset holders make money work for them however in all

three the higher the risk the more education needed and the higher the potential reward

employees pay high taxes since they work hard to get money for themselves

whereas businesses get taxed less because their owners worked hard to set up something

that can pay everyone else e.g their workers by taxes are reduced with serving the public in mass

if it is a food catering company like mcdonald's who are actually in the real

estate sector they reduce taxes because they are feeding the public real estate companies

provide housing and multinational companies provide employment for many

injecting funds into the local economies franchises and preventing homelessness

governments reduce these companies taxes

since it reduces strain and cost on government-funded sectors such as social housing

finally on to the point about keeping earnings valuable

as you probably know physical money's value used to be based on gold abundance in a country

how much gold that country had determined the value of the country's currency

but also controlled the number of banknotes and coins in circulation

during this time you could easily exchange between gold and dollars this was until 1971 when

president Nixon of the us removed the dollar from the gold standard this meant that the dollar's

value no longer held a direct gold conversion and in fact they were held to no value at all

since all global currencies had their currency dependent on the value of the dollar at the time

they had no direct gold conversion value either this was the first global introduction of fiat

currency meaning that the physical money's value was now controlled by the federal reserve

along with the government with no real value to compare to

the more money printed from that moment the less value it received reducing is purchasing power

the process of value reduction of currency is known as inflation according to investopedia.com

I was shocked to hear that 40 of us dollars in existence

were printed in the last 12 months according to techstartups.com let me repeat that 40 of

us dollars in existence were printed in the last 12 months so what does this mean for you

your money is drastically losing value when holding its cash in a bank account

you could say it has a practically negative interest rate meaning the more money you store

there the more money you lose this is why it is a wise choice to put your money in investments

that actually rise in value compared to losing the value of the money you worked hard to earn

in a nine to five job it also means that for most a nine to five job will not be enough by

itself to achieve the financial independence that everyone seeks to have don't worry though teaching

you how to invest with little is the purpose of this channel so stay tuned for the next video

remember to work hard and consistently educate yourself thank you for watching you made it to

the end so i know you liked the video let me know down below by turning the gray button blue in the

red button gray and if you want to see why you should and how you can invest in penny stocks then

turn post notifications on because those are the topics of the next two videos now on this channel

you're gonna get education and inspiration the quote of this video is by yay shoot for the stars

so if you fool you land on a clown make sure you always aim high in life whatever you do

the bible verse of the video is taken from Proverbs 10 verse 4 and it reads lazy hands make

for poverty but diligent hands bring wealth and this is something you're going to have to apply

in all aspects of your life you want to do well whether you're in school you're working or you're

investing I've been the Penny Investor stay safe stay thankful and I'll see you in the next one