Sahil Bloom: The “X Factor” for Financial Freedom and Why FIRE Won’t Make You Happy

Summary

BiggerPockets Money Podcast: Sahil Bloom on the “X Factor” for Financial Freedom and Why FIRE Won’t Make You Happy

Host: Mindy Jensen
Co-Host: Scott Trench
Guest: Sahil Bloom
Release Date: February 4, 2025

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Introduction to Sahil Bloom’s Financial Journey

The episode kicks off with Mindy Jensen introducing Sahil Bloom, highlighting his unique approach to achieving financial independence (FI) through the development of an "X factor." Sahil's journey contrasts with typical entrepreneurial narratives, as he did not grow up in a family that emphasized financial discussions or entrepreneurship.

Notable Quote:
Sahil Bloom (00:41): “I didn't grow up with an entrepreneurial bone in my body. My entire childhood was about playing sports and later transitioning into finance.”

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Building a Financial Foundation in Private Equity

Sahil delves into his early career post-graduation from Stanford, where he joined a private equity fund in 2014. Emphasizing a disciplined savings rate of around 20%, despite the high cost of living in cities like New York and San Francisco, Sahil focused on living below his means and investing in high-return funds.

Key Points:

• Savings Strategy: Maintained a 20% savings rate while living in high-cost areas.
• Investment Approach: Maximized investments in private equity funds offering 20-25% IRR, complemented by low-risk index funds.
• Value of Environment: Invested in a conducive living space to enhance productivity and long-term income generation.

Notable Quote:
Sahil Bloom (04:50): “I was very much a simple person. I lived below my means and invested the gap between my income and expenses into long-term compounders.”

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Transition from Private Equity to Entrepreneurship

After seven successful years in private equity, Sahil experienced a personal epiphany in 2021, realizing that his singular focus on wealth accumulation was detrimental to his personal relationships and mental health. This led to a swift transition, leaving his role and moving 3,000 miles to be closer to his family.

Key Points:

• Personal Reflection: Recognized that financial wealth alone did not equate to happiness.
• Life Changes: Sold his California home and relocated to prioritize relationships and personal well-being.
• Financial Security: Relied on a one-year rainy day fund and ongoing income from advisory roles and new ventures.

Notable Quote:
Sahil Bloom (17:07): “No job will ever pay you enough to be far away from people you love.”

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Entrepreneurial Ventures and the X Factor

Post-transition, Sahil ventured into building scalable online businesses, starting with a newsletter that quickly grew its subscriber base and attracted sponsorships. He expanded into consulting services, offering high-ticket content strategy solutions, which allowed him to surpass his previous income levels.

Key Points:

• Newsletter Growth: From 15,000 to 800,000 subscribers, monetizing through sponsorships.
• Consulting Services: Launched high-ticket services charging $5,000 to $10,000 per month.
• Scalability: Leveraged the internet’s scalability to generate exponential income streams.

Notable Quote:
Sahil Bloom (24:01): “The scalability of the Internet is incredible. As you grow the subscriber base, your income can scale almost infinitely.”

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Establishing S Bloom Media Holdings

Sahil explains the structure and mission of his holding company, S Bloom Media Holdings, which oversees multiple ventures including media properties, minority-owned cash-flowing businesses, and a venture fund. His role focuses on strategic oversight and driving business growth.

Key Points:

• Holding Company Structure: Manages various media assets and minority-owned businesses.
• Venture Fund: Launched SRB Ventures with a $10 million fund in 2022, investing in early-stage technology companies.
• Team Expansion: Delegated operational responsibilities to CEOs and specialized teams for different ventures.

Notable Quote:
Sahil Bloom (34:33): “My set of responsibilities is strategy. I help from a board level with strategic oversight and driving business to those companies.”

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Pillars and Levels of Financial Wealth

Sahil introduces his frameworks from his forthcoming book, "The Five Types of Wealth," elaborating on the pillars and levels of financial wealth. He emphasizes focusing on income generation, expense management, and long-term investment as the foundational pillars.

Key Points:

• Three Pillars of Financial Wealth:
  1. Income Generation: Building and leveraging skills for higher earnings.
  2. Expense Management: Controlling cash outflows to maximize savings.
  3. Long-Term Investment: Investing the surplus into compounders.
• Levels of Financial Wealth: Five-tiered progression from meeting basic needs to achieving true financial independence.

Notable Quote:
Sahil Bloom (39:54): “The three pillars are income generation, expense management, and long-term investment. This simple model is how every wealthy person has built their wealth.”

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Beyond Financial Wealth: The Five Types of Wealth

Sahil expands on the broader concept of wealth beyond just financial aspects. His book categorizes wealth into five types: Time, Social, Mental, Physical, and Financial. He underscores the importance of balancing these areas to achieve a fulfilling and wealthy life.

Types of Wealth:

1. Time Wealth: Freedom to choose how to spend time.
2. Social Wealth: Quality of relationships and social connections.
3. Mental Wealth: Purpose, growth, and mental well-being.
4. Physical Wealth: Health and vitality.
5. Financial Wealth: Money management and investment.

Key Points:

• Holistic Wealth: True wealth encompasses multiple dimensions, not just financial.
• Personal Alignment: Aligning life values with each type of wealth to prevent burnout and dissatisfaction.
• Purpose-Driven Life: Emphasizing the role of purpose and mental well-being in achieving overall wealth.

Notable Quote:
Sahil Bloom (50:15): “The Five Types of Wealth show that money isn’t the only form of wealth. Time, social, mental, and physical wealth are equally important for a fulfilling life.”

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Life Lessons and Final Thoughts

The conversation wraps up with Mindy and Scott reflecting on Sahil’s insights, particularly the importance of not sacrificing personal well-being for financial gain. They highlight the need to balance financial pursuits with other forms of wealth to ensure a fulfilling life.

Key Points:

• Balanced Pursuit: Encouraging listeners to seek a well-rounded approach to wealth.
• Avoiding Burnout: Learning from Sahil’s experience to prioritize personal relationships and health.
• Long-Term Happiness: Recognizing that financial independence is a means to achieve broader life satisfaction.

Notable Quotes:
Mindy Jensen (53:06): “Your time is finite. Don’t push the finish line endlessly. Make a pivot once you reach financial independence to focus on other areas of wealth.”

