Transcript

Save Smarter, Live Richer: Practical Investment Tips with Financial Expert David Bach

From Tommy Mello · Episode page · Watch on YouTube

· 38 min · 7,897 words · 101 timestamped sections

This is the full, timestamped transcript of "Save Smarter, Live Richer: Practical Investment Tips with Financial Expert David Bach", an episode of Tommy Mello published December 5, 2025 (38 min, about 7,897 words). It mentions 11 people, works and ideas, including Automatic Millionaire, Roth IRA, S&P 500, Fidelity, Vanguard.

What is discussed, and when

  1. – 5:00: Fidelity, Vanguard, Automatic Millionaire, David Bach
  2. – 10:00: Roth IRA, Automatic Millionaire, Latte Factor, Michael Mallowitz
  3. – 15:00: Automatic Millionaire, Roth IRA, S&P 500
  4. – 20:00: Automatic Millionaire, S&P 500
  5. – 30:00: Automatic Millionaire
  6. – 35:00: Automatic Millionaire, Roth IRA
  7. – 37:42: Automatic Millionaire, Tommy truth

Notable quotes from "Save Smarter, Live Richer: Practical Investment Tips with Financial Expert David Bach"

  • Known for the automatic millionaire, and the Finish Rich series.
    about Automatic Millionaire · at
  • Fidelity has the largest 41k numbers of anybody. There's Fidelity, there's Vanguard, there's Schwab. Fidelity has right now 565,000 people who are millionaires in their.
    about Fidelity · at
  • Better. That fund has averaged over 12% for the last 5 years. If you go back and you pull these funds, the S&P 500 fund, great option. Like I heard you I listen to you on a podcast. You've got $100 million now in the S&P 500 pretty much.
    about S&P 500 · at
  • So I'm just curious. I did a Roth IRA when I was 16. At this point next year it comes out of a self-directed. It's got over a million dollars in it. I got very lucky. Now I couldn't put money in.
    about Roth IRA · at
  • Yeah. That's the one thing, I'm sure you're familiar with Michael Mallowitz. I got to know him pretty well. But this idea when it hits that's when I was 16, it hit my account. I didn't miss the $300 a month,.
    about Michael Mallowitz · at
  • Thanks so much for listening to this episode. Like always, we're going to close it out with the Tommy truth, which is a little slice of wisdom from me to you that can help…
    about Tommy truth · at

Who and what is mentioned in this episode?

People

  • Clarence David — Person · 2 mentions
  • David Bach — Person · 1 mention · first at
    Think this job sucks. It's not the job that sucks. It's that you didn't use your money to build some freedom. David Bach is a 10X New York Times bestselling author, entrepreneur, and financial educator.
  • Michael Mallowitz — Person · 1 mention · first at

Books & papers

  • Automatic Millionaire — Book · 9 mentions · first at
  • Latte Factor — Book · 1 mention · first at
    I would tell you because my kids have Roth IAS. When I wrote this book, The Automatic Millionaire and then the Latte Factor, my young I've got a 15-year-old now and I have a…

Companies & orgs

  • Fidelity — Company · 2 mentions · first at
  • Vanguard — Company · 2 mentions · first at
    Fidelity has the largest 41k numbers of anybody. There's Fidelity, there's Vanguard, there's Schwab. Fidelity has right now 565,000 people who are millionaires in their 401k…
  • Schwab — Company · 1 mention · first at
    Fidelity has the largest 41k numbers of anybody. There's Fidelity, there's Vanguard, there's Schwab. Fidelity has right now 565,000 people who are millionaires in their 401k…

Concepts & topics

Full transcript with timestamps

An interesting phenomenon happens where people who are making good money in a job if they don't actually start to build financial freedom, they actually start to resent their job. So what happens is you got someone who's making 200,000 or 250 or 300 interesting

and they got themselves a Harley and they bought themselves a new truck. Now two years have gone by, a recession hits. They're having to work harder. They're making maybe 310, 320, but they're actually further behind. and all of a sudden they're like, you know, I think this job sucks. It's not the job that sucks. It's that you didn't use your money to build some freedom. David Bach is a 10X New York Times bestselling author, entrepreneur, and financial educator.

I'm a drop of truth on you right now. You want to go and try and get rich overnight, you will stay poor forever.

Known for the automatic millionaire, and the Finish Rich series. Don't buy options. Most people have no business buying options. Looks super sexy on CNBC. Super risky. With over 7 million books sold, he's taught millions how to build lasting wealth through simple automatic habits.

Recessions make millionaires. Booming economies like this, this is where people can get lazy.

