The 40-40-20 Formula: How I Invest My Money for Safety, Growth, and Big Wins

What this episode is about

The "40-40-20 Formula" is an investment strategy that allocates 40% of funds to low-risk investments for steady returns, 40% to medium-risk investments targeting higher gains, and 20% to high-risk opportunities for exceptional returns. This balanced approach aims to protect overall capital while allowing for significant growth potential, adaptable to any investment amount.

Key takeaways

• Inflation doesn't sleep; park cash and watch its value melt yearly like an ice cream cone in July.
• 40 4020 isn't just a strategy; it's an anti-inflation battle plan dressed as a diversified investment portfolio.
• High-risk investments are your financial roller coaster; thrills can lead to chills but may result in 3x or more!
• Think of low-risk as your financial safety net; it won't win gold, but it saves from falling flat.
• Investing isn't a waiting game; it's a deployment mission—money should be on duty, not lounging in a bank.

Who speaks in this episode?

• Unknown Host (Host) · 46 min speaking

What is discussed, and when

1. 0:00 – 5:00: 40 4020, Low-Risk Investing, Medium-Risk Investing, Chase
2. 5:00 – 10:00: Compound Calculator, Wells Fargo, Acorn
3. 10:00 – 15:00: Medium-Risk Investing, Cash Flowing Businesses, Compound Calculator, Chase
4. 15:00 – 20:00: EverBull, Cash Flowing Businesses
5. 20:00 – 25:00: Cash Flowing Businesses, Apple Inc., Low-Risk Investing, Medium-Risk Investing
6. 25:00 – 30:00: Amazon, Apple Inc., Tesla, Inc.
7. 30:00 – 35:00: EverBull, Icon Meals, Joy Ride Candy, Skinny Pasta
8. 40:00 – 45:00: Elevator Syndicate, Elevator Night, Ethereum, Elevator Mortgage
9. 45:00 – 45:50: Elevator Syndicate, Elevator Night, Elevator Mortgage

Notable quotes from "The 40-40-20 Formula: How I Invest My Money for Safety, Growth, and Big Wins"

• Give it away to charity. But today, we're only going to cover one topic focused on investing. I call it 40 4020.

  about 40 4020 · at 0:14

• Four or 5% if I could just for the safety. And if you want to blow your own mind, if you go look at a compound calculator. Compound calculator. If you want to really mess with…

  about Compound Calculator · at 5:58

• All right, businesses, cash flowing businesses. So, an example for you is I invested into a company called EverBull.

  about EverBull · at 18:05

• In investing. I reduce my risk. If you notice from the kind of the theme and the trend of my topics, I reduce my risk by investing into experience. By investing into something…

  about Cash Flowing Businesses · at 21:28

• Phone that day, do you know what would happen if you spent that 15,000ish on stock? You would have over $1 million of Apple stock for 15 grand. It's a really fun fact. You can…

  about Apple Inc. · at 25:44

• Should consider some Tesla stock. If you buy from Amazon, like most people on the planet do, well, Amazon's one of the best performing stocks in human history.

  about Amazon · at 27:52

• So, Elevator Syndicate, you can look at elevators syndicate.com, is my angel investment group. I have 930 investors in the Elevator Syndicate. I've raised over $56 million, four companies, and we.

  about Elevator Syndicate · at 32:23

• Thursday, elevator nights. That is my 57th time throwing a free event. You can look at elevator.com. I'm throwing it in Los Angeles at Hubble Studio this Thursday. And if…

  about Elevator Night · at 44:36

Who and what is mentioned in this episode?

People

• Pace Morby — Person · Referenced expert · 1 mention · first at 22:02
  Mentioned as an example educator in creative financing, relevant to acquiring cash-flowing businesses/real estate.
  Number 14. I like co-investing into something like that. That's a cash flowing business. You can study people like Cody Sanchez, Pace Morby, and people like that, Marcus…
• Marcus Lemonis — Person · Referenced expert · 1 mention · first at 22:08
  Cited as a public figure associated with showcasing small businesses, reinforcing the cash-flowing business theme.
  Flowing business. You can study people like Cody Sanchez, Pace Morby, and people like that, Marcus Lamonus that are showcasing small businesses and creative financing in ways…

Companies & orgs

• EverBull — Company · Case study investment · 6 mentions · first at 18:08
  Used as the primary example of investing in a cash-flowing business and as an angel/early growth investment that scaled from ~13 to 103 locations.
• Elevator Syndicate — Company · Host’s investment vehicle · 3 mentions · first at 32:23
  Described as the host’s angel investment group used to raise and deploy capital into companies with traction (2–20M sales).
• Apple Inc. — Company · Example individual stock · 3 mentions · first at 24:02
  Highlighted as a company listeners likely use (iPhone/AirPods) and a case for investing in products you already purchase.
• Amazon — Company · Example individual stock · 3 mentions · first at 27:52
  Used to illustrate medium-risk investing in companies you already buy from and the compounding effect of consistent stock purchases.
• Chase — Company · Referenced bank (CDs/cash example) · 3 mentions · first at 3:41
  Used alongside other household-name banks to illustrate cash losing value to inflation and CDs as a low-risk option.
  Let's say you do have $100,000 saved up in the piggy bank. So, you've got $100,000 in your Bank of America or your Chase or your Wells Fargo account. That $100,000 in 2025. Next year in 2026, we'll spend like it's $91,000.
• Wells Fargo — Company · Referenced bank (CDs/cash example) · 3 mentions · first at 3:43
  Mentioned as a major bank offering CDs and as a proxy for low/no-risk savings vehicles.
  Offering CDs right now of four to 5% for the year. That may not sound that exciting to you, but when Wells Fargo, Bank America, Chase type, major banks are offering that, that…
• Skinny Pasta — Company · Portfolio/raise example · 2 mentions · first at 33:03
  Cited as a brand the Elevator Syndicate raised money for, illustrating the syndicate’s deal activity.
  Have actually raised $56 million. You've seen some of the brands. I've done it for Skinny Pasta. It's called Its Skinny Pasta. I've raised millions of dollars for Icon Meals. So you can look at its skinnya.com, iconmeals.com.
• Icon Meals — Company · Portfolio/raise example · 2 mentions · first at 33:04
  Mentioned as another company the syndicate raised millions for, reinforcing the angel investing theme.
  Seen some of the brands. I've done it for Skinny Pasta. It's called Its Skinny Pasta. I've raised millions of dollars for Icon Meals. So you can look at its skinnya.com, iconmeals.com.
• Joy Ride Candy — Company · Portfolio/raise example · 2 mentions · first at 33:12
  Used as an example of a syndicate-funded brand in the food/candy category.
  I raised money for multiple different brands, a lot of food and beverage brands. we just did it for Key.co.
• Bank of America — Company · Referenced bank (CDs/cash example) · 1 mention · first at 3:41
  Cited as a place people park cash and as an example of a major bank offering CDs for low/no-risk returns.
  Let's say you do have $100,000 saved up in the piggy bank. So, you've got $100,000 in your Bank of America or your Chase or your Wells Fargo account. That $100,000 in 2025. Next year in 2026, we'll spend like it's $91,000.
• Tesla, Inc. — Company · Example individual stock · 1 mention · first at 27:50
  Used as an example of aligning stock purchases with products you use (owning a Tesla).
  So, in the stock market, to wrap that part up, think about companies that you shop at. If you drive a Tesla, you should consider some Tesla stock. If you buy from Amazon, like…
• KeyCorp — Company · Portfolio/raise example · 1 mention · first at 33:18
  Presented as a recent syndicate raise and described as having 7,000+ luxury homes on its platform.
  We raised millions of dollars for Key.co, which has over 7,000 luxury homes on their platform. I like angel investing into companies that have got good traction. And so, I try to find businesses. I've done it for Cars and.
• Acorn — Company · Referenced tool/platform · 1 mention · first at 8:35
  Suggested as a way to set up recurring contributions for children’s investing accounts via gifts and small deposits.
  Just consistently now instead of someone buying them a $100 present, they're putting a hundred bucks into their Acorn account and you've invited 35 people to their party to…
• Ford — Company · Inflation example · 1 mention
  Referenced to illustrate inflation via rising vehicle prices (Ford truck example).