Scott Trench (55:19): “Success often follows interest. Pursuing what energizes you can lead to both happiness and financial gain.”

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Conclusion

Sahil Bloom’s journey exemplifies the integration of disciplined financial strategies with a holistic approach to personal well-being. His frameworks on the pillars and levels of financial wealth, along with the five types of wealth, provide a comprehensive roadmap for achieving not just financial independence but a fulfilling and balanced life.

For more insights, Sahil’s book, "The Five Types of Wealth," is available at major bookstores and online platforms, with additional resources available at the5typesofwealth.com.

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Listener Takeaways:

• Define Your “Enough”: Clearly understand what financial independence means to you personally.
• Balance Your Wealth: Focus on building not just financial, but also time, social, mental, and physical wealth.
• Strategic Investing: Prioritize income generation and long-term investments over short-term savings.
• Holistic Well-Being: Ensure that your pursuit of wealth does not compromise your relationships, health, or mental peace.

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Episode Highlights:

• 00:41: Introduction to Sahil’s background and financial journey.
• 04:50: Discussion on living below means and investment strategies in private equity.
• 17:07: Sahil’s realization of the imbalance between wealth and personal life.
• 24:01: Transition to entrepreneurship and leveraging the scalability of online businesses.
• 34:46: Overview of S Bloom Media Holdings and its diverse ventures.
• 39:54: Introduction to the pillars and levels of financial wealth.
• 50:15: Exploration of the five types of wealth beyond finance.
• 53:06: Final reflections on achieving a balanced and fulfilling life.

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Resources Mentioned:

• Book: The Five Types of Wealth by Sahil Bloom
• Website: the5typesofwealth.com
• Social Media: Follow Sahil Bloom on Twitter, LinkedIn, and other platforms for more insights.

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Stay Connected: Subscribe to the BiggerPockets Money Podcast on your favorite platform and follow the conversation on social media to continue learning about financial freedom and holistic wealth building.

Transcript

[Mindy Jensen]

We are so excited to have Sawhill bloom on the podcast today. To achieve fi and actually retire early, you often need to have an X factor. Increased income, starting a side business, a side hustle, a real estate portfolio, something that makes you stand out. Well, Sahil not only started his own business, but also created several diversified income streams that were instrumental in allowing him to hit financial independence. But what's most important, a healthy mindset along the way. After all, there is so much more to being wealthy than just the numbers. Hello, hello, hello, and welcome to the Biggerpockets Money podcast. My name is Mindy Jensen, and with me, as always, is my X Factor co host, Scott Trench.

[Scott Trench]

Oh, thanks, Mindy. It's great to be here. You always bring the why Biggerpockets has a goal of creating 1 million millionaires. You're in the right place if you want to get your financial house in order, because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting or whether or not you found that X factor already. Sahil, thank you so much for joining this Biggerpockets Money podcast today. We're so excited to have you.

[Sahil Bloom]

Thank you for having me. I'm thrilled to be here.

[Scott Trench]

Awesome. Could you start us off with where your financial journey, your journey with money begins?

[Sahil Bloom]

Oh, man. I think the most important thing for me to get across is that I do not come from a family where financial independence or money was really a topic that we talked about. My dad is a professor. He's been a professor his entire life was on the academic track, very safe, stable career track, but not one where he was doing a whole lot of entrepreneurial things or side hustles or talking about investing or compounding or any of these topics that you often talk about with your audience and with your families, I'm sure. And so I didn't grow up with an entrepreneurial bone in my body. All of my friends now that have made a bunch of money in the world of entrepreneurship or with side hustles, when I asked them, what were you doing when you were a kid? They're like, oh, well, when I was six, I founded my first business and then I scaled it up and I had this side hustle, and then I was doing this along, you know, I was, you know, selling cards alongside my high school. Like, I didn't do any of that. And so if I have been able to create a journey around this, anyone can, because I spent my entire childhood and most of my young adult life basically screwing around, playing sports. I played Baseball my whole life. Ended up getting a scholarship to play in college, and I ended up taking a job in the world of finance straight out of school. So I got done. I graduated From Stanford in 2414, did my undergrad and a master's degree there. And then I basically wanted to take a job where I felt like I was going to both earn the most and learn the most straight out of school. With the premise being I didn't know anything about money. I had read about Warren Buffett and sort of learned a little bit about investing. But I really thought that, okay, if I can, for the next three or five years, really create a foundation of financial wealth building and financial knowledge. I think because of the way compounding works, just with, like, the ability to sort of coast off of a base that you create, that I can set myself up really well for the rest of my life. And so that was really what I did. That was the start of my journey. I joined an investment fund in 2014. We were. It was a private equity fund, so we were buying and selling businesses, and I was an analyst there.

[Scott Trench]

Awesome. And what did that look like for you in terms of building that foundation? Was there, like, were you spending as little as you possibly could and just stacking up cash? Were you trying to maximize income? Was there an investment approach or. Or an X factor began to apply at that point?

[Sahil Bloom]

I am very much a simple person. I am not into fancy watches or fancy cars or fancy things in any particular way. And I'm also not someone that tries to status flex on those kind of things. And so I really lived below my means during those years. But for one thing, which was, I really have always valued investing in myself in the context of the place where I live. I have always found that if I spend a little bit more to have a primary residence where my, like, mind sort of feels free and open, I generate better outcomes. And so what my first job, when I took it, I spent a little bit more to have my own place rather than rooming with three or four people. It would have saved me money in the short run to have fewer people. But I figured that if I invested in a slightly nicer place where I could have the headspace to sort of think that I would actually generate more income on kind of a more exponential basis over time. And so that was really the only, only area of my life where I think I spent more than on paper. I probably should have, because I was betting on the long term, on the income creation that it was going to generate.

[Scott Trench]

What did the foundation look like was this where you save in 10%, 50%, where were you putting these proceeds and how are you investing them?

