How to Use Big Gains vs. Small Gains. Make the Big Moves Early.

There are a million posts on the difference between being young and old it really boils down to a shift in recovery time along with pain tolerance. When you’re young, you have the ability to recover quickly (just look at physical injuries) however your pain tolerance is lower (not enough repetition). As time goes by, after multiple painful repetitions (physical with weights/sports, mental with stress/emotional events) you’re going to become desensitized to most forms of pain. Tolerance builds over time making the answer clear… put the pain/stress on as early as possible to become desensitized.

Big Gains

Put Physical Pain Up Front: If you look at someone who is overweight and in their 30s, the upward battle to get in shape is enormous. Muscle memory is real. If you haven’t developed a solid physique in your 20s or at the latest early 30s maintaining a high level of fitness will become incredibly difficult. The reverse is also true. If you can take the physical pain up front, you’re going to be in the best shape of your life and offsetting the inevitable declines will be significantly easier. Even if someone tries to take performance enhancing drugs to give themselves an edge, it just won’t compare (otherwise pro-athletes would continue to perform well into their 40s). Remember, when referring to fitness we mean both looking good and feeling healthy as well. There is a tremendous difference between being physically muscular and being coordinated with cardiovascular health as well. Since health is #1 (more important than both time and money) anyone foolish enough to let their bodies go down the drain in their 20s will pay for that decision for the next fifty years.

Put All Financial Gains Upfront: Instead of trying to get ahead by slowly putting away money (10% is always thrown around as the norm), it makes much more strategic sense to try and put away a large amount of money early and “let it ride”. This allows you to let time work in your favor and you can even slip up a few times. Your slips won’t matter because if the principal investment is untouched you’ll be set without lifting a finger. Once the math “clicks” you’ll see its much more meaningful to work extremely hard when you’re young to lock in the compounded gains. The table below should be an eye opener. As a simple example, if someone decides to wait for 5 years before really putting money away (think doctor/lawyer) that means you’ll need over $600K+ in post tax income to catch up to someone who put away low six figures just a few years earlier. This is a daunting task when you consider that the young hungry business person will unlikely see a zero income year.

Person 1

Decide to Play Catch Up? If someone decided to “take it easy” because investing smaller amounts over time is easier, you’ll see a huge disadvantage appear. Even if they were to put away 45% (almost half) of the amount for 15 years (3x more time) they won’t catch up to the big investments made by the first example! To put it into clearer terms, the last five years of investing (years 11-15) is roughly equivalent to the single $100K investment made in year 1 by the first example ($257.8K vs. $285.8K). This means five full years of effort in “out years” is equivalent to a single painful event year 10 years ago. This bears repeating. Even if someone saves approximately half as much over the course of 3x more time, they will be worth less than the person who put the large capital investments up front. If you want to play the game from a psychological perspective, think about tripling the number. Take any amount you have today and ask if you’d rather have triple the amount in 15 years .

Person 2

Take Advantage of Being Young: Approximately 32% of the readership is just joining the workforce while the remaining consists largely of working professionals with 6-figure incomes (or better). With that in mind we would challenge any young reader to learn the art of “playing dumb” as early as possible. This means using your youth as an excuse to avoid large scale items. No one cares if a 22 year old lives with a roommate. No one cares if he can’t afford a $40,000 watch. No one cares if he goes to Thailand to party instead of Monaco. No one cares if he only has two suits. No one cares if he eats a sandwich to go vs. a sit down seafood restaurant for lunch. In short, take advantage of lying down about any amount of income you’re making and you won’t see a material impact to your social life. When you’re 30 it won’t be impressive to “scrape by” and you surely won’t be interested in drinking 12 shots over the course of 48 hours to party all weekend. In short, if the *perception* is that you’re young, penniless and naive… You know what to do… Take advantage of the situation.