Get ready. This conversation will change the way you think about your personal finances and investment strategies. All right, guys. Welcome back to the Mellow Millionaire. Today, I got an awesome guest. You're going to learn about wealth, saving, retiring like a millionaire. David Box in the house. David has taught millions of people how to build lasting wealth through simple automatic habits and inspired a global movement around financial freedom. And today he's going to share with us an amazing new tax strategy.

David, thank you so much for being here, brother. Good to be here. Um I'm I'm so thrilled this could work out. Thank you.

So, let's just get started. You know, what's the number one piece of advice that you give people about money? Before I even say what it is, let me just say that I've worked with thousands of real life millionaires. Not people who built business and sold businesses. People who had jobs making 50, 75,000, $100,000 a year. Average Americans. How they built real financial freedom is super simple. Comes down to three words. Pay yourself first. It's all about paying yourself first. It's the flow of money. the way ordinary people in America have become millionaires. And by the way, there's now 24 million millionaires in America.

And that's a number that's going to double in the next 10 years. And the bulk of these Americans have become wealthy by paying themselves first. But it's the second part that's the key. They made it automatic. It was all done automatically behind the scenes, right? Like you've got 1,5 employees you told me today.

Yeah. Okay. So when an employee has a 401k plan, the single most important decision they make is when they sign up for their 401k plan. It's that automatic decision where they're paying themselves first before they pay the government, which by the way, it's the only legal way to get to paying those taxes, right? So they've got to pay themselves first. The formula, and I'll give you the exact formula right now. We know what the number is to become a millionaire in your 50s. It's one hour a day of your income. So the first hour day of your income, so everybody who's working for you, if they're filling out the little form and they go, "Well, what is an hour day of your income?" It's 12 and a half% of your gross revenue. Now, I actually want you to save more than that. I want you to save 15 now because you're going to need more money. The reality is with inflation, the cost of everything, you

need to be saving minimum 10% of your gross income, but ideally 15%. Fidelity has the the largest 41k numbers of anybody. There's Fidelity, there's Vanguard, there's Schwab. Fidelity has right now 565,000 people who are millionaires in their 401k plans. It took them an average of 26 years and they saved 14% of their gross income. Now, in most cases, those people also had some kind of a match. Their employer put a match on top of it. So, very important for your average employee that they invest in a targetdated mutual fund. And what that means and well I'll use fidelity as example here. If it's a Fidelity plan inside that 41k plan will be a mutual fund with a date. If you have a Vanguard 41k plan in most cases they're going to have target date mutual funds. They may you may have you may have offered your employees also the option of having an index fund. If someone wants to have 100% index fund which is great like the

Vanguard total return stock market fund the symbols VTI has 3600 stocks in it. That fund has got $1.7 trillion in it right now. That's the biggest no-brainer mutual fund you could ever invest in. Meaning like you don't need to think. It's got 3,600 stocks in it. It's going to it's going to average wherever the stock market does or in many cases better. That fund has averaged over 12% for the last 5 years. If you go back and you pull these funds, the S&P 500 fund, great option. Like I heard you I listen to you on a podcast. You've got $100 million now in the S&P 500

pretty much. You've got a diversification then. So for somebody who's listening that the one of the biggest myths is that they tell people when you're young you should be super aggressive with your investments

100%. They say you know you're young you can afford to lose money you should take more risk. The problem is someone who's 30 and invests super aggressively and loses all their money. They're equally unhappy.

Yeah. And and so someone who's 30 that takes too much risk, they often get scared out of the market and they never go back in again. So I would if I go back to that allocation I said earlier 75% stock 25% bonds for a young person. It's a great allocation.

So I'm just curious. I did a Roth IRA when I was 16. At this point next year it comes out of a self-directed. It's got over a million dollars in it. I got very lucky. Now I couldn't put money in there after I was 27.

It's in a Roth IRA. A Roth IRA which you can max out 7500. I was putting 300 a month when I was 16. I worked two jobs to do that.

And you're 42. 42. Okay. Um Yeah you know, now here now we'll talk later about my ideas for changing the tax law on retirement accounts. You know, with a Roth IRA, you'll just leave it there because why would you take the money out just like keep growing taxree? But what I would tell you because my kids have Roth IAS. When I wrote this book, The Automatic Millionaire and then the Latte Factor, my young I've got a 15-year-old now and I have a 22-year-old. So, when they read the Latte Factor six years ago, they were like, "Well, Dad, how do I get one of these Roth IRA accounts?"

I'm like, "Well, we go set it up for you." And my 15-year-old now has we've funded it for three years. So this year it's $7,500.

