Click Here to Get All Podcast Show Notes!
Wealth isn’t about chasing the next hot stock or investment. It’s about mastering time, habits, and your own biology. In this episode, Sharran breaks down the Wealth Time Engine, a framework for creating lasting wealth through three foundations: Time, habits, and biology. He explains why focusing on short-term wins often leads to failure, and why patience, compounding, and disciplined habits are the real keys to financial success.
Sharran illustrates these principles with real-life examples, including his own experiences in real estate and the story of Ronald Read, a janitor who patiently built an $8 million estate. Sharran also explains how to calculate your wealth buffer, create rules around investments, and overcome the fear-driven biology that causes many to sell too early.
With strategies like the Rule of Three Decades and investment rationale frameworks, this episode teaches how to let time and discipline generate wealth while avoiding common behavioral traps.
“Wealth is a gap between your income and your ego multiplied by time.”
– Sharran Srivatsaa
Timestamps:
01:40 – Foundation 1: Time and compounding
03:59 – Rule of Three Decades: Earn, compound, withdraw 4%
04:45 – Foundation 2: Habits that control your wealth
07:37 – Case study: Ronald Read, a janitor who built an $8M estate
08:30 – Bad investments: How to build decision filters
09:43 – Wealth buffer calculation: Protecting what you earn
10:05 – Foundation 3: Biology (fear, loss aversion, and the amygdala)
12:05 – Warren Buffett example: Be greedy when others are fearful
14:15 – Investment rationale: 4 questions to prevent fear-based selling
15:24 – Summary: The Psychology of Getting Rich
Resources:
– It’s Boring, But It Can Make You Dangerously Wealthy
– The Next Billion by Sharran Srivatsaa
– Board Member: ARC Multifamily Real Estate Investing
– Board Member: The Real Brokerage
Connect with Sharran:
– X
– YouTube
– Threads
Transcript:
[00:00:00] Hey, this is Sharran Srivatsaa. Welcome back to The Business School Podcast, and everyone thinks that wealth comes from finding a perfect deal, a perfect investment. You think about the best stock or the best real estate deal or some big next hotshot startup opportunity. But what if that is the wrong game that you’re playing entirely?
[00:00:17] So if wealth isn’t really about investing, then what is it actually about? It is actually about the wealth time engine, and this is how normal people like you and me can hopefully create the wealth that we always dreamed of. I honestly wish we were taught all of this in school, but I had to learn it the hard way, so I’m breaking it all down for you step by step, starting right now.
[00:00:45] One thing is for certain: just because it’s tried and true doesn’t mean it’s working right now. So the big question is this: where can you learn what is working right now? The strategies, the tactics, the psychology, and the exact how-to. How to grow your business. How to blow up your personal brand and supercharge your personal growth.
[00:01:07] That is the question, and this podcast will give you the answer. My name is Sharan Srivatsaa, and welcome to Business School.
[00:01:20] You’ve been taught that building wealth is about finding the right investment, the perfect stock, or the best rate of return, but you’re playing the wrong game entirely. The real game isn’t about picking investments; it’s actually about time. Let me show you the three foundations we need to understand in order to build real wealth.
[00:01:37] I call this the Wealth Time Engine. The first foundation is math. To understand this part, you need to know what compounding is. Here is a simple formula that explains it. Money multiplied by time equals wealth, meaning when you combine money and time, you get wealth. So here’s what this looks like in practice.
[00:01:56] In the stock market, 10 specific days contain half your returns. You just don’t know which 10. If you’re not invested in the market on those days, you lose the lottery. The only way to win is to never leave, meaning it’s not about timing the market, it’s about time in the market. Here’s a different example.
[00:02:16] In 2007, Warren Buffett made a bet. He said that a simple index fund left alone for 10 years would outperform any hedge fund in the world. To give you some perspective, hedge funds are the most sophisticated financial shops in the world. They have armies of analysts, work from complex investment strategies, and are constantly trading.
[00:02:35] They do whatever it takes to make more money. The results 10 years later was that the S&P returned 85% and the hedge funds just averaged 22%. Buffett has been proving the same point since 1965. Berkshire Hathaway compounded at 19.9% annually for almost 60 years by doing one thing: buying quality companies and holding them forever.
[00:03:00] By the way, this works for real estate, too. When I first got into real estate, I became a flipper, meaning I would get the deal, I would rehab the property, I would sell it, I would take the profit, and I would move on to the next one. Over five years, I flipped about 100 homes and made good money. At the same time, my friend did something completely different.
[00:03:17] He started with one single family property. A couple years later, he bought a fourplex, which is four units. He waited a little longer, pulled some money out of it, and he bought a 20-unit complex. He never flipped anything. He just held them, refinanced them when the time was right, and pulled money out, and bought more of them.
[00:03:33] At the end of those five years, I had flipped 100-plus homes, and he owned 20 units. His net worth was five times that of mine. The lesson for me here was that while I was chasing these quick returns, he was using time as his business partner. So here’s what this means for you. Stop asking, “What’s the best investment right now?”