Concepts & topics

• 40 4020 — Concept · Core topic · 2 mentions · first at 0:18
  The episode’s central investing philosophy: 40% low-risk, 40% medium-risk, 20% high-risk to balance safety and upside.
• High-Risk Investing — Concept · Core topic · 2 mentions · first at 0:51
  Defined as the 20% sleeve aimed at outsized returns (3x–12x), mainly via crypto and angel investing, with warnings against over-allocation.
  Investing. My goal is to make between 10 and 30% for the year. And lastly, the final 20 of the 404 4020 is 20% into high-risisk investments. This is where I want something…
• Medium-Risk Investing — Concept · Core topic · 4 mentions · first at 0:43
  Defined as the 40% sleeve targeting ~10–30% returns through real estate, individual stocks, and cash-flowing businesses.
  The second part, 40% is medium risk investing. My goal is to make between 10 and 30% for the year. And lastly, the final 20 of the 404 4020 is 20% into high-risisk investments. This is where I.
• Low-Risk Investing — Concept · Core topic · 3 mentions · first at 0:37
  Defined as the first 40% sleeve targeting ~5–9% returns using CDs, gold, and S&P 500 to combat inflation.
  Understand why I've used this investment strategy for my whole life. First, the first 40% is lowrisk investing. I want to make between 5 and 9% for the year.
• Cash Flowing Businesses — Concept · Core topic (medium-risk bucket) · 6 mentions · first at 14:33
  Framed as a medium-risk path to returns via profitable operations (e.g., franchises/locations) and experience-driven risk reduction.
• Compound Calculator — Concept · Tool recommendation · 6 mentions · first at 6:02
  Recommended as a practical tool to visualize compounding and motivate consistent low-risk investing contributions.
• Ethereum — Concept · Referenced crypto asset · 2 mentions · first at 30:02
  Mentioned as part of cryptocurrency high-risk investing, though the speaker emphasizes Bitcoin more heavily.
  Year. Okay. What are some high-risisk investments? There's a couple. One is cryptocurrency. Mostly I'm talking about Bitcoin and Ethereum and really Bitcoin.

Places & events

• Hubble Studio — Place · Event venue · 1 mention · first at 44:40
  Named as the venue for the upcoming Elevator Nights event in Los Angeles.
  Thursday, elevator nights. That is my 57th time throwing a free event. You can look at elevator.com. I'm throwing it in Los Angeles at Hubble Studio this Thursday. And if…
• Los Angeles — Place · Event city · 1 mention · first at 44:40
  Identified as the city hosting the Elevator Nights event mentioned at the end of the episode.
  Thursday, elevator nights. That is my 57th time throwing a free event. You can look at elevator.com. I'm throwing it in Los Angeles at Hubble Studio this Thursday. And if…

Sponsors

• Elevator Night — Event · Promoted event · 2 mentions · first at 44:28
  Mentioned as a free recurring event series hosted by the speaker, with a specific upcoming event in Los Angeles at Hubble Studio.
• Elevator Mortgage — Company · Promoted company/service · 2 mentions · first at 44:25
  Mentioned as part of the speaker’s 'Elevator' brand ecosystem offering mortgage services in the U.S.
  Invest into deals alongside of us. If you're looking for a mortgage, we have Elevator Mortgage. You can go to elevator mortgage.com if you are here in America. we have the Elevator Nights.

Full transcript with timestamps

0:05 Ladies and gentlemen, welcome to a special edition of the Money Mondays where we cover three core topics. How to make money, how to invest money, how to give it away to charity. But today, we're only going to cover one topic focused on investing. I call it 40 4020. my investment philosophy. You may have heard me sprinkle in some clips here and there over the last two years of the podcast, but today I want to explain everything about 40 4020 so you can understand why I've used this investment strategy for my whole life. First, the first 40% is lowrisk investing. I want to make between 5 and 9% for the year.

0:43 The second part, 40% is medium risk investing. My goal is to make between 10 and 30% for the year. And lastly, the final 20 of the 404 4020 is 20% into high-risisk investments. This is where I want something crazy to happen. I'm hoping for 3x, 7x, 12x, something wild to happen or a big return. And if I get it wrong or it takes a long time, I'm hoping that the low risk and the medium risk covers the high risk 20%. I want to have that as part of my portfolio so that I can have some major things happen to shift my financial, you know, situation. Now, let's use a real life example of $100,000.