Previous two years it was $7,000. So this kid's 15 with $24,000 in his Roth IRA. If you go to investor.gov, they've got a probably the easiest compound interest calculator there is to to use in the world. It's free and you can run these numbers. So I go, James, let me show you something. If you save $20 a day, so we just use you. All you do is fund a Roth IRA until you reach your 60s.

It's so cool. And you and you only earn, you know, you don't get the returns that you quoted with like private equity. You know, if you get 10%, right? The stock market for the last hundred years is average 10% annually with reinvested dividends.

James, how much money you think you'll have? The answer for him is over $11 million in tax-free money

at 10%. At 10%. Now, you can run these numbers lower. You could run them at 8% or 7% and then you just realize you need to save more money. But the key is $20 a day for most people can be a life-changing amount of money to put away for retirement. One of the things I did on I didn't bring my stack of cash for this show because I wasn't knowing we were going to do this show, but I just did a bunch of podcasts and um I carried around I'm not one of these people who does this, but I carried around a stack of $10,000. So a stack of $10,000 and 20s is about that thick.

Okay? So imagine I'm holding $10,000. The reason I did that is because I wanted to ask people, what do you think it takes to below $10,000 a year? And the answer is $27.40 a day. And and you know, the question I ask people is like, look, I don't know what your financial situation is, but I know a whole lot of people who blow $27.40 a day on nothing.

They're going to get a candy bar, the chips the you know, you go to Starbucks and you're not going out. You're not going into Starbucks and out of Starbucks and spending less than $10,

right? Chipotle today just had came out with earnings and they basically said, you know, young people are starting to come here less because because you go there and you get a burrito and a Coke and it's $27,

right? So, you know, people are starting to actually wake up to the fact that with inflation, they're going to need to save more money. And the only way to save more money is to make the decision automatic. I carry these phone this phone right now as like a as a uh a prop. Also, these are money-making machines. And what I tell people is your phone right now is a money magnet where you can make everything automatic. All your savings, all your investing automated with a click of, you know, a few clicks or people, the greatest technology in the world is separating you from your money automatically. It's much harder to hold on to your cash right now because everyone is coming for it. And they're not just coming for it once, they're coming for it for the lifetime value of the customer, right?

Everything's a subscription fee now. Yeah. That's the one thing, you know, I'm sure you're familiar with Michael Mallowitz. I got to know him pretty well. But this idea when it hits that's when when I was 16, it hit my account. I didn't miss the $300 a month,

right? Because I just would look at it once a year and I just never used that money. I said, "That's my future self's money." And it's hard to do that. This takes some discipline.

What you just said is like gives me chills because it's the key, right? You made a decision at a young age to take care of your future self. Right now you're doing that with your health,

right? And at the end of the day, a lot of people will they they know they should do something better with their finances, right? Like this book, The Automatic Millionaire, sold two million copies. The updates got success stories galore in the back of the book. And the thing I'm always the most fascinated with is like, well, what what made you make the decision? Right? Like there's a story in the front of this book now with a woman named Tiffany. She was a teacher making $39,000 a year, but she lost her job, which is unusual as a teacher. They had layoffs.

She was hugely in credit card debt. She had to move home with her mom and she saw me on Oprah talking about the automatic millionaire. She's like, I think I can do this. She went down to the bookstore, bought the book, and said, "Not only do I think I can do this, I think I can do this for myself, I can get out of debt. I can pay myself first. I can change the course of my life, and I think I can teach others." She's now gone out and taught millions of people how to do this. And she's a self-made millionaire now. And that's an extreme example, but I get these stories all the time from people, and the question is always, what made you make the decision? So, so, so let me ask you, what made you make the decision at 16?

So, I got in my cousin's red Corvette. We're sitting in the car and he goes, "How much money you got in your retirement account? Like, tell me about your Roth IRA." I said, "What are you talking about?" And he goes, "Dude, I'm 10 years older than you. I'm 26." He goes, "You don't understand that extra 10 years, what it'll do."

He goes, he goes, "Listen, man. Why don't we go set something up right now?" So, we drove I to the bank. We sit down. And he goes, "How much can you afford a month?" I go, "About a h 100red bucks." He goes, "Can you do 300?" And I'm like, "I'd have to get a second job." He's like, "Well, how do you feel about that?" I'm like, "I could do it." And it was more of like, you know, when I looked at a compound interest that back in the old school finite math days on the back,

that extra 10 years is crazy. When you look at Buffett, one of the, you know, wealthiest people in the world today and you see his compounding, his compounding started after 60 because once you get to the fourth decade, money starts to compound at a rate of over 20x compound over 40 years.

