In a corollary to my “Learn the Language” post, I’d like to explore the Ultimate example of learning the language in order to set yourself free, pursue your highest and greatest purpose, or simply fritter away your time in the most enjoyable fashion.

Naval Ravikant is the Seymour of personal finance. Instead of telling his imbecile wife to learn German to read a dumb book of poems, Naval tells you, the imbecile wage worker, to get rich.

The typical American is set to grind for approximately 50 years, dating from high school graduation. An apprentice will start at 18 and retire at 67 ½, a student will acquire debt until age 22 and retire at 67 ½ (or never if you’re a millennial and your social security is being garnished to pay your debt burden), and a wage worker will be on food stamps, Medicaid, and other government safety net programs until they die.

Working until 67 ½ sounds like death to me. If I’m already dead, why not take a chance on a better outcome? There are many options for achieving this, and those options depend on your skills, location, disposition, predilections, hobbies, etc. Naval has the blueprint and you need to provide the details.

Below, I’ve excerpted some of Naval’s tweets from his tweetstorm How to Get Rich. He also has a Youtube “podcast” that provides commentary on the tweetstorm.

“Wealth is having assets that earn while you sleep.”

This is Robert Kiyosaki 101. If you haven’t yet, read “Rich Dad, Poor Dad” and “The Cashflow Quadrant.”

Assets could be stocks, bonds, a business, real estate.  Naval’s interests and skills converged on tech, so he made money being involved in tech companies, and now, angel investing.

I have some stocks and bonds and am investing heavily in real estate. Why real estate? Time, leverage, and opportunity. Time: I bought a duplex at age 31. Without any extra payments I’ll own the house free and clear by age 61, 6 ½ years ahead of typical retirement. I’ve already beat the average American. Leverage: I had bad credit and basically no money. I took out a penalty-free IRA withdrawal to put a 3.5% down payment on a house worth $100,000, and the bank lent the rest. Nobody will give you that deal on any other asset. I basically acquired a $100,000 income producing asset using my previous employer’s 401k match. I arbitraged the system to give myself a worst-case scenario retirement date 6 ½ years ahead of schedule. Opportunity: Houses are affordable where I live. I can do sweat equity to add value and save on repair costs.

You have to perform a searching personal inventory of interests and skills to figure out what works for you. Naval leans hard towards tech and the infinite leverage of the internet. I agree with him. I’m just not good at it yet.

“Ignore people playing status games. They gain status by attacking people playing wealth creation games.”

Naval is great because he once was poor and now is rich, and he’s frank that being rich is better. Having money creates a baseline of happiness because you aren’t worried about basic things. People playing status games are often not wealthy and blame Wall Street, J.P. Morgan, and other bogeymen for their unhappiness.

I recently had a high school friend who’s now a Marxist tell me it was sad that I wanted to get rich by exploiting the labor class, apparently because I have rental properties. Communism and other similar ideologies set up false dichotomies wherein everything is struggle, power, and exploitation. Based on this, success and money are ALWAYS the result of cheating, harming somebody else, or being a piece of shit.

My personal experience refutes this Marxist determinism. I worked for five years as an underpaid teacher in the inner city via Teach for America. I lived the status game. My retirement plan was a Ponzi Scheme of a pension that required me to pay in 14% of my earnings. Seeing the inevitable doom of this situation, I bought a house in a fair, arms-length transaction for the price the buyer asked. I then used my own two hands and labor during evenings and weekends to fix the house while living there for two years. Marx never swung a hammer and neither have most of his adherents. I’m not surprised their facile worldview excludes uncoerced sweat equity. Real work requires creativity, gumption, and effort that doesn’t instantly get you likes on Instagram. Blaming Capitalism, Wall Street, “them,” or your landlord is easier than making more money.

Having spent five years teaching, I’m well aware of the unfair systems that often benefit the rich, and in fact agree with many arguments put forth by Team Status Games. What I won’t do is live in poverty, self-flagellate on social media, and shit on anybody with money in order to demonstrate my sympathy with The Movement, whatever it may be.

