The hidden truth! Why the wealth of 99% of the population is the same as the wealth of the top 1% of the population.

Carlos Lontro
Oct 9, 2017 · 11 min read

Hi everyone,

After several years of experience and extensive research, reading books, talking with entrepreneurs, successful traders and manger here is my small contribution to the hidden truth of our society. Just like the old Roman Empire, the citizens were kept unaware from what really happened in the background of ruling and politics with all sort of entertainments.
in true reality we are slaves from the society just like the old times and deceived by the system. Nowadays it is the big corporations and big banks that want to entertain us and hide their true hidden agenda from us. All the major media is owned by them and entertaining us. The less questions we ask the better.
The big banks most of times only pretend to serve us best and offer the best investment options when in true reality we are only losing money in the long run and they are making tons of profits from fractional banking, lending money and investing it in higher yielding assets.

Big banks can easily make 6–10% average returns per without great risk using your money investing in a diversified basket of indices. The Standard & Poor 500 for example follows the 500 largest US listed companies. Historical data since 1929 when this Index was created point to average gains above 7% per year since that date and if we consider after 1980 when the computer age began the annual average rose to 11.5% per year.

Average Yearly returns

These results are average with positive and negative years through different economic cycles. Periods of expansion / growth and contraction / recession may last for several years. For example, in the year 2000 this index corrected and presented negative results for 3 consecutive years, -9%, — 11%, — 22%, equivalent to a loss of more than one third of its investments. But anyone who followed a safe low leverage strategy to buy and hold their investments for the long term saw their investment virtually doubling up to the current date, including the giant correction that happened in 2008 of a negative 37% performance for that year.

Yearly gains of the S&P500

A lot of people lose a lot of money on these market crashes because they jumped in the hype when markets where making new record highs after record highs and driven by greed and “recommendations” from their banks they bought leveraged ETF’s and other derivatives. Such corrective moves are usual and repeat time after time along with the different market cycles.
The small average Investor with little knowledge leverages 2 or more times and ambitions 30–50% of profits per year, but when corrections of 20–30% happen they will suffer total losses of their invested capital. The more profits you ambition, the greater the risks.

Another example of what is sold to us from the banks as a “good” investment is a Retirement Plan, where in many European countries, banks only offer a guaranteed rate of 0.75% per year. If you consider the European Central Bank inflation target of 2% this is literally joking with the peoples intelligence, you are literally throwing money away having less money in the future considering it will grow less than the everything you will have to buy affected by the normal rising inflation.

The system, and here I refer to the big corporations and the richest families in the world, owners of the largest companies and institutions and banks and therefore also governements, are focused on keeping the people uninformed and dependent on the financial system and credits, having our money stuck with these “Good Investments” that they present to us with nice and fancy names, Retirement Capital Growth, Guaranteed Retirement Fund, etc… while they use and abuse our money at zero cost to issue credits without any kind of control and invest in the big world indices that grow 10 -20–30x more than the solutions that are “offering” you.

Following these last 10 years of experience, monitoring monetary policies of the world’s largest central banks, researching, studying, reading and managing private funds, talking with amazing traders/investors/managers, chatting with economics and finance graduates and bank officials, I come to the conclusion that people with a graduation and working on a bank has very little macro-global knowledge and fundamental analysis to speculate in the exchange markets or to speculate on future recessions or periods of expansion. We usually thrust in our financial advisor who manages our money on the bank and right now if I had 20.000$ to invest I am quite sure they would “recommend” to Invest in the S&P500 because it has made an incredible return of 13% year to date, and 26% since July 2016. No matter the current price per earnings ratio, the current uncertainty, the extremely over bought levels, the extreme greed sentiment above 90%. At the end of the day, this person has a regular job and only wants his paycheck and has to deal with clients and phone calls all day with no time for any due diligence about what he is recommending to the banks clients. Many times they also follow orders from the top management team to sell these Indices, the clients have a disclaimer and the bank is not liable for any market crash as this can never be timed with precision. Full risk for you, no risk for them.

Back to the Retirement Plan commonly offered in European Banks with a rate of 0.75% a year investing 50 $ a month, considering you would start this subscription at age 30 and retire in 36 years from now on, your expected final assets would be 22 thousand euros.

Point number 1, considering the average expected inflation of 2%, you are only losing money and losing purchasing power. Point number 2, you did not generate enough wealth to pay a sustainable annual dividend. A dividend is an annual profit you can earn without lowering your investment. At the end of this subscription your capital is entirely available to you but stops yielding any profits from here on. Point number 3, if you withdraw 450 € every month, you will exhaust all this capital in 4 years, that took you 36 years to “supposedly” capitalize.
At age 70 you would be fully dependent of social security/retirement.

What they do not tell us is that each of us can be financially independent after a few years. Just do what banks do on their own behind your back and what individuals with some financial knowledge do.

The media work for the large corporations and most of the information is filtered to keep us financially uneducated and spend our money in their products. Marketing and consumption is what makes them money and this is their highest and only priority. Fear is no longer spread with force to control the masses, but trough manipulation of our self-image.

