Nischa Shah worked in banking for nearly a decade before quitting to pursue her content creation business full-time.
Leaving the corporate world meant taking an 80% pay cut at the time, she told Business Insider. It also meant forgoing a six-figure bonus, which BI confirmed by looking at a copy of his employment contract.
“It was the hardest decision I've ever made,” she says, adding, “I had supported myself financially and I knew what would make me happy.” he added.
Shah felt comfortable walking away from a steady paycheck as soon as the personal finance YouTube channel he launched in 2021 started bringing in enough income to cover his fixed expenses.
It also helped that she had built up six-figure savings, according to screenshots of her savings and investment accounts seen by BI.
The former investment banker from London has been working for himself for over a year. She earns money through her YouTube, where she has nearly 1 million subscribers, as well as hosting speaking events and increasing sales of her online Make Her Money course.
How an accountant and former banker invests money to build long-term wealth
Mr. Shah, who is also a chartered accountant, recognizes the importance of having a diversified portfolio and owns various asset classes such as cash, real estate, bonds, and stocks.
“All these different asset classes react differently in different markets,” she said. “You never know which ones will do well, which ones will go up, and which ones will plummet.”
She elaborated on stock market and real estate investment strategies.
stock market
Shah also diversifies within asset classes. When it comes to the stock market, “the way I diversify is through funds, so instead of investing in individual stocks, I invest in hundreds of different companies through one fund,” she explained. “So I’m reaching out to every region, every sector, every industry.”
Other smart investors prefer this type of index fund investment. Index funds are inherently diverse and, because they are passively managed, tend to have lower management fees. Anyone can open an account with a brokerage firm like Fidelity or Vanguard, choose an index to invest in, and buy stocks.
Shah added that there are three keys to long-term investment success: “Diversify, start early, and be consistent. That's how you reach your goals by the time you retire.” This is the secret to doing so,” he added.
real estate
Real estate is a difficult asset class to own. Thanks to micro-investing platforms, anyone can invest in the stock market with as little as $1, but owning real estate usually comes with larger up-front costs.
Mr Shah had lived at home for a number of years in his early 20s to save up for his first home in the UK, but at the beginning of his career he wanted to add property to his portfolio. She and a group of her friends discussed the benefits of owning real estate and came up with strategies for actually owning real estate.
There are two main reasons why she likes this type of investment.
First of all, you get leveraged gratitude. With real estate, unlike other investments, you can borrow a large amount of money (from a mortgage lender) to purchase the property, but you don't have to share any part of the appraised value.
“If you put down a 20% deposit, the bank will lend you 80% to buy this asset,” she said. “You can't do that when you invest in the stock market. You can't make money using other people's money.”
Second, if you buy investment properties and rent them out, you can generate cash flow. This is your rental income minus all your expenses.
The cash flow you can generate from real estate is “far greater than what you can get from most other investments,” Shah said. “It doesn't compare to dividends. It takes a lot of investment to earn the same amount.”
Mr. Shah owns a mix of commercial and residential real estate, but he doesn't want to reveal the details of his portfolio, much of which he expanded in the past five years, when bankers were the highest paid. she said.
Mental tricks to spend less and save more
It is not lost on Ms Shah that her previous six-figure salary, which BI confirmed by examining her employment contract, contributed to her rapid savings ability.
Still, she used three psychological tricks to reduce her expenses and keep her paycheck high.
Shah started making YouTube videos in 2021 using an iPhone and a microphone he bought for about $25.
Nisha Shah
1. “Working Hours Rules”
Before you buy something, calculate how many working hours you will have to spend to make that purchase and ask yourself if it is worth it.
For example, “If you want to buy a new pair of trainers that cost $100 and your hourly wage is $20, you would have to work five hours to buy those shoes,” Shah said. “Is he willing to trade five hours of work for them? If he doesn't have a trainer, then yes, probably no problem at all.”
But if this is your fifth pair of shoes, “you've been trading for 25 hours,” she points out. This is about 3 days worth of work and may change the way you look at your purchase.
2. Ask, “Would I buy it if no one else saw it?”
Another powerful question to ask yourself before purchasing anything, especially a physical item, is, “Would I still buy it even if no one saw me with it? ”.
“Many of us spend money on things we don't need because we don't have to impress people we don't like. We all know that saying,” Shah says, but that doesn't mean there's no need to impress people. You don't stop buying to impress. . It's easy to get caught up in one's social status, but even Shah wasn't immune to it. “I did a lot of this in my early 20s. There are a lot of material items that I bought that, when I look back, I could have used that money for something better.” “
Before you upgrade your car or buy the latest iPhone, ask yourself if it will make you happier or improve your life.
“What you're actually saying is, 'Is this really what I want or am I doing it for someone else?' It really flipped a switch,” Shah said. You can spend less on things that aren't important to you and free up more cash to invest in wealth-building vehicles like the stock market, real estate, or yourself.
3. 48 hour rule
As the name suggests, wait 48 hours before making any major purchases.
It's normal to want to buy something right away.You shop, try on fashionable blazers and feel like yourself have To have it.
“We always want to buy something right away. Please wait 48 hours before making a purchase,” Shah advised. “And if you're still thinking about it, go ahead and buy it.” But if you don't like it after two days, just skip the purchase.
Bonus Money Savings Hack: Automate your savings
Shah's psychological techniques can help you change your spending habits, but when it comes to big savings goals like vacations, first assets, or early retirement, the best way to achieve them is to automate your savings. .
“As soon as you receive your paycheck, as soon as the money is in your bank account, move it to your savings account. Pay yourself first before you do anything else,” Shah said. “At the end of the day, systems trump willpower.”
