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Warrior Trading // Ross Cameron // Day Trade Warrior

I'm going to show you how to become financially independent by breaking out of the habits they're holding you back. Everything I Share with you comes from mistakes that I've made in my own career. I have seven of them. I'm going to share in this episode and one of them cost me over $2 million to learn.

You're going to get to learn that today for free. Now most people think to become financially independent means you need to make a lot of money, but that is not true. But let's get started with mistake number one. I Watched my mom work at a hospital up in Vermont the same job for 40 years.

She worked there for 40 years and you know what happened. She got laid off after 40 years because she was nothing to them. They didn't care about her. Why was she so loyal to them when they would show no loyalty back to her? And that's the question that you have to ask yourself.

Employers generally are not going to be loyal. There's a myth in in thinking that you have job security because there's no such thing as job security. The only thing that you can count on is your skill and you've got to continue to aggressively build your resume. And that's why it's smart for career growth to change jobs every 3 to five years now.

You don't want to change jobs too soon, so you know what's what's the right amount of time I should say at a job before I switch, it's 3 to five years if you stay for one to two years. When I look at resums for people to work for me and I see they switch jobs every year I Don't want to hire this person I think the time it's going to take to onboard them, they're going to be gone I Want to see someone that shows the commitment to stick with something for three, four, five years and has moved up in their career, they're getting promotions. They're getting more responsibility. So each time that when they apply for a new job, they're getting promoted or someone who's getting promoted from within is is okay too.

If you're moving up the ranks within a company, that's fine. But you've got to put yourself first and you cannot get into that that that guilt trip of feeling like I have to be loyal to this person when the fact is that person unfortunately most likely would not be loyal to you. You have to put yourself first when it comes to your career, your retirement, and your financial. Independence The second mistake is being too conservative while you're young.

So how much risk should I be taking based on my age? Well, what we've always been told is that when you're younger, that's the time to take more risks when it comes to advancing and developing your career. And when it comes to how you invest the money that you're saving, even if you're only saving a little bit, this is because you have a lot of time on your side. So the last thing for instance, you want to do is if you're 64 years old and you're planning to retire next year, you do not want all of your life savings, your retirement invested in something that has the risk of dropping 50% overnight. But I've seen people do exactly this.
There was a family member on my wife's side who was heavily invested during the.com bubble, did really really well and then lost almost I mean more than half of it and it was going right into their retirement. And that completely changed the trajectory of what they were going to be able to do, what they were going to be able to afford during their retirement. And so conventional wisdom is that when you're younger, that's the time to be heavily invested in higher risk assets like stocks up to 80, 90, or even 100% and not to invest in low risk um, or and low return assets like bonds and treasuries and things like that. But as you get older, you want to pull back on the equities and increase on those more conservative Investments Because that money from the conservative Investments is what you're going to actually need to pay your bills when you're retired.

But one of the big mistakes that will slow down your ability to Achieve Financial Independence And to retire is by putting all of it into something very conservative when you're young because then it doesn't grow. This is exactly what my uncle did in 1993. My grandmother died and they sold her house up in New Hampshire and they got around I Think it was around uh, $200,000 when they sold the house. So my uncle took all that money and he invested it incredibly conservatively from 1993 until my dad passed away in 2007.

So for about 15 years, the account did almost nothing. So when my father passed away in 2007, it was at about $220,000 He had grown 10% over 15 years. That is terrible. An account invested heavily in equities over over 15 years should be able to double, if not triple.

so to grow by only 10% This is really poor performance. You are shooting yourself in the foot by being too conservative. When We're Young That's the time to take more risk. and if we don't do that, there's an incredible opportunity that's lost.

All of the growth that we could have gained during that period is gone. and ultimately that delays Financial Independence and it delays our ability to become retired. Mistake number three is simply never setting a goal poost. I Can't tell you how many people I've talked to who have really no idea how much money they need saved in order to be financially independent or in order to be retired.

And so without a goalpost, they don't really have anything they're working towards. They just know Ultimately, right now they're working and they're going to be working for a while. And I think that that's a huge mistake. All right.