The way Social networks changed reflect this need to consume and spend, show off, seek the “approval” of others or important people we would like to be compared with or give us the “illusion” to be like them, if we “behave” like them, buying what they are paid to advertise. A fear of being different and not socially accepted is planted in our sub-conscious since our early years when we where watching advertisements everywhere.
A big new expensive car to boost our EGO and walk tall, while we are financially miserable, always arguing with our partner to pay bills, mobile phones that cost 150% of a minimum wage, expensive clothes and brands to increase our self-esteem even if only for a few minutes, an endless number of brands, accessories and equipment to show our “status” and increase “social” approval. An illusion of how shallow and empty our lives are, the education that has been imposed by the media and advertisement where we have to own fancy stuff to feel “happier”, just to maximize profits of all those big corps.

For example did you know that Giorgio Armani is a L’Oreal sub-brand, and L’Oreal is a sub-brand of Nestlé. Oh yeah … what does Nestlé have to do with face creams and fancy clothes??
Have a look at the picture below.

10 mega corporations that dominate the world today and work hand in hand with the big banks. Besides these corporations there are half a dozen families whose power and influence reaches our daily lives. It is only 1% of the world’s population that has the same wealth as the total wealth of the remaining 99% of the entire population. If you want to join those 1% you have to be doing what the remaining 99% are not willing to do.

Change your lifestyle! Live according or even better, below your means for a few years. But remember it is not living frugal that will make you rich over time, its the process of investing and repeating this process spending your money wisely!

If today we decide to stop being slaves of society and stop looking for the “approval” and “acceptance” of society and if we follow a different path then the 99%, we can really capitalize and get a portfolio that in the years to come will provide us with an annual dividend which may cover all of our future expenses.

The most important point is to get rid of this mindset of consuming/spending and stop living for “appearances” and “approval” of society or individuals. Cut with everything that is above your level of economic possibilities, get rid of all debts and loans and free yourselves from banking slavery, or at least refinance a better deal.

Reduce expenses and stop acquiring goods or services that increase our monthly expenses. An expensive and nice car usually has higher monthly costs, higher fuel consumption, more expensive insurance, maintenance, tires, etc., and a much more pronounced devaluation. We fool ourselves or fall for the seller’s traps claiming the car will have less problems in the near term and you’ll save a lot of money. This is just an excuse we want to hear and reinforces our ego that seeks social approval. “Everyone will be looking at me and envy my nice car and all my “friends” will want to have a ride with me. I will feel awesome.” But after you’ll sign the credit papers and start to make some math’s at home and the first payments start to get out of your bank account with little money left to go out, travel and really enjoy your life this feeling will quickly fade away.

People who achieve financial freedom in 10–20 years save on average 20% of their wages per month. If you earn 1000 € and if you save and invest 200 € regularly and have still money left, you are free to spend it as it pleases you, enjoy life, don’t go from 8 to 80, find the right balance. You want a cell phone of 700 €? Go for it! You want a vacation? Go for it! But first, EARN & SAVE & INVEST & REPEAT THIS PROCESS EVERY MONTH!

Going back to the previously above mentioned example, using the 50€ subscription for the Retirement Plan but this time invested in an Investment Fund with an average annual profitability of 12% per year, we can achieve the same results of 22.000€ in just 14 years, instead of the 36 years. If we would keep compounding profits completing the 36 years we could expect a capitalization of almost 366.000€.

Compound interest, according to Albert Einstein is the 8th wonder of the world and one of the paths to financial freedom. In the early years it is slow and takes time to grow and savings have a bigger importance, but over the years the profits generated over the past profits start to grow quite exponentially.

With a portfolio of 366.000€ we can use the Trinity study that recommends a 4% yearly dividend payout as a safe withdrawal rate. We would be talking about 14.000€ a year, every single year onward, with few odds to deplete our portfolio.

The harder you work to reach your financial freedom, the quicker you can achieve it. Cut with expenses you do not need. Do you really need to have a 3Gb Data Plan for your cellphone? Do you really need that Netflix subscription you only use once per month? Only here you can already be saving up to 40–70 € every month. In 20 years this could be a 130–230€ yearly dividend. This could provide for all your groceries and improve your budget at age 50.

Free excel sheet Download here.

Plan a pic-nick once a month, or dinner with friends at your place, you will enjoy the following weekends at their place, avoid going to much to expensive restaurants, reduce the foods you “want” (cookies, chocolates, anything with high sugars and processed, etc.) and improve the list of foods we “need”. Eating healthier can be more expensive in the short term, but you will feel healthier and avoid the doctor more often, check new car insurance every year, you might save a few bucks there, another example is a car with 16" wheels whose tires cost 120–150€ each, replacing with 15" wheels that cost 70–80€ each can save you 200–300€ each time you have to change the 4 tires. Cutting down a coffee a day, if you smoke you can try to smoke one cigarette less each week, set a daily target for each day of the week and gradually cut one cigarette on a week day over time, you can save up to 80€ a month, not mention all the health improvements from it. If feel that need to buy something, wait at least 3 days before really buying, most of times after 3 days that desire fades away and it was nothing you really needed in the first place.

There are lots of ways to save money without significantly reducing your quality of life or comfort, and all these differences combined with a commitment to improve your ability to save monthly can result in your financial security in 10–20 years.

I wish you all best of luck in your journey.

For any investment plans and simulations or any question you have you can join Facebook group and contact me and follow my posts and articles about Forex and Investing on my blog

Carlos Lontro

Written by

Hi, I’m Carlos. A Popular Investor @eToro -> ESIRInvestors; and Asset Manager & administrator of ESIR Investors Community on FB.

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