[00:03:54] Start asking, “What’s a good investment I can hold for the next 10, 20, or even 30 years?” Let me give you a simple framework. I call it the rule of three decades. Here’s how it works. Decade one, build a war chest, meaning earn more and spend less. Decade two, let it compound, meaning don’t touch it. And decade three, live off of 4%.
[00:04:14] So you take your annual spending multiplied by 25, and that is your financial freedom number. Let’s say you spend $100,000 a year, then your number is $2.5 million. At $2.5 million invested, you can withdraw 4% every year, and you’d theoretically never run out. There are three things that control your freedom number.
[00:04:34] Number one, how much money you make. Number two- How much money you spend? And number three, how long you leave it alone. And the longer you leave it alone, the more it grows. The second foundation is habits. This part of the engine is made up of three parts. Number one, the lifestyle tax. Number two, social pressure.
[00:04:54] And number three, bad investments. First habit is the lifestyle tax, and here’s what that looks like in real life. When I got into entrepreneurship, I made no money, so my wife and I agreed to something simple: to live off one income, mainly because we had no choice. So her income at that time paid for our baseline lifestyle, then to allow me to hit the home runs.
[00:05:15] The best part is this Even after we hit the home runs multiple times, we never changed that model. We lived off of the same fixed expenses for 14 years. And because we separated those two buckets, we’ve been able to compound our investments without any breaks. But here’s what most people do. They earn more, so they spend more.
[00:05:35] Their lifestyle expands with their paycheck, and suddenly, there’s not anything left to invest. Let me show you how crazy this gets. Take a high earner making $500,000 a year. Let’s say they’re saving 5% of their income. That’s $25,000 a year going into investments. Now, take someone earning less at $150,000 a year, and let’s say they save 35% a year.
[00:06:00] That’s $52,500 a year going into investments. The person making three times less is investing two times more, and after 20 years at 7%, guess who’s wealthier? The person making three times less money. That’s crazy, right? The second habit is something you need to avoid. When you’re making money, it’s common that your lifestyle expenses rise with your income.
[00:06:24] But let me tell you about when the income train suddenly stops. Mike Tyson made over $400 million in his career. His lifestyle rose to match that income, with houses and cars and tigers and an entourage. Then the income stopped, but the lifestyle didn’t. In 2003, he filed for bankruptcy, owing $23 million.
[00:06:45] The problem wasn’t that he made $400 million. The problem was that his lifestyle expenses never stopped expanding. He was so worried about his status and trying to keep up his appearance that he had no buffer between his income and his spending. So when the income dried up, there was really nothing left.
[00:07:03] You can even see this with NFL players. 78% are in similar circumstances within just two years of leaving the league. They made a high income for three to five years, their lifestyle rose to match it, and then the income stopped. But they kept spending at that level, so they went broke. The pattern is always the same: high income, zero habits around the spending, lifestyle keeps expanding until there’s nothing left.
[00:07:28] The truth is, you are financially responsible for the decisions you make. It’s not about your income. It’s about whether you protect the buffer or let your lifestyle overwhelm you. Let me share a story about Ronald Read. He was a janitor from Vermont. He drove a used car, he bought his own firewood, and he clipped coupons.
[00:07:45] And when he died in 2014, his estate was worth $8 million. And here’s the part that floors me. He gave most of it to his local library and hospital. People who’d even known him for decades had no idea that he had that much money. It was the same market everyone had access to. He had just bought shares of blue-chip American companies that he understood, and he simply never sold them.
[00:08:10] Now, I’m not asking you to clip coupons or drive a used car. I explain that to make a point about his discipline. You should do whatever makes you happy, but you have to understand that there’s a trade-off. Wealth is the gap between your income and your ego multiplied by time. Ron Read just had a very small ego and a very long time to make compounding work for him.
[00:08:30] The third habit is bad investments. Most people are afraid of making bad investments. They don’t want to invest in the wrong thing, or maybe they just get excited by the next big stock. The real problem is that they don’t know how to make a decision. You see things on the news, or you hear about what your friends are doing, and without a system, you either freeze up or you chase whatever sounds good in the moment.
[00:08:50] The reason you feel like you might make a bad investment is because you don’t have a filter for choosing a good one. There are two ways to build that filter. The first is investment rationale. If you’re already invested in something, you can build a rule for yourself, something like, “I don’t touch my investments for 90 days after the market has dropped 20%,” because in the last 50 years, it has always made 40% or more and made double the money.
[00:09:15] The rationale in this case, knowing that it is grounded in the last 50 years back test, is what makes this rule real for you. The second is the investment X-ray. When you’re evaluating a new investment, you run it through a checklist. The investment X-ray looks at four dimensions and gives you a score out of 25 for each one.
[00:09:34] Number one, capital preservation, number two, tax efficiency, number three, growth, and number four, yield. Both of these filters are just tools to help you avoid bad investments, but if you want to keep your habits in check, you need to know your wealth buffer. So take what you earn, subtract what you spend, and that number expressed as a percentage of your income is your wealth buffer.
[00:09:54] So if you make $10,000 a month and you spend $7,000, your buffer is $3,000. That’s 30%. Under 20%, your lifestyle is good. Anything over 30%, compounding starts to work faster for you. The third foundation is biology. This is your internal wiring that makes you chase shiny things and pull your money out too early.