I don't know what it is about a husband and wife getting together. But if there's both of them there, they'll say, you know what, let's just let's just do the fifth wheel. Let's just do that second house. Let's just do the Harley. And like, we deserve it. We work so hard. and they don't realize they're stealing from their future and they almost feel like they're self-entitled. Business owners do it all the time. They they take out a draw and like we work our butts off. But I'm like that money is like the fuel of growth. I'll tell you for couples it's a real issue because I always say people are usually born one of two ways. They're born to spend or they're born to budget. Which by the way I don't like budgeting because budgeting is too hard. You should make it automatic. But you tend to marry your financial opposite. And if you and it's very rare that two people who like to save get married. Sometimes

two people who like to spend get married but that's why they end up bankrupt. Right?

So I think the the way you get people to get clarity around their money decisions is I teach people to look at their values first. So what are your most important values? Purpose focused financial planning which is that what's the purpose of money in your life? The purpose in your money in your life is whatever you've decided the purpose is. But if it's just to buy stuff, I promise you that stuff longterm doesn't make people happy. Just doesn't.

No. And it creates more stress. So the thing that happens is our incomes go up is our lifestyles increase. And as our lifestyles increase, our stress goes up.

And you know, they say 70% of people have jobs right now would like to quit their job. They're basically checked out, right? They're unhappy.

And the number one reason is typically because they think their boss sucks, right? Like I know I know you're doing leadership books or whatever. Like I I I joked with somebody the other day. I said, you know, somebody should do a book called Just Don't Suck, right? Because people are looking for love when it comes to work. People's, you know, our real stories are what impact people. Like my case, I started buying my I bought my first stock at age seven. That's because my grandmother took me to McDonald's and was like, I'm going to teach you today that there's three types of people in the world. Those who work here, they make minimum wage. That's a tough way to make a living, but they people do. There are those who come here and eat just like you right now. You're a consumer. You're spending money. And there are people who own this place.

They're the ones who bought the stock. And she took me home that day, you know, much like your your cousin did and opened up the newspaper and circled MCD and was like, "That's the symbol of the stock." Put me in front of a television set, showed me how to read read a ticker symbol on the screen, and then took me down to a brokerage firm and helped me buy my first stock. And what that lesson did for me was that lesson was that made me realize everything we do every single day, someone makes money from it.

Yeah. And if I can invest in those companies, that means I get to make money on it. Like how can you own an iPhone and not own Apple stock? Well, you might not know if I should own Apple stock, but you know, if you buy the S&P 500, you have Apple stock. How can you shop on Amazon every day and not own Amazon stock? how you know every single thing that you do all day long, you're spending money all over the place. And I was just on another podcast and somebody said, "Well, aren't you worried about everything going wrong?" And I'm like, "Everything going wrong? What does that even mean? Like, do you think people are not going to keep watching Netflix and they're not going to be listening to Spotify? All those companies just continue to make profits. And by the way, the next 10 years are going to be the best 10 years, I think, of our life, even though the market's at an all-time high right now." You know, if you've

been an S&P 500 fund this year, you're up 19% year to date, right? It's insane. You know, I think I think what'll happen the next 10 years is we we'll continue to see this hockey stick because the reality is AI is producing profitability.

I was just in Australia last week. I've been to China, South America. I've been all over the place and I just love this country. I love the idea of the American dream because I came from very low income. Uh but this is the epitome. We all have a chance and I'm in a meritocracy. I live in Europe and the and I live yeah full time now I live in Italy. I live in Florence, Italy. So we lived in Manhattan and I'm like we're going to go for for nine months we're gonna go Jack when you're a sophomore and we'll go live in Italy and we'll expose you to all of Europe. Well, what ended up happening is everybody fell in love with it and we stayed. So my both my kids went to international schools in Florence. My my older son now is at Northwestern. He's about to graduate and he's going to go live in New York again with he's got a job. And my younger son's uh got two more years. But we've been in Florence now for six years. I

have all these expat friends and the thing you learn about wealth is that the United States is the only country that taxes you wherever you go. So, you know, if you decide to move abroad, you still get taxed. Um, but other countries, you can get out of a lot of those taxes. And people just move based on taxes.

Oh, yeah. And so, the wealthy all over Europe, they just go where the next good tax deal is. I fundamentally believe in the American dream. I think, you know, the automatic millionaire book was about the American dream. If you pay yourself first, if you save small amounts of money automatically and you buy a home, you have to buy a home because you can't get wealthy as a renter. It's just statistically been impossible, right? Homeowners are worth 40 times more than the average renter. So, if you go into a bar and you meet someone, if you ask them if they rent or they own, a renter on average has $10,000 net worth and a homeowner on average has a $430,000 net worth. People will say, "Real estate hasn't performed as well as stocks."