In Your 30s Not There Yet? No problem, the strategy we would deploy is the see-saw approach. One year you’ll bite the bullet and focus a ton of time on generating event driven income (anything that’ll allow you to potentially sock away 6 figures in a year, we’ll draw the line there). Instead of trying to become frugal (see boring) you’ll oscillate between putting away a large amount of income and relaxing the following year. The reason why we would suggest this route over the constant grind is that you’ll avoid personality deterioration. If you’ve ever hung out with someone who saves 70-80% of their income for 10+ years… you’ll know exactly what we’re talking about. Years 25-45 or so are the prime years of your life so if you’re already in your 30s it probably makes sense to switch to an oscillation framework. In addition, this guarantees you’ll outperform the steady saver from the examples provided above, one year of pain is worth more than two mediocre years. So you can live it up, buckle down and oscillate to avoid burning out and remind yourself of the joys that money can bring.

Forget About the Investments: This is probably the most difficult part. In order to see the value of putting big gains up front you have to forget about the investments and avoid using the gains. This means you’re doing yourself a disservice by constantly checking a personal trading account or your net worth on a daily basis. This will either 1) make you feel rich or 2) make you feel uncomfortable during a market down-tick. In addition, to avoid using the gains you’ll have to *trust the process* by taking any material financial windfall and throw it all into equity + debt instruments and close the brokerage account screen.

Small Gains

While the most important section is about the value of large gains, we’d say small gains should be used as a “revolver”. For those unfamiliar with finance terms, a revolving credit facility is essentially quick access cash at a low interest rate. Instead of being charged an interest rate, all small gains should be used to create a revolving cash facility for one-time charges.

Website Income: You will fail. Or you’ll get lucky and hit your first idea out of the park. More likely your first 10 ideas will fail. This is a great thing because failing early in life sets you up for a great future and the small failure can actually help you. What you’ll do is set up 2-3 basic checking accounts with income from all of your failed ideas. Lets say you started a niche website on the best yoga equipment for stretching (talk about a terrible idea) but… that website generates a couple hundred dollars a month. Now lets repeat this with 5 more websites and that’s $1,000 a month. You can take all of the money and throw it into an “emergency” checking account. This will offset all of your one-time charges for at least 5-10 years. In five years you’ll have $60,000 to either keep as a safe haven or use to fund a small idea: as noted $50K is the approximate amount we use for selling a new product: 1) $10K website design/sales page – any specialized work you need to make your website look better; 2) $5K demand check – quick demand check before you even get started with your idea (if there are zero orders you don’t proceed); 3) $35K product manufacturing and design -find a place to produce your product and design.

Small Gain High Risk: Another advantage of small gain items, you can take a huge amount of risk with it. If you have a similar situation to the items outlined above you can also throw it all into risky investments: small/micro-caps, high volatility crypto-currencies, high volatility leveraged equity products, options etc. This is a great way to get a meaningful return off of a small gain. If you’ve walked backward into an extra $10,000 for some reason (large gift, fortunate one time sales day etc.) you can go ahead and put an aggressive move onto the table. If you end up picking up a 5-10 bagger (500-1,000% return) that’s going to make the small gain a meaningful one. Besides who want’s to live their life buying nothing but boring indexes and bonds!

Hitting Singles With a Rental: The third way to make small gains is to own a couple of middle class rental properties on leverage. This means your primary goal is to get the cash flow to “show a zero”. Subtracting out fees and depreciation, on a tax basis you can show 0 income on a couple of properties while benefiting from cash flow positive numbers in the mid-hundred dollar range on a monthly basis (this even includes property management if real estate isn’t you’re way of earning your money). While we’ve focused primarily on “electronic real estate” (cash flow positive websites). Diversifying into cash flow positive rentals can also be used as a small gain for high risk rewards or emergency cash accounts.