“You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain your financial freedom.”

Get it through your head that sitting in an office for 8 hours a day will not get you financial freedom. If you haven’t yet, go read Rich Dad, Poor Dad right now and come back.

Now that the light bulb has turned on, understand why equity is key. Equity in a business can 10,000x when it goes public. Now you’re a millionaire. Equity in a business pays you while you’re sitting at home. Equity in a business allows you to live a life of otium.

I’ve picked real estate investment as my “business.” It probably won’t 10,000x, but it fits my circumstances, as I’ve already said. With just one rental property on a 30-yr mortgage, my worst case retirement is 6 years earlier than the average American. With my current portfolio of 8 doors, my worst case retirement age is 40.

Many count on a 401k or IRA for their retirement financial freedom. This isn’t quite equity. By the time you are retired, your financial advisor will recommend you own a low-risk portfolio of bonds that pay a guaranteed return every year. The problem is, these bonds are typically 1-3%. If you saved 1 million, your bond will return $10,000-$30,000 per year. Not great. My worst real estate investments pay 10% cash on cash every month. With 1 million in real estate, I’d earn $100,000 to your $30,000. This income is then taxed very little because my CPA is a magician and the U.S. tax code is rigged for the wealthy, many of whom own real estate.

What if I rent out my time for $150/hour? Well, you’ll probably spend $135/hour and still wind up poor. The Millionaire Next Door does a great job of explaining the losing proposition of renting out your time, even when it’s for a lot of money. The authors provide a net worth metric and categorize individuals as Prodigious Acculumators of Wealth (PAWs) or Underaccumulators of Wealth (UAWs). Many doctors are UAWs because, despite having high salaries, they have equally high expenses. See Allen Iverson and M.C. Hammer. Renting out your time gives you a tremendous advantage, but every dollar over your initial $15/hr should be put into investments, businesses, or real estate until your passive income exceeds your active.

“The internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.”

Naval tweeted this roughly two years before COVID-19. Due to the lockdowns, we all learned that we actually can do nearly all white collar jobs from home. When forced to figure out Zoom calls, all of a sudden these corporate assholes that forced you to commute to the office realized you don’t need to. Soon, they’ll realize the twenty hours of meetings embedded in their forty hours of mandatory work are also horseshit and unnecessary. Once that cat’s out of the bag you’ll be able to make a living working twenty hours per week from your couch.

“Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now…Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.”

On the Joe Rogan Podcast, Naval described Rogan as an embodiment of this tweet. He started a podcast to make himself happy and talk to friends and now it has millions of listeners. More importantly, Rogan is by definition irreplaceable. His uniqueness magnifies his value. Rogan combined genuine curiosity with something creative that cannot be outsourced or automated.

I’d recommend two books that dovetail with this idea of specific knowledge: Mastery by Robert Greene and Range by David Epstein. Both books describe individuals who seem to meander aimlessly through careers, when in fact they are following a singular vision for their personal fulfillment. Joseph Campbell called this “following your bliss” and structured the Hero’s Journey around this quest. Money, then, is not the prize.

“When specific knowledge is taught, it’s through apprenticeships, not schools.”

Too many kids are going to college. I taught high school English for five years and we forced kids who hated school to buy into the college dream and get themselves into debt to graduate from a bad school, drop out after 2 years, or take 6 years to graduate after taking 2 years of remedial classes.

As a country, we’ve been shitting on the trades for too long. I don’t think Naval is specifically talking about the trades here, but they bear mentioning. The “dumb kids” are often the ones funneled into shop class in high school. This may be because they are actually dumb, in which case they will be a dumb carpenter also. Other times, a student may have ADD or be athletic and they want to be doing something active rather than sitting in a chair all day. This person, especially if athletically inclined, is the ideal candidate for an apprenticeship and will flourish in the trades.