That's ridiculous. Okay, 600 grand. Nobody pays for the most part for their first home. They don't pay cash.

No, you're getting a 30-year They're getting a 30-year mortgage. They're putting 20% down. So maybe they put a hundred grand down. Okay.

And now [clears throat] if that $600,000 home now turns into a million, they made $400,000 if they're married. They made $400,000 tax-free on a $100,000 investment. You know, we call that a 4x return. Very hard to get a 4x return by simply buying an index fund. takes decades, right? Rule of 72, 10% takes seven years. So when you look at the wealth in America today, it's in two buckets. If you sliced open America, they've got a balanced portfolio that's 60% stock and 40% bonds. Those have been the two things that have made millionaires in this country in the last 30 years. When I wrote the automatic millionaire, I launched his book on Oprah 20 years ago. Stock value has had a 6x return. So it's g it's gone up sixfold in 20 years. Real estate's gone up fourfold, but again with with actual leverage of a mortgage.

Yeah, the leverage is where you get it. So an ordinary American with an ordinary job, if they bought a home and they've been paying themselves first for 20 years, they're a millionaire today. Now some people go, "Well, a million dollars isn't what it used to be." Still more than 96% of Americans have. So there's 24 million millionaires in America. 96% aren't millionaires. And seven out of 10 Americans are still living paycheck to paycheck.

Seven out of 10. Seven out of 10. Six out of 10 Americans don't have $1,000 in a bank account in case of emergency purposes. Four out of 10 don't have $400.

Huh. It's scary actually. And you were in commercial real estate. Yeah. You did some good research. I started my career in commercial real estate.

And you know what? What is your take on that? Because you you talk about stocks, bonds, and you talk about homeownership. You know, there are a lot of tax advantages to buy real estate. Depreciation. Now, you got accelerated depreciation. It's

Well, I mean, like I'm I'm imagining that we're in a building that you own. Yeah. These are both paid off. Yeah.

So, you know, when you have a business, it is literally the biggest no-brainer in the world to buy a building, right? And then you have a building the you have an LLC that owns the building and your business leases it back.

This is an opportunity zone, by the way. And there's an opportunity zone. So, you got even bigger depreciation. And now with the new tax laws, as you know, you can do cost segregations now. So you're getting

do that on Airbnb, too. You know, you're getting 100% depreciation depending on how it gets done. Um, you can depreciate things a lot faster. So, it's all about taking your money and getting your money to work for you. The the thing and you're you're you're entering this new level of of wealth and you and you're learning all the tricks. They obsess on making sure that their money is working for them while they sleep,

right? That's wealth. And that's wealth. And and really what wealth is, if you're smart about it, is it's freedom. You can be wealthy and not be free. I have quite a few friends who've got a lot of wealth and they've bought so many things that they're actually not free. You know, now they've got five, six, seven, eight homes and now they have to have a whole team to manage the houses. An interesting phenomenon happens where people who are making good money in a job, if they don't actually start to build financial freedom, they actually start to resent their job. So, what happens is you got somebody who's making 200,000 or 250 or 300 and they got themselves a Harley and they bought themselves a new truck and maybe they got into a bigger home. Now, two years have gone by, a recession hits. They're having to work harder.

They're making maybe 310, 320, but they're actually further behind. And all of a sudden, they're like, you know, I think this job sucks. It's not the job that sucks. It's that you didn't use your money to build some freedom.

What what what what can you say? What moves the needle for people? So, the thing is when you're in your 20s and your 30s and and even your 40s, you have an unstoppable amount of energy. You can just go through walls and then all of a sudden you get in your 50s and your 60s and you just don't have the same energy. You don't want to go through walls the same way. You don't want to wake up in your 50s and be like, "Oh my god, okay, I've really got to get going." I mean, and by the way, if you're in your 50s and that's you, you still need to get going.

There's a chart in my book, and this was a chart given to me in training at Morgan Stanley. We had a guy come into, you know, one of our top financial adviserss. He was like 62. He was getting ready to retire. And the last thing he did was hand us this chart. And the chart was showing us back in the day what would happen if we invested $2,000 in IRA account. I saw you give this example before, but I've got this example of $3,000, right? So that if you start at age 15, this is like my son, and you save $3,000 a year from age 15 to 19. At 65, this person's got $1,615,000 if they earn 10%. The next kid starts at 19, invests till age 26, never invest another dollar, they've got less, 1.5 million. Next person starts investing at 27, invests every single year till the age of 65 and they've got less at 1.3 million. Compound interest works when you start it and you start sooner versus later. So, let me just ask you a selfish

