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You can work harder, earn more, and cut small expenses, but still struggle to build wealth. The reason? Four silent money monsters are quietly stealing your money without you even realizing it.
In this episode, Sharran provides a simple framework for identifying and eliminating the four biggest obstacles to your financial freedom. Because, of course, wealth is often lost through overlooked forces working against you.
Sharran explains why idle cash loses purchasing power, why having a tax strategy can dramatically impact wealth building, and how emotional decisions can interrupt the power of long-term investing. He also reveals how seemingly small investment fees can compound into millions of dollars lost over time. A key takeaway is that building wealth is not always about making more; it is about keeping more.
“Sometimes wealth creation is not about making more—it’s actually about losing less.”
~Sharran Srivatsaa
Timestamps:
00:00 – Introduction
01:31 – Inflation and the hidden loss of purchasing power
06:32 – Taxes and how they destroy wealth creation
14:22 – Interruption and the danger of breaking your investment plan
17:49 – Fees and the hidden cost of investment expenses
22:06 – Recap: The four money monsters
Resources:
– 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] I bet you’re working really hard right now and still sometimes thinking, “Man, why am I not making it? Is it because I am spending too much money or that I probably need a better job?” Well, the fact is that it doesn’t matter if you get a new high-paying job. It doesn’t matter if you, uh, drink one cup of Starbucks less.
[00:00:19] It doesn’t matter because there are actually four silent money monsters, four things that are actually taking away and stealing your money, in fact. And the crazy part is no one ever tells us a- about it at all. There’s no class that teaches us at school. Nobody explains this to us, and they just say, “Hey, work hard, save some money, get a good job, and it will all be okay.”
[00:00:43] Hey, uh, if you don’t know me, my name is Sharran Srivatsaa. I have had a chance to build two billion-dollar businesses, one in the private market and one publicly traded on the NASDAQ. I’ve invested in 100-plus companies. I was an investment banker at Goldman Sachs and at Credit Suisse. I’m also a diehard Anaheim Ducks fan, and today I am the CEO of acquisition.com, where I work with my partners Alex and Leila Hormozi, to build what I like to call the next billion.
[00:01:06] But the reason I’m sharing this with you is once I realized why Everything was slowing down from a money perspective. It put all of these, these, all of these issues in perspective for me. It was not about not having the coffee, it was not about trying to get a new job. I just realized if I could just control these four things, everything would change.
[00:01:26] So I’m gonna tell you exactly what these four money monsters are and how you can avoid them. So here is money monster number one, and that is inflation. Well, what is inflation? Inflation is a silent tax on the growth of the economy, and most people don’t even know that it exists. So let me give you an example of how it may actually kind of show up in your life, right?
[00:01:46] Let’s assume you have $10,000 in your bank account right now, and that it was, it stayed in your bank account for five years. Well, in five years, that $10,000 is probably going to be able to buy less than what it could have five years ago. I, I will tell you actually a crazier story. Um, I’ve, I drink the same exact Starbucks order for the last 10 years, and I remember during COVID, during 2000, uh, and 20- and, and 2020, this exact drink cost, uh, $2.85.
[00:02:20] Well, today it costs $5.75, and that is in under six years. Now, how do I know this? Because I order the same drink on the app every single morning. In under six years, right, you have more than a double in the price of something that we all drink, that we all work with day to day. What is that? That is inflation.
[00:02:41] And so when you have the same amount of money that is sitting in your checking account and you don’t do something with it, then it is naturally losing value every single day. This means that every dollar needs a job. If you walked into your office and you had 10 employees, and those 10 employees were just kicking their feet up and doing nothing, well, what would happen?
[00:02:58] Nothing, right? You’d be really frustrated. That’s exactly what’s happening with your money as well. So if your money just sat in a checking account, you can be darn sure that its value is, is being reduced. Now, why am I telling you this? I’m telling you this because you have, you and I have no choice but to at least find a way to let our cash keep pace with inflation.
[00:03:20] Because that $10,000, if it just sits in that checking account and is making, checking or savings account, and it’s making nothing less than .01%, then in two, three, five years you put more savings into it, it loses money every single day. So the least you can do is try to do, is try to get it into a high-yield savings account.