So how do we set a goalpost? How do I figure Figure out how much money I need in order to retire? Well, for years, financial advisers have used the rule of 4% so let me show you what that looks like on the Whiteboard. The rule of 4% states that if you have an account, you can draw 4% off that account indefinitely as long as it's invested in stocks and bonds. And the reason is because since the historical performance has been 7 to 8% by withdrawing 4% per year, you're not even taking all of the growth at the account. On Any Given year.
So $1.5 million account. That means you could actually withdraw $60,000 per year. Which is $5,000 per month. All right.

Well, that's a big number. But the way we figure out what that number is is, we take our monthly cost of living and multiply it by 300. So 5,000 * 300 is 15 1.5 million. So the quickest way to figure out what that magic number is for you is is to Simply multiply your monthly cost of living by 300.

So while the rule of 4% is a popular way for a financial adviser to tell you this is how much money you need to have saved in order to retire, there are other ways to sort of figure out what your numbers might be. You may choose to find ways to generate passive income. Perhaps you're able to invest in a rental property, maybe you have a business that's generating some cash flow, or you have some side hustles that sort of can help offset the income that might be lost by retiring without actually having that $1.5 million or whatever that magic number is for you. In any case, it's a big mistake to not set goalposts.

you have to set goal post because that way you know you know this is what I'm striving for. This is where I'm trying to get to and then you can start to map out all right if this is the goal and this is how much I'm making, this is how I have to budget and this is how long it's going to take for me to get there. Mistake Number four is not budgeting and not having a contingency plan. One of the big mistakes that I made when I was younger is: I I set up a budget for myself based on how much I was making or how much I thought I'd be making and my expenses.

but I made it basically like perfect and there was no allocation for savings. I was just trying to basically keep my head above water, but what I failed to do was plan for the unexpected and it kept happening. I mean it was like clockwork. Every month something would come up my dog.

He got hit in the face with the by a porcupine so we had to bring them to the vet that cost 500 bucks and then there was a problem with the boiler down in the basement right? I had to get the guy out that cost 700 bucks and then you know it was. It was this and that and then the dishwasher breaks and then this and it's like there's always something and the problem for me was that I was paying my bills. but I wasn't keeping an allowance or a contingency for all of these unexpected things and those are the things I was like well there's a credit card, there's a credit card and it didn't take long for me to build up $30,000 in credit card debt. Over the course of a couple of years of just these things kept coming up.
the car breaks, you know someone gets sick. it's like there's just always something so it's important to budget. It's important to know how much you're spending relative to how much you're making you want, of course, would like to see that in Balance It's important to allocate some of what you're bringing in to go aside to savings. and then investing your savings without being too conservative is, of course, important.

but more than just that, you have to plan for the unexpected. You have to try to have some contingency allowance when I was doing some construction projects when I was younger and I was working at this firm that did these big projects, there was a 10% um, contingency fee that was built into every budget and they were just like. there's always going to be something. we're going to be in the middle of a project and we're going to find out there's a best or you know there's going to be some.

There's always something it doesn't matter, it's just we have that because that way the client just knows the the total budget isn't based on not having anything. That is a surprise. It includes 10% allocation for a contingency and usually we use some of it, not all of it. They actually I don't remember a time where we used the whole thing, but we always used some of it and that allowed the the client in this case to be happy.

At the end of the day when we'd say well, we didn't use that whole contingency and they're like oh, great. The project came in a little under budget, but when you're going through your life and your paycheck to paycheck and you're constantly dealing with these surprises, what it creates is unnecessary stress and obviously it makes it that much harder to Achieve Financial Independence or to even think about retiring early. The fifth mistake is being house poor. Being house poor is when you buy a house that's pretty big and it's taking up two too much of a chunk of your income.

so most of your income. is going to your housing and then the income that you should be able to use for savings and for other expenses becomes really small. and you're like, oh, I have this beautiful house. It's all right.

But the fact is, as we were saying with mistake number four surprises come up. and when that happens all of a sudden, you don't have the cash flow. and the problem with buying a bigger house or even a bigger apartment is that everything is then proportionally more expensive. Your insurance is higher, your taxes are higher, your utilities are higher, more square footage to heat cool.

