Ryan Sean Adams (4:27)

Sam Dogan, welcome to Bankless.

Sam Dogan (4:29)

Thank you very much. Thanks for having me, Ryan.

Ryan Sean Adams (4:31)

We're really excited about this. Okay, I gotta start with the first question off the bat. It's in everyone's mind, given the title of this episode. Can anyone be a millionaire? Is this a matter of luck? Or can, like, anyone do it if they just pull themselves up by their bootstraps?

Sam Dogan (4:45)

Well, I don't think there's 100% probability, but I think if you read Millionaire Milestones and you follow personal finance sites and podcasts, you're going to be much more focused than the average person. Only about 6.5% of the US population are millionaires, but I think you can raise that probability to probably 75%. Let's do it that way.

Ryan Sean Adams (5:05)

Wow. Okay. What's stopping people from just becoming millionaires? Why can't everyone just do this?

Sam Dogan (5:10)

Well, one, there's education. You got to understand how to save and more importantly, how to invest in asset allocate over a period of time. There are many reasons. You just might not have enough money. You might not have enough education. You might not have enough patience or time, and you might not know what to invest in. So Millionaire Milestones really starts helping create a framework for investing over the long term. You've really got to know what you're doing and be patient along the way.

Ryan Sean Adams (5:39)

One of the things I've been kind of shocked about is, like, none of this is taught in schools. I mean, I guess there are, like, you know, personal finance classes in some jurisdictions, in some areas that are being mandated, but they still don't quite teach this. They certainly don't frame it as, like, how to become a millionaire. Is this the type of thing that most people learn in school? Or how do people actually learn these lessons?

Sam Dogan (6:04)

Well, it's interesting. California, I think, passed a law that says there needs to be one course for all high school seniors in 2026 and beyond, a personal finance course. So it's. It's happening, but it's still a shock to me that there are no required courses on personal finance. And it's not just about becoming a millionaire. It's just being financially literate, literate to handle your finances. And I think you learn so far by doing and by failing and by wondering where all your money went after you pay all your taxes, or wondering what happened to your crypto position or stock position after you bought at the right time and then you panic sold. Most people Learn by trial and error. And I'm trying to help people not make too many errors on their path to financial freedom.

Ryan Sean Adams (6:50)

Yeah. Do you agree it's like investing? I think this is Charlie Munger take. Investing is more like a temperament than it is sort of a knowledge set or a specific skill set that you accrue.

Sam Dogan (7:03)

Well, you definitely need to know the fundamentals of investing. You should learn about, for example, the probability that the s and P500 will go up in any single year is about 75%. The probability of a bear market happening while the drawdown is about 35%. So you understand these historical figures and there's no certainty in the future, but you understand this historical framework, so you can invest accordingly. And investing definitely is a lot about emotion control. But if you understand the numbers and you can control your emotions with a proper asset allocation according to your own risk tolerance and financial goals, which change over time, it's a forever going process. You're going to do much better than the average person.

Ryan Sean Adams (7:48)

Just top the line stats like how many millionaires are there out there? Maybe just in the U.S. so it's.

Sam Dogan (7:53)

About 6.5% of the 340 million U.S. population.

Ryan Sean Adams (7:58)

Okay.

Sam Dogan (7:58)

So there's about 20 million millionaires. So if that's a lot, that's more.

Ryan Sean Adams (8:03)

Than I think a lot of people are expecting.

Sam Dogan (8:04)

Yeah. So it's like if you're walking around and you know, if each millionaire was actually a zombie or something, you'd be kind of scared walking around and you know, so it's actually kind of ubiquitous, but not really. Right. Six and a half percent. And they're more concentrated in the bigger coastal cities where the income and the income and growth potential is generally higher.

Ryan Sean Adams (8:25)

And when you say millionaire, are you like, is this basically net worth less the household or do you include the house?

Sam Dogan (8:33)

The primary residence? The primary residence, yeah, it includes the primary residence.

Ryan Sean Adams (8:36)

Okay.

Sam Dogan (8:37)

And so there's two ways to think about this. So in the United States, the median house is about $400,000 and the median net worth is about $200,000. So about 80 to 85% of a typical person's net worth is in their primary residence, which is kind of risky. We saw that in 2008, 2009, during the housing crash, a lot of people lost their homes through foreclosure, short sales. And this is something where we talk about in the book on how proper asset allocation is very important. And then over time, that mil, the average actually American is actually a millionaire. Based on the latest consumer finance survey, it's about $1.06 million is the average net worth for households in America.

Ryan Sean Adams (9:22)

Oh, wow, that's average. It's not median, right?

Sam Dogan (9:24)

It's not median. The median is about 100. Let's just call it about $200,000.

Ryan Sean Adams (9:28)

Okay. And the reason that's skewed is because we have a lot of centimillionaires and a lot of fair number of billionaires out there that are definitely. Bezos is in the average numbers.

Sam Dogan (9:38)

Right, right. So that skews it upwards.

Ryan Sean Adams (9:40)

But so I think some people will be surprised with some of those raw numbers that being a millionaire only puts you in the top 6% or so in the U.S. so what does it take to get in the top 1%?

Sam Dogan (9:51)

So top 1% cutoff is 13 million, 13 to 14 million. Once you got that, that is the threshold for top 1%.

Ryan Sean Adams (9:59)

Okay.

Sam Dogan (10:00)

And then top 0.1%, it just really ramps up that way. So it's really skewed on the top 1% to top zero. When people think about, like, the really wealthy people, it's really the top 0.1%, not so much the top 1% anymore. It's interesting.

Ryan Sean Adams (10:14)

Let's. Let's talk about the why question, because that's sort of where you start your book. And your book goes through a number of milestones that millionaires will need to consider and will want to hit throughout their journey here. But the first is, I think, the most fundamental question of all, because there could be some people listening to this saying, like, maybe not very many. Maybe most people want to be a millionaire, but others say, look, why should I work towards this? What is the point in being a millionaire? What are the benefits? And you begin with your first milestone in this book of you actually have to find your why. So could you talk about that? Why is being a millionaire worth pursuing at all? And how does someone find their why?

Sam Dogan (10:54)

Well, I think it's important to understand there's trillions of dollars out there in the world for the taking. You know, the knucklehead you went to high school with might be super wealthy because he or she decided to try and put themselves out there. So one know that there's a lot of wealth, especially here in America. And if you don't take advantage of that, I think you're kind of wasting your opportunity of being born and to live in America. There's so much opportunity. I grew up overseas in Malaysia, Taiwan, Philippines, Japan, Zambia. And then when I got here, I was like, wow, this is. This is like the land of the free and the rich. Let's go.

Ryan Sean Adams (11:27)

Sure.

Sam Dogan (11:28)

And so you don't really know your why, maybe until you kind of get out of school and you get into the real world and it starts beating you down. Right. Maybe like a micromanager starts telling you what to do every single day, even though you know how to do it. Maybe a colleague backstabs you and you thought, you know, you guys are good friends. You won't really discover your why until maybe five years out of high school or college. And then what happens is you might be stuck in the wrong path or you might think this is your why. And then years later you're like, this is terrible. I don't want to go through the motions over and over again. So you will eventually. I think everybody will eventually get sick and tired of what they're doing. For me, that was about 11 years in banking industry. I was like, after the, doing the same old conference, speaking with the same old clients, going to the same old country, it was, it was boring and it was a grind. And so it's important to discover your why, because it's important to realize that eventually you're going to become miserable. And by that time you're miserable. You need enough money, you need enough passive income wealth to give you the options to do something you really want to do for your next step.