Athletes typically have great muscle memory and are often kinesthetic learners. Put a hammer and drill in their hand and they will learn quickly and perform the job well. Sign them up for basic accounting, business, and entrepreneurship at the state or community college, and convince them to start a business by age 30. By age 40 they can step back and manage the process, collecting passive cash flow, or just live like an honorable gentleman off the labor of some other clowns who couldn’t get their entrepreneurial game right.

The United States real estate mortgage market is also rigged for the tradesperson to be financially independent through rental property ownership. Purchase a single family home with 3.5% down, live in it for one year, rehab it, refinance, move out and, buy another. Biggerpockets.com has ample resources to help make this happen.

By buying, rehabbing, and renting only 5 properties, starting at age 20, you can retire at age 50 and generate at least $40,000 of rental income. By providing your own sweat equity, you can outbid others on the purchase price, or simply save more money in the rehab phase.

In terms of macro trends for worker demand, there’s an affordable housing shortage, and at some point the country will need tradesmen and women to build those houses.  While U.S. population growth is slowing, it’s still projected to be net positive over the next 30 years, meaning people will still need places to live, and tradesmen will be in demand.

Lastly, but most interestingly, the decline in trades has coincided with a decline in unions, which tracks very closely a decline in wages taken home by the average American ( see chart below).

By becoming a tradesman, you’re reversing that trend line and putting the “fuck you” in “fuck you Wall Street.” You may even revitalize the fabled American middle class. By giving the common man more clout, our elected officials might be scared to bail out banks and overleveraged corporations in the next recession so we can pretend there’s at least a modicum of capitalism left in our system. With the re-manufacturization of America post-COVID-19, I expect there to be more opportunities for tradesman and unions as well.

I’d like to reiterate that tradesmen are not idiots. Just watch This Old House or read Fine Homebuilding if you don’t believe me. Unfortunately, the stereotype contractor is a meth head who shows up in between binges to snake a drain or throw some paint on a wall. THAT guy shows up because the other candidates were convinced to go average a C- at a state college and be miserable in a cubicle. The real tradesmen that are at the top of their craft are bona fide geniuses and artists who command exorbitant prices in the marketplace. I think there’s thousands more of them languishing in a lecture hall where they don’t belong.

“Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.”

I suppose the argument is that if Van Gogh had Instagram, he’d have sold millions of prints in his life and would have been justly rewarded for his genius instead of dying penniless and denigrated by contemporaneous critics. Naval correctly points out the free and limitless possibilities of using a computer and the internet to create something unique to you.

Naval’s larger point here is that somebody with a great idea and some coding finesse can probably program some crazy shit that can work 24/7 using trillions of bytes to earn them money. The leverage you can create with this automated Rube Goldberg machine is infinitely more than the leverage I can create buying a house with 3.5% down. If swinging a hammer scares you, then coding and the internet might be your yellow brick road.

Coda

With Naval, as with many others, getting rich is step one to fulfillment and happiness. Getting rich just to get rich is the dumbest thing you can do. Money does not make you happy. However, being poor certainly causes a lot of misery. Scraping by while making $30,000 a year might be even worse. I’ve always said there’s no better way to waste a day than to spend 8 hours working.

As I’ve said, I’ve chosen to use real estate as my primary get rich vehicle. In addition I’m building my work-from-home skills by using free and cheap educational tools like Coursera, NYU Online, Yale Open Courses, and other online learning so that I can participate in the work-from-home boom in the coming years.

My job is paying for an online MBA that will increase my earnings power and give me many skills that I can translate to remote work, while also developing my quantitative abilities for analyzing real estate. Real estate is plan A. My current well-paying job is plan B. If I still have to work by the time I finish my MBA, I’ll earn higher wages to accelerate my retirement timeline, build greater wealth before retiring, or demand a ridiculous work from home schedule that will look very little like work. What’s your path?

Fuck work. Get rich.