Most Shared Moment: How To Get Rich *SLOWLY*: Scott Galloway

Scott Galloway (0:03)

The email I get most is from young men looking for guidance and mothers looking for guidance for their sons. The second most frequent email is the following. Is it too late to invest in NVIDIA? And the honest answer is, I don't know. I can imagine a scenario where it gets cut by 80%. I can imagine a scenario where it triples. So this is what you do. You invest in SPY, because about 20% on the dollar will go into the Magnificent Seven, because they're about 20% of the market cap of the S&P.

Steven Bartlett (0:33)

SPY is again a basket of different stocks.

Scott Galloway (0:35)

It's an index fund that mimics the S&P. So there are 500 companies in the S&P. NVIDIA is probably 3 or 5% of the total value of the S&P. So 5 cents on your dollar goes into NVIDIA, right? About 20%, is that right? 24, 25% is the Magnificent Seven, the tech companies we talk about. 25 cents on your dollar will go to them. So assume those companies double. Great, you participate, but assume the other 493 companies finally get their time in the sun and those companies go down a half, you're still fine. You're still fine. Again, you don't need to find the needle in the haystack and stop believing in a very American way that you can figure it out. I know the brightest people in finance.

My net conclusion is that none of them have any fucking idea. Some have a little bit more of an idea. But if you look at the entire alternative investments industry, hedge funds, private equity funds, mutual funds, anyone on CNBC, if you took all of their returns in aggregate, they're less than the S&P by the amount of their fees. It's one of the greatest griffs in the modern economy is believing that some guy who looks old and unhappy and has suspenders and went to Harvard, knows more about the markets than you.

All you need to know is diversification, right? SPY, start saving young. And then the next best piece of advice is if you can, if you can, force savings. 98% of us will spend everything we get our hands on. It is very hard to have the discipline to take money that is within your grasp and invest it. Force savings plan. Find out at work if they have profit sharing or IRAs or Roths, whatever the, I forget what it's called here, where if you put some money aside, the government matches it.

Steven Bartlett (2:30)

Pensions?

Scott Galloway (2:31)

Well, not only pensions, but there's something here. I forget what it's called. If you save 5,000 pounds through your work, the government I think will match it, put in a thousand pounds. There's all sorts of saving schemes at work. Acorns, the apps that round up to the nearest dollar and then immediately shoot it into SPY. Try as hard as you can to put yourself in a position where you invest despite your best efforts not to. Because the majority of us will get that money and go buy a flat screen TV.

Steven Bartlett (2:59)

And when you're saying investing, I think because it can sometimes sound complicated from someone that's so far away from it. There's apps on our phones now where we can in a couple of minutes invest in the exact thing you've just said. We can make an account in a couple of minutes and probably ask for our passport, take a photo of our passport. There's so many different apps where you can go in and invest in the S&P 500 You don't need to call someone or know someone. And you can invest, what's the minimum you can invest?

Scott Galloway (3:22)

$50. Go to public.com. I mean, start with a basic low-cost ETF or index fund. SPY, if you want to take a little bit more risk and you want to be in tech, there's all sorts of ETFs and index funds around tech. Every young person, especially young men, is under the impression they're smarter than they are and that they can beat the market. So okay, take 30 percent of your money, have some fun, buy Starbucks, NVIDIA, Unilever, Nova Nordisk, whatever you think you have insight into, so you can learn a life lesson that over the long-term, you don't know what you're doing, and just put it in an index fund. Because the marvelous thing about the human race is we become more productive, and the Western economies, generally speaking, over the medium and long-term are up and to the right. Again, and I'll go back to my algorithm or equation, focus, find something you could be good at, maybe great, that has a 90-plus percent employment rate. Stoicism, we haven't talked about that. Realize there's some things you can't control, focus on the things you can control. One thing that is within your control is spending. Try and find a partner, try and gamify spending. I spent $78 a week my summer between my junior and senior year, including rent, because I needed $3,300 to go back to school. I partnered with five other guys in my fraternity, and we gamified who could spend the least amount of money. Find a partner who's aligned with you around spending and saving. Right? Realize no one's as impressed or thinking about your shit as much as you are. Right? Try and find reward from exercise, from relationships, not from signaling wealth with kind of stupid shit. Right? I call that stoicism. It's really more about discipline. Develop a savings muscle. One, an appreciation for time and how fast it's going to go. I was stupid. I remember my best friend, Lee Lotus, picking me up to go to the beach when I was in college, and he was scrambling to find $2,000 to put it into something called an IRA Roth. Whereas company, a bank he was working for, he was just out of college, if he found $2,000, they would match it with another $2,000. I thought, I said to him these exact words, if $2,000 means anything to me when I'm older, shoot me. I have made so much more money than Lee Lotus, and he is a multimillionaire now, so am I, but I've endured a lot more risk and a lot more ups and downs because he was that lame guy scraping together $2,000 when he was 23 I went out and spent my first bonus check at Morgan Stanley. I got $28,000 my first year out of college, Morgan Stanley, $28,000 check. I go out and I buy a $35,000 BMW, hung swim goggles from the rear view mirror thinking that would impress people. I don't know what I was doing. I figured out if I had bought a Hyundai for $9,000, which you could get in 1987 or whatever it is, and invested the other $20,000 in SPY, never looked at it again, I would have enough money now to buy 11 Ferraris, including that new electric Ferrari that for some reason appeals to me, which makes no sense, an electric Ferrari. Anyways, you're going to love this. I tell the people who work for me that I drive up in a Ferrari and I say, if you work really hard, someday, someday, I'll have two Ferraris.