Putting it All Together


While we’ve put up a lot of numbers here the key is really decisiveness. We’d say the biggest mistake we see people make when trying to accumulate money is being indecisive. Once you choose your path to earning *event* or large one time gain income… You can’t falter. Instead of trying to go down 3 paths at once choose one to be your primary income producer. The biggest and most lucrative ones are of course: Business, Real Estate and Career income. Once you’ve set down on one path to be the primary income stream do not deviate. You’re allowed to go down two paths at maximum. Since you’ll be developing two income streams one will naturally dwarf the other but your skill-set will be diversified. The rest of the money will all go to “small gain” set it and forget it type environments. If real estate is not your path to earning income, you’ll need a property manager. If internet based income is not your path, then you shouldn’t bother with purchasing “internet real estate” on flippa. If you’ve gone into sales, it does not make sense to spend your weekend doing a technology bootcamp. Decide on a path (making sure it is lucrative first).

If you’re interested in learning about your specific skills you’ll want to read our upcoming book Efficiency. You’ll figure out the following when it comes to earning money: 1) what skills you have, 2) what industries to join, 3) how to choose the right company to work for, 4) how to start an internet company, 5) how to build a basic niche website and 6) how to do all of this without becoming that boring guy who look uncomfortable in any social setting. Efficiency will be available in July, subscribe to receive discounts or follow us on Twitter for the launch. Remember we can give the tools, but no one can execute on the plan but you.


  1. Pacificus813 says

    I’m so excited. Takes you guys almost a year since announcement to get the book out. Can’t wait for it now…

  2. Chris says

    Can’t wait for the book to release. I discovered this blog 1-2 years ago and it changed my mindset on how being different than the masses is not a curse, but rather a blessing.

    Just a few accomplishments after finding this blog:

    1.- Switched from Pre-med to Economics and managed to graduate with a 3.8 GPA

    2.- Bulls**** myself into the MO/BO of GS from a Non-target school not even in the top 200

    3.- Got accepted at a Target School for Masters (Think Oxbridge/ LSE)

    4.- Learned sales and improved health by engaging in college sports and powerlifting

    Now, I’m working hard towards breaking into Banking/Consultancy in London this year, also starting a few affiliate marketing websites on the side. (Im 23 yo)

    This is coming from a kid that was raised in a 3rd world contry by a single mom earning around ~9000 USD a year. WSPs gave me some guidance on how to live my life efficiently and now the only thing I’m worried about now is becoming average and let my life slip through luck and excuses.

    Thanks for your help guys.

  3. says

    As someone who entered the workforce at 20 (entered college at 17, finished in 3 yrs)…I can confirm this to be absolutely correct.

    1 – Your body won’t put out as much energy as you age, those 12 hour workdays will become more burdensome and hangovers will ruin your day.

    2 -Never depend on your savings. If you’re living off your savings, have some cash flow flowing in….because when you have more spare time your expenses go up.

    3 – If you have any issues that need to be sorted out (anxiety, weight, etc)…get them fixed ASAP. It’s better to lose weight or see a shrink when you have the means and time, as it will improve your daily performance. It’s a gift that keeps on giving. People notice when your personality changes for the better, or your potbelly is gone. Personally, I dropped 35 pounds in a year (190, now 155); 20 of them in a month.

    First time I got fired (boss was VPs bro in law, couldn’t fire him), it took me 9 months to get over it…spent too much time trying to think what happened. Spent all of my savings, and then some. Got back up, in the process I got laid off but didn’t bat an eye after two days. Why? Because I knew trying to bust a Sigmund Freud over spilled milk won’t fix shit, bills still got to be paid, and time is money. Can’t make money if I’m trying to analyze what happened. Also, eating PB&J and living out of your car makes you question a lot of things. Desperation is a motherfucker….and a motivator as well.

    Cut your losses (emotions in this case), and move on. There’s a ton of money to be made out there. Found a gig where I get a cut of the profits and I hired someone to help me. So now I make money doing nothing…and can make some more if I want to do grunt work.

    If I’ve learned anything it’s….better to be the one calling the shots than risk getting s**** on.

  4. says

    Damn it, you’re going to *destroy* the self-improvement community,STAAAHP(jk).

    Seriously though, your free content seems enough already, imagine your book. Also, seeing the high posting frequency, i can feel your frustration. Publishing an ebook is a hustle, even after you’re done writing.