Etc Your maintenance is higher, Everything goes up. So the conventional wisdom is that your mortgage payment should not be more than 28% of your total income pre-tax All right. So if you're making $100,000 a year, then you shouldn't be paying more than $28,000 a year in mortgage. So then you know, divide that by 12 and that's you know.
$2,000 a month? Approximately a little over $2,000 a month. Okay, and and that's all well and fine, except for the fact that so many people, especially in today's housing market, end up getting into houses that are 35% 40% or higher whether it's a combination of rent or mortgage, because when you add in all these extras, it just becomes bigger. Right Right now, it's super expensive for all the utilities. It's super expensive to hire anyone plumbers or electricians to work on your house.

When things break, everyone's backed up. no one wants to work. The fees are crazy high and so it puts us in a situation as a homeowner where we're constantly feeling like we're up against the ropes I Regret when I made the decision to buy a bigger house because I did it at a time when I took this big leap and for me all of a sudden it was like I went from a house that was no big deal to pay for. and then all all of a sudden I had a house where I'm spending thousands of dollars a month on all of these things and it's like wow, You know the Morgage is just one piece of it.

It's all the other stuff and it's the same with rent. I I Think that we've been trained to believe that buying a home is a good investment. I Think for people that bought homes 5 years ago, they were good. Investments Because the prices have gone so high, is buying a home today a good investment? I'm not sure that it is.

I Mean first of all, while a house is an investment in the sense that over 20 30 Years it'll increase in value. You're also putting a lot of money in every year to maintain it. You know when you buy a stock and hold it for 30 years, you don't have to put money in every year to maintain that position. You just buy the stock and then it grows.

You know, the house. There's a lot of liability that comes with it, in the sense that it's an ongoing cost to own it and to maintain it. So yes, in exchange for that, you have shelter. But I'm not convinced that being a homeowner is as good of investment right now as it was before, especially because of the interest rates that makes the cost of owning that much higher.

And taxes? well, those are only going up as well. So I think you could make a compelling argument for staying in a rental. But I know rents are going up as well. And a certain point when you're paying rent, you're just helping pay someone else's mortgage.

However, when you're a tenant, you don't have to deal with all those headaches of oh, you know, a pipe burst or I've got to replace this. I've got to replace that. That's the landlord responsibility. So I Really think that there's a lot to be said for living more simply and not putting yourself in a situation where you're going to become house poor.

Mistake Number six is paying interest versus earning interest. When we borrow money, we have to pay interest to borrow money. When you borrow money to buy a house. When you borrow money to buy a car, you're paying an interest rate to borrow that money.
And while it's important to take loans to establish A good credit history so you can buy a house, there are obviously things like a home that you can't really buy just in cash for most people because they're so expensive, so part of planning that out is using alone. However, with current interest rates as high as they are the cost of borrowing, it makes it really difficult to feel like it's a good decision to buy an expensive brand new car when you could get a pre-owned car that's got some miles on it but is Trusty and reliable like a Honda or Toyota for a lot less. Similarly, with a house. if you're in a house right now and you have a lower interest rate, it would be really hard to sell that and go move into a house with an interest rate that's three or four times as high because you're going to be paying so much more in the borrowing fees, right? So you're either doing one of two things: you're paying interest or you're earning earning interest.

People who are earning interest are the people who have saved their money. They've invested their money, and now they're earning interest on their Investments. And the thing with interest is that it's compounding so it's growing. The sooner you can start taking advantage of compound interest, the faster you will.

Fast Forward Your ability to become financially independent and even retire. And the biggest risk with paying interest is unsecured debt. Like credit card Debt credit Card Debt Before before the recession and before interest rates went crazy were 20% now 25, 30% 33% This is an insane amount to be spending on interest and I get being backed up in that corner where you know expenses come up and you have no choice because that's what happened to me. But this is where it takes making some really really spending some time thinking about the way your life is set up and if you need to make some really radical changes in order to get yourself in a structure that is more sustainable.

because if you are constantly paycheck to paycheck back up against the wall. It creates so much stress. I Know from my own experience and you're just wanting to find a way to bring it down. It's really important to prioritize making those changes.