Ryan Sean Adams (12:36)

Yeah, that certainly resonates with me and I think resonates maybe with a number of bankless listeners here, which is like, and there's a term for this, I know you were kind of one of the early prophets of this movement too, the fire movement. Financially independent, retire early. Right. That's fire. And I think that resonates for me when it comes to a why to build your wealth. A lot of that is summed up in the word independence. Or maybe another word for that is kind of freedom. So for me, it was always very much about the freedom to work on whatever I want and not be. People use the term wage slave. The freedom to just work where I want, for who I want, on whatever causes or purposes I want to work on, and not to have to just be in the grind of producing a paycheck. It was also the freedom to help those in my life, like my family, those around me. The idea of having a safety net for people I care about, the ability to buy a loved one something that they need, maybe it's a car, maybe it's a house, something like that, it's security, it's protection for those that you love and those you care about. And it was also the freedom to convert this wealth into other types of wealth. We recently had Sahil Bloom on the podcast who wrote a book called the Five Types of Wealth. I don't know if you've dug into that, Sam, but it's funny because this episode is all about net worth, which is one component of wealth. But the beautiful thing about net worth is you can kind of convert it into the other types of wealth as well. So if you're not grinding on a 70 hour work week at a banker job at Goldman Sachs or something like that, well, then you have more opportunity and time to spend on your physical fitness or your relationships or just time in general to get your mental house in order. And so for me, it was all encapsulated in kind of the word freedom. And that's what financial independence. That's been kind of the goal of what we're doing on Bankless and is one of my personal goals too. Is that a common story? Does that, does that resonate with you?

Sam Dogan (14:43)

Well, when I started talking about fire, it was July 2009 when I started Financial Samurai and we were going through a global financial crisis. It was really scary. It was really bad. Credit Suisse at the time when I was there, we had gone through seven rounds of layoffs and I was thinking to myself, well, I'm probably going to be next. But somehow I survived. I was probably too cheap. You know, I didn't call, I wasn't a big cost center. So I was like, okay, let's keep saying so I survived. But then I was thinking to myself, man, this sucked going through the global financial crisis. Because if you're, if you're in finance and you're not helping your clients make money and you yourself are not making money, then what's the point, right? I mean, it's kind of like a soulless job. And so, yeah, I escaped in 2012 after negotiating a severance package. And so my why was finding happiness and health again? You know, I was going through a lot of chronic pain, chronic, chronic back pain. And I was like, I was just miserable. This was no way to live. There's no way I could do a 40 year career like my parents in the government. And so I wanted to get out by 40. But when I decided and I discovered how to negotiate a severance package, the C's parted. I was like, okay, no more golden handcuffs. I could keep the gold that they were deferring to me over the next five to seven years. And so I said, you know what, I'm 34 years old, I'm out of here. Worst case, I don't like freedom and I don't like doing the things that I want. I'll just go back to a job within the next two, three years. And what happened was I discovered my joy for writing on Financial Samurai. And then I became a father in 2017, five years after I left. And I was like, this is the best thing ever in the sense that I had the finances and the freedom, the time to actually raise my child myself and to watch him grow up and protect him. And that was just amazing. When people have children, what happens is the money will come because you're going to get fitter, you're going to be a nicer person, more patience, you're going to work harder, you're going to save asset, allocate accordingly. These are the defining moments in your life. A financial crisis, having children, someone dying. Right. These are the wake up moments that force you, I think, encourage you to get your finances in order.

Ryan Sean Adams (16:52)

Yeah, I think a lot of people maybe find their why is basically their family and the loved ones in their life. I mean, that was certainly the case for me of why I, I have been on a grind in a lot of ways, both earlier in my career and now more lately as well. That, that brings to mind though that this question of like, when we use the term financial independence, what does that really mean? Is there like a crisp definition of that? Maybe it varies depending on your circumstances or who you are. But you know, five years after you quit kind of your banking job, would you have considered yourself financially independent? Was that a threshold that you met? And how did you know?

Sam Dogan (17:29)

Yeah, so there's various definitions of financial independence. One of the most common definitions is the 4% rule, taking the inverse of that. So the idea of the 4% rule, coined by Bill Bengen, is that if you withdraw at a 4% rate of return, 4% rate for your investment portfolio, you won't die with nothing. You'll have enough to live for the rest of your life. If you, if you retire at a traditional age of around 60, 65, I've taken that a little bit, a little step further. So as the inverse of the 4% rule is 25. So take your annual desired household expenses times 25. This is like a baseline for being financially independent.

Ryan Sean Adams (18:08)

Okay, so if you're spending a hundred thousand dollars in your household, then you have to have 2.5 million in net.

Sam Dogan (18:14)

Worth in investable assets. Investable assets excluding your primary residence, which, you know, saves you on rent. If you have no mortgage, but it's generally investable assets. So in general, that's, that's the way to go. That's a baseline. But I've taken it a little bit step further and I have a multiple of gross income. Now why do I do gross income versus expenses? One, it's harder. It pushes you further. So as you make more money, it focuses, it makes you focus on your savings and investing. So let's say you make $100,000. So it's still 2.5 million, right? But let's say you're only living off 50,000 of it, right? So you could actually cheat your way to financial freedom by just slashing expenses down to ramen noodles and just living off 25,000 a year. Right. And you know, like, and then times it by 25, you can have a much lower number. But if you focus on income, as your income grows, as most people's income grows over time, that threshold gets higher and it forces you to continue to save and invest. What I see most commonly on the path to fire is undisciplined saving and investing. Over time, you just kind of get lazy. You just get comfortable and you don't push yourself. And I think that's a real, real dangerous situation to be in.

Ryan Sean Adams (19:31)

Okay, so tell me more about this net worth guidelines, because I noticed some in one of the earlier chapters of your book, and I think if I'm understanding you correctly, Sam, you like basing some of the net worth targets on multiples of income, right? So let's say I think you have a 10x salary type rule. If you've been at work for 10 years, then your net worth should be about 10x your income. So would that mean if my income is $100,000 per year, I've been working 10 years, I should have. My goal should be to have about 1 million in net worth and investable assets. Is that kind of a proxy?

Sam Dogan (20:11)

It's not so much 10 years. It's not 10 years because that would be pretty quick for the average person. But the proxy is, once you get to a 10x gross average income multiple, that's when you start feeling financially free.

Ryan Sean Adams (20:24)

I see. Okay. And then when you feel financially free, I guess that's kind of a spectrum, is it not? So, I mean, because there's also. It's interesting you use that word feeling as well, because sometimes the feeling can just continue to be out of reach. Even though you hit an earlier target, you still, for whatever reason, don't feel like you're financially independent. Are there other Soft aspects of this, aside from kind of a net worth number, that are key to feeling financially independent.