[Sahil Bloom]

Yeah, I was very fortunate in the fact that I had taken a job that was quite lucrative in terms of what you can make straight out of school. So you know, a typical role in the private equity world straight out of school, like either in an analyst or associate level, you're making somewhere between probably 150 to $250,000 a year. The flip side of that is that most of those jobs are in the highest cost of living areas in the world. So you know, you're talking about living in New York, San Francisco, London, you're living in very, very high cost of living. So my savings rate was probably in the like 20% range if I were to go back and look at the numbers. So it wasn't extraordinarily high because I was spending a bunch of money on rent and on just general cost of living. But I wasn't spending money on going out. I wasn't spending money on like, you know, sort of vacations. I didn't take a vacation. For the first several years of working I was very much heads down. I was working 80 to 100 hour weeks, really focused on learning and on creating as much value for the people around me as I could. On your question on the investment side, all I really focused on was two things. So my role, because I was working at this private equity fund gave me the right to invest in our fund on a fee free and carry free basis, meaning I was not going to pay the fees that a normal investor would have to pay to access this vehicle that we invested out of. That was a huge advantage because it meant that these funds which were at the time returning a 20 to 25% annual IRR, I was going to have access to that as an investment vehicle, which most people will not. And so what I said was I'm going to maximize my, what I'm allowed to invest in that. We had a limit on how much we were allowed to invest. I'm going to maximize that and then every other dollar I invest is going to go into the safest, most BO asset classes. So like I was really going to invest on the other side of the spectrum and just like low cost mutual funds type stuff or, or index funds.

[Mindy Jensen]

I want to go back to that 20% savings rate right out of college, living in a high cost of living area. You said oh, it wasn't extraordinarily high. You're wrong. That's extraordinarily high for somebody who is just out of college, who doesn't really know what they're doing. Even though you're working for this financial firm, would you say that you were like well versed in personal finance?

[Sahil Bloom]

I think because I was surrounded by people who were talking about finance every single day. A bit of that sort of just like by osmosis. I was learning on the fly as I went. And I was very fortunate in that the people in my sort of immediate cohort, my like mentors within the firm, who are more junior people who are still some of my best friends to this day, none of them were like the high flying, flashy, big spending finance folks that you read about in books or see on tv. All of them were like living very boring lives. Part of that was because we were just working really hard. There wasn't, you know, we were a small firm. We were just on the come up and so there was not really a moment where you would have said like, oh, I'm going to go blow $50,000 on a watch. Like, it just, it wasn't a thing, it wasn't part of the culture. And frankly we weren't in New York. And so there wasn't the like status flexing that I think happens when you're in this like hyper, hyper competitive cultural environment.

[Mindy Jensen]

So that again is another, I don't want to say flex or superpower, but you were, that was a benefit, that was a huge boost that you might not even realize or you didn't realize at the time that you're not surrounded by these people that you're trying to keep up with who have the BMW and the Mercedes and the, the Rolex watches and the fancy suits and you're not trying to keep up with them. That itself is going to help you, even though you aren't. That's not your thing to, you know, show everybody how much money you're making. It's really difficult for somebody, especially somebody young, especially somebody new to the firm who's trying to get their footing in and fit in with everybody, to not fall into that trap too.

[Scott Trench]

Can I go back to the, the overall story here for a second on this and just kind of pick up, how long were you in this private equity role?

[Sahil Bloom]

I was at the firm full time for 7 years.

[Mindy Jensen]

Hello, my dear listeners, I have a quick request for you. We would like to hit 100,000 subscribers on YouTube and we're doing really well. We're already up a lot, but we need your help while we take a quick ad break. You can Hop on over to YouTube.com biggerpocketsmoney all spelled out and make sure that you're subscribed to this channel. Stay tuned after a quick break for more from Sawhill.

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[Scott Trench]

All right, welcome back to the show. We're joined by Sahil. So to extrapolate a little bit, these roles started at high compensation. They scale very nicely and private equity returns were phenomenal from 2014 to 2021. During that seven year stretch, is it safe to say that your income exploded over that time and that you were able to invest a good chunk of that in these very high return funds for that, that time period and that that was a major factor in your wealth journey or.

[Sahil Bloom]

Yes. I mean your income exploding explosion is probably an overstatement. The way the career track typically works in the world of private equity or even hedge funds or venture funds would be your income would sort of steadily rise, but you know, to, to very high levels on an objective basis. You know, by the time you're five or six years in, you're probably making from a base compensation standpoint somewhere in the half a million dollars range, you know, plus or minus depending on how big the fund is. We weren't a particularly large fund, so it was kind of in that, in that ballpark. And then the real driver of long term wealth is your ability to invest in the funds with your own capital and then also your carried interest in the funds which is your percent of the profit share of the fund. So these funds make money via percent of AUM management fee and then on top of that they make money by taking 20ish percent of the profits they generate from investing the money. And that can be really large. Because if you just do the math, like if you take a billion dollar fund and you say okay, I'm going to double the value of that fund And I take 20% of that, that's 20% of a billion dollars. So you make $200 million in profit share at the fund level. That gets split up among all the people at the fund. Obviously the founding partners take the most of that and it trickles down to the little folks like I was at the firm. But it's still a tiny percentage of $200 million is still a lot of money. And so that is the real wealth driver at these firms. But you have to stay for a long, long time to see those returns because it takes seven to 10 years for it to all vest and for you to be actually given. You know, when you sell the companies get these compensation measures. The last thing I'll say is some firms have a really attractive thing which is that you are allowed to invest your retirement Plan into the fund on a tax free basis. That is like an enormous wealth creator for a lot of people that stay in those career tracks for a long time because it means that you're rolling over gains into a 20% vehicle tax free over long periods of time. So when you look at, you know, people like Peter Thiel who like has this famous, like, you know, Roth ira, like the back the loophole around that rolling things over tax free at a high rate of return is an extraordinary wealth creation measure.

[Scott Trench]

2 in 20 is the famous phrase, right? 2%. If you have a billion dollar, a fired equity firm raises a billion dollars, they'll charge of that or $20 million to pay the salaries of the team and they'll pay 20% of the gains, which if you double it, like you said, it's $200 million, 10, 10x that amount. So that's the, that's the real driver and kicker in this. And, and it, and to get a private equity job at a promising fund out of college. You know, a lot of things go into that, I imagine. And so this was not an accident, right? This was, this, this was a situation you put yourself, you set yourself up for and that you put in 80 to 100 hours a week for six, seven years in order to access and realize the most of that opportunity. Is that right?