I Have found in my own experience that I can be a lot I can be very content with a lot less I can be very happy with a lot less, especially when it means my stress goes down. The seventh mistake is not taking advantage of taxfree accounts. This one drives me nuts. So Ross how do I take advantage of taxfree accounts? It doesn't matter if you're self-employed or you work as a regular WW2 you can contribute to IRAs Traditional IAS Roth IAS a 401k if you're employed I Know so many people who are in their 40s in their 50s who have never contributed to a tax-free account and it's hard to contribute when you're 48 years old and you want to be retiring in 10 years because now you don't have the advantage of that compound interest.
The way compound interest works is that the sooner you put money in, it grows and then now the new growth rate is based on the New Balance so it keeps growing exponentially. There was a man who lived down the street for me in Vermont He was an old man, he was very frugal and he lived to be in his '90s and he accumulated over 8 million ion dollar. He was a janitor and one of the things that he started doing very early in his life. Even when he was working at a gas station and as a jander was buying stock certificates, he would just buy some shares of stocks that he liked Proctor gamble Philip Morris Exon Mobile whatever.

And over the course of his you know, 70-year adult life from the age of 20 to the age of 90, he had 70 years to benefit from compound interest. So I'll show you a graph of what it looks like to put away even. just let's say, $200 a month for 70 years. You do that for 70 years and it's going to blow your mind how much that grows.

But you do it for only eight years. You do it for 10 years. It's not going to grow that much so I hope, if anything, this inspires you to start saving sooner. But this is the mistake that I made.

So when I set up a trading account was $600 I had this goal of growing it to a million bucks I've now grown it to over 12 million, but I made $4 million of that and I and I it wasn't in a tax-free account. I was making far more than I needed for spending and then I got a bill a tax bill for $2 million. All of a sudden, I owe $2 million of tax on the $4 million of of profit that I made in 2020. This is a huge amount to pay in tax.

so I ended up setting up an IRA account, I put in 6,000 one year I put in 6,000 the next year I put in 6,000 ,000 The year after that, I put in $18,000 and I started day trading with that account and it's grown to over $6 million. That's completely taxfree. There's no tax in that account now. I could have done all those same trades in my regular tax account and paid an extra $3 million in income tax.

but why do that? The government wants us to eventually retire, right? These accounts are set up for our benefit. I mean the structure is there, so if you're not utilizing it, you're overpaying on tax unnecessarily and you're just essentially. this is one of these bad habits that is holding you back. So I encourage you to start Tra to start well, trading if you'd like, but to start investing and utilizing taxfree accounts.

Now one of the things that's really special about these taxfree accounts is you know you can't work a W2 job and have all that income grow in a tax-free account. but you can trade and you can trade and have all of the income from trading in a tax-free account. In fact, if you want to do that and live off of, you know, $20,000 a year. You make a little bit of money in a regular taxable account.
so you're at a very low income tax bracket because you make basically no taxable income and then the rest of your money you make in a taxfree account. You can make $10 million and you'd still be in a low tax bracket because the gains were in a tax free account. So I think there's something incredibly special about this that all people should be utilizing and it's a huge advantage to active. Traders this again when you're young.

this is when you can afford to take more risk. So this is when I'm going to be an Active Trader I'm going to try to grow that account as quickly as I can because now $6 million and I'm 38 years old. so I still have a lot of time for that 6 million to keep growing thanks to compound interest if you enjoyed this episode I Hope you subscribe to the channel, Hit the thumbs up and hey, check out this episode right here that YouTube thinks you're going to love.

By Stock Chat

where the coffee is hot and so is the chat

24 thoughts on “The 7 worst financial mistakes you can make…”
  1. Avataaar/Circle Created with python_avatars @diegoa3991 says:

    Despite the markets fluctuating trends, I believe that sticking to a systematic approach that’s proven to be effective, will most likely get you success in this respective field, not LUCK!

  2. Avataaar/Circle Created with python_avatars @MG-nn8dy says:

    so good!

  3. Avataaar/Circle Created with python_avatars @paramountx says:

    When did you start trading in your tax free account? At what point were you like, alright, time to make some tax free money?

  4. Avataaar/Circle Created with python_avatars @shootthemoon-ml7ki says:

    Camel was ment for ur pup he’s happy 🎉

  5. Avataaar/Circle Created with python_avatars @Philadelphiamalayale says:

    IRA is not tax free.