Sam Dogan (20:56)

Yeah. So another definition of financial independence, so 10x is the kind of the baseline multiple. And I believe once you get to 20x20x your average gross household income, you are financially independent and you should feel.

Ryan Sean Adams (21:10)

Completely free because that's a flywheel. At that point, you're just not able to spend fast enough. Well, I guess you could. Unless you could, but.

Sam Dogan (21:17)

Yeah, but at 20 times your average gross annual income, you're set. You're set. So the other definition I like is called, it's not, it's basically can you generate enough passive to semi passive investment income to cover your desired living expenses?

Ryan Sean Adams (21:35)

Okay, right.

Sam Dogan (21:36)

So if you don't have to really work for your money, all that dividend income, rental income, you know, private investment income or distributions that come in, if it can completely cover your reasonable desired living expenses, you're free, you're financially free. You just have to keep up with inflation, probably plus 1 to 3% as a buffer.

Ryan Sean Adams (21:58)

Let's talk about income then, because that's another kind of milestone or key principle in your, your, your idea and in your book here. And I think you encourage really, really cranking on income early. So this is sort of a, you know, grind when you're in your 20s type of methodology. And I think you advocate saving a large percentage of the income that you generate. So when it comes to, to really dialing in that income, that income flywheel, what do you advocate that people do? How do they get started here?

Sam Dogan (22:26)

Well, I think it's important to know what service minimum wage income is like. So the minimum wage, it's actually high now it's like 15, 16, $17. At least here in California is to work at a job that's terrible, that doesn't pay well, that you're consumer facing, you got to help people think about working at McDonald's and knowing the pain it is to work those type of jobs at such little level. And that gives you the motivation to not take whatever job you do have that makes more than minimum wage. Right. So I think the problem is a lot of people just think about their day job income as the a hundred percent source of all their income. But no, if that engine goes down as we see through recessions, stagflation, global financial crisis, your plane goes down, you're done. Right. So you wanna try to have, think about like maybe like three engines on each wing, so you have like six other income streams. The more the better. So when that income Stream, the main one goes down, you're still flying, and maybe you can still fly and float down to a safe landing where you survive. Right? And so the key is to really not only be great at your job and to network and to provide more value than you cost, but to develop those side income streams. After work or before work, you know, whether that is starting your own website or business, whether it's a podcast, blog, whatever it is, before you go to work for one or two hours or after work for two to three hours, those are the magic hours. That's when you actually are working on something you really enjoy, where if you make a dollar from there, it feels ten times better than making a dollar for someone else.

Ryan Sean Adams (23:58)

In order to do that, you really have to spend a lot of hours at this thing. And I think you advocated doing this earlier in your life, in your 20s. What's kind of magic about this period of time? I think we have a lot of younger listeners and, you know, I don't. I don't know that there's lots of other things that you could do with your time right, in your 20s, and maybe more enjoyable things than. Than being on the grind. What, like, can you advocate that position? Why should people focus on this?

Sam Dogan (24:24)

I'm telling you. So I'm 40. I'll be 48 soon. And I wish I worked harder in my 20s and 30s. So I was working 60 hours a week. And then I went to business school part time for 20 hours a week. So that's 80 hours a week. And I was thinking myself, I should have gone more. I should have started Financial samurai sooner in 2006 when I came up with the idea, not 2009, once the financial crisis hit. And the reason is when you're in your 20s, you don't know how much energy and freedom you really have in your 20s until you're not in your 20s, right? 30s and 40s, when you have children, you have aging parents to take care of. That time you have available after about 35, 40, it shrinks tremendously. And when you look back and you look at how much time you had in your 20s to actually build a business, to work harder, to come in earlier, to work longer than your bosses at least. It's kind of a joke, but you don't really know that. So hopefully people can just look at the people who are older, you know, 10 years, 20 years ahead of you and just listen to them because they've already been through where you've gone. And I'm telling you folks, if you save and invest aggressively in your 20s and 30s. You're going to be so happy in your 40s and 50s when you have less energy and less time. Here, here's an interesting point. So the, the personal saving rate in America, the national saving rate in America is about 5% right now. So that means you have to work 20 years to save one year of expenses to cover one year of your expenses. That's crazy. No wonder why everybody's, like, working forever. But here's the shocking thing. During the pandemic, March 2020, when the stock market fell 32%, the personal saving rate actually shot up to over 30% in March, April, and May. So in other words, we have the ability to save if we want to. We're just choosing not to because we're not good at forecasting our misery in 10, 20 years, and we're not good at forecasting our health and our time. But I'm telling you, folks, the more you save, the more freedom you'll have later on.

Ryan Sean Adams (26:23)

Yeah, these are the two sides, right? It's like grinding very early and then also saving the excess of that grind. I want to come back to saving in a second, but I want to plus one and agree with you on kind of the virtues of doing this, working very hard in your 20s. Because what I found in my 20s was I was taking time away from things like building my World of Warcraft character to getting that character to level 20. Right. I was taking from my video game time, and I was applying that to work in my 30s. If I were to work equally as hard as in my 20s, it was taking my time away from, like, my kids and my family. And that is like, far more valuable time. So you really do have a, a lot of time wealth in your twenties that can go towards this. Let's talk about the saving side of this equation. Right? So you advocate saving as much as a 50% of your income. And I guess maybe this varies based on how much income you're actually generating and what your expenses are. But like, okay, 50%, that's a lot more than most people are saving. Justify this. How can you. Where do you come up with this number?

Sam Dogan (27:30)

So I think it's pretty straightforward. Every year you save at 50% means one year of freedom, you save. So if you work 10 years, you'll save at least 10 years of freedom. And we all know that time is more valuable than money because time is finite and money is endless and we all die. Median age life expectancy is 80. But again, people don't really think about that when they're younger, they think they're going to live forever. They don't think about that. Right. The other thing is it's really easy to save 50% if you just think about your paychecks. For example, most people get paid biweekly, so every two weeks. So all you gotta do is save one paycheck, save and invest that one paycheck and just try to live on the rest. So we know about hedonic adaptation where we get used to living with more wealth, more income. Right? But hedonic adaptation goes in reverse as well. The more you save, yeah, you have less free cash flow, but you get used to living off less income as well. So I always have the saying when I tell people on Financial Samurai, I say, if the amount of money you're saving each month doesn't hurt, you're not saving enough because you're not forcing to change your habits. You're just winging it. And too many people, and I've run financial samurai for 16 years now, too many people, 10 years later, they wonder where their money went. They're like, where did it go? It's just like going out in San Francisco or New York City. Where did my cash go? Where did my money go is because they're not diligently saving and investing.

Ryan Sean Adams (28:55)

You have a number here that you advocate in your book. And by the way, when you talk about saving, it's saving and investing is the key. We'll come back to investing and what to invest in later. But you have a number in your book, $250,000. And you say, set a goal to hit 250k, why this number? What's the significance?

Sam Dogan (29:17)

So I was thinking about this a lot because sometimes people will be like, well, I'm starting at zero. A million sounds so far away, right?

Ryan Sean Adams (29:24)

It is far.