[00:03:40] If you just did that one thing and, and you did nothing else, the least it happens, it actually keeps pace with inflation. Just keeps pace. It doesn’t beat it, it just keeps pace with it. So you may end up in five years with a little bit more than $10,000, but the equivalent purchasing power of that $10,000 is exactly the same.
[00:03:58] So if you did nothing else and you were just gonna quit this video right now, please do me one favor. Don’t put all your cash into a random savings account. Make sure it’s at least in a high-yield savings account. Now, if you don’t have access to a high-yield savings account, but you have access to a brokerage account, I want to introduce you to this concept called a Treasury Inflated Protection Security.
[00:04:19] Treasury Inflation Protection Security, TIPS. You’re welcome to Google it, and, and I … Essentially this is what it means. Uh, TIPS is a is a bond. It’s a security that’s offered by the US government. Most Treasuries that are offered by the government have a fixed rate of return. They say, “Hey, uh, here is a 10-year Treasury.
[00:04:36] It pays you four and a half percent,” meaning it pays you four and a half percent of interest every year for, for a 10-year maturity. Well, TIPS is a little different. How TIPS works is that it’s, the interest rate on TIPS is actually benchmarked to something called CPI, which is the Consumer Price Index, and the Consumer Price Index is just a made-up basket of goods and services, mainly goods, that most people use, bread, milk, whatever else.
[00:05:02] I’m not sure. And they track the price of that basket of goods over time, and if it’s worth $100, then it’s worth $103. That’s what it costs. Now, you’ve seen a 3% growth in inflation, right? So the, this, the TIPS security is ac- Their interest rate is actually tied to the CPI, which means that if you invest in TIPS, you don’t have to worry about keeping pace with inflation.
[00:05:29] It automatically adjusts and keeps your money in, in place and at pace with inflation. So if I were, if I were doing this today and I just wanted to make sure that I did not lose any money to inflation, I would take the $10,000 that I had, and I would put it in the TIPS security, and then I know that whenever I pull it out, it will be, it would have kept pace theoretically with inflation.
[00:05:50] Now, how you get access to TIPS? Well, you can buy it directly from the US government. You can go to treasury.gov, I believe. That, if that’s a little complex, there is actually a ETF called TIP, and if you buy that, it actually does the same exact thing. It, it, it mimics the, how the TIPS security works, and it allows you to keep pace with inflation.
[00:06:12] In fact, I own it right now. I, I use the TIPS security for a combination of how I manage my cash overall so that I don’t have this single monster eating away at my finances. Right, so, uh, money monster number one is inflation. Okay, what’s money monster number two? Money monster number two is taxes. Now, taxes are the number one drag on wealth creation.
[00:06:39] If you did nothing else, your number one investment strategy should ha- should be to have a tax strategy because what is a tax? A tax is this partnership agreement that you have signed with the government overall. Now, if you live in the US, that is, taxes are a partnership agreement that you have signed with the US government.
[00:06:57] It i- the tax code has 70,000 pages or whatever it has, and you’ve never read the entire tax code. You have no idea what it is. But the tax- your taxes are collected at source. If you don’t actually pay your taxes, they will do whatever it takes to collect it. They will sell your house, they’ll sell your car, they’ll garner your wages.
[00:07:14] They will garner your wages. They will talk to your employer and say, “Hey, this Sharran guy has not paid his taxes. You need to pay it at source. You can’t even pay him until he pays our taxes for us.” That’s called wage garnishment. They will find a way to get the taxes. So it’s important for us to figure out if you can actually have a tax strategy.
[00:07:30] Now, what is a tax strategy? Of the entire US tax code Less than 1% of it is related to paying taxes. 99% of the tax code is actually built on incentives. It tells you how to not pay taxes, and that is what I would love for you and me to learn. Because if I told you that there was a partnership agreement that you had with the US government that allowed you to not pay taxes, and you just had to familiarize yourself with it, and heck, 99% of that document was related to not paying the taxes, I think you and I would pay attention to that.
[00:08:06] But the fact is, no one’s taught us how to do that, and I think that’s really, really important. And if you just, if you did nothing else, and you just saved on taxes, and you just got the 30% back or, or whatever it may be, you win. You don’t… There’s no way you can create a 30% net investment in any given year.
[00:08:23] You get it right away. Additionally, if you actually get your taxes back, and you got, you got every dollar that you get back, it’s a dollar in your pocket. To, to go get some- an investment to work, you have to take that investment, pay taxes on it, and then go invest it somewhere else. In this case, you already have it, which is insane.