    Lastly, i know the no Qs rule, but it’s more of a rhetorical one: Could we say that getting a career is not mandatory in this day and age to become wealthy?

  5. John G says

    #1 “Website Income: You will fail.”

    I laughed out loud. I love how blunt you guys are.

    #2 I also LOLed at the product dev numbers. Spot on.

    Also, big thank you for helping so many people get their ducks in a row. Found this blog a few years ago after getting two interesting, but overpriced and useless arts degrees.

    Was ready to jump off a bridge.

    Since then I developed a product and found an investor who kicked in more money than I normally make in a year.

    Just getting that much done showed me how much I can do to turn it around and how wrong the people around me were.

  6. JP says

    Thanks for the content, very insightful! What’s the knock on someone who saved 70% plus of their net income for a decade?

  7. says

    Wish I could do it over, but I’m a dentist making 500k, however just started making good salary in my mid 30’s and have 250k student loans still. Younger guys…do not go into healthcare! I’m over a decade behind bankers, and as you can see from the charts up there, even saving only 100k a year, theyd already be near a million, if their savings went up over those years…2 mm easily. You can live off that. Instead, my financial nut is less than 100k, my 500k salary is only half after taxes, take away another 36k a year for my student loans, and you can see I’m forced to work my ass off to rapidly build up investments or I won’t have enough principal to live off down the road. Worse yet, there is no stealth wealth, everyone assumes you’re rich because of the degree and you feel the resentment. I have the lowest net worth of practically anyone I know! Sure I can live comfortably (now closer to 40 than 30), but I AM FORCED TO WORK FULL TIME, and will have to for decades. Since I’m really clueless about the whole internet space, I’m going to have my second income stream be real estate, but living in an expensive coastal town even this will take many years of rent inflation to pay any dividends. Moral of the story…when you’re young, work hard to make money. I worked hard to get into more school where I had to keep working hard and taking on more debt, and did not make any money for a decade. You’ve been warned!

    • Wall Street Playboys says

      Amazing comment the fact you’re admitting mistakes is more than most “well educated” will ever admit to.

      The man doesn’t lie, stack your chips now since you’re making good money and play a little catch up.

      Probably best to adopt the “every other year” strategy to avoid becoming boring guy with no personality.

      • Nathan says

        Lawyer here.

        Law is worse.

        Even the areas of law that are performance-based (personal injury, class actions…anything contingency-fee based) take too long to get really rolling to make law worthwhile. Any other practice areas you’re straight up trading time for (not great) money.

        Law is a “copper handcuff” job:

        The money starting out is not that great and the work required makes it a Yuuuuge time suck and difficult (but by no means impossible) to build biz on the side.

        If you could get a job as a lawyer (emphasis on “job” and not “career”), means that you:

        (i) are reasonably intelligent;
        (ii) have solid work endurance; and
        (iii) are not socially retarded.

        = you could be successful and far better off financially doing something else (sales, engineering, etc)

        Law is still prestigious, yes…

        …but as WSPs say:

        F*ck prestige. Get money.

        And do it fast. Once AI-based legal applications get working well, the legal profession is gonna get paved.

      • A says

        Engineering is ok. But that phrase comes into play:

        “Always comfortable, never rich”.

        Now sales is a different story…

      • Max says

        Another lawyer here.

        Second almost everything that Nathan has said – you will get ‘good’ not great money but it takes a long time. You can start a side business but like anyone else in an intense career it is never going to be easy.

        Disagree on the AI though – lots of law is specialist advisory work and involves getting black or white out of a huge puddle of grey. Specialist thinking is involved, so the one benefit of law is that it is ‘future-proof’ e.g. very hard to automate giving advice on whether a loan agreement at LIBOR + X% between a blue chip parent company and its non-resident offshore subsidiary is an arms length finance arrangement for the purposes of international transfer pricing and corporate tax law.

        AI will replace some of the more mundane tasks and will redefine legal research and that is probably a good thing for all – cheaper for clients; less crap for lawyers to do.

  8. YM says

    Awesome article.