1:20 Again, for you, this might be $10,000. You might have $10 million or anything in between. All the math percentages, they all equate to the same thing. So, I'm just going to use the $100,000 as the core number. But I want you to understand as you're listening to this, if you've got 10 grand to work with or you've got 10 million, it's the same concept. We're just going to use 100,000 as the number. And 40 40 20 is the same math whether you have 10 grand or 100 grand. Okay? I'm very passionate about this topic. I use this as part of my speeches and sometimes it changes with the time because things happen in the markets. The 40420 part does not change.

1:55 Meaning I stick to the same principle, the same model, but I might be looking at certain things that change within the category. So there might be some new things in low-risk investing or might be some new things in medium risk investing or might be some new things in high- risk. Right now you're seeing Bitcoin at $119,000 breaking records. So you might be thinking about within your high-risisk that 20% maybe you're switching some things around of allocating some extra capital to Bitcoin or on the lowrisk side there might be something new like a CD that's being offered at over 4%. Maybe there's some switches there in low risk. So let me walk you through real life situations, real life investments that I've done over the years so you can pick and choose for yourself what might fit for you or you might do my entire strategy of 40 4020. You can adjust this number based on the type of investor that you

2:43 are. I like this strategy because it keeps me focused. It keeps me safe. It diversifies me and allows me to make good decisions with my capital as it comes in over the course of time. What I do is as income is coming in, I'm consistently deploying it into one of these three categories and into the sub subjects within those categories to make decisions for myself. And so that I'm constantly investing and deploying the capital. I'm not keeping some big piggy bank at any given time. You'll often hear real estate investors and a lot of strategic investors that don't keep a lot of cash on hand because they're deploying it into investments on a consistent basis because of this one concept.

3:24 Inflation. Inflation is very very real. We've been battling with 8 to 9% a year inflation. Some people argue over the numbers, but let's just use those general examples. eight to nine% of your inflation. So, let's say you do have $100,000 saved up in the piggy bank. So, you've got $100,000 in your Bank of America or your Chase or your Wells Fargo account. That $100,000 in 2025. Next year in 2026, we'll spend like it's $91,000. 2027 it'll spend like it's $83,000, then $74,000, then $65,000, then 58,000. The numbers can vary. Even if it goes down to four, five, six, 7%, which it hasn't, or it goes up to 10, 11%, which could be scary, each year your 100K becomes 91K, then 83K, then 74K, etc. And so your physical cash number in your bank account stays the same, right? Let's say you just saved up 100,000. It's sitting in your savings account at Bank America, Chase, example. It'll still look like

4:26 you got $100,000, but if you go try to buy a Ford truck and that Ford truck was $55,000 and now it's $64,000. Or you go try to p pay for valet parking and it was $25 and now it's $30. Or you go try to buy bread and the bread was $4 and now it's $4.70. Or you buy a t-shirt was $25, now it's $28. That is real life inflation. So that $100,000 that's in your bank account, it still visually looks the same, but the spending power is less around eight or nine% a year less each year. That's why you have to deploy into investments. The majority of your capital should be at work. And if you don't feel comfortable when I say that, put into lowrisk or no risk investments. Even if you're just making four or 5% a year, which is great, at least you're fighting with inflation. At least you're not making your 100 grand go down to 91,000 in spending value.

5:19 What you're doing is battling it. Let's say your 100k physically and appearance-wise becomes 105,000. At least now you've battled with the inflation a bit. You're not covering the whole eight or nine%, but you have increased by 5% in your bank account. All right, let's walk through some real life investments. I think you can hear with the passion in my voice because this is such an important topic. The money Mondays, it came to be because of my passion for this 404 4020 principle. Me wishing and hoping and spreading the message around the world through my speeches, books, and events about this concept. All right, on the low risk side, again, I'm hoping for that, you know, 5 to 9% range, but I'd be taking four or 5% if I could just for the safety. And if you want to blow your own mind, if you go look at a compound calculator. Compound calculator. If you want to really mess with your head after

6:09 this podcast, Google search compound calculator and just put in your age. So let's say you're listening to this and you're 43 years old. Put in the date of retirement. So let's say you want to retire at 75 years old. So that's 32 years. Put in the interest amount that you want to earn. So let's say it's 8% a year. and then put in the amount that you can contribute upfront and that you can contribute consistently over the course of time. So let's say you could contribute $10,000 upfront an additional $10,000 a year for those 32 years. Well, if you put in a compound calculator, $10,000 a year, and then you put in the $10,000 up front and you put in 8%, it will blow your mind what that number turns into. like a staggering amount of money. Not a couple hundred thousand.

6:58 Typically, it could end up being a couple of million dollars if you can stay consistent adding in $10,000 year after year after year. And by the way, if you all of a sudden on year four or five, you could add $11,000 a year or $12,000 a year or $16,000 a year. And you could increase it over time as you're getting older, as you got more savings, as you have more of a career happening, etc. Maybe you've got some exits or you have an inheritance or you have a dual income with a husband or wife. Like as things go, you can increase the rate of return at a staggering amount just by going from 10,000 to 12,000 12,000 to 16,000 16,000 18,000 a year contributed to this pot of gold to this investment of this 8% a year. It will blow your mind. But if you just do it $10,000, $10,000 a year without increasing, I still want you to look at a compound calculator and see the magic of compounding interest. Now,

7:55 imagine you do this for your four-year-old son or your nine-year-old daughter and you're putting in a,000 bucks up front and you're contributing a,000 bucks a year, right? Let's say you're earning 40, 50 grand a year or maybe you're earning 80 grand, 100 grand plus a year. Could you contribute $1,000 a year to your son or daughter's consistent compound calculator savings account for them? It is staggering what would happen if you did that. I mean, like actually staggering. Again, you can hear it in my voice. What would happen for them when they're 35 years old, you've been putting in for 31 years, for example. And at birthday parties, instead of taking in presents, you ask people contribute to that investment account. And you can do it with Acorn or one of those type of companies. And it's just consistently now instead of someone buying them a $100 present, they're putting a hundred bucks into their Acorn