Sam Dogan (29:26)

So you want to think about little baby steps. First, maybe it's the first thousand, then 10,000, then 50, 100. But 250,000 is the magic number that I think where just compounding really takes off. And it's very noticeable because for most people who work, they have potentially a 401k or 403 plan. And in 2025 you can save pre tax 23,500 into that plan. So step one is to try to max out your 401, all your tax advantaged accounts. And so at 23,500, that's a lot of money. But if you get to $250,000 portfolio, and we know by history the stock market returns about 10% on average since 1926. And we know that there's a 75% chance you're going to make money from the stock market any given year if your $250,000 portfolio has a greater chance of generating more than you can contribute in a year. So in other words, 10% times 250,000. 25,000. Right. And if you contribute 23,500, suddenly you're making more from your investments than the amount you can contribute to your 401k. Right. And so that is where the compounding magic really starts taking off. So that once you get to that 250, you stay diligent in your contributions and in your investing. It's only a matter of time before you're going to get to a million dollars.

Ryan Sean Adams (30:48)

So the compounding is active this entire time, but you really start to notice it once you get closer to 250k number. Because then you're like, wow, I just made in one year the same amount that I actually invested in, like my, you know, tax free accounts. And that's, that's kind of magic. Once you see the compounding at work, then you start to compound and you even want to save more.

Sam Dogan (31:09)

Brian. And just look at 2023, 2024, the S&P 500 went up 23% a year. Amazing. That's crazy. So like if you had 250,000 there, 20%, that's $50,000, your portfolio return double what you could have Contributed to your 401k. And that's a baseline start. I mean, once you get to that 250, and I know everybody can who's listening. I mean, the magic really starts compounding it. This is one of the things that I think surprises many people on their financial independence journey. You can punch in the numbers in the calculator and you say, well, in 10 years at a 7% compound rate, you'll have this amount. And you look at that number, most people look at the number and they're like, wow, that's impossible. That's crazy amount of money. Yeah, well, what I'm telling you after 16 years is those numbers are real. And oftentimes they go even further than you expected.

Ryan Sean Adams (32:01)

Can you talk about debt for a second here? Because you might also be talking to some folks who actually have some debt. And maybe we'll put aside mortgage debt and talk about that when we talk about, you know, like buying your first home and that sort of decision. But other types of debt, maybe it's student loan debt, maybe it's car loan debt. Maybe it's credit card debt. Before you start on this saving investing track, does it make sense to pay that off?

Sam Dogan (32:26)

So I've got a great framework for this as well. It's called the debt and investing framework. Now debt is not necessarily bad unless it's credit card debt, consumer debt, and you're buying stuff you don't need. That's bad, right? Not even the great Warren Buffett can outperform the average credit card interest rate of about 18%. That's crazy. Please pay off your consumer debt immediately.

Ryan Sean Adams (32:45)

So that's just first, just do that first.

Sam Dogan (32:47)

Before you start credit card debt, you got to focus on getting that down. If you don't crush that credit card debt to zero, you're going to be in a world of hurt. But here's a more important framework that I think people should think about. It's called the debt and investment, debt and investing ratio. So the idea is you take your debt percentage, your interest rate percentage, let's say you have 8% loan, multiply that by 10 and so you get 80%, you take 80% of your savings or your free cash flow to pay down that debt and the remaining 20% to invest. So this way you're winning. Generally you can't lose. You're paying off your debts, you're winning. It's guaranteed 8% return, 20%, you have a chance of winning with your investments. Now, once that debt interest rate gets to 10%, you allocate. So 10% times 10 is 100% of your free cash flow to paying off that debt. Why? Why 10%? Because we know that the historical rate of return on the stock market is about 10%. So you might as well just go all in and pay off that guaranteed 10% rate of return, you know, to pay off your debt. Now if the interest rate was at 3%, very cheap debt, right? Inflation is about 3%, 10 year bond yield is about 4.5%. That's cheap debt. You probably don't want to pay that off, but you still pay off your debt because it's debt. So you can say, well, 3% times 10% is 30%. Take 30% of your free cash flow, pay down the debt, 70% to invest and go forward from there.

Ryan Sean Adams (34:12)

I love that. I love boiling this down to kind of formulas and process and basically like a science, because then that does something we were referring to easier like earlier in the episode, which is it creates the habit and the default temperament towards doing this right? You just, everything's on autopilot. And so when you Talk about savings. I imagine you take 50% of savings and you invest that. You're talking about just dollar cost averaging, everything in. Right. Like from basically from your paycheck. I would imagine just making that a regular discipline. Don't touch it. You don't have to make a decision every time you invest. You just dollar cost average into your portfolio assets. Let's talk about what to invest in and some ideas that you have around that. So is the basic methodology here that you advocate? Of course. Like this is a crypto podcast. So we have some hot takes on crypto as an allocation of this portfolio. But the basic fire type concept, this would be low cost index funds, I would imagine, real estate, that sort of thing.

Sam Dogan (35:12)

So bread and butter stocks, real estate. Invest in what you know well and if that's crypto, great. We know a long, we have a long track record for both real estate and stocks. Right. And so you want to figure out an asset allocation between those two and then within those two. So for example, stocks, you could go 100% stocks if you're in your 20s and 30s, but maybe as you get to your 40s and 50s, you want to dial down that asset allocation based on your age, maybe your age, into bonds or different allocations. And I talk about this in the book. In terms of real estate, I think it's very important for most people to get neutral real estate. And what's neutral real estate, that is to own your primary residence. If you own your primary residence, your neutral real estate, because you're going up and down with the market, you're not a price taker anymore, you're not at the mercy of your landlord raising rents, you're largely fixing your living costs. You're only really long real estate if you own more than one property because you have to live somewhere. And so these are the things and decisions and the asset allocation you have to think about that match your financial goals and target going forward. And in terms of crypto, I would, you know, I consider it as an alternative asset. Seems like it's definitely the train is, is heading, heading forward and going to go bigger because of the new administration. And so I like to allocate 10 to 20% of my investable assets in alternative investments. Whether that's crypto, whether that's venture capital. I'm investing aggressively in private AI companies because I think they're going to destroy the future and you know, put us all out of work and our children. So might as well get rich doing that.

Ryan Sean Adams (36:47)

Sure.

Sam Dogan (36:47)

Because. And if they don't if it's all hype over bubble blown out of proportion, then our children will have jobs and a future that they can develop financial independence with as well.

Ryan Sean Adams (36:57)

Yeah, I guess that's a win either way. Can we talk a bit more about first home kind of real estate? So we're talking about that plan of you're increasing your income, you're saving a large portion of that. How do you know when it's time to kind of buy a first home? And when it comes to a mortgage, like, I mean, how much house should you buy? How large should your mortgage be? How should you think about saving for a down payment? Is it even a good idea relative to just investing in your kind of portfolio of stocks and alternative assets and the rest of it?