    Another thing related that wasn’t mentioned. Learn how to control your emotions early, along with developing healthy belief systems.

    Recently have seen some older guys struggling with controlling emotions in stressful situations and its a very sad site to see. This goes for emotions relating to money, girls, and stress in general.

    Enjoy the incline!

  9. James Strikes Again says

    After being reading this blog routinely since 2013, and working in med device sales, I finally jumped “on board” with your policies at 25. Rode out the storm we call Obamacare, and bounced to a stabler company. Like you all say, if you can sell you should have no problem finding a job.

    -DCAing into S&P Index- $5k a month
    bought a bunch of small caps and crypto at a grand or two in each…never know where they will go.
    -And have some investments in healthcare stocks in solid companies in the industry I work in.

    My only risk to falter at this point is the whole “the market is too high” and “recession is imminent” playing with my emotions. They said the market was too high in 2014. And I didn’t invest in the market. I just saved cash in a bank account. Now, I realize, NOBODY can time the market. Only thing to do and best thing is like you said, make a plan, stick to it, and use TIME to your advantage.

    Was just at a former colleagues house, a buddy of mine who used to work at Zimmer-Biomet with me, and couldn’t believe his multi-million dollar house at 35. I asked him what he did… He said he DCA’d for 10 years

  10. Robert says

    Guilty of checking my portfolio every day. But it’s so much fun! Admittedly, there is a slight change in my mood when I see a dip. However, I’ve become quite good at controlling my emotions. Recently saw my portfolio take a $40K dip. Thought to myself, “that sucks”, then put more money in. Back up to where it was, and it’s still not enough. Back to grinding.

  11. Jose says

    I love your blog. I have been reading, learning & applying the knowledge. Thank you. I started sharing it when I sent some wage slave one of your tweets that has to do with retirement accounts. He got pissed and told me to stop being so negative. Lol….never heard from him again. I guess the truth hurts….hahaha. He was trying to act rich by showing me his 403b and how he will retire rich…By the way…he’s 46 so he said he was too old for the blog…lol

      • Floyd Mei says

        I am 40 and yeah I agree I messed up – divorce and just a decent 150K job and all that.

        When this blog keeps saying It’s too late, I actually get energized because it’s better to hear that at 40 and make massive improvements than to hear that at 50 or 55.

  12. AC says

    If I get this (and previous posts) correctly the core strategy is as follows:

    – Put 100K in index funds first

    – One time, 6 or higher figure income, throw it into index funds/bonds, unless you are waiting for a market correction

    – 4 figure income (annually), throw it into bitcoins. If it goes under “oh well”, if it goes at some point in time, x4 (or any other multiplier you are happy with), extract the money and put them someplace else (i.e. index funds)

    – 5 figure income annually or one-time put it into a business venture or RE

    – Manage your cash flow and always have in cash 12 months of expenses (ultra-safe play as income will never go to 0 for a full year)

    – Use a standard % of salary to fund business ventures, ppc, etc

    – ???

    – profit!

    Am I missing something? 🙂

  13. Blackvorte says

    Can you clarify this? “If real estate is NOT your path to earning income, you’ll need a property manager.” My understanding is you wanted the income to be as passive as possible which is why you don’t recommend things such as content websites (constant updating). A proper manager would therefore been seen as a positive?

    • Belgian Beau Gosse says

      Depends on the situation. If you’re a real estate rookie and you don’t have many properties to manage it would be pretty stupid to hire a property manager.

      If you’re the CEO of your own company and you have several properties but not enough time to manage them it would be pretty stupd not to hire a property manager.

      Be decisive and make progress one step at a time. Starting several projects at the same time usually results in failure.

      Navy SEALs explain use the “crawl, walk, run approach”. When you’re learning how to crawl you should focus on crawling, you shouldn’t waste your time on worrying about how to run.

      • Blin says

        When you’re starting out (with few properties and some free time), not hiring a property manager is like being paid to learn and get experience. I think everyone should manage their properties themselves for at least a few years before hiring a PM.

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