8:44 account and you've invited 35 people to their party to their birthday party. You can imagine what happens over the course of time. If you as a family are contributing and friends and acquaintances are contributing into your child's savings account when they're 20, 30, 40 years old and they need money for college or they need money for their wedding or for their first house. they could have tens of thousands if not hundreds of thousands saved up depending on your contributions. And if you put it in over time a bit larger amounts, you know, a couple thousand dollars a year and you do it over those 30 years, then again, you're going to see something that could be one or$2 million saved up for them. Not to mention, if you did that until their retirement obviously now you're talking about, you know,5$10 million, which will it's again compound calculator will blow your mind. All right. So on the lowrisisk investing,

9:30 what are some things that you can invest into that are safe? Well, your banks are offering CDs right now of four to 5% for the year. That may not sound that exciting to you, but when Wells Fargo, Bank America, Chase type, you know, major banks are offering that, that is very, very safe. Now, could a bank go bankrupt? Sure. But if a bank goes bankrupt, especially a household name bank, our economy is in complete disarray. Something tragic happened in our society. You can think about to the times in 2008 when we had a humongous e economic collapse. And so the likelihood of a Bank America, Chase or Wells Fargo is pretty close to 0% of them going bankrupt when you're using a household name bank like that. Is there some risk?

10:16 Sure. But it's very very much much less than 1% chance. So I look at that more as a no- risk investment than even a lowrisisk investment because highly unlikely that a household name bank is going to go bankrupt. and there would be signs and situations ahead of time that you could pull your money out along the way. So, think of that as a no- risk investment as close to it as possible. Now, four or five% a year doesn't may not sound like a lot to you, but just a few years ago, typically CDs were 1% 2% or 3% on specials. It was very rare that you would ever see something like this. And now it's being consistent at four to 5% for the year.

10:53 Another one is gold. Again, gold might seem like a high-risisk investment, but if you go look at the last 30, 40, 50 years, gold has been very consistent. Have there been some drop offs along the way? Of course, there have. Drop offs can happen during, you know, economic turmoil, war, recession, etc. But look at the consistency over the decades. Gold has consistently gone up and it is pacing, you know, outpacing the stock market and so many different things people can be investing into. And you can physically have gold at your house or in a safety deposit box at the bank and it's something that you can see, feel, touch or you can invest invest into it as a commodity. But gold has just been one of those things that has been tried and true for many many years.

11:37 The next thing is people are surprised when I say this is in the lowrisk category is the S&P 500. I mean, how dare I say S&P 500 in a low-risisk category? When this is betting on the top 500 stocks on the stock market, people hear stock market, this should be medium risk or high risk, but it is not. Here's why. It has been 91 years of the S&P 500, which has gone through recessions, depressions, and so much craziness, and it has averaged 11% a year return. If you dollar cost average or you just look at the investment over the course of the last 91 years, that number has been extremely consistent. If you la decades, there's only been a few losing years.

12:23 Just go look at the S&P 500 or Google search it or chatbt. S&P 500 returns the last 25 years, for example. You'll notice there's only been a few losing years over the last few decades. decades. That is a very rare thing in most investments. Typically, investing, you're hoping to, you know, win here, lose there, win, win, win, lose a couple times. You're thinking about ups and downs. S&P 500, if you look at it, has only had a few losing years in the last few decades. And those few losing years were nothing in comparison to the consistency of growth.

13:00 So, when you think about 11% a year and go back to that compound calculator that we talked about, oh my gosh, if you were getting 11% a year return and you were putting in 10 grand a year, for example, you would have millions and millions of dollars at the end of the rainbow. If you go look at it after 25, 30 years, what would happen at 11% return? It is mind-blowing. So, the S&P 500 is the top 500 stocks on the stock market and it is very easy for you to invest into. You don't need an investment manager. You don't need a wealth manager to do this.

13:33 You can handle this on your own. All right. So, the lower risk investing CDs are around four or 5% which is amazing. You can do them on six month 12-month notes. You can do them longer if you like. Gold you can buy physically. There's typically gold pawn shops and gold stores and gold, you know, things you can go to those stores in your area if you want to buy physical gold or obviously you can buy it online and buy it as a commodity. The S&P 500 is something you should be taking very seriously. If you could be contributing capital to the S&P 500 year after year, there can be losses along the way, right? There could be a bad quarter, a bad year, etc. It it just hasn't happened very much over the last few decades. And so I look at that as the safe category. All right, medium risk investing. There's three core topics that I like. Again, there's other categories. There's lots of options, if

14:21 not infinite options for you to be an investor into. But in the medium risk category, I look at three core topics. Real estate, the stock market, individual stocks, and cash flowing businesses. On the real estate side, there's obviously lots of options. There's long-term investing, there's fix and flips, there's Airbnb rentals, and so many different options. You could try to look at section 8 houses, you could try to look at short-term rentals, you could look at vacation rentals. You could look at fixing and flipping cheap houses that are, you know, 100k, 200k, 300k. You could look at fixing fancy houses that are a million dollars, $2 million. You could look at multifamily, storage units, commercial. There seems to be so many options. I like to study as much as humanly possible or co-invest with someone that's really good at real estate. So, there might be someone in your local market or there might be

15:18 someone that you've been following online that accepts investment capital. Think about people that are experts in the category. You might want to co-invest with them. That could be co-investing into a real estate fund, right? That has fixed returns or that has average average returns over the course of time. So there might be someone that has a $50 million fund. You could put in 50 grand, 100 grand, 25 grand, 500 grand, for example, depending on their minimum. And then in that fund, those funds are typically 5 years or 10 years.

15:48 You could be earning return on that. That same person might also have individual projects, right? They might be buying a house for 600,000, putting $100,000 into it. So now they're in for 700K, and they're hoping to sell it for 840 or 900K, for example, after they pay commissions and fees and things like that. They're hoping for a return of 12%, 18%, 22%, 14%, etc. So, you might be able to co-invest with someone into a real estate project like a fix and flip if they are a seasoned expert. I don't mean your cousin or your friend from high school that's doing their second or third flip. I'm talking about someone that has done it dozens of times, if not 50 or 100 plus times. That is someone that you can safely co-invest into. Now, when I say safely, we're still in the medium risk category. Can someone that's done 80 flips lose on the 81st flip? Of course they can. However, their likelihood of messing up is much

16:45 less than someone doing their second or third flip. They have so much experience doing 80 flips. They have so much knowledge in their area. They probably know the county officials. They know the contractors. They know the people's at Home Depot by name and face. Like because they go to Home Depot so often. Like they know the people and the things. They have the experience. They know the real estate agents. They know the market. They know a lot of the things because they're doing their 81st flip. Can they lose on flip number 81?