[00:08:40] So the number one st- the first strategy of investing is to actually have a tax strategy. Now, uh, you may say, “Well, Sharran, it feels really complex. What do I do?” Et cetera. Well, let me give you a couple ideas. The first idea on a tax strategy is that if you live and work in the gig, gig economy, and where you are living is, uh, not relevant, so you don’t have to go to a, a job day to day where you have to live in a particular city, then it may be worth considering whether it’s more beneficial to live in a tax efficient state, like the state of Florida, or the state of Nevada, or the state of Texas have tax efficiency.
[00:09:16] They don’t have any state taxes, so you instantly get a break. Well, look, I, I mean, I live in the state of California. I’m driving in Southern California right now in, in greater Laguna Beach. Well, I pay an extra 13% in taxes because it’s 72 degrees, and my wife and children love living here, so I just have to make more money.
[00:09:32] Maybe you want to do that, too, and that’s okay. However, like sometimes you should take the easy button, and maybe where you live is important. Second is there are some tax advantaged accounts where you put your money. I call this asset location. It’s not about allocation as to, uh, stocks and bonds and mutual funds.
[00:09:47] It’s asset location. Where do you actually put your money? So if you take, for example, a 401plan. I’m not advising that you do that. You should talk to your financial advisor, however. But if you work with an employer that provides a match to your 401plan, that makes sense to take the match because they’re essentially telling you, “Hey, for every dollar you put in here, we’re gonna contribute some or all of it for you for free,” and in a tax, in a tax efficient account.
[00:10:11] That’s a really, really good thing, right? That’s number two. If you start to find the different versions of how you can actually save in taxes, you’ll start to realize that it’s not just income taxes. There is state taxes. There is long and short-term capital gains. Let me tell you about this one more, which is the idea that if you actually buy a security Right?
[00:10:34] And holding onto that security, like a stock. You just make a determination that, hey, if I don’t need that money, I’m at least gonna hold onto it for 12 months. Well, if you bought Apple stock and you held onto it for 12 months and one day, then when you sold it, you now have capital gains. It s- sounds really simple from a treatment perspective, but that is the difference between ordinary income, which is, for a lot of people, 37%, or capital gains, which is 15 to 20%.
[00:10:56] You automatically make twice the amount of money from a savings perspective just by holding onto a security for 12-plus months. Now, why is the case? This is what I wanna explain to you. The s- the reason is that the tax code incentivizes certain behavior. It does not penalize income. If you just realize that the tax code is just an incentive machine, that the US government has put policies in place, and every other government in the world has put policies in place where they’re like, “Hey, we’re gonna give somebody a deduction if they do this activity, if they invest in this low-income housing, if they put money in oil and natural gas, if they do R&D development, if they buy real estate.”
[00:11:37] They do that to actually spur the economy. And because you spur the economy, because you’re doing the job that the government should do but the g- government can’t do, they give you a tax break for doing it. And it’s significantly more efficient for the government to be able to do that as opposed to do it themselves, ’cause they don’t have the capital to do it.
[00:11:52] The tax code is an incentive mechanism, and if you know the incentives, you can play right into that and get the benefits that you need. The worst thing, the… Did you know the worst tax treatment is for people who work their face off? The worst tax treatment is for people who get a salary. The worst tax treatment is for people who wake up every morning and get a salary and a bonus every year.
[00:12:15] It’s the worst tax treatment. That’s why the tax code incentivizes you to start a business and invest in real estate and, um, you know, uh, put money down for R&D, et cetera. Just knowing that allows you to figure out how you can avoid the money monster number two, which is taxes. Here’s money monster number three.
[00:12:33] Um, by the way, before I jump away from taxes, if your CPA is not talking to you about tax planning and only thing that your CPA does is file your tax return, they, they, they call that tax preparing, then that’s what your CPA is. That’s what your accountant is. They are a tax preparer. They do compliance.