[Sahil Bloom]

Yeah, I worked very, very hard. I would say that I was fortunate in landing the role straight out of school. I probably did not have the same track record of internships. What I did have was really, really high ability to engage in teamwork and some of these more behavioral skills that the firm that I was joining was really going to value. And that was because the type of investing we were doing was a lot of family businesses, you know, smaller medium sized businesses where relationship building was actually more important than financial modeling. And so while like a Blackstone, a kkr, a Carlyle, these big private equity funds really look for people who are going to be able to come in and do the financial model the absolute fastest. The firm I was joining was much more leaning into people that were going to be able to build relationships with these companies.

[Scott Trench]

So in 20, I'm gathering around 2021 is when you left this profession. Can you tell us a little bit about your transition out of private equity?

[Sahil Bloom]

Yeah, and this is a big part of my journey and my own story, which is as the years started to progress in my own career and as I sort of started getting a bit more senior, I started to become very narrowly focused and almost obsessed with accumulating Financial wealth as the sole exclusive means of achieving happiness in my life, that was very much my own sort of narrow obsession and priorities. There was nothing in the firm, nothing in the group of people that I was around that I would say contributed to that. That it was my own narrow, myopic focus on this making money being the path to me achieving happiness. And I kept convincing myself that the next bonus or the next promotion or the next thing, I was going to feel great on the other side of that. And every time it would come, I would inevitably feel that momentary high and happiness and then immediately reset to saying, is this it? What's next? What's the next thing? And unfortunately, along that way, I had allowed a lot of other areas of my life to suffer. I had so exclusively focused on money that all of these other areas of my life had started to deteriorate. You know, my relationships, first and foremost with my parents, I was never really seeing them. They lived 3,000 miles away with my sister. My wife and I were struggling to conceive at the time that had created a strain on our life. You know, my health, I was drinking a lot, six, seven nights a week. My mental health was suffering. So all of these other areas of my life had started to suffer because I was so focused on this one thing and thought that everything else was sort of a distraction. And in 2021, I experienced kind of all of that come to a head. I had a conversation with an old friend who asked me how I was doing. And I said that it had started to get tough being as far away from my parents as I was not seeing them very often. They were getting older, and he asked how old they were. I said mid-60s. He asked how often I saw them. I said, once a year. And he just looked at me and said, so you're going to see your parents 15 more times before they die. And I remember just feeling like I'd been punched in the gut. I mean, the idea that the amount of time you have left with the people that you care about most in the world is that finite and countable that you can place it on a few hands. I realized in that moment that something had to change. And I told my wife the next day that I thought we needed to make a move. And within 45 days, I had left my full time role at the firm. We had sold our house in California and moved 3,000 miles to live closer to both sets of parents on the other side of the country.

[Scott Trench]

At this moment of inflection, when all these things are happening here, how are things going at the fund in a general sense?

[Sahil Bloom]

The fund is doing great. And to this day, the fund continues to do great.

[Scott Trench]

There's no issue going on at work that caused this year. Now, what was the lifestyle like that you were leading at that point? And was there any reduction in standard of living with the transition over that from, you know, 15 days before the decision and 60 days later after you'd settled in 3,000 away in the other state.

[Sahil Bloom]

So standard of living, we had a nice house that we had built in California in 2019. You know, standard of living with relationships was pretty negative, partially because Covid had hit and we were basically stuck at home and locked down in California. So my social life had taken a big hit, you know, part by my own doing, part by Covid. And things that were happening was pretty lonely in terms of reduction. You know, the shift was, you know, moving across the country. We got a new house on the East Coast. I was very fortunate in the fact that, like, I had worked really hard for seven years and built a really nice investable asset base and a financial base where I wasn't scared for the, like, two year window to come. You know, I sort of viewed it when I was making this transition as I didn't go to business school, but, you know, after two or three years working in private equity, the traditional track is you go to business school and then you come back after the firm pays for you to go to business school and then you come back or you go down a different path. And I had explicitly not done that. I had worked during those years and continued to make money. And so my thought when I left was, let me go see what else I can do. Like, let me see if I can create my own thing with, you know, and I'll talk about it. But some of the different side hustles, different things that I had been tinkering with over the prior year when, since COVID started and see if I can build something. And if not, it was a two year business school stint and I'll go back and take another job in the world of finance, closer to my parents and being closer on the East Coast. That was sort of my mindset when I went into it. So there wasn't a drop in our standard of living or our lifestyle.

[Scott Trench]

Awesome. And what was your investment portfolio like in terms of the allocation and specifically how much cash did you have on hand in terms of monthly or annual spending when you made this decision?

[Sahil Bloom]

One of the first things I did when I started my career was to create a One year rainy day fund. And that was probably one of the best decisions I ever made financially. I am someone that believes that there are certain things that you can model on paper and then there are certain things that are just nice for you as a human being for your peace of mind based on what you need. I'm someone that is naturally a little bit paranoid. And so I knew like if someone recommends typically three to six months as a rainy day fund, I was like, I'm going to have a year, I'm just going to set this aside in cash. And at the time, holding money in cash made no sense because there was no yield on it. Now obviously it's a little bit different, but I had a year set aside in monthly spend, which is a really comfortable place to be if you're going to make a transition. To be clear, I wasn't taking my income to zero by making this change. I, when I was leaving and I wasn't joining another fund, my firm offered for me to remain as an advisor to some of the companies that I had been involved in. So I was going to continue having income as a result of that. And then anything new that I was doing, I started a newsletter that was monetizing. There were some things that started happening. So it wasn't as though I went to like, you know, 100% burn rate and I was just losing all of our monthly expenses. That would have made me feel a bit uncomfortable in making the decision. There were things that made the decision a little bit less, a little bit less scary. But yeah, have it. Having the one, the one year rainy day fund was really helpful.

[Scott Trench]

It's not an always rule, but it's generally the rule that these life decisions seem to coincide with. Folks who have that one six months, one year, maybe even two year cash position. And I think that the point you made about that being the best investment you've made is spot on. The returns on that in general quality of your life. I always wonder, leave the question out there. Does the decision happen if that cash reserve is not there in the same way? I think the answer for a lot of folks is no. But again, it's not a rule, it's a hard rule. It just seems to be the tendency for folks that make decisions like yours.