17:10 Sure. Can they lose a lot a little bit? Sure. But ultimately, you could feel safer, someone doing their 81st flip that they are likely to win or break even. And most of the time, they're going to win. And you typically aren't just going to invest into one fix and flip with them. You might be wanting to invest in three, four, five, six with them. And then the likelihood of them failing is tiny because again, they've gotten experience doing this 80 times in the past. So, on the real estate side, you can research for yourself to try to do it yourself, which I would consider more high-risisk if you don't have the experience, or you could consider co-investing. What you're going to want to research also is, do I like short-term? Do I like Airbnb in this city? Do I like multif family or forplexes? Do or do I like storage units? What is the type of real estate that you'd like to invest into? What is

17:57 the type of return you're looking for? Again, in the medium risk, I'm hoping for that 10 to 30% range of return. All right, businesses, cash flowing businesses. So, an example for you is I invested into a company called EverBull. I put in 500,000 back in 2018 when there was around 13 locations. Then they got to around 17, 18, 19 locations. Helped them raise $5 million for the company to help them scale. So, it's helping protect my investment. it's helping the business by adding gasoline to the fire and I believed in the company watching their growth. Then I invested more buying some of the locations in 2020 and 2021. So owning physical locations of EverBull, which is an Asai bowl chain.

18:42 Now if there was only one or two locations, that would be high-risisk investing. No matter how much I like Jeff Fencster, the CEO, if he only had one or two locations, that would be a high-risisk investment. But the fact that they were at 17, 19, 22, 24 locations, etc., that became a lower and lower risk. Can any individual ever bowl close down or have a bad year? Of course they can. But again, over the course of time, they're going to learn, get better, better menus, better experience, better staff, etc. Better marketing.

19:11 Now, fast forward to 2025. Remember, I invested when there's around 13 locations. Now, there's 103 locations, right? It has grown by over 800%. There's eight times as many locations as my investment back when I put in 500K back in 2018. And they're opening one new location every six days. Now, think about this for a second. It's a cash flowing business. These restaurants can do 600K, 700K, 800K, 900K, maybe even a million dollars, some of them more out of a location that only costs around 160,000 on average to open. And so the risk rate of return is let's say it costs around 160,000. Again, this number changes based on your market, changes based on the size of location. Let's just use that as an average for this EverBull.

19:59 And you guys can look at everbolt.com. And if grosses, let's call it 600K, 700K, 800K. Let's say it makes around 20 to 26%, you know, profit. That becomes interesting. That means after about a year and a half or so, I'm starting to get most of my money back, if not all my money back on the investment. Where other franchises could take three or four years and cost more than double the investment. Meaning another type of restaurant could cost $350,000 on average. And it might take three or four years to get the money back that I invested into that franchise. And so I like this model and I look at as a cash flowing business. I've invested into gyms. I've invested into other types of businesses that are cash flowing businesses. And so look for yourself. Is there someone opening their ninth hair salon or their ninth pizza restaurant or their 14th dry cleaners? Right? Think about someone that has experience. If

20:55 they have their first or second location, that is considered high-risisk investing. If there someone that has nine locations, 14 locations, 25 locations, that becomes medium risk to low risk investing. Can it fail? Of course, I have to keep saying that. Yes, any one location or any one situation can have a bad quarter, a bad year, etc. But over the course of time, companies with experience, people with experience, businesses with multiple occasions are less likely to have failure. There is going to be and there can be failures in investing. I reduce my risk. If you notice from the kind of the theme and the trend of my topics, I reduce my risk by investing into experience. By investing into something that's been a proven track record over and over and over. So if someone has their 13th location of something, I know going in I could lose some of my investment on a location 14, but it's unlikely because

21:53 of the experience, because of the things that have taken them to get to their 13th location. Now they're opening number 14. I like co-investing into something like that. That's a cash flowing business. You can study people like Cody Sanchez, Pace Morby, and people like that, Marcus Lamonus that are showcasing small businesses and creative financing in ways you might be able to even buy cash flowing businesses. But you got to make sure that you study and really understand that cash flowing business. Really understand what is it doing? What is the profit? What is my risk? Who is going to be the operator? who how can I help scale this business the marketing the ads the efficiencies etc on the other part of medium risk investing is the stock market but individual stocks these individual stocks are companies that you believe in or that you like or that you're a customer of so I'll use an example

22:50 there's thousands of stocks to choose from I'm not looking at penny stocks I'm not looking at the next new shiny thing I'm investing in a companies that I believe in for the long term and or I'm a customer of and I know that a lot of other people are. So Netflix you've been paying 15 bucks a month for example for the last 1015 years but you're listening to this and you probably don't have even 10 or $15 worth of Netflix stock. that is one of the best performing stocks in the history of the world that you've been paying for that you've been spending hours a week watching and your kids your your friends or your parents or your neighbors all of them are watching it too and you hear about Netflix all the time and you could have invested in their stock you could have thrown in a few hundred here and there into their stock and few hundred it would be a few thousand now if you would have invested a few thousand you

23:44 probably have 10 or 20,000 now if you would invested 10 or $20,000 depending on the year you'd have hundreds of thousand dollar now because Netflix is one of the best performing stocks in history and you've just been sitting idly by watching it. You're paying for it on your credit card. You're watching it, consuming it. You know about it. Everyone talks about it and you're not investing into it. Just like the Apple iPhone, the Apple laptop. You might be listening to my podcast right now, the Money Mondays. You're listening to it on Apple AirPods. Do you know that if AirPods were their own company, they'd be one of the biggest companies in the history of the world? The AirPod has done hundreds of billions, billions of dollars in revenue, and it's going to keep growing year after year because people lose AirPods or they want the newer version, etc. Sometimes AirPod does a launch and does like $13 billion on a launch of

24:36 just the AirPod itself. Just one little category, one little product inside of the Apple portfolio. You might be listening to this on your AirPods or on an iPhone or on a laptop and you don't have Apple stock. Think about this for a second. You could afford to buy an $800 phone, a $1,200 phone, a $1,400 phone. So, you cannot tell me that you couldn't afford to buy $800 of Apple stock, $1,200 of Apple stock, $1,400 of Apple stock, for example. There's a fun fact. Do you know that if you each time that you bought the iPhone, right, there's been 15 iPhones and let's say they averaged for $1,000, right? They were 800 bucks, 1,200 bucks and everything in between.

