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what's up everybody I'm just but it's Singh and welcome to the minority mind sent hey do you like coca-cola you know I don't drink that stuff who said anything about you drinking coke oh you just asked if I liked coke yeah I asked if you like coke the company you know coca-cola sheesh get your mind out of the consumer mindset it's even worse than having your mind in the gutter anyways I don't want to spend this video talking about the coke business itself I want to talk about why financial education is so important by using coke as an example and I'll show you exactly what I mean but before I get into it make sure you hit that thumbs up button below and subscribe to the minority - YouTube channel so you don't miss a new videos every week in 2017 James Quincy the CEO and head bossman of coke made 10 million dollars from working his job running coke not bad now compare that to this Warren Buffett and his company are investors in the coca-cola company and in 2017 the same year Warren Buffett and his company made 592 million dollars in dividend income from just owning shares of the coca-cola company let me explain what this means James Quincy has to work very hard I mean he runs a huge corporation and he's compensated very well for that I mean a made ten billion dollars in 2017 but this is called active income because he had to work to earn this ten million dollars Warren Buffett on the other hand is an investor he uses his money to invest in other companies and so he uses money in this case to buy and own shares of the coca-cola stock and coke pays out an annual dividend or cash payments to their owners and in 2017 Warren Buffett and his company made five hundred and ninety two million dollars in dividend or cash payments just for owning the coca-cola stock and Warren it didn't have to sell a single can of coke but there's a lot more I want you to understand than just how much money you can make in legal terms the money that James Quincy made from his job is called earned income because that's the money he had to go to work to earn and the money that Warren Buffett made from dividends is called portfolio income now while these are small legal terms that have big tax consequences because James Quincy made his ten million dollars from his job and I'm gonna assume that all ten million dollars from salary just to keep things simple he has to pay earned income tax rates on his money and these rates tend to be very high so he made ten million dollars and because he lives in Atlanta Georgia which isn't a super high tax state he will end up paying around forty five percent of his money in taxes leaving him with 5.5 million dollars now this is a lot of money but he paid almost half of his salary in taxes Warren Buffett made right around five hundred and ninety million dollars in dividend and he come from coke that's about 60 times more than the CEO of the company that he has invested it but because Warren Buffett made this money through dividends the maximum tax rate that Warren Buffett will have to pay remember maximum tax rate on his five hundred and ninety million dollars is 20% all money is not created equal Warren Buffett made sixty times more from coca-cola than the CEO of coke made but because Warren Buffett made his money as an investor he is entitled to bigger tax breaks why because well that's what the tax code says James Quincy is an employee at coke he has to go to work five six seven days a week to make sure that you drink Coke products not Pepsi and because he is the CEO and he worked his way up he gets compensated very well for that but his tax rates his effective tax rate is more than two times more than what Warren Buffett's effective tax rate is on his dividend income from the coca-cola company because of how they earned their money and I know you probably said little taking off yeah duh Street this is cool and all but I don't have a couple billion dollars just sitting around for me to go and buy companies with that's cool I get that but this doesn't mean that you can start incorporating this investor mindset shift with I don't know fifty thousand dollars or five thousand dollars or five hundred dollars the system rewards you for not listening to it if you listen to the system you go to school get a job and you work your way up the corporate ladder hey you can make a lot of money which is great but remember it's not just how much money you make that matters is how much money you get to keep which is why I need you to start thinking different on the other hand if you understand how money works and you start building your financial education now you can go out and you can start using your money as a tool to attract you more money this way you can get the best return on your time and your money this doesn't mean you have to quit your job I mean Warren Buffett makes a salary from his company too but you have to start using your money smartly Warren Buffett uses his money to invest in other companies you could do the same thing by using your money to invest in other companies through the stock market and if you want to create passive income and you can invest in dividend paint companies or you can invest in assets like real estate slowly over time if you keep adding more money to your investments and you keep compounding your profits by reinvesting the money that you do make your investments will grow and the amount of money you're making from passive income is gonna grow a lot to remember 99% of Warren Buffett's wealth was made after his 50th birthday money takes time to compound sure maybe you won't make six hundred million dollars a year from one stock but one if you make an extra sixty thousand dollars a year it is very doable but you have to start taking baby steps today and if you want to learn more about how you can invest your money in the stock market or I can invest your money and real estate to create passive income and linked a couple videos for you to watch in the description below so check them out thank you for watching if you enjoyed this video hit that thumbs up button and share with one friend so you can help spread the word don't miss our new videos on entrepreneurship and money every week at 7:30 a.m.
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