question. Let's just say God was really good and abundant with your life. Where would you be thinking about putting money to to get the highest IRR? And I know you'd be diversified. You'd probably have some long-term PE. You'd probably do some commercial real estate. I don't know. What would you do? You know, I think everybody's situation it's always different, right? I think the question is are you is the goal to continue to build wealth? Is the goal to preserve wealth? I think aged is a lot of a huge factor in this, right? Because you're 42. You're doing so well that you're at a point now where like I'll just talk to you personally, but you're at a point where you're building generational wealth. And part of it when you build generational wealth is are you simplifying your life or are you making your life more complicated? So, one of the things you need to ask yourself when like I think it's smart because again I

listened to a couple of your podcasts before I came here. You're buying businesses in spaces that you know you understand the game now because you've been bought out by private equity. You get you get how like look I can buy these businesses as six. I can clean them up. I can sell them at 12 or 15, right? That's the whole private equity game.

So, you're in this what I would call the smart part of the food chain in private equity. uh for most retail investors and I include high net worth individuals in this category. Anybody over 25 million, once you get over 25 million, the first thing these these adviserss will tell you is you should have 25% in private equity. They'll try to have you have 10 to 25% of your allocation in private equity. I can tell you how much I have in private equity and I've been involved in private equity because I was vice chairman of a firm that was bought by private equity. Um I have zero in private equity. Now, why do I have zero in private equity? So like if you listen to Chimoth for instance on the All-in Summit, he rails against the fact that many private equity funds, the old ones paid back capital, right? But the new ones, the money is just continuing to roll from fund to fund. And what happens is the NAV value of these funds is

arguably made up because these things are not liquid. So, they're selling these they're selling companies from one private equity friend to the next private equity friend, but they're not always paying out the dollars. So, I'm not personally a huge fan of it. Um, I think for you, I'd be buying businesses and buildings,

right, and land. There's about 122 acres in uh in Idaho because, dude, this is the most unfound area in northern Idaho. And I'm like, man, once this thing gets found,

it's still a little late for me, but 10 years ago, people were buying it like pennies on the dollar.

And it's like, it's paradise. It's right next to a ski mountain. It's on a massive lake.

You got to tell me where it is later. So, these are the questions I repeat all the time. So, what's one piece of gamechanging advice you wish you knew in your early 20s? I

think that there's a skill set and a gift to building relationships and continuing those relationships. And I'm somebody who's got friends that goes all the way back to the third grade and I continually make friends and I keep friends. And if I could go back and I told my son this, I wish I had kept a really solid database starting at 20 because I still am not in a position where I can just click an email and go, I want this to go out to these 500 people. The younger that you appreciate the relationships, the better. So that would be my first bit of advice. love the idea of the rolodex. I mean, that's an oldfashioned term, but a database. Uh, one of the things I I stopped picking of people I had a common history with and I started hanging out with people I have a common future with.

You you've gotten to know probably Dan Sullivan, right? Dan used to say, um, you know, I want to be with people who are batteries included. And I started saying, you know, when you meet people there are pe if you're you're somebody who's got a fully charged phone, like you're you're a batteries included guy. So if you put yourself around other people who are batteries included, the energy level just immediately goes up. People who are batteries included, people who don't have a fully charged battery, they want to hang out with you too because they want to plug into your battery.

That's interesting, right? So you have to sort of think, you have to look at things as like, is this person bringing energy to me or is this person draining energy from me?

Here's my test, David. It's an easy test. You pull out your cell phone and when the caller ID pops up, do you get excited? Do you smile? Are you excited or are you like here we go?

Yep. I try to wake up every morning. You I have my whole process everybody has. But like I've got my I wake up and I meditate. I journal. I do my gratitude. And then every morning I send I usually send three messages a day where I send out basically a love message. And often that message is just a what I call a good job message. You know, I know you were talking about kids. Like I do that with my kids like you know good job. Here's here's what you're doing right. You know catch people doing things right. We don't do that enough.

Oh, I love this. Yeah, you do have great energy David. Um, thank you. We could keep going here, but I really want to dive into this tax strategy because I'm super excited about it.

All right, so this is a big idea. At least I think it's a big idea. Um, what happened is when I started updating the automatic millionaire and I'm getting all the new statistics and all the new stats, a number popped out at me that blew my mind away. $46 trillion right now in retirement accounts. All that money got there in the last 40 years because that's how long we've had these 401k plans. So there's 46 trillion dollars in retirement accounts and I've spent basically 30 years of my life helping people fill these accounts.