25:21 Let's just call it 1,000 bucks times 15 iPhones. If each time the iPhone came out and it was $800, that same day you bought $800 of Apple stock, the next iPhone comes out and it's $920 and you bought $920 of Apple stock. If the 15 times that the iPhone came out on the exact same day you bought the exact same amount of stock, so you can't tell me you didn't have the money because you bought that phone that day, do you know what would happen if you spent that 15,000ish on stock? You would have over $1 million of Apple stock for 15 grand. It's a really fun fact. You can go research it. It will blow your mind and it will keep growing up. That number will keep rising year after year because Apple has been consistent year after year. It is staggering the revenue that they do, the market share that they have. It is super impressive. And so if you like a company like Apple, research it and buy some

26:18 Apple stock. And oftentimes people say this is not investment advice. This is investment advice. I want you to do your research, choose companies that you like and make an investment that you can afford to do. If it's a few hundred dollars, fantastic. I don't want you to go put all of your capital into any one thing. I don't want you to put your life at risk. I don't want you to put your finances at risk. That's the whole point of this model of 40420, diversifying your investments into small bite-sized different amounts so that no one investment can hurt you. I don't want you to put all of your money into Apple or all of your money into a CD or all of your money into a real estate deal or all of your money into an Everable restaurant. I want you to pick and choose things that you like as you're listening to this that you feel comfortable with. And I want you to invest a small amount or a portion that

27:06 you can that fits into your life. And each year, year after year, as you bring in more income, deploy more investments into the categories that you like. I diversify it in this 40420 model. But I want you to think about for yourself, what type of investor are you? As you're listening to me, are you liking when I say lowrisisk stuff that you're like, "Oh yeah, I want to invest with the CD for 4.2%. That would be great. Or, you know what, the S&P 500, that is right. I did research it. It does crush it. Maybe I just do that. Or, you know what? I I want more action. I want to invest in real estate. I want to fix and flip houses every seven months. Well, you can research each of those different categories and make a decision for yourself or split it up the way I do.

27:45 So, in the stock market, to wrap that part up, think about companies that you shop at. If you drive a Tesla, you should consider some Tesla stock. If you buy from Amazon, like most people on the planet do, well, Amazon's one of the best performing stocks in human history. Why don't you have some Amazon stock? If you're buying $265 on Amazon every other week, maybe you should be buying a matching amount of stock and after years of you buying and shopping on Amazon and you at the same time buying Apple Amazon stock. Wow, what would happen for you?

28:16 If you just look at the Amazon rate of return over the last few decades, it is again mind-blowing how well Amazon has done as a company. Think about the thousands and thousands of thousands of dollars that you spend on Amazon every year. Imagine if you bought thousands and thousands of dollars of Amazon stock every year. Also, again, these numbers are adjustable. You might be able to afford millions of dollars of Amazon stock. You might only be able to afford $500 of Amazon stock. And both are fine. Just investing where you're at. Don't try to keep up with the Joneses. Just consistently invest in things that you like, whether it's Amazon, Apple, Google Netflix Facebook Tesla etc.

28:55 Research the companies that you like, put in a comfortable amount, and just keep contributing to that same thing that you feel comfortable with year after year after year. All right, the last part is high-risisk investing 20%. Now, again, you can change this number based on your comfortability. If you get nervous when I talk about high-risisk investing, maybe it's a smaller percentage. If you're obsessed with high-risisk investing, I would still not suggest a higher than 20%age. Here's why. If you all of a sudden deploy 50% of your 100k that you we we use as the example into high-risisk investing and things don't work out or they take a long time, you are essentially gambling.

29:32 High-risisk investing is called high risk for a reason. Now, you might be able to change your financial life if you get it right with that 50% investment, putting 50K into something in the high-risisk category, but this is not a safe strategy. And so, I'm going to walk you through the safe strategy, which I say is 20% or less into high-risisk investing. And let's just use the 100K example. That means $20,000 goes into this category this for this year. Okay. What are some high-risisk investments? There's a couple. One is cryptocurrency. Mostly I'm talking about Bitcoin and Ethereum and really Bitcoin.

30:08 And two is angel invest. Angel investing is similar to what I mentioned about EverBull when I put in that first 500K in 2018. That was into the parent company for parent company stock and shares. That is a long-term angel investment. Now people talk about this the statistic that nine out of 10 angel investments fail. Well n out of 10 anything fails. Nine out of 10 comedians fail. Nine out of 10 musicians fail. Nine out of 10 lots of things fail. You can reduce your risk, which is the theme of my speech today. You can reduce your risk by finding things that already have experience that already have proof.

30:50 So, if you're angel investing into your friend's first restaurant or first year of their clothing line, that is not just high-risisk investing. That is very, very, very high risk investing. But if that same friend of yours is doing 12 million in sales of their clothing brand and they are raising capital for their business and you throw in 25K, well, you are now angel investing into a still considered a startup company. You're buying some equity of that company. Let's say they're doing 12 million in sales. Let's say they have a 25 million valuation. You're buying a percentage of that company. You're buying a little piece of that company with your 25k.

31:26 And if that company goes from 12 million sales to 19 million and 19 million to 31 million and 31 million to 42 million the valuation of that company will go up and your 25k will be worth 45k then 70k then 100k etc. On paper that is not a liquid investment. Let me repeat this on paper your 25k in equity could now be worth 45k then 71k then 100k plus etc. on paper based on the valuation of the business does not mean you can pull that money anytime soon and the company cannot give it to you and so when angel investing why I'm saying that so clearly is even when you get it right it might be right on paper so when I say angel investing sometimes it takes long well the liquidity event for a company is typically 5 to seven years I invest into companies that are already doing 2 to 20 million in sales that is my message that is my thesis.