Sam Dogan (37:31)

So I think wealth is something that's tangible that you can enjoy. So real estate is something that is tangible that you can enjoy, make memories, raise your family. So I think it's a very valuable asset. And so I think you have to figure out as soon as possible where you want to live and what you want to do with your life. The sooner you figure that out, the easier it is to buy a home. If you're a vagabond who just don't know what you want to do, it's going to be very tough to buy a home. You just can't do it, you shouldn't do it. But if you see yourself living there for five, preferably 10 years, then you should probably buy a home. Because the history shows that real estate generally outperforms inflation by about 1 to 3% a year. So if inflation is at 2%, it goes 3 to 5% a year. And then when you have leverage, when you borrow, put down 20% and you borrow 5, that 5x that amount, those returns really start compounding after 10 years. And so for the average person, I think you really need to figure out what you want to do, where you want to live 5, 10 years and buy that primary residence. And during that process, before that process, you want to be aggressively saving and investing for that down payment. And that's where your stocks, stocks come in, and hopefully your stocks do well. But then you have a process where, when you know, okay, I want to be buying a home in the next 12 months, definitely six months, you're going to start de risking your down payment. Otherwise, what if you end up with not as much as you hope for, and then it's a competitive bidding situation and then you're kind of screwed.

Ryan Sean Adams (39:02)

So you want to de risk your down payment, but ultimately you're taking that down payment out of your assets that you have invested in the market. Yeah, that kind of thing usually.

Sam Dogan (39:11)

Yeah, exactly.

Ryan Sean Adams (39:13)

One of my favorite instruments actually that's available to like home buyers in the US is the mortgage and particularly that 30 year fixed rate mortgage. And the reason I like mortgage, it depends on the rate. There's a certain amount of very fortunate individuals among our US listenership who's kind of locked in like nice 30 year fixed rate mortgages at like 3%. And man, that looks really sweet when inflation's raging at 5, 6, 7, 8% because you're effectively, you're making money on the government loan to you as well. What are your thoughts on kind of like a mortgage and how large of a mortgage to get in general and kind of the terms to lock in? Do you have any takes on this?

Sam Dogan (39:55)

Well, I do have a home buying rule and it's called the 3033 home buying rule. The 3 is the most easy to understand. It's, it's the most memorable. It's basically to try to buy a home around three times your annual gross income.

Ryan Sean Adams (40:08)

Okay.

Sam Dogan (40:08)

Now it's very conservative. I think most people have to stretch to about five times. But this is a, this is a multiple where you're like, okay, I'm going to buy a home, it's going to be nice and I'm going to sleep well at night and not worry that I'm going to lose my job and stuff. In terms of the mortgage, it is always important to compare the mortgage rate to what the expected return is of any other asset class you own. And also the risk free rate of return, which is the 10 year bond yield at right now about 4.5%. So if you are paying a higher rate, then you're paying a real interest rate and if you're paying a lower rate, you're paying a negative real interest rate. Mortgages. I use mortgages aggressively in my 20s and 30s to build wealth. I just. All in, let's go. And it's backed by a real asset. And the funny thing is it's much easier to leverage up 5x with real estate than to leverage up with stocks. Yeah, and why is that? Because stocks provide no utility. They goes up and then goes down 20% the next day. And you have no idea because of a tweet, a random Tweet. Oh, down 20% in a month, you're screwed. So you have to use mortgages wisely. And the problem now is obviously at six and a half, 7%, 30 year fixed rate mortgages, it's very difficult for the average person to buy a home. But here's the thing. This is very important for folks who don't travel out overseas or anything. And that is US Real estate, especially compared to the income generating potential, is cheap. We have one of the cheapest real estate in the world. If you go to Paris, Vancouver, Toronto, Hong Kong, Singapore, Beijing, the per capita income is much lower and the real estate is higher. And so I think there's a big shift here where people need to know that foreigners look at US real estate and the crazy amount of wealth that's being built because of entrepreneurship and all that, and they see us and like, wow, it's so attractive. And they want to buy. So if you don't want to buy your own piece of America, foreigners will buy it for you. And then once they buy it, then we're going to be even more priced out. So this is a long term trend people need to be aware of.

Ryan Sean Adams (42:20)

Yeah, I agree with that. I would, I would. Plus one, that I would also add that not only is real estate fairly attractively priced again, I know it's gone up a ton. So people listening to this might be like, what the hell are you guys talking about? Like, real estate has just skyrocketed. It's now more expensive than other than ever. But like, look at it relative to other countries. But also not, not just that, it's also the, the lending terms that Americans can lock into are very like very favorable. So I've, I have family in Canada. The thought of Canadians getting a 30 year fixed rate mortgage, it just like doesn't exist. You know, they've got like five year rotating, it's all variable. And the US benefits from this because of course Treasuries are the global reserve asset, right? The asset that everyone around the world buys. And so we have much more favorable lending terms as well. We can get mortgages at more attractive rates to actually purchase this property. So for me, as bullish as I am on, you know, other asset classes, like crypto, that sort of thing, it totally makes sense to grab the low hanging fruit of kind of like real estate where it exists now, whether you scale and you do more than kind of a first home and a second home, that kind of thing. And that case will vary depending on, you know, what asset class you're investing into. But pick up the low hanging fruit guys.

Sam Dogan (43:37)

And it's also interesting if you look at historical interest rates, look, look back to 1982. We've been going down, down, down, down since And I believe we're going to revert to trend over the next three to five years. And so be patient. I don't think we're going to go skyrocket high inflation rate forever. These are blips due to trillions of dollars pumping into the economy to combat Covid. It might happen again, but the long term trend is down. So I would take advantage. It's really, for the average person, one of the best ways to build wealth. Because not only does housing tend to go up with inflation plus 1 to 3%, you are leveraged to that and you're also enjoying your time there. And you're also having a forced savings account where you're just paying down your mortgage. So it's in the reverse where 10 years from now you're like, oh man, I'm way richer than I thought I could have imagined versus the person who would just rent. Which is fine. But just like how shorting the s and P500 over the long term is not a good idea, renting real estate is like shorting the real estate market long term, it's also not a good idea. There are moments in time when you should rent. You need to rent. But when you are settled and you see yourself living here for five, 10 years, you should lock down your primary residence.

Ryan Sean Adams (44:56)

Not a good idea. To short scarce assets, everybody. That's something that long term is not.

Sam Dogan (45:01)

Going to work out.

Ryan Sean Adams (45:02)

Not going to work out.

Sam Dogan (45:03)

Short term, it could definitely work out, but after. Yeah.

Ryan Sean Adams (45:06)

Let's talk about more advanced real estate, because I know you've allocated a lot of your portfolio, kind of your investable asset portfolio in real estate. Maybe this is beyond the kind of the first home, but a lot of wealthy people like real estate. Can you explain why?

Sam Dogan (45:20)

Oh, yeah. It's because it's a tangible asset that you can enjoy that's less volatile and there's no daily ticker symbols telling you how much you've made or lost. And so I think for people who build a lot of wealth, they focus on what they're good at in building wealth. And a lot of that is entrepreneurship and focusing on the business building something that has nothing specifically to do with investing. Right. And so when you can focus better, you're less distracted and you can probably make more money. So real estate is something that every single wealthy person I know who's worth over 10 million, 20 million, a hundred million, they have huge real estate portfolios, not only their primary residence, but vacation properties. And they just spread it around. It's almost like it's Just asset allocation, where they know that if the worst comes to happen, they're at least going to have their properties. And it's interesting also real estate, because it's kind of a hedge against a recession in a way, because when people are freaking out about stocks, they tend to buy bonds, treasury bonds, and then when we buy bonds, the yields tend to go down. Yields going down means buying real estate becomes more affordable. And so wealthy people like to park their money in real estate for these reasons.