My whole career has been about teaching people to pay themselves first and save money automatically so they'll have money when they retire and they can enjoy their retirement. What I realized as I was updating the book and I've had this idea for a few years. people aren't taking money out of their retirement accounts. What I didn't know is what the what percentage weren't taking money out. With ChatGBT Deep Research and all these AI tools, I was able to find out that eight out of 10 Americans, it's 83%, but I'll keep it simple. Eight out of 10. Eight out of 10 retirees are not taking money out of their IRA account until they hit what's called RMD age. RMD age is required mandatory distribution age. It was 70 1/2. Now it's 73 and it's going to go to 75 in 2033 depending on when you were born. As a financial adviser, cuz that's where I basically spent my last 30 years. When you run a financial plan for someone,

the plan, all plans default to take IRA money last. So they have you spend all your taxable money and not take your IRA money until the RMDH. So no one's taking this money. And the number one reason is taxes,

right? Because all this money's been put away tax deductible. It's growing tax-free and no one wants to pay ordinary income tax. That's why all the money got put there. It was a tax, you know, avoidance strategy, right? Like you're basically taking money that and paying yourself first. You don't pay taxes. That's the beautiful thing. So my idea is this. My my idea is to change ordinary income tax on IRA accounts to a flat tax. So what we ran was an analysis of what would happen if you had a flat tax and we ran three different cases 10%, 12% and 15%. And people can go to Iraflatax.com um and they can read the white papers that we've done. And [clears throat] to simplify this, here's what happens. If you take it if you take ordinary income tax and you go to retirees, you give them an eight-year window. So my my suggestion is that you're flowing into the economy, the numbers look like this.

And these are again, I'm using AI to, you know, I'm using all the the engines to do this. So you have to take that with somewhat of a grain of salt, but all this data came back and said you would in 10 years basically bring in a trillion dollars in taxable money forward. So the government would earn would bring in all this money over a trillion dollars. you'd bring another trillion dollars into the economy and that economy money is not all instantly spent and many cases they'll move money into their taxable account but then they'll start to spend some of it sooner that goes into the local economy.

Right. Right. Like that goes into garage doors. It goes into anything that needs to be done in their local economy. So that could create up to$ two and a half trillion dollars in local economy revenue. It would raise the GDP. The lowest number it's come back is a quarter of 1%. Could raise GDP. That's quarter 1% annually. Could raise GDP up to 1% annually. So what you have here is a very simple idea that is less tax means more retirement. So there will be some people who are against it. But I think it's kind of such a simple idea that it could get bipartisan approval. And it's similar to the Roth IRA. The Roth IRA was done with bipartisan approval. There's $2.2 2 trillion now in Roth IAS. The financial service industry learned how to teach people how to do Roth conversions. And this would just be another conversion that could be considered for an 8-year window. It would also, the last thing

I'll say is this impacts 73 million baby boomers and it impacts 50 million people be underneath those baby boomers. So, we've got 50 million people in their 50s. If all of the sudden you're in your 50s, you're 53 to, you know, 60, and you know that you've got the chance to fund your retirement account and then take it out at a lower tax rate, you're going to see people increase the amount of money they put in their retirement accounts.

Yeah, they'll use the ketchup provisions in their 50s, which is exactly what we need them to do.

But that's it's it's a crazy world. I'm very optimistic. I was sitting down with Robert Chadini influence. He came to the house. I met through Joe, got to know him really well. hung out with him like a dozen times. Comes to the house with him and Bobette and we're just chatting and he goes, "I am so excited. I am so energetic about the future." And so many people are so worried. What What is your take?

I'm excited about the future. I think the next 10 years are going to be the greatest 10 years of our life.

Golden. I mean, I really do. And I think from a from an investment standpoint, there's going to be more money made the next 10 years than the last 20. I I just think we're going into a very unique moment in time. And I also think what's exciting, especially for like when I meet people like you, is there's just an entire opportunity of wealth creation in these older bluecollar traditional businesses. Like this whole idea that everybody's got to go to college and get these AI jobs, right? I just worry about the entitlement. Not not the entitlements.

I'm not talking about government. Just this idea that we should be provided for. We live in this rich country. We don't need to work. We don't need to try. We need to we want to play video games. We don't we shouldn't have to. And and this idea of the hunter of going out and getting it of like I got my first job at 12 washing dishes. And I'm not bragging about it. I'm just like mom didn't have a lot of money. I wanted to make my own. Like what's wrong with that? Some people just I'll tell you one last cute story. Um when I wrote the automatic millionaire um I used to get my haircut at a place called Nice Cuts in San Francisco. I went to Nice Cuts because the haircuts were six bucks. So the guy who cut my hair was a guy named Sam and it was his place and Sam had two of these places. And he goes, "You're" I go I gave him the book. I go, "I'm going on Oprah with this book." And he's like, "Oh, what are you going to talk about?