32:23 So, Elevator Syndicate, you can look at elevators syndicate.com, is my angel investment group. I have 930 investors in the Elevator Syndicate. I've raised over $56 million, four companies, and we deploy $3 to $6 million per deal into companies that are doing on average 2 to 20 million in sales. So, I'm not just telling you guys a theory. When I talk about all these investments, when I talk about investing in Everbolt, when I talk about the stock market, when I talk about real estate, these are my real life investments. These are the things that I actually do. And so with when it comes to this with angel investing, I have actually raised $56 million. You've seen some of the brands. I've done it for Skinny Pasta. It's called Its Skinny Pasta. I've raised millions of dollars for Icon Meals. So you can look at its skinnya.com, iconmeals.com.

33:12 Uh, I did $4 million for Joyide Candy. I raised money for multiple different brands, a lot of food and beverage brands. Uh, we just did it for Key.co. We raised millions of dollars for Key.co, which has over 7,000 luxury homes on their platform. I like angel investing into companies that have got good traction. And so, I try to find businesses. I've done it for Cars and Coffee, my sports car store chain. So when you hear about Skinny Pasta, Icon Meals, Joy Ride Candy, etc., I'm raising money for these companies to help them scale.

33:45 You can co-invest into deals like that. You can find people in your neighborhood on social media, people that you trust that might be raising money for their companies. Again, you've got to vet it and make sure that you trust this business or this brand or the CEO. And when you get it right, you could have a big win. There's been some companies that I invested into that they were doing, let's call it 7 million sales and now they're doing 60 million sales. That is a huge return. When you hear about EverBull, I invested at 13ish locations.

34:15 Now there's 130 locations. That is a big return. That is on paper. I've not gotten cash back for my investment for that. Now, I got some distributions along the way obviously and I've gotten some payouts along the way from Everable, but the for the most part, this is a really good example. my 2018 investment. It's now been seven years. The company's obviously doing, you know, tens of millions dollars in revenue, opening a new location every six days. I'm not pulling cash out, right? I'm not selling my stock. On paper, my stock is worth obviously a lot more going from 13 locations to 103 locations. But that is on paper. And so, you got to keep in mind when you do an angel investment, that has to be that let's say that 25K that we use as the example. that money you have to be comfortable locking up for a long period of time even when it works.

35:03 All right, to wrap it up, Bitcoin Bitcoin is the single best performing asset in the history of the world. Let me repeat, Bitcoin is the single best performing investment asset in the history of the world. Now, you might think you're too late. There's a famous quote or famous theory. When was the best time to buy real estate? 20 years ago. When's the best second best time? Today. When's the best time to buy Bitcoin? 14 years ago when it first started. When's the second best time? Today. You don't have to try to dollar cost average or wait for it to go down and wait for it to spike up and wait for it to go down and try to trade. Buy little bits of Bitcoin that you feel comfortable with. And do not watch. I want you to put it on the side. So, if you're throwing a,000 bucks in Bitcoin, for example, and it's going to have fluctuations. It could be at 119,000 today. While you're listening to this,

35:57 it could be 114. It could jump to 122, 122,000. It can have fluctuations, but over the course of time, because it's a 24-hour market, there's a lot of liquidity, a lot of fluctuations, a lot of movement that happens in a 24-hour market. Bitcoin is very volatile from that perspective. However, if you look at the last 14 years, it's only had a couple of losing years. I think two losing years out of 14. To me, that is a great great great thing to consider. Now, can it keep up with this growth for the next 14 years? Maybe. What we've seen is the consistency that year after year, year after year, Bitcoin has fought through bad marketing, bad situations, bad people, all the things, bad press against it. But year after year, it has gone up consistently for all 14 years.

36:48 There's been two losing years and really just one losing year of any substantial matter which I think was around let's call it around 30-ish percent. And guess what? The very next year got it all right back. Consistency if you look at the Bitcoin track record is what you should be looking at. Now you're buying in at the all-time high. Bitcoin is at an all-time high this week as you're listening to the Money Mondays. However, I'm not asking you to go spend hundreds of thousands of dollars. If that is a big amount of money to you, don't put in 500 bucks, put in 200 bucks, put in two grand, 10 grand, 20 grand, whatever is a comfortable amount for you that you can leave in a volatile thing that has shown consistency.

37:27 Bitcoin to me mathematically over the course of time should end up being worth 1 million, $2 million of Bitcoin in our lifetimes, maybe even more. And here's why. Now, as I say that, it could also go down tremendously this week, this month, this year. Bitcoin can go from 119 down to 90,000 really quickly. It could happen. But there's so many wealth funds, wealth managers, venture capital, hedge funds, whole countries, major major mogul that are buying up Bitcoin. And so there's support. Bitcoin cannot go to zero. Just be clear that that is a physical impossibility because there's support from so many people that would buy it along the way. It's it is unlikely or mathematically at this point impossible for Bitcoin even go down to 10, 20, 30,000 because there's so much support from so many wealthy people that have a vested interest.

38:22 So what is that threshold? What is that number? I don't know the exact number. No one does. But I would assume if you just think about the amount of support that is out there from so many wealthy people, wealthy companies, corporations, countries, etc. that are supporting it, I don't see how Bitcoin can even go down to 50,000 really because there's too many people that will buy it up at 70, 80, 90 because they've got investments at the $100,000 range in this example. So, is it scary to buy Bitcoin at the all-time high? Well, not actually that scary when it's had an all-time high so many times in the past. And so thinking for yourself, are you comfortable with a high volatility investment? I don't consider it high risk even though it's in the high-risisk category because of the consistency year after year. There will be swings. So you have to be ready to put it in and trust in the consistency.

39:16 If it goes down, I'm not asking dollar cost average. If it goes up, I'm not asking you to throw in more. I'm just asking to be consistent. You could buy it Bitcoin now on Cash App, Robin Hood, Coinbase. There's a lot of options, but I would be looking at Bitcoin as something that you put in a small amount of money over and over and over. And again, small is relative to your situation, and you just keep buying in over and over. Whether it's at 119, 104,000, 150,000, whatever, Bitcoin is something that mathematically, why do I think it's going to be worth a million, 2 million, 3 million over the course of time in our lifetime? is is this and I'll end with this.