[Sahil Bloom]

I think the combination between having that cash position and then also knowing that we could reduce our monthly expenses to a bare bones minimum if we needed to was really comforting. Neither my wife or I, we're very aligned in money values which by the way, like number one life hack in the world is marrying someone with whom you're aligned on your money values because she's not into fancy things. I'm not into fancy things. We love having a nice house. That's our number one thing that we really like. We love, like, the place where we live. We want it to be nice, but we don't do jewelry. We don't do watches. I mean, this is embarrassing for me to admit. I have not gotten my wife a single piece of jewelry since her wedding ring. We got married eight years ago. We just. We don't. That's not the way that we express love. We like going on trips together and doing other things like that when it's a shared experience. And so as a result, we knew that our monthly spend could be very, very low if we needed it to be, you know, and we didn't have. We didn't have our son at the time. And so that's another. That was kind of another lever of safety in making that change.

[Scott Trench]

Can you tell us a little bit about your journey with money since that move and the businesses you've built and kind of give us a little bit more about this X Factor concept?

[Sahil Bloom]

Shortly after making the move, I built and had started this newsletter. So I had originally started writing on Twitter in May of 2020, right in the middle of COVID Really. It was, like, just on the weekends. I was kind of writing these threads, these posts, and I had grown the platform from 500 or so followers to about 100,000 or so by the time May 2021 rolled around. When I was leaving, I had converted a bunch of those people to subscribe to this newsletter that I had started, which I called the Curiosity Chronicle. The idea of kind of pursuing curiosity and sharing things that I'm learning. And that newsletter in May of 2021, when I made that shift, was about 15,000 subscribers. And I didn't know anything about the media business, but I figured that I could see if I could get a sponsor for that newsletter. And so after I made the shift that I was no longer at my job, I texted a few friends who had startups and asked if they would be interested in sponsoring an issue. And one of them took me up on it and paid me $500 to send out this sponsor snippet at the top of this newsletter. I was sending it one time a week at the time. And so I was like, okay, that's $500 a week. Call it $2,000 a month. I was like, what if I send it twice a week? Okay, I just doubled the income from this thing. And that was my first interaction with the scalability of the Internet and of your ability to reach people. Because I just had this realization that as I grow the subscriber base and if I increase the surface area of the amount of sends that I send, the income of this thing will just scale and presumably scale kind of infinitely or at least to some high level. So that was really my first interaction with building a new business. Business was like that idea. Alongside that, I had a bunch of people that started approaching me asking if I could help them with kind of writing on the Internet, growing their platform, Twitter, LinkedIn, newsletters, etc. Bunch of businesses, founders, etc. So I set up a sort of consulting company effectively where I would help people with that. And it was a high ticket service. I would, you know, charge a lot on a monthly basis, call it like five to $10,000 a month to help people operationalize building out a content engine within their business or for these founders. And it turns out at that ticket price, you just don't need that many customers to make to like replace the income that I had previously had from my old job. And so suddenly I was sort of in this world like by fall of 2021, where I was actually making more money on a monthly basis income from those two things than I was at my old job. I didn't have the same carried interest and wealth creation thing, but from an income standpoint, I was actually making more.

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[Scott Trench]

We're joined by Sahil and just on that point actually what was the quality of life difference in terms of hours for that income? Because that's the big trade you made. Here is something about the quality of life. Life was all about making maximizing money. Surely the carried interest would have been potential. The theoretical potential for the carried interest Was much higher than what you were doing here. But tell us about the happiness factor in the other areas of your life and how that transforms.

[Sahil Bloom]

No job will ever pay you enough to be far away from people you love. That's the best way that I can put it. I was suddenly in this world where I was surrounded by people I loved. That number 15 times before my parents were dead turned into hundreds. I mean, I saw my parents several times a month. I continue to see them several times a month. The most important thing was when my life came into alignment and when my stress levels dropped and when I felt a level of clarity and calm in my life. My wife got pregnant. And after two years of struggling to conceive, we got that incredible news. And so many things in life just started to fall into place. You know, I had the freedom to focus on my health again. You know, I wasn't working the 80 plus hours a week. I was kind of, you know, leaning into things that I really found energy in. So I was like, writing is my favorite thing in the world. I was getting to write a lot. You know, I was getting to work with founders of these companies directly. I was investing in some of those companies. Personally, I was really working on things where I felt like I was kind of the captain of my own ship, which just felt really good. And it was the first time in my life and I had had no, no plans to do that. There was not an entrepreneurial bone in my body and getting to lean into that. I just found I every single day was waking up with real energy for the things that I was getting to do. And my life started to improve all around it.

[Mindy Jensen]

Was it just you or did you have employees at that time?

[Sahil Bloom]

Early on, it was just me. And to this day, it's just me that writes and creates all the content, because that's my favorite thing. That's what I want to do. I want to spend time writing. Now I have a team at the holding company level of my structure, which we can talk about. I have a team and there's people that are working on things that I'm not great at, like dealing with all of the optimization around ads and funnels and segmenting and video editing and all of the other things that I have no competency around. But early on, it was. It was just me.

[Scott Trench]

Yeah, I'd love to hear about how your company evolved and what the structure is today and what's next.

[Sahil Bloom]

Yeah, so today I have everything structured in what I would refer to as a holding company.

[Scott Trench]

Can you introduce it as well, like what the holding company does, like what is the mission, the purpose of the whole enterprise here.