You know, my goal is to get 10 million Americans to pay themselves first one hour a day of their income." And he goes, "What does that mean?" I go, "It means 12 a half% of their gross income." Literally falls over laughing. He he could not stop laughing. I goes, "Sam, what's so funny?" He goes, "David, I came over on a boat from Vietnam. Like I'm one of those people. I didn't speak English. I had $75. I worked in the back of a restaurant and they gave me a cot and I slept on that cot and I ate rice and bananas basically for a year. My mom told me when I got to America, she said, "You need to save 90% of your income and live off 10%." That's why he's laughing. He goes, "But I was in America, David." He goes, "I lived off of 25%."

So he saved 75% of his income that first year. That's how he got into his own business. And now he owns real estate. All he had he was buying buildings in San Francisco. And that's the immigrant mentality. They come to this country, they're so hungry. All they see is opportunity. And that's a gift.

Is there a book that when you were younger just changed your perspective on life or just really changed something other than your own?

Oh my god. Dale Carnegie Think and Grow Rich Dale Carnegie How to Win Friends and Influence People. That's the book that started it all for me.

So that was I read that book at age Napoleon Hill. Yeah. 19. And then after that book, I read Napoleon Hill's Think and Grow Rich. Those were my first two self-help personal development books. That started me on the journey. Those books are still classics. I've made my kids read those books.

And there's this idea, a carpet DM or whatever, live life to its fullest. But here's my problem. How do you say live today like it's your last day but also say prepare for the future?

I know it's such a great question because my my phrase is always live rich now and and people go well live rich now then that that would mean I should just spend all my money and just enjoy my life because what if I die tomorrow?

It's a lot of discipline. How do you exercise that skill of discipline? I find it I find it easy and hard at the same time because discipline is doing something you people are like, "Man, I get up early and I go to the cold plush." But you love that stuff. If you love doing it, some people go, "I hit the gym for two hours a day." That's not discipline. Not if you enjoy it. Not if it's like something you discipline is actually doing something you do not want to do.

See, we got such an interesting conversation about this because I think that discipline isn't a habit, right? So, whatever the habit is becomes a discipline. I don't think people who go to the gym two hours a day started off liking it. I think the more you go to the gym, the habit of going to the gym, it's just way more enjoyable, right? Like I work out five days a week at least. And I've just been in Chicago for 4 days, a hotel that did not have a gym, and I had four days without working out.

I love this, David. Uh well, you got Look, I I want to do this again in the future. You got a book release. Everybody gota you got to go pick up uh so you got the new copy of the automatic millionaire

auto. Here we go. Automatic millionaire 20 year anniversary edition. All right. Thank you so much, David. Thanks for coming in today. I really enjoyed it.

You're super welcome. I've enjoyed it. Thank you, brother. Appreciate you. Thank you.

Thanks so much for listening to this episode. Like always, we're going to close it out with the Tommy truth, which is a little slice of wisdom from me to you that can help guide you in whatever you're striving towards right now. These simple steps transformed my life from being a broke 20-year-old to becoming a cash millionaire in my 30s. Number one, work on yourself. Readers are leaders. Read a lot. Get a great mentors. Invest in yourself. The law of the lid says you're only going to go as far as your brand allows you to go. So get educated as much as possible. Be genuinely curious and stay curious for the rest of your life. And that's it, guys. We'll talk to you next week.

Questions about this episode

What is discussed in "Save Smarter, Live Richer: Practical Investment Tips with Financial Expert David Bach"?

In order: 0:00 Fidelity, Vanguard, Automatic Millionaire, David Bach; 5:00 Roth IRA, Automatic Millionaire, Latte Factor, Michael Mallowitz; 10:00 Automatic Millionaire, Roth IRA, S&P 500; 15:00 Automatic Millionaire, S&P 500; 25:00 Automatic Millionaire; 30:00 Automatic Millionaire, Roth IRA; 35:00 Automatic Millionaire, Tommy truth.

What is mentioned in this Tommy Mello episode?

11 people, works and ideas are mentioned, including Automatic Millionaire, Roth IRA, S&P 500, Fidelity, Vanguard, Clarence David. Each one on this page links to its own page with every episode that mentions it.

How long is "Save Smarter, Live Richer: Practical Investment Tips with Financial Expert David Bach"?

The episode runs 38 min; the transcript is about 7,897 words in 101 timestamped sections.

More from Tommy Mello

About this transcript: the episode's spoken words as captioned on YouTube, split into timestamped sections. Reclip.Me locates every person, work and idea in the text, keeps the time it is first named, and quotes the words around it verbatim. Last updated January 24, 2026.