39:53 There will only ever be 21 million Bitcoin. 4.6 million Bitcoin are missing. And people don't talk about this or realize this part. And more than 4.6 million, that number will grow month after month, year after year for the rest of eternity. Why 4.6 million are missing? Because people lose their wallets, people lose their phones, people lose their cold storage, people lose their lives. And so when someone loses their wallet, if they don't find that wallet, there's no way to get their Bitcoin back. If someone loses their little cold storage, that little device, there's no way to get their Bitcoin back. If they lose that passcode if someone transfers it incorrectly, they send Bitcoin to an Ethereum wallet or they send Bitcoin to someone else's wallet incorrectly, there is no way to get that back. If someone loses their life, it is very difficult to go get their Bitcoin out from their phone or their laptop or

40:47 their app. Unless you know exactly where it is, you know all the keys, you know, all the access, etc. It is actually very difficult if someone passed away to get access to their Bitcoin unless they've left protocols for someone or left it in their will the information on how to get it out. So, if there's 4.6 million Bitcoin missing already and then it goes to 4.7, 4.9, 5.2, to this is a supply and demand issue is why I am mentally focused on Bitcoin over the course of time because I believe in supply and demand very very greatly in all things that I do sports card trading sneaker flipping inventory and low amounts of like the Michael Jordan rookie card the 1986 rookie card and Michael Jordan because there's only 430ish of that perfect 10 card there's a low supply I know the number and I know that Michael Jordan will grow in demand year after every year because he's the goat, he's the legend. This applies in all things

41:42 that I like, supply and demand. So, if there's 4.6 million Bitcoin missing, that means that there's 16.4 million, right, of Bitcoin that are out there. And that number goes to 16.3, 16.2, etc. And we're not even fully mined yet. There's it's going to take till around 2045 to all 21 million Bitcoin have been mined. And so if the supply keeps getting less year after year because people lose their lives, lose their wallets, lose their storage etc. and the demand as you can see keeps growing from people in the past, present and future.

42:17 Well, if the demand keeps growing and the supply keeps getting less and keeps weakening, what happens to the price? Well, you've seen it. You've seen what happens to the price year after year is it continuously goes up. Even though there can be drops along the way from people selling for liquidity or people selling for different reasons or trading or whatever they're doing, there can be drops. The consistency, if you look up the Bitcoin chart year after year, has gone up except for two years. If the supply keeps getting less, not if it it will keep getting less because people will keep losing their phones and wallets. They'll keep losing their lives because that's just what happens sadly.

42:53 I don't want to say it so bluntly, but it is the reality. So, the supply will keep getting less. The demand will keep growing. To me, you will see Bitcoin over the course of the long term be worth $1 million, $2 million per Bitcoin. But you can still invest just 400 bucks, 800 bucks, two grand. You don't have to buy a whole Bitcoin to invest into Bitcoin. It is something you should be considering. You should also be considering for your family, for your corporations, for your children, etc. Buying small amounts that you're comfortable with, setting it aside, and do not make an emotional decision whether it goes up or down. There's plenty of people that have FOMO, plenty of people have regrets. Ah, I could have bought Bitcoin at 80,000. I could have bought Bitcoin at 400 bucks. Blah, blah, blah, blah, blah. This is the reality of the time now. Buy little bits of Bitcoin that you're comfortable with. Hold on to

43:38 it and do not sell. Whether it goes really, really high up, really, really low down, or has a roller coaster up and down along the way, buy an amount that you are comfortable with to stick in there for the long term. And if you can keep adding to that for yourself, for your children, for your future, you will be very happy over the course of the long term, even if there's some fluctuations along the way. All right, so you're listening to the money Mondays covered three core topics typically. How to make money, how to invest money, how to give away charity, but today was called 404020.

44:09 If you like to look at the elevator syndicate, you can go to elevator syndicate.com. You can join for free. if you are an accredit investor and then we send out investment updates on things that we're investing into every 4 to eight weeks for people to optionally invest into deals alongside of us. If you're looking for a mortgage, we have Elevator Mortgage. You can go to elevator mortgage.com if you are here in America. Uh we have the Elevator Nights. The event is actually this Thursday. I don't like to be timesensitive typically on my podcast, but it happens to be this Thursday, elevator nights. That is my 57th time throwing a free event. You can look at elevator.com. I'm throwing it in Los Angeles at Hubble Studio this Thursday. And if you're listening to this after this, there's going to be more elevator nights all over the country as I throw event number 58, 59, 60, etc. completely for free. We have

44:54 Elevator.studio. That's my social media agency. We've spent over $60 million with influencers for brands, products, mobile apps. And so, Elevator is my brand. Elevator Nights, Elevator Syndicate, Elevator Mortgage, etc. because I want to help people in different categories, especially in the financial markets. Things that are important to them like mortgages, like social media, like investing, etc. I appreciate you guys listening to the Money Mondays. Make sure to spread the message with your friends, family, and followers about money. We grew up thinking it's rude to talk about money.

45:23 I think it's that's ridiculous. We have to talk about investing. We got to talk about loans. We got to talk about bills. We got to talk about overhead, taxes. Those are all real parts of our life. So, make sure to have blunt discussion with your friends, family, and followers about money. Have open conversations, learn as much as you can, research as much as you can, and we'll see you guys next Monday on the moneymunddays.com.

Questions about this episode

Who speaks in "The 40-40-20 Formula: How I Invest My Money for Safety, Growth, and Big Wins"?

Unknown Host (Host).

What is "The 40-40-20 Formula: How I Invest My Money for Safety, Growth, and Big Wins" about?

The "40-40-20 Formula" is an investment strategy that allocates 40% of funds to low-risk investments for steady returns, 40% to medium-risk investments targeting higher gains, and 20% to high-risk opportunities for exceptional returns. This balanced approach aims to protect overall capital while allowing for significant growth potential, adaptable to any investment amount.

What is mentioned in this The Money Mondays Podcast episode?

27 people, works and ideas are mentioned, including 40 4020, EverBull, High-Risk Investing, Medium-Risk Investing, Low-Risk Investing, Elevator Syndicate. Each one on this page links to its own page with every episode that mentions it.

How long is "The 40-40-20 Formula: How I Invest My Money for Safety, Growth, and Big Wins"?

The episode runs 46 min; the transcript is about 8,653 words in 62 timestamped sections.

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