[00:12:57] They just make sure that you turn in your, uh, tax returns on time, and, uh, that’s their job. If you want- To actually get tax strategy and tax advice, you need to go find a tax strategist. This distinction was really important to me. I thought that my CPA, my tax advisor, my tax preparer was my answer. That’s when I…
[00:13:18] But then when I talked to my first mentor, who’s a multimillionaire, he said to me, he’s like, “Your CPA prepares your taxes. He’s a tax preparer. You need to go find a tax strategist, and your entire conversation needs to be with this person on the ways that you can reduce your strategy. And then you have your tax strategist pitch these tax strategies to your CPA.”
[00:13:36] It’s not your job. It’s the tax strategist’s job, and it’s the tax strategist’s job to actually figure out how to earn their fee to, and pay you less money. And the tax strategists do this all day long. Their entire job is to reduce taxes. So they spend, they figure out, they read the tax code. They have all the ideas, and they’re like, “Oh, here’s Sharran, here’s the situation.
[00:13:52] If we make this thing, and if we do, know the law and follow the rules and document the truth, he will get this benefit. Let me actually present a memo to his tax preparer so that he can go do that.” It is not your job to pitch your CPA on what you should do. You will never win that battle. You don’t know more than him or her.
[00:14:09] But if you have a tax strategist that can do that, you will instantly be able to drop more money to the bottom line, thereby creating better financial security for yourself. Here’s number three. So number one was inflation. Number two was taxes. Monster number three, this is the silent monster that no one knows about, and that is interruption.
[00:14:29] Now, what is interruption? When you invest in something, the benefit of that investment is for it to stay and grow. Now, uh, interruption is just like everything else. Now, I’ll give you an example that is not investment-related. Let’s say you were wanting to get six-pack abs, the greatest thing that everybody wants, six-pack abs.
[00:14:51] Well, would you continuously do it where you, uh, ate right, slept well, got exercise, got a trainer, or would you do it for three days, and then you would quit for five? You’d do it for eight days, then you’d quit for 10. What would you do? You would do it consistently. Well, investing is just the same. The longer you have an investment horizon, the better you win.
[00:15:11] Let me give you an example from a stat. People talk about the historical average of the S&P 500 investing in the market to be 10 to 11%. That’s true, especially if you ha- invested in it from, you know, for a 25 to 30-year period. You can look up my numbers on this. It, of a 25 to 30-year period, it kind of averages around 10-ish to 11%.
[00:15:32] Depending on what, 30 years, right? However, but for people that have invested during that time, their return has been 3 to 4%. Why? Because most people, when are unable to have their behavior tied to this idea of investing even when that is the strategy. They’re like, “Hey, markets went up. Uh, I, I, I’m, I’m…
[00:15:57] Everyone’s greedy, I should take my money out. Oh, markets went down, everything is down, I’ll just wait for it to come back up before I buy in.” Or, “Hey, I’m getting nervous, I need to buy this.” Or, “Man, I really want that Lambo, I should sell my stock to buy that Lambo.” You interrupt because you want a fancy purchase, you interrupt because your next-door neighbor told you that the, there’s an impending crash coming.
[00:16:15] You interrupt because you, you saw a headline. You interrupt because you saw a news article. And because of that, you interrupted the greatest machine that is working in your favor. What is the greatest machine that’s working in your f- favor? What is the greatest… Wh- what is the greatest thing that you have?
[00:16:31] That, from an investing perspective. Your best investment partner is time. The number one partner in investing is time. And when you let time work, it actually works slowly. It works slowly in the beginning and fast at the end. So you gotta let it, you gotta get into the fast portion. And the only way you get into the end is if you don’t interrupt it.
[00:16:49] Interruption crushes long-term returns, and it’s almost to the point of 60% down when if you just let the money stay and build and grow overall. By the way, if you have children, please teach them the idea that once you think about long-term investing, to do whatever it takes to never pull the money out.
[00:17:07] I’ll actually do another episode on how… What if you, what if you have a need, right? Sometimes people are like, “Hey, I, I, I put money aside and I’m investing in a long-term portfolio for a long amount of time. I, I have a short-term need. What do I do? I feel like I have to sell my securities.” Well, I’ll talk about this another episode to give you more detail on how to do this.
[00:17:25] But you have the ability to borrow against your portfolio without actually having to sell that stock and interrupt the growth of that portfolio. And when you do that, you still get your liquidity today, but you still don’t interrupt the growth of the portfolio overall. So money monster number three is interruption because of stress, behavior, market news headlines, et cetera.