[00:10:12] Even with perfect math and solid habits, your brain can still trick you. This is biology. In fact, this is one of the most researched fields of neuroscience. Your brain has a fear center called the amygdala. When it detects a threat, it hijacks your entire nervous system. It overrides logic, it overrides reason, and it forces you into fight or flight.
[00:10:33] This is the reason why you have people panic-selling and pull their money out too early. And what’s crazy is that the financial markets are professionally designed to trigger this response. It’s like a casino where Wall Street is the house and all the investors are just the gamblers. Take a look at the stock charts or financial news.
[00:10:50] They put the numbers in red, and so your brain associates red with danger, with blood, with stop signs. Even the sounds are borrowed from emergencies, so your nervous system can never tell the difference between a market dip or a fire alarm. Or take the headlines that you read. The language is engineered to trigger fear and not help you make decisions.
[00:11:10] Have you ever wondered why it’s like this? It’s because financial media isn’t designed to help you invest; it’s designed to keep you watching, and fear is the most reliable way to do that. But there’s another layer to this. It’s called loss aversion. Behavioral economists have even documented it, and there are hundreds of books on this topic.
[00:11:31] It’s when the pain of loss hits you twice as hard as the joy of a similar gain, which means a $10,000 loss hurts twice as much as a $10,000 gain feels like. So your brain is wired to avoid that pain at all costs, and in a market dip, that wiring screams out to you to sell. But you need to recognize that this is your biology working against you.
[00:11:56] The best investors recognize this feeling and have learned to treat it as information, rather than letting their fear response dictate their actions. Warren Buffett once said, “Be greedy when others are fearful.” And in the global financial crisis in September 2008, he was doing just that. He did the opposite of what fear was telling him to do.
[00:12:16] He invested $5 billion into Goldman Sachs, he invested 3 billion into GE, and he wrote an op-ed in The New York Times titled, Buy American. I Am. While everyone else was selling, he was buying, and he even told the world about it in The New York Times op-ed. I was even working at Goldman Sachs as all of this was happening.
[00:12:35] So here’s what you really need to understand. The concept of fear and greed is so interlinked that we actually have the CNN Fear and Greed Index. When people are curious about when to buy or when to sell, we have an index to show that. So here’s the difference between people who build wealth and people who chase it.
[00:12:52] Most people are focused on short-term wins. They’re looking at quarterly metrics and trying to beat the market every three months, and then they try to stack those wins on each other. It sounds like a good idea to start, but it actually doesn’t work. Every time you move money, you pay taxes and fees. Think of taxes and fees as a toll booth on a highway.
[00:13:12] Every exit and re-entry is another toll booth on the highway to Compounding City. The more you trade, the more tolls you pay. The more tolls you pay, the less time and money actually has to compound. Time in the market beats timing the market. I learned this the hard way with my own funds. For the first five years, we barely beat the S&P 500.
[00:13:34] Then, we completely changed our time horizon. Instead of a five-year time horizon, we asked, “What if we held for 100 years?” Everything changed. We stopped looking for the next opportunity, and we became permanent owners, and that’s when compounding took over for us, and we had our 10 best years ever, just by changing our time horizon.
[00:13:55] Warren Buffett says his ideal holding period is forever. But forever is [00:14:00] the only time horizon that eliminates the trigger for your fear response entirely. When you’ve already decided that you’re never going to sell, the red numbers and the headlines just don’t matter. You can just ignore them and let time do its job.
[00:14:14] So here’s the method to help you beat the fear response. Let’s go back to the investment rationale. Let me break down exactly how to use it. Before you invest in anything, answer four questions. Number one, why do I own this? Meaning, what is your plan? Why this asset or this company? What do you understand about it that makes you so confident to hold it for a long period of time?
[00:14:35] Number two, what am I expecting to happen? Are you expecting the revenue to grow? Are you expecting market expansion? Maybe a dividend. I want you to be specific. Number three, how long am I holding this? Meaning, what is your time horizon? Is it five years or 10 years, or 20 years? Number four, when would I sell?
[00:14:53] Definitely not when you’re scared, definitely not when the price drops. When would you actually exit this position? What would have to change about your plan for you to sell? You should even build rules around this, something like, “I don’t touch my investments for 90 days after the market drops 20%.” In the last 50 years, every time the market has dropped 20%, it’s recovered 40% or more and doubled the money.
[00:15:15] The rule is based on data, and when fear is overwhelming the market and everything is screaming at you to sell, that rule becomes your default behavior. If you want to build real wealth, you need to master time, and the only way to master time is to master the three foundations of the Wealth Time Engine.
[00:15:39] Hey, this is Sharan. I have an awesome free gift for you just for listening to the podcast. As you may know, I’ve got a chance to build two billion-dollar companies the hard way. So if you like this episode, you will love getting the exact playbooks from those wins. It’s on my Substack, called My Next Billion. It has the exact frameworks I wish someone had given me when I was figuring it all out. Now you get the real lessons from the trenches as I go for a three-peat and build the next billion. So everything’s free at mynextbillion.com. Please check it out at mynextbillion.com.