Ryan Sean Adams (46:31)

Let's talk about active and passive income again. Because real estate, of course for some people can be a source of passive income. Although you know, sometimes it's hard to tell how passive it is. I guess it depends how much you're doing as a landlord, if that's how you choose to do it. Although you can buy things like REITs and that can be a source of passive income, I guess, dividend income, that sort of thing. Anyway, when you think about active versus passive income, you're like, which is better? And I feel like the obvious answer to that is passive, but maybe not always. In which cases is passive better? And how do you build passive income?

Sam Dogan (47:05)

Yeah, passive is better if you don't want to do anything right. Truly passive income is dividend income, CD income, treasury bond income, truly passive. And then there's risk free passive income versus risk required passive income, risk required passive income, stocks, real estate. As you know, as when you're a younger person, 20s, 30s, you can afford to take more risk required and more activity associated passive income. So in other words, rental properties, for example, you know, sweat equity, you're dealing with tenants, burst pipes or whatever it is. But as you get older and wealthier, you want to really transition more to passive income. And passive income is all about figuring out what that yield is, that interest rate is, that income level is compared to a risk free rate of return. So nobody would ever invest in any risk investment if you didn't think it was going to return greater than the risk free rate of return. So the risk free rate of return right now is the 10 year bond yield. It's always been about 10 year bond yield and it's about 4.5%. So you wouldn't invest in stocks, real estate, anything if you didn't have a strong certainty you're going to earn more than 4.5%. And the idea is you want to build a large enough capital base to have the option, the optionality of converting that capital into generating more passive income. You don't need to generate passive income to be financially independent. But you should have the optionality to do so because you can always sell stocks or real estate or crypto to pay for your life. But you need to have that optionality.

Ryan Sean Adams (48:38)

Say a word about cars, if you will. Sam, I feel like you've got an axe to grind on cars here because this is a common mistake investors make earlier in their financial progress. But they overspend on cars. Talk about this.

Sam Dogan (48:51)

Oh, I think cars is probably the number one personal finance killer in America. We have a love affair with cars. Like 95% of us own cars. And my rule is the 1 10th rule for car buying. I introduced this back in, I think 2009, 2010, and I think it is a very popular rule, and that is spend no more than 1/10 of your annual gross income on the purchase price of a car. So if you make $100,000, buy a $10,000 secondhand Toyota Corolla. Amazing, reliable car. Won't, won't break the bank, nothing. If you want a $60,000 car, don't buy it if you don't have at least 600,000 in household income. And if you want that, try to get that $600,000. You'll be amazed at how, how motivated you can be by tethering your wants with your activity. You got to, you got to earn it. Try to earn it. And that's kind of a mindset in the financial samurai community. Don't buy things you haven't earned yet. Earn it.

Ryan Sean Adams (49:50)

I like that. I really like that. I guess, I mean, does this preclude leasing? Is it never a good idea to lease a car?

Sam Dogan (49:56)

Oh, no. So it would be like if you wanted to lease $50,000 car. Yeah, you gotta get that 500. You can lease or cash leasing. There's obviously benefits as well. I like to just buy my cars with cash and then just hold them for 10 years.

Ryan Sean Adams (50:09)

There's a lot of people who live in urban environments where maybe they can defer a car purchase like for a long time, maybe indefinitely.

Sam Dogan (50:16)

Uber, you know, New York City, I wouldn't own a car in Manhattan. I would just take the subway, take the Uber and hitch a ride with friends who want to go out of town.

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Ryan Sean Adams (52:07)

Let's talk a little bit about the entrepreneurship side of things. In particular you have this line which is equity is what will make you rich, not your salary. I think specifically you're talking about kind of your own business equity. Some sweat equity here. When we say business we're not necessarily talking about a Silicon Valley funded startup. We're talking about any small business. A side hustle even can qualify on this. Can you explain? You've got another 3:33 rule I think for entrepreneurship and businesses here and just starting something. Maybe this is something that you followed in your life. What is this? How does someone get started on the entrepreneurship track and start building their own thing?

Sam Dogan (52:47)

I think if you look at the US economy, it's made up majority of small businesses but obviously the big businesses get all the headlines and CNBC and so forth. You have to think about why you're employed. You're employed because Supposedly you generate more value than your cost, otherwise you wouldn't be employed. And if you are employed and you're not doing that, you're going to soon be unemployed or eventually. And so as a business owner, it's, you are building equity in the business, which trades at a multiple when you finally sell it, if you sell it, or if you never want to sell it. And so if you own a business, you can generate income for your salary, but every single dollar you bring into the business, let's say your business in your field sells for 10 times earnings, right? Every dollar you bring in, you actually bring in $10 of equity. Right? The S&P 500 is trading at 22 times forward earnings. These are obviously best in class companies in America. You're not best in class company, so you probably traded less. But you could be like, if you're a hot AI company, you could trade at a hundred times earnings. The idea is you want to build a business and build your own equity. So not only are you building equity that trades at a multiple, you're also building income. And that's the win, win scenario that everybody needs to think about. And so for me, I decided to start Financial Samurai in 2009, not so much as a business, but as a way, a cathartic way out of the global financial crisis. And then when I left in 2012, I was like, oh, I could actually try to grow Financial Samurai into a web property that generates regular supplemental income. And so I spend about 15 to 20 hours doing that. And it is a business. It's valued at a multiple of earnings or revenue or operating profits. And I've had many people over the years say, I would like to buy Financial Samurai. And I always say no, because I don't really care about that exit. Because, you know, if you're, if you have a baby, you never sell your baby or what kind of father or mother are you? Right? I want to do this because I enjoy doing it.

Ryan Sean Adams (54:43)

Is there, is there a rule for this? Like three years moonlighting, trying to cover 30% of your expenses? Yeah. What's the rule here?

Sam Dogan (54:50)

There's not a rule, but there's a guide. So everybody should start some type of business. You don't even have to know exactly what you're doing. The key is to just start, start your own website, come up with that idea, and then you can pivot and brand, you can pivot accordingly. But you know what? After three years, after three years of not generating a livable income stream, you should probably not focus on that business. So much. You got to get to face the music. And everybody should start a business while they have a secure day job. Remember, you only need to work 40 hours a week. That's crazy. I don't know a single person who's worth over 10 million who's working less than 40 hours a week. They're working way more and they don't have to. So I would say the rules of business. Start a business while you have a day job. Check it out, try it out. Build your brand online, try to do it for three years, and try to make, you know, try to replicate at least 30% of your day job income before you consider taking that leap of faith and leaving your day job behind.

Ryan Sean Adams (55:51)

Sam, when you were talking about businesses being worth a multiple of revenue, multiple of earnings, something like that, does this imply that you should think about businesses that you can sell? Because it strikes me there could be some businesses that are harder to sell than others. So in the case of a business that's just like you are the sole person in the business, you are the brand, you are the operator, that might be a bit more difficult to sell without some sort of handcuffs than a business where you've got kind of a fleet of workers and it's very process oriented and there's like kind of a liquid market for it. Does that factor into the analysis at all in terms of, like the type of business that's able to be sold?