[Sahil Bloom]

Yeah. So the holding company that I have is called S Bloom Media holdings and the entire idea is for me to be able to leverage the different things that I'm sharing out in the world. All of the media properties that I'm involved in, whether it's the book or newsletter or any of the social media platforms to both reach people and create ripples through the content. And then also to accelerate companies that I own, either through, you know, significant minority ownership stakes in cash flowing larger companies or through my venture fund where I invest in early stage technology companies. So today the holding company sort of sits as like a halo on top of a bunch of companies that sit below it at the actual holding company level. That's where I have my book, my newsletter, any other monetizing media assets that sort of sit up there. The newsletter today reaches 800,000 or so people two times a week. Still is how much I send it. Newsletter sponsorships now are kind of order of magnitude $10,000 per cent. So you can think about how it scaled from the $500 when I sent the first one on through where it is today. Same two newsletters that you send every single week. But as I said when I first realized it, the scalability of these things is incredible as you reach more and more people below that there are a handful of significant minority owned cash flowing companies. So I mentioned earlier that sort of consulting operation that I set up to help people with building out their content engines that is now a company that has a CEO and a team that is running it and I own a chunk of that. There is a newsletter growth operation business, there is talent business where we place talent into growing companies. There's a web design and development business business. There's a handful of others that all sort of exist underneath and are owned anywhere from 10 through 50%. They all have CEOs, they all have operators, they have teams that are running them on a day to day basis. My set of responsibilities is strategy. So I help from kind of a board level strategic oversight and then also driving business to those companies. So if people are coming to me looking for insights on newsletter growth or how to do any of these other things, I actually have companies that can help people with those exact things. So kind of lead generation. Those are all high ticket services companies for the most part and are all cash flow generating. So they pay out dividends every month or every quarter on the basis of the cash flows they're generating. And then the final thing that's a piece of my holding company is a venture fund called SRB Ventures, $10 million fund that I raised in 2022. I had done a bunch of startup investing personally over the years just out of my own capital. You know, I had the networks from the Stanford days, and I'd continued to build on that. And so I ended up raising that fund from a bunch of investors and have been investing out of that since 2022.

[Mindy Jensen]

You just said a lot of things. How many hours a week are you working?

[Sahil Bloom]

Well, you're catching me right now in a very crazy time because I'm in the midst of launching this book, so I'm probably working right now just as much as I worked as an analyst in my private equity days. Fortunately, I'm working on something that I really love doing and that I feel a real purpose and mission around, which means that it feels quite easy to do that. But in normal times, you know, probably somewhere between like, 40 and 60 hours a week, depending on what it is. But I really think, you know, there's a difference between time and energy. And working 60 hours a week on things you hate is significantly more challenging than working 60 hours a week on things that really provide energy to you. And I get so much energy from seeing how the ideas that I share can positively impact people. I'm sure the same way you guys do, being able to hear from your listeners how they've changed their life on the back of something that they've heard from you. I can't imagine a better use of my life than getting to do things like that. It feels incredible that I'm so grateful for the fact that I get to do stuff like that. And so I. I do work a lot, but it's because I really like.

[Mindy Jensen]

What I do that really matters. You said working 60 hours at a job you hate is infinitely worse than working 60 hours at a job you love. I'll give you working 40 hours at a job you hate is infinitely worse than working 80 hours at a job that you love. Because when. What is that cheesy phrase? When you love what you do, you'll never work a day in your life. Yes, but. Or yes, and it's also true. I have had jobs that I really did not even want to get up in the morning. Every time the alarm went off, you're like, oh, five more minutes, please. And this job, I just pop out of bed and I'm ready to go. I'm so excited to get to work because I get to talk about real estate and money all the time. This is like a dream job.

[Scott Trench]

You have two frameworks that I want to dive into here. One around these kind of pillars of financial wealth, and then one around these levels of financial wealth. Can you introduce us to those and tell us about those and tell us about what's in the book as well?

[Sahil Bloom]

The pillars of financial wealth. Within each section of this book, within each type of wealth, I lay out what I view as the three pillars of that type of wealth. Within financial wealth. Those three pillars are quite simple. Income generation is one that is your cash inflows that you are generating from primary employment, secondary employment, side hustles, whatever it might be. It is expense management. The actual cash outflows from spending money on things, experiences, taxes, any cash outflows that you have. And then the third is long term investment. It is taking the gap between the cash inflows and the cash outflows and investing it into long term compounders, things that are going to compound over the long term in your financial life. That sort of simple model of growing your income, managing your expenses and investing that gap is how every single person in the world that has made a lot of money has done it. There's different variations on how it happens. It might come from a windfall event, you know, it might come from just steady rises in income. It might come from side hustles, whatever. But basically that's what it is. You're generating a gap. You're investing that gap into things that are going to compound over the long term. And so complicating it beyond that ends up becoming a dangerous thing. You actually don't need to. You just need to think about how am I going to do those three things, things well, how am I going to grow my income? Basically that comes down to building skills and then leveraging those skills. How am I going to manage my expenses such that they grow slower than my assets, than my income is growing rather? And then how am I going to simply and basic invest my gap in something that is going to stack and compound for the long term?

[Scott Trench]

What then are these levels of wealth that you describe here? And also I have a question of do you feel like there's a specific time and place to apply each of those pillars? Like, is there a better, is there a time in life when it is way more important to apply frugality than income or investing? How do you think about applying the, you know, or applying the focus in those areas and then how does that translate to these levels of wealth?

[Sahil Bloom]

I think that the Basic principle that is true is that you can only manage your expenses so much, but you can grow your income infinitely effectively. And so overly focusing on saving the $2 here, the $3 here is actually energy that you should probably focus on growing your income. Similarly, overly focusing on trying to generate an incremental percent return in your investments is energy that you could spend on focusing on how to make twice as much income. I think about this all the time when I go and mentor young people. You get someone that has $100,000 of investable assets and on $100,000 income level, and they're spending all of this time and energy worrying about how to generate 10% returns versus 8% returns on the 100,000, rather than how to turn the 100,000 of income into 200,000. And if you just think about the pure math on that, like the 100,000 to 200,000 is 100% return on what you were making in a year. The extra 2%, it's $2,000, right? It's 2% that you're going to generate on this asset base. On top of that, you're probably not going to outperform the market over a long period of time. And acknowledging that and just appreciating that you can just ride market returns to an extraordinary wealth bucket, you will focus more on the income generation, on the skill building, and on the ability to leverage those skills in different unique ways. For that reason, I think that really focusing on building those skills and on figuring out different ways to leverage those skills across your primary employment and then with different side hustles that might earn you some side income is the probably the most strategic path for most people to achieve financial independence. It is very hard to cut your way to financial independence.