  6. Avataaar/Circle Created with python_avatars @benthomson4695 says:

    Great video Ross! Am I right in thinking with the $6million you’ve made in your retirement account. Are you unable to withdraw that money until retirement age?

  7. Avataaar/Circle Created with python_avatars @riddlerMD365 says:

    What a good way to learn about candle stick patterns? Could you make a video on some resources?

  8. Avataaar/Circle Created with python_avatars @elvissboh says:

    Nice nice video ross. Love and shared it

  9. Avataaar/Circle Created with python_avatars @obaiomari881 says:

    You have a lot of experience on investment, I suggest you make a separate series of episodes with even different setup/office so people know it's separate from trading lessons. Thank you Ross!

  10. Avataaar/Circle Created with python_avatars @MrGogotohell says:

    Hey Ross, just bought the book you are my friend send me the ladder

  11. Avataaar/Circle Created with python_avatars @goodbyemr.anderson5065 says:

    If you live pay cheque to pay cheque you don't have any money for savings end of story.
    With youtube, its pretty easy to figure out how to fix almost anything these days. Appliances are super super easy to fix, and often its cheap to buy the parts. I still fix almost everything that breaks in my life even though I could hire someone. I grow up really poor, and 25 years of trades helped to i guess.
    Merry Christmas everyone, and Happy New Year.

  12. Avataaar/Circle Created with python_avatars @Roughneck7712 says:

    Great video! I would love if you created a follow up video explaining the different IRAs used by traders and the one you have setup. If you trade within a Roth IRA, please explain how you max yearly contributions while being a high income earner

  13. Avataaar/Circle Created with python_avatars @stelliumX4 says:

    Can you do more of these videos??

  14. Avataaar/Circle Created with python_avatars @stelliumX4 says:

    This will help me as I finalize my 5-10 year financial plan! #3

  15. Avataaar/Circle Created with python_avatars @thegamerboneless2864 says:

    Their are workers and owners. Most will always be workers.

  16. Avataaar/Circle Created with python_avatars @rufusmcgee4383 says:

    My worst financial mistake was getting a financial planner. I had 300K in the bank in late 1998. His advice was to create a corporation and charge me 1K every year to do my taxes. His next advice was to put me in touch with a broker BUT the financial tangle with my new corporation left my money in a low-interest account throughout 1999. When that was finally taken care of (Dec 1999), my broker's advice was to plow all my money into the market and buy on margin if things went south. He recommended a number of companies that went broke, such as K-Mart, Lucent and others, all while charging 2% commission on trades. Finally, I got a margin call and sold everything on the exact day of the low of the 2000-2002 bear market, down about 80%. The company I was working for and had invested most of my remaining savings in went bankrupt a few days later. I lost my job and I've never really recovered.

  17. Avataaar/Circle Created with python_avatars @janosik150 says:

    House is not investment…just nessesary need that if not kept up will disintegrate with in years..and its borrowed from the bank…and then illegally from government…if government people would want anything good they would lower property taxes

  18. Avataaar/Circle Created with python_avatars @addertooth1 says:

    My earlier years were weak due to investment choices. I knew I didn't want to be in stocks and bonds. I selected various Vanguard products. But, even when the market was booming, Vanguard drew so much out for fees that I was only getting about half the actual market growth. Always look at the fees and charges of these highly reputed funds. Once you know the truth, you will likely want to move to a lower "load" fund. Otherwise, only the people who manage those funds will get rich.

  19. Avataaar/Circle Created with python_avatars @avapostle8132 says:

    Omg! Day trade through an IRA. That is brilliant and an incredible Christmas gift. 😁❤🎄⛄🎁

  20. Avataaar/Circle Created with python_avatars @jeffcokenour3459 says:

    Merry Christmas!

  21. Avataaar/Circle Created with python_avatars @boss99gt says:

    Sound advice!!!

  22. Avataaar/Circle Created with python_avatars @killtemc9435 says:

    My dad was a car salesman he used to people are always gonna need a place to stay and a way to get around😊

  23. Avataaar/Circle Created with python_avatars @lesstarling9806 says:

    Great video Ross! ……play smart for the long game, it pays off…..I tell my kids “Patience” wins the game

  24. Avataaar/Circle Created with python_avatars @jondunn1980 says:

    👍🏼👍🏼

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