Sam Dogan (56:30)

I think it's important to figure out what you would like to do first, what you like and want to do. So for Financial Samurai, I love to write, I love to connect, and I love to learn from people from all over the world with different perspectives. Now, if I wanted to focus on the money aspect, right then I would hire a lot of writers, I'd leverage the brand and I'd have different people and all that. But I just like to write. But I know I have the optionality to leverage up the brand and the business. And when that time comes, maybe I'll do it. Maybe I'll hire someone for the Financial Samurai podcast or have this column or whatever. I can do it. It's very easy and obvious to do it. But the key thing for me is I just want to write. Just let me not manage people, let me just write lifestyle business. Lifestyle business. So it's really, you want to focus on your lifestyle business or you want to focus on the money? I feel a lot of people who take that, you know, maybe the venture money and try to really blow it up are maybe a little thinking Too much about the money, whereas ultimately I just want to have the freedom to do what I like, earn some extra income and just be free and happy.

Ryan Sean Adams (57:35)

Yeah. This is one thing I realized about startups and taking funding is that can be another form of boss. Your VCs become your boss, your investors become your boss. There are cases where your customers, if they're large enough, even become your boss. And so there are some benefits to keeping kind of a leaner lifestyle business that you just thrown off cash. You enjoy doing it. It's a small team, small operation. Yeah. So that's, that's a road less traveled, but certainly a valuable one if people are thinking about freedom.

Sam Dogan (58:05)

You know, back in 2010 or 11, maybe I was 12 when I left. I had a crossroads. I was sitting at the poker table with my buddies and I asked them, would you be willing to do 15 to 20 hours a week for a lifestyle business? Maybe you make 250 grand a year, enough to live a decent, happy lifestyle or work 80 hours a week for two years with a 20% chance of making 100 million.

Ryan Sean Adams (58:29)

Yeah.

Sam Dogan (58:29)

Or maybe the windfall is like 50 million, but then if you don't make it, then you're left with nothing except for your memories and experience. And so every single one of the people at the poker table said, oh, I would definitely go for glory. You know, and this is San Francisco after a while and we're betting big bucks. And then as the night wore on, and the one who was most adamant about going for glory, 100 million, 50 million, whatever it was, and he lost a huge pot. It was like six, seven hundred bucks. You just lost all his money. And then he looked at me and said, you know what, maybe the lifestyle business wouldn't be so bad after all.

Ryan Sean Adams (59:01)

That's definitely a good question to ask around the poker table. Let's talk about this. You encourage people to be where the money is. And I think you're talking in this chapter about being in proximity to a high growth network, in particular urban areas that are growing. And this can be a network that people plug into. And I think your advice is, hey, don't be afraid to move to these locations. Can you talk about this?

Sam Dogan (59:25)

Oh, yeah. So look at the S&P 500 historical growth chart since, I don't know, 2005. If you look at the MAG7, which Nvidia, Apple, Microsoft, Google, Tesla, I mean, it's like this, it's like straight up to the right. And if you look at the rest of the S&P 500, the 493. It's almost like a flat line. It's kind of sad. It's been growing at the rate of inflation. So in other words, what's an easier way to make money? To be where the 493 are or be where the Mag 7 are? And I think it's obvious that you want to go where the growth is. I think a lot of people misinterpret high cost of living areas, San Francisco, New York as too expensive. It's just unaffordable. It's a bubble, it's going to crash. But the reason why these cities are expensive is fundamentally because the income opportunities and the wealth building opportunities are greater, they're higher. Yeah, right. So it doesn't matter if you are like in a small town and the most, the most valuable company there is worth $10 million, let's say, or 100 million. It's very hard to get rich. It's. The odds are against you. But if the companies are worth trillions of dollars in your city and they're hiring people and you network with all these people who are making millions and they go off to start their own companies and they might be successful, that network really grows. And just being there, just being there will dramatically increase your chances of building wealth and opportunity. A lot of people ask me, Sam, why are you still in San Francisco when you could save so much money and move to Des Moines, Iowa? And I love Des Moines, Iowa for the steak. And it's pretty good. And it's good for like four months a year, the weather is okay. But man, here in San Francisco. Yeah, it's expensive. Yeah. The median home price is like 1.8 million. And if you want a decent home, it's like three million, sorry, two, two and a half million, whatever it is. But the ability to, oh, invest in another venture capital fund that invests in the next hot startup or to speak, to just take a muni ride down 15 minutes downtown just to meet with a VC guy or a startup guy or consult is endless. It's actually overwhelming. And, and so I'm actually thinking about leaving, but maybe another in five to ten years, not now. Because there's so much opportunity, especially with the AI Boom.

Ryan Sean Adams (61:41)

Yeah. So be where the money is. And you talk about moving to kind of a metro area and looking up different metro areas based on kind of their growth, the companies that are in them and not just the cost of living. Right. That would be a one sided bet there. I also wonder if you think this applies to kind of the the industry that you're in as well kind of being where the money is. So I used to be in the healthcare industry and healthcare technology specifically. And after working 5, 10 years in this space, I realized, man, you know what, the next year is pretty much going to look the exact same as the previous four or five years. Right? Healthcare growth is something like 3,4% annual per year. And you compare that to something like AI, which is growing at 50%, 100% per year, it's literally 10x the growth of healthcare. And when I looked at healthcare, I saw a whole bunch of people who had decades of experience. And if I wanted to rise in the upper echelons of healthcare, I would need decades of experience as well. And then when I compared that to something on the tech frontier like crypto, everybody in crypto only had like, you know, two, three, four years of experience. Everyone was new and I could easily catch up. And that's the way AI really is now, I think. So your be where the money is principle applies not just to where you live, but also the industry and the skill set that you develop as well.

Sam Dogan (63:03)

Absolutely. And it depends. Absolutely right. Be, be intentional with what you want to do. If you want to grow your wealth, don't just go to college and just whatever you got to be intentional. Very intentional. There are clear winners in the space and technology will likely continue to be a winner over the next 10, 20, maybe forever. Everybody's trying to innovate, and when there's innovation, there's growth, and when there's growth, there's tremendous amount of wealth accumulation and building.

Ryan Sean Adams (63:28)

Okay, Sam, so everything we've talked about, let's talk about another person that, that can be essential in terms of a, you know, plan, a financial plan to get to millionaire status. And that is a significant other. So the other important person in your life, do you have any like, takes on this? How do you include a spouse, a significant other in kind of your long term financial planning? Is it important to be like, do you have to be on the exact same page? What does this look like?

Sam Dogan (63:55)

Wow. It's interesting because here in San Francisco, one of the greatest short paths to wealth is to just marry someone who is already wealthy. You know, and you see these generational wealth that happen in all the time, people, you know, they'll make decent money, but then suddenly they, they pop up and say, hey, we've got a house warming in our $7 million home. You know what, how did that happen? So it's easier to build wealth with two people on the same page than two people not on the same page. And also as an individual. And so when you think about, you know, you meet your spouse at Meta, who also makes 300 to 800 grand. Well, I mean, life is pretty easy in terms of building wealth, but yes, absolutely be on the same page. When I left in 2012, I met my wife in college at the College of William and Mary. I was a senior and she was a freshman, so she was three years younger than me. And so when I left in 2012, I said, okay, this is crazy. I'm leaving a well paying job behind, but I want to write, I want to make no money. You okay with that? I'm okay with that. You know, you got the severance package, okay, we'll be good. So I told her, look, if things are okay in three years and we're not lying on the street and starving, you too at age 35, can leave your job and I'm going to help you negotiate a severance package. And she said, okay, deal. And so we had a game plan. We said, we're gonna save and invest most of your income. We're gonna live frugally for two and a half, three years and let's make this happen. And we made it happen. In 2015 at the age of 35, she also negotiated a severance package worth a low six figures. But that was the send off, the catalyst for us to be both early retired or both unemployed and living this strange new life. So yes, you absolutely have to highlight your goals, talk about your goals, talk about how you're going to get to your goals and stick with it.