[Scott Trench]

I also do wonder though, that the person with 100,000 or even more extreme, the $10,000 in assets that's super focused on etching out that extra return. Something about that mindset though, leads those folks to end up earning more money or saving more money because they think about. From an investment perspective, I completely agree with the framework around there. And I remember being that person obsessing over my $10,000 in a Chinese fruit juice company that did not go super well trying to get excess yield. But I think that the fact that I was so interested and passionate about investing also just made me want to earn more and save more so that I could invest.

[Sahil Bloom]

That is a very good point. Under the Charlie Munger piece of wisdom that success follows interest and the fact that you were that interested in Something and you were willing to lean in it and learn about it, actually probably uncovered new and interesting ways to make money down the line as well.

[Scott Trench]

Yeah, I mean, come on. How did I lose money though? It was trading below net asset value.

[Sahil Bloom]

I saw that way too many times at private equity, by the way, where we would try to outsmart a bad market. I would say the single thing that I focus on now as an investor in my venture investments or my companies or anything else that I'm doing is the macro conditions of a market. Because you cannot fight a bad market. You can have a great team and a great thesis for a company, but if the market is sort of like declining or flat, it's so hard to win and make more and more money and grow your earnings. But you can be an okay company with an okay thesis and okay team in a great market and you can capture your share of the market and just do quite well over the long term and grow earnings. And so I just focus more and more now on investing in great markets.

[Scott Trench]

Let's play that out for a second here. I know this is a tangent that you just opened a whole can of worms here. And we're trying to dissect the really high level macro themes right now before we get into the smaller markets, which I think you're meaning. This market is growing and this is a good venture capital investment because consumer interest is growing here. But we were thinking about this. Dave Meyer, the host of the Bigger Pockets real estate podcast, and I were thinking about this. We were talking about how if we Zoom out in 2024 and look at like what happened in the financial markets at the highest level, stock market increased 24% and is now trading at close to an all time high price to earnings ratio. Gold grew 30, went up 30%, Bitcoin's up 115%, the 10 year treasury yield went up about 18% year over year and real estate went nowhere. The prices went down or rents went flat. That led me to think about reallocating my portfolio, which I did from the index fund. I sold a big chunk of my index fund portfolio and putting it into real estate. I don't think that's what you mean when you think about markets growing or there. But I'd love a reaction to that thought process and then a definition of how you think about markets and investments in venture companies. Companies per the $10 million fund that you referenced earlier.

[Sahil Bloom]

Yeah, I find that when I try to outsmart things or think too strategically about these things, I sort of like to know where I'm an idiot on stuff and I know that I'm an idiot on thinking about perfect how to rebalance my portfolio and how to spend time on that stuff. And so I just don't, I'm like, I just know that if I try to do those things, I'm not going to do well with it. I just assume I'm not going to. And so I literally just dollar cost average into index funds and I'm happy to ride whatever ups and downs they have because I know I'm going to hold these for the next 30 or 40 years. It's just going to continue to build. I'm going to borrow money against it probably in the future and I hope I never have to sell it and pay taxes on any of it. And so, so I think that when I think about allocating into different asset classes, I think about net new dollars versus reallocating things I've already invested. Every time I make an investment, my operating thesis in my mind is I'm never going to sell this. Am I happy making this investment if I'm never going to sell this investment? Usually when the answer is no, I'm better off not making it because I am not comfortable in the long term thesis. And what this is, that is a very old school, probably like somewhat of a buffet mongerism mindset around it, but that's what works for me from a headspace standpoint. Mainly just because I want to take all that headspace that it would consume for me to think about those things and put it into assets that I know I have control over, like the ones that I own and things that I'm actually involved in the operations of. So that that's what works for me. As I think about that when I talk about kind of investing in good markets, I'm really referring to like in my private equity days. I'll give you an example. There was a company that we were looking at in the E Commerce space. They were selling sort of like home decor products. E Commerce, that was, it was like an okay business. You know, the actual operations of it were kind of okay, team was okay. But the market was growing at 20 plus percent per year. You know, in a broader like GDP growth of a 2%, 3% GDP growth environment, the market was growing at 20, 30% because more and more of home decor was shifting to online purchase from you know, traditionally being a totally in store thing like buying rugs. It was the first time in history that people were buying rugs online and getting them shipped to their house and so all of a sudden this market was booming. And that, as a thesis, would have been a great place to invest money at the time, because it didn't really matter if the business wasn't extraordinary or exceptional. What really mattered was they could be okay and ride this rising tide that was happening for the next three to five years. And like that company as an example, I think grew earnings from 17 or so million when we looked at it, to like 70 million over the course of, you know, three to five year time span. If you had put a little bit of leverage on that when you bought it, you probably would have, you know, made 10 times the money that you put into it.

[Scott Trench]

Awesome. So those returns would floor. I can't. I can't. I couldn't resist. On a terrible pun for your home decoration and carpet business here. Sorry.

[Sahil Bloom]

That was quite good. It was good enough that I completely missed it.

[Scott Trench]

We'll keep moving here. Last question before we kind of adjourn here. Can you tell us about the five types of wealth? Five types and five levels of wealth here, the framework that you have. Introduce us to that and tell us a little bit about the book as well.

[Sahil Bloom]

Yeah, so two separate things here in the financial wealth section. I have this idea that there are five levels of financial wealth building. You know, on from kind of level one, which is just your baseline needs being met, food and shelter, on through level five, which I consider to be the level where the assets that you hold are producing significantly more income and cash flow than what your monthly expenses are. So, like true financial independence, all needs are met, you can do whatever you want. And your pathway through those levels is really what you're talking about. When you're talking about your journey, you're kind of focused one level at a time. It's kind of like a video game. It's kind of a fun way to think about that journey that gives you these incremental steps that you're working towards. The Five Types of Wealth is sort of the macro theme and the title of the entire book. And the whole idea is that the way that we've measured our lives is broken or at least incomplete, because it has historically and culturally just been focused on money. It is the only way, the only type of wealth that we've ever, ever considered. And unfortunately, while money isn't nothing, it can't be the only thing. I saw that in my own life, money had become the only thing that I focused on at the expense of all of these other areas. And there are these other types of wealth that contribute to Living a great, happy, healthy, fulfilling, wealthy life. And so the five types of wealth that the book considers are time wealth, that is the freedom to choose how you spend your time, who you spend it with, with where you spend it. An awareness of time as your most precious asset. Social wealth is the idea of your relationships, the people you are surrounded by. Mental wealth, that's all about your purpose, your growth, your ability to create space, to wrestle with some of the bigger, unanswerable questions of life. Physical wealth, which is all about your health and vitality. You know, health is wealth. And then financial wealth, which we've talked about at length on this podcast. And specifically with financial wealth, it's the idea of really understanding what your definition of enough looks like, what that life actually looks like to you. Because in the absence of that knowledge, in the absence of the understanding of enough, you just chase whatever more the world is telling you that you need.

