put it all on the line...

This piece is going to be different than the previous letters…

It’s a topic that I haven’t touched on yet.

But this seems like a good time. It’s a more personal topic, so I’m keeping the writing informal.

Please feel free to write back to me, if you have any questions, comments or observations I would love to hear from you!

Moving on…

Everyone wants more money. Whether you’re a 20 year old, or a 50 year old. It’s one of the most important and desired things in life.

But here’s something not enough people talk about. 

How much money you have is a function of three factors.

1. How much money you make

2. How much you spend

3. What happens to the remaining money

Most people are fixated on the first, and don’t pay heed to the other two. 

And naturally so. It is the first problem they need to solve. 

Once that is solved, they never look at the remaining two. 

Because that’s what society tells us. Get a job, make money, put it into a savings account and work till you retire. Forget about everything else.

And we know that more often than not, that life is nether financially rewarding, nor internally fulfilling. 

The modern world gives us an alternative, should you choose to take it. 

It requires a careful consideration of your finances.

This is not financial advice.

Disregard what I say if you’d like.  

I’m no one to tell you what to do with your money. 

But here’s a disclaimer. There are rules of thumb that most successful people follow. 

I try to follow them. You can go out and try to reinvent the wheel, prove them and me wrong. But in most cases, following wisdom laid out by people who’ve done it before, is usually the smartest thing to do.

So here’s the two rules that I try to follow, which you should consider following as well.

1. More money = more risks

Most people say you should live your best life in your 20s. Do the things that you want to do. For the average Joe, that is decent advice. The reasons are pretty clear. Few obligations, fewer responsibilities. 

But here’s my take on it. While that is decent advice in theory, in practice, it doesn’t quite hold up. 

There are major financial repercussions to it. You spend money to travel, to go to parties, to eat good food, to go to concerts, etc. 

The opportunity cost to the money spent here is massive. 

As a result of doing this for a few years, you end up with little to show in terms of savings and assets.

Now for all of you that say “it’s fine”, and “we’re still young”, here’s what you need to know. 

The decisions you make in your 20s go onto define the quality of your life in your 30s and beyond. 

Savings and assets are a cushion. 

You ability to take risks is directly correlated with how much cushion you have. 

The bigger the cushion, the more risks you can take. The more risks you can take, the better the odds of success.

Does this mean you stop spending money, and having fun? Not at all. In fact I’m a firm believer that you need to learn to spend money to make more money. 

But if you can keep a close eye over how much you spend and how much you save, it could be one of the best things you do for your future self. 

You’ve seen people complaining about their jobs, their lives. And when you ask them what they’re doing to change that, the answer is Zilch. Nothing. 

That is because most of these people are in no position to take risks. They have a job that pays them every month, a majority of which goes towards their car, house and lifestyle. 

Little in terms of savings or assets. 

They have virtually no way to escape their current life and build a new one. 

If you don’t want to end up like that, start spending less. Start saving more. 

This will be the launchpad that allows you to build your dream life.

Because with money saved up, you can start to take on bigger risks. In terms of actions, and in terms of investment.

2. More risk = more money:

This refers to the 3rd factor that dictates how much money you have. Robert Kiyosaki has this immensely popular quote:

“The rich don’t work for money. They make money work for them”.

If you are in your 20s, then you should try to make calculated high risk investments with high potential upside.

Risk and investing is something few people comprehend. 

When making investments, they say “oh this is risky” or “oh what if it doesn’t work out”. 

That’s exactly why it’s called an investment. If you want outsized returns, it comes with risk. 

If it was guaranteed, then it wouldn’t be an investment.

If you’re in your 20s and have money saved up, then you have one of the most potent combinations to build long term wealth. 

You have money and you have time. 

You have the opportunity to make risky plays both in life, and with your investing.

Because if you’re right, you will get massive payouts that will fund your life and dreams.

And if you’re wrong, you can always go back and make the money again.

Of course this doesn’t mean you go rogue and start gambling on stuff you don’t understand. 

But if you take calculated risks, and really put in effort to understand all the various opportunities available to you, you can do better than 99% of people out there. 

This is your time to start building assets and wealth that enable you to live the life that you want.

A couple of good investments or decisions can potentially fund all your experiments for the next decade or more.

I’ve been buying and investing in collectibles since 2022. I lost money early on but after hundreds of hours of research and learning, I started to make money. Collectibles are a risky asset but if you know what you are doing then there are endless opportunities to generate outsized returns. That is what I count on.

But more importantly, even if it doesn’t work out, I come out of it with learning, experience that cannot be replaced. And because I am young, I have time to make that money back. 

So if you are in your 20s, think about your lifestyle, your spending, your savings, your investments, everything. Take a close look, and see if there’s space to make some changes. 

Saving more money will allow you take bigger risks. Taking bigger risks will allow you to make more money. 

This may not sit well with many of you…and that’s fine. It’s a very subjective decision. 

A majority of the people in the world don’t want to change their lifestyle. They live standardised lives without much adventure. Most of them don’t get to do what they want and they’re fine with that. 

If you want to be one of them, then by all means continue to live unbothered by what I or anyone else says. 

But quoting naval again (he is one of my favourite thinkers),

“The only real test of intelligence is if you get what you want out of life”.

If you want to do the things you like and enjoy, and strive to reach financial independence eventually, then implementing some of the things I spoke about today should help.

Until next time,

thanks for reading.

- Khyatt