[00:17:49] And here’s money monster number four, which are fees I’m telling you this because I was a banker at Goldman Sachs. I charged fees, and one of the number one reasons why I quit the financial services industry and became an entrepreneur was I just could not stomach charging fees to my clients because their…
[00:18:14] I saw how much it affected their kinda long-term, uh, impact on, on their portfolio. I’ll give you a crazy number example. Let’s say you had a million dollars, and you invested it over, um, a, I think it was like a 15-year period, a 15 or 20-year period And say it was in the S&P 500 and it grew 10% a year, right?
[00:18:37] Over that period, you roughly will have, call it, six and a half-ish million dollars at the end. Well, the crazy part is, if you had the same exact portfolio, and instead of getting a 10% return, you just got a 9% return, 1% less, 1% less, right? And that’s a normal fee. 1% of assets under management is a normal fee.
[00:18:57] So the same portfolio got you six and a half million dollars. The same portfolio with 1% less gets you how much less? How much less do you think? Well, I’ll tell you. In the same period, a 1% fee equals over a million dollars. Equals over a million dollars. That is crazy. That is almost your enti- That is more than your entire principal in this process, and we don’t notice the fees that we charge on investments because the financial services industry, h- hello, me, me having done that one time, has an am- does an amazing job of masking that process, and I think we should ask for our fees.
[00:19:37] Now, I’ll give you a crazy example that this may be the pro tip of the video, which is one of my favorite ETFs to invest in is called the Q’s, QQQ. QQQ is a technology-forward ETF that invests in technology companies, and it’s a great way to get exposure to technology of the future. Now, everybody invests in QQQ.
[00:19:59] Everybody… Oh, I have a lot of friends who invest in QQQ. I invest in QQQ until I realized, uh, one day, I was like, “I cu- I’m curious what the fee structure is on QQQ.” And while it’s not much, because it’s just an exchange-traded fund, I realized that it had a fee structure that I was surprised by. And then I did some research, and I realized that there was another fund called the QQQM, which was the exact same QQQ ETF, the exact same one.
[00:20:26] But the M was for long-term investors, and the fee on the QQQM, the same exact structure, was 75% less So you can literally get the same exposure, especially if you’re not gonna sell your securities, and you would pay 75% less in fees. And you… It might sound not like a lot, but over time when you hold it, in this case, it was a million-plus dollars, right, which is crazy.
[00:20:55] So, um, I think it’s really important to ask your advisors or look at the fee structure as to how, uh, how the fees work. As a financial advisor, I wanna tell you, as a former financial advisor- Uh-huh … I wanna tell you. I’m a professional investor now. I have no problem talking about fees because I’m a professional investor now, and I put my money where my mouth is.
[00:21:15] But if you’re talking to a financial advisor, it’s hard. It, it probably feels uncomfortable for you to ask, “Hey, what are your fees?” Right? It’s, it’s uncomfortable. What I… My recommendation on how to ask that question is, um, I would say, “Hey, Sharran, I’m super excited to work with you. I want you to make a lot of money.
[00:21:33] Could you kinda explain to me, help me understand how everybody gets paid?” How I get paid? How do you get paid? How do the funds get paid? Like, can you explain to me how everybody gets paid? Because net-net, what you showed me, I love. Could you kind of explain to me, help me understand how everybody gets paid?
[00:21:49] And that is their fiduciary responsibility to break down for you how everybody gets paid. And when you see how everybody gets paid, at least you know where everything sits, how everything works, and you can make a decision that is good for you because you just wanna make good decisions based on good information overall.
[00:22:06] Four money monsters, and if you just sequentially start to eliminate them, I think you start to get wealthy without actually doing, doing much. Number one, inflation. Make sure you, uh, don’t let your money sit idle in your, in your random accounts. Every dollar needs a job. Number two, taxes. Taxes are the number one drag on wealth creation.
[00:22:23] Try to not just have tax prepared, but you have to have tax strategies. Number three, interruption. When you pick a long-term security, let it in- don’t, don’t interrupt it. I, I’ll, I’ll talk about borrowing another time. And number four, fees. When you talk to a financial advisor or you look up a investment, just look up what fees there are, right?
[00:22:39] And that will allow you and give you a sense of understanding what it does overall. Sometimes wealth creation is not about making more. It’s actually about losing less, because it’s not what you make, it’s what you keep