Ryan Sean Adams (65:43)

Communicate, stay in sync. I guess these are the keys. And since you were used the retirement word, we've been talking about it as well, right? Financially independent, retire early. This also gets to what's the definition of retirement? And I'm not sure that I figured this out for myself. Sometimes I wonder if I'm retired right now. I'm doing what I want to be doing. I am my own boss. I'm not kind of, you know, working for someone else or schlepping an hour. Although I do work really hard, so it doesn't feel like I'm retired. What does retirement even mean to you?

Sam Dogan (66:17)

Yeah, so for me, I retired from finance. The grind of 60 hour weeks and stressful clients and deadlines and quotas and all that stuff. And I actually truly did retire in the traditional sense. For the first six to 12 months after 2012, I just played golf, I walked in the park, I traveled to 20 countries. It was great. And then the problem is, after you've seen one gothic church in Europe, they all start looking the same over and over again. Right? And I had this dream of, you know, writing on my laptop on a balcony on a cruise ship around the Mediterranean for months on end. But then I did that for two weeks. And then after a couple weeks, it all starts looking the same. It starts looking a little boring. And you want to have renewed purpose. And so I think retirement has changed. People in the past, couldn't work from home or travel and work and do all that. So I think, to me, I would say I'm semi retired or a fake retiree. Let's be frank here. You know, I. You know, these articles, the podcasts on Financial Seminary, they don't write themselves, but I do it because I really enjoy doing it. And if you read any of my work, it's personal, there's storytelling. It's not like some SEO optimized article. Right? And so retirement, now the definition is being free to do whatever you want because you have enough money to cover your living expenses. And that's really it.

Ryan Sean Adams (67:40)

All right, are you ready, Sam, as we end this for a quick lightning round, a few quick questions?

Sam Dogan (67:45)

Sure, let's go.

Ryan Sean Adams (67:46)

All right, question number one, the lightning round. How much money should you die with? What's the right number to die with?

Sam Dogan (67:53)

The right number to die with is enough money that covers all your funeral and burial expenses and all the financial loose ends. I think the right money is enough where you have no debt left to your heirs, and the right amount of money is an amount that is enough to keep your children safe from being homeless, but not enough where they're demotivated to do nothing with their lives.

Ryan Sean Adams (68:17)

Okay, how about AI job risk? Should people be worried about their income potential with, you know, AI rising up?

Sam Dogan (68:24)

Absolutely. Absolutely. I think it's really dire. Unfortunately for younger people and current currently employed people, I think AI in the next five, 10 years is going to wipe out millions and millions of jobs. So you've either got to learn how to use AI to be more productive, and you need to build a brand for yourself. You got to stand out somehow, or I think you're gonna get disintermediated away and lose your job or lose a lot of income. And so the way that I'm doing that is. Well, obviously I know the tools. I'm trying to learn the tools to make financial samurai more productive. But I'm really aggressively investing in private AI and public AI companies, because if they do well and crush the labor market, the investments are gonna make a great return. And so my kids, 15, 20 years from now, they're not gonna say, why didn't you invest or work in AI near the beginning? I'm going to say, you know, actually I invested a lot near the beginning. Here's your millions right here. No, I'm not going to say here's your millions, but I'm saying you tried your best, you got it. You got rejected. Like that kid Stanley jung with a 1590 SAT and a 4.0 GPA from every 90% of the schools you applied to. You can't get a traditional, well paying job. It's okay. Everything will be okay. Because your dad invested consistently and aggressively in AI for your future. And I think that's what everybody needs to do. You're hedge. You're either going to make a lot of money or you're not. But at least you'll have a job if you don't make a lot of money.

Ryan Sean Adams (69:46)

What's the best asset class and why?

Sam Dogan (69:48)

I think for the average person, the best asset class is real estate. It's my favorite asset class. To build long term wealth, you're paying down your debts, you're building home equity. There's a discipline involved there. Real estate grows 1 to 3% higher than the rate of inflation. And in 10, 20 years, you're gonna be much wealthier with real estate than if you weren't. And it's hard to sell real estate, which is actually a good thing. Unlike stocks, you just get all emotional with real estate. You just ride through the ups and downs and hopefully, I'm pretty sure in 10, 20 years you're gonna be much wealthier as a result.

Ryan Sean Adams (70:20)

Favorite finance book, besides your own favorite.

Sam Dogan (70:23)

Finance book, I like the Millionaire Next Door. It was definitely an inspiration for me to write the modern version of the Millionaire Next Door. And the premise of the book is to say, look, there are a lot of millionaires out there who you just can't tell are wealthy. They live humbly, they invest wisely, they just stick the course. It's not some mythical status to have financially. So the idea is to say you too can be a millionaire, but you got to follow these steps and stick with it long enough.

Ryan Sean Adams (70:53)

Last question for you. What's the best bull case you've heard for crypto? Like, what's the thing? I know you're not deep in the weeds in crypto, but what's the thing that you've heard that kind of makes sense to you about this asset class?

Sam Dogan (71:03)

I think the biggest bull case for crypto is that the administration is behind crypto. So when you have a government entity that finally comes around to say, okay, we're going to recognize it as a legitimate asset class and then build a framework, regulatory framework around it, I think that's when you know it's here to stay for the long term. Because the government is the richest entity in the world, and it has. It's the most powerful entity. So if you have the government on your side, generally, good things happen. It's like real estate. The government is on the side of the homeowner. 65% of Americans own home. You've got tax deductions. 250,000 is tax free if you're single, if you sell, 500,000 is tax free if you sell, if you're a married couple. Right. So if you have the government on your side, nobody can beat the government.

Ryan Sean Adams (71:49)

It's a great point. Crypto's come a long way since Internet drug money, you know, 10 years ago. So, Sam, this has been a pleasure. Thank you so much for joining us today, guys. The book is called Millionaire Milestones. Fantastic book. Highly recommend it. We'll include a link to the show Notes, also to Sam's Twitter, Twitter profile, and to financialsamurai.com where you can find all of his work and writing. Sam, thank you so much for joining us.

Sam Dogan (72:12)

Hey, Ryan, thanks so much for having me. It's been a pleasure. And if you want to know anything or ask me a question, just comment on one of the 2,300 plus articles I've written since 2009 and I'll see it and then I'll respond.

Ryan Sean Adams (72:24)

Impressive. All right, guys, got to end with this. Of course, none of this has been financial advice. Crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, everyone. But we're glad you're with us on the bankless journey. Thanks a lot.