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hello and welcome to penny investor where we teach
you how to invest with pennies so today we'll be
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talking about what is financial independence why
a house is not an investment how to pay less taxes
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while you're losing money when putting in a bank
and how to become financially independent today so
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open your ears because i'm about to open your eyes
so that you can open some doors in your life okay
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firstly what is financial
freedom or financial independence
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financial independence is the status of having
enough income to pay one's living expenses
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for the rest of one's life without having
to be employed or dependent on others
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now notice here that it doesn't say enough
money or enough savings what it says is
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enough income meaning what the return in money
from one's business labor or capital invested
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especially on a regular basis here's where
it gets interesting according to m1 finance
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an investment is a purchase that is completed
with money that has a potential to produce income
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or a profit things that naturally lose value over
time and with use are not investments for example
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if you buy just a new coat to keep you warm for
the winter you didn't invest in it you bought it
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an oven for better cookies at night is bought
and a new car definitely isn't an investment
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in other words if it is not putting money
straight into your pocket each month then it
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is not an investment some examples of investments
are a share of a company also known as a stock
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a rental property and a business that grows
in value what most people don't realize though
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is that buying a house for yourself to live
in even if the house appreciates meaning
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increases in value is not an investment it's not
making you money each month quite the opposite
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anything that takes money out of your pocket
is called a liability the first thing that you
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must be able to do for financial independence is
recognize the difference between an investment
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and a liability this will save you a lot of money
in the long run what are the benefits of financial
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independence it allows you more freedom of travel
a wider selection of choices in your day-to-day
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life more flexible work hours going overseas to
visit family it reduces stress and the negative
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impact of unforeseen events it reduces your
taxes significantly and it keeps your earnings
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valuable i'll come back to the last point but
first many people do not understand why taxes
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are reduced for a business and taxes are
minimal for money and through investments
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let's start with investments does it make sense
to keep paying more for what you already own
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no but jobs does it make sense to keep paying
for what you take from someone else's pocket
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when they could have multiplied that and
returned it with interest through an investment
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definitely this highlights a difference
between earning from a job versus earning
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from an investment since companies taxes can be
reduced as employees pay high taxes but mainly
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because companies use leverage to earn money also
known as good debt if you want a video on leverage
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drop a comment down below similarly employees
work for money business owners make money for
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themselves and others and investment or asset
holders make money work for them however in all
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three the higher the risk the more education
needed and the higher the potential reward
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employees pay high taxes since they
work hard to get money for themselves
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whereas businesses get taxed less because
their owners worked hard to set up something
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that can pay everyone else e.g their workers by
taxes are reduced with serving the public in mass
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if it is a food catering company like
mcdonald's who are actually in the real
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estate sector they reduce taxes because they
are feeding the public real estate companies
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provide housing and multinational
companies provide employment for many
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injecting funds into the local economies
franchises and preventing homelessness
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governments reduce these companies taxes
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since it reduces strain and cost on
government-funded sectors such as social housing
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finally on to the point about
keeping earnings valuable
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as you probably know physical money's value
used to be based on gold abundance in a country
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how much gold that country had determined
the value of the country's currency
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but also controlled the number of
banknotes and coins in circulation
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during this time you could easily exchange
between gold and dollars this was until 1971 when
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president Nixon of the us removed the dollar from
the gold standard this meant that the dollar's
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value no longer held a direct gold conversion
and in fact they were held to no value at all
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since all global currencies had their currency
dependent on the value of the dollar at the time
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they had no direct gold conversion value either
this was the first global introduction of fiat
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currency meaning that the physical money's
value was now controlled by the federal reserve
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along with the government with
no real value to compare to
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the more money printed from that moment the less
value it received reducing is purchasing power
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the process of value reduction of currency is
known as inflation according to investopedia.com
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I was shocked to hear that
40 of us dollars in existence
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were printed in the last 12 months according
to techstartups.com let me repeat that 40 of
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us dollars in existence were printed in the
last 12 months so what does this mean for you
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your money is drastically losing value
when holding its cash in a bank account
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you could say it has a practically negative
interest rate meaning the more money you store
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there the more money you lose this is why it is
a wise choice to put your money in investments
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that actually rise in value compared to losing
the value of the money you worked hard to earn
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in a nine to five job it also means that for
most a nine to five job will not be enough by
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itself to achieve the financial independence that
everyone seeks to have don't worry though teaching
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you how to invest with little is the purpose of
this channel so stay tuned for the next video
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remember to work hard and consistently educate
yourself thank you for watching you made it to
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the end so i know you liked the video let me know
down below by turning the gray button blue in the
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red button gray and if you want to see why you
should and how you can invest in penny stocks then
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turn post notifications on because those are the
topics of the next two videos now on this channel
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you're gonna get education and inspiration the
quote of this video is by yay shoot for the stars
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so if you fool you land on a clown make sure
you always aim high in life whatever you do
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the bible verse of the video is taken from
Proverbs 10 verse 4 and it reads lazy hands make
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for poverty but diligent hands bring wealth and
this is something you're going to have to apply
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in all aspects of your life you want to do well
whether you're in school you're working or you're
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investing I've been the Penny Investor stay safe
stay thankful and I'll see you in the next one
10437
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