[Scott Trench]

That is the journey of BiggerPocket's money, in a nutshell, is to figure out what that enough level is, get there, and then begin that journey of figuring out what's life beyond work in a general sense, or beyond the need to work to fund that. So love it. And can you tell us about what the book is called when it comes out and where people can find it?

[Sahil Bloom]

Yeah, the book is called the Five Types of Wealth. You can find it anywhere books are sold. I'm always a big fan of supporting your local bookstore. If you have one that you love, obviously you can get it on Amazon, Barnes and Noble, anywhere else. And you can find more information at the5typesofwealth.com and you could find me at sahilbloom on any platform.

[Scott Trench]

Well, thank you so much for coming on BiggerPockets money day and sharing your story. This was a wonderful, wonderful conversation to have with you. I think folks learned a lot and a lot of good perspectives that you share here. A lot of wonderful frameworks that you bring to the table in terms of life and wealth building. So thank you.

[Sahil Bloom]

Thank you.

[Mindy Jensen]

Thank you, Sahil. And we'll talk to you soon.

[Scott Trench]

All right, that was Sahil Bloom. Mindy, what'd you think?

[Mindy Jensen]

I thought that that was very interesting. I have been giving a lot of of thought without actually putting a name to it about his five types of wealth. Just recently, in conversations that I've been having with Carl and the time wealth is absolutely the most important thing. You can't do anything. The clock always keeps ticking. I recently saw that movie Interstellar where they talk about time warps and you know, the theory of relativity. And it was kind of went way over my head. But here on Earth, we have a clock that keeps ticking and keeps moving forward with no way to go backwards. And the freedom to choose how you spend your time is so important. But also social wealth. I mean, what are you doing with your time if you're just sitting at home alone doing nothing all the time? Social wealth, your relationships, mental health. I'm sorry, Mental wealth, your purpose. We just had Doc G on with his new book, the Purpose Code. And that book is, is so, so good at walking you through figuring out what your purpose is going to be. Physical wealth. Scott, I started going to another gym. My gym. I started going to a gym last week, or I'm sorry, last year, and it closed on December 30. It was so disappointing. I know. Yeah. Like what, how does the gym close? Turns out Longmont has a lot of gyms, so I found a new gym. I've been going. I'm. I can't say that I love it, but I love the way I feel when I'm done. And obviously financial wealth, which we have spent a lot of time on, but you know, we. This show talks about the financial wealth. It doesn't really talk so much about time wealth and social wealth and mental wealth and physical wealth and, and, but those are all part of being a wealthy person, a well rounded wealthy person. It's just not just about money in your bank. And the rest of his story was fascinating too, but that really, really hit with me.

[Scott Trench]

Yeah, I'm a big believer in this. I see this pattern a lot. And Sahil is a great example of this where folks, you know, go well past the point where more money really incrementally has an impact on their happiness or, you know, or lifestyle. And, and once they actually make the change and pursue the options that that brings them, they're able to pop up and think about more of these other areas of life in a different way. And that's like, kind of sad about capitalism in America in 2025 is that for a lot of people it kind of takes that reality to take place. So I think Biggerpocket's money, we need to enable that for more folks so you can get over the finish line here and have enough assets. That's the, well, more than cover your lifestyle needs so that you can pop out and think about those other things. And I don't think we will pretend to have a lot of answers on how to have fitness. Although my next book title after Set for Life will be sweat for life. So look for that in 2027 here. Well, I don't think we, I don't think we pretend to have a lot of answers in all those other areas on there. I hope that the folks view us as a means to getting to that point so that they can really begin that next part of the journey, money on there and focus on those other levels, those other areas of wealth outside of that.

[Mindy Jensen]

Yeah. Well, I have a suggestion. Don't do it like I did it. Carl and I were just like Sahil and his wife focused on the money and. Well, maybe not his wife just saw Hill was focused on the money and focused on the money and all of a sudden he's like, I'm only going to see my parents 15 more times in my life. I. Something has to change. And once we reach financial independence, we looked around and we're like, oh, that wasn't a very enjoyable journey. Focus on your time during your journey, focus on your relationships during your journey, your mental health, your purpose, your physical health. Focus on all of these things, not just the finance aspect of it, because we might have retired or Carl might have retired, you know, a year later with a much more enjoyable journey. And because of that time, time thing where we don't have go back in time, do overs, we can't go back and, and see if we would have had a better journey, if we would have done it right, done it differently the first time.

[Scott Trench]

Your advice is wonderful and people should take it. And for the many people out there who will definitely not take it and will still obsess about the money, my advice to you would be to just know the finish line and when you get there, make the pivot on that front. Make sure it's not decade away. Make sure it's just a few years away and do it like Sahil, do it like Sahil did and make that transition and get to work on those other things because time is finite. Mandy's answer is better. But if you can't do it, do that, do that. Get just to find that finish line and get there and then make the pivot, make the change.

[Mindy Jensen]

Yeah. And don't keep pushing the finish line. Really do your research and figure out what your finish line is and then don't keep pushing it. Figure out what you want to do once you hit that finish line. And I mean, you can always change your mind, but the, the, the one more year and one more, you know, oh, just a few more dollars and, oh, I'm not sure if the 4% rule works, and, you know, keep changing all of this, then you're never going to be done.

[Scott Trench]

Love it. Well, should we get out of here, Mindy?

[Mindy Jensen]

We should, Scott. That was an awesome episode. And that wraps up this awesome episode of the Bigger Pockets money podcast. He is Scott Trench. I am Mindy Jensen, saying can't linger wedding singer.