Every investor needs to understand each

of these four concepts in order to grow

their money and reach financial freedom.

The first concept is all about where

your profit comes from. And based on my

almost two decades of professional

experience, from my time on Wall Street

to running an investment company here in

Europe, too many investors don't

understand this point. So to illustrate

it, imagine that you are a criminal

mastermind who knows how to print money.

You take one full month to print a

million euros for yourself. Now, let me

ask you this. By the end of the month,

have you created new wealth in the

world? Well, you individually are

certainly wealthier. But is society as a

whole wealthier? Well, of course not.

Otherwise, the European Central Bank

could just print a million euros for

every single person in Europe and we

would all be rich. But if that actually

happened, it would simply lead to

enormous inflation. Money would lose its

value. In reality, printing money does

not create wealth. It redistributes

wealth from society to the money

printers. Now, let's look at a second

scenario. You are a talented software

developer who spends the same amount of

time, a full month to develop a new

piece of software for your client and

the client pays you a million. Have you

created wealth? Well, you individually

are a million richer. So, that's nice.

But on the other hand, your client is a

million poorer. So in pure cash flow

terms it's a wash right but in this case

your client now also has a valuable

piece of software. So the net result of

your activity is positive. You have

actually increased global wealth in this

scenario. Now there are some people who

build their entire careers around

redistributing wealth. Criminals,

corrupt politicians, gamblers. But

that's not just a miserable way to live.

It's also risky and difficult. If you

look at most financially successful

people like most everyday millionaires,

they reached financial success by

creating wealth, not by taking it from

other people. And this is also the first

concept that any investor needs to

understand. There's a big difference

between activities that create wealth

and activities that only redistribute

it. When you're a beginner, all forms of

investing look the same. Stocks, bonds,

options, forex, day trading, but they're

really not. Now, the cleanest example of

wealth redistribution would be foreign

exchange trading or forex because in

forex you make a bet that one currency

like the US dollar will rise or fall

against another currency like the euro.

There's a good friend of mine, smart,

hardworking guy, and he's been doing

forex for almost a decade. Over this

period, he's had some fantastic months,

but he's also had some terrible months.

Overall, he's made basically no money at

all. Last year he lost $16,000 that he

couldn't afford to lose. Now, every time

we talk about it, he agrees that he

should really stop, but the next time we

talk, he's trading again. I don't want

you to get sucked into this kind of

addiction. So, let me explain two

reasons why Forex and other similar

forms of wealth redistribution almost

never work. The first reason is

mathematics. Wealth redistribution is by

definition a zero sum game. In forex, if

you bet that the dollar will rise, there

needs to be somebody else who bets the

opposite. One wins, the other loses, and

the average player earns zero. But in

reality, playing a zero sum game takes

significant time and effort. It takes

money. You've got to pay taxes and

brokerage fees. And after you take all

of that into account, the average result

becomes negative. The average trader

will always lose money. This is

inevitable just because of the math. All

right, but you might say, "Well, sure,

the average Forex trader loses, but I'm

not average. What if I'm smarter than

everybody else? Or what if I buy a super

cool trading course from my favorite

guru?" Well, here we come to the second

reason why wealth redistribution is a

bad strategy in the financial markets,

which is demonstrated by decades of

data. Millions of smart people have been

trying to come up with clever trading

systems since the first financial

markets were created. With all the

effort and endless hours they have

devoted to this activity, you would hope

to see a meaningful percentage of them

become skilled and get good results. But

every serious long-term study of traders

like this one or this one or this one

shows that the vast majority either lose

money or underperform market averages.

And by vast majority, I mean as much as

97 to 99% of traders lose out. And the

few who do succeed typically don't stay

successful very long. So this is why

even if your favorite trading guru

actually was a profitable trader once

and isn't just really good at

photoshopping profits, they are now

selling trading courses instead of

making millions in the markets. The

reality is the financial markets are

complex. In the short term, the prices

of currencies and stocks and commodities

like gold move up and down close to

randomly. The smartest person on earth

could analyze price charts for a 100red

years and still not learn how to predict

them. So the second concept that you

need to understand is that in the

financial markets, wealth redistribution

is not a reliably winnable game. This

rules out not just forex but many

popular activities like day trading,

CFDs, prediction markets, options

trading and more. Now instead of wealth

redistribution, you want to participate

in wealth creation. And this brings us

to the third concept that every investor

needs to understand which is all about

who benefits when wealth gets created in

our world. I grew up in a hardworking

family in Eastern Europe. My parents are

teachers and they taught me if you work

hard, you will do great in life. And of

course, that's a good lesson to teach a

kid. But as you grow up, you realize

working hard only gets you so far,

right? I mean, many of the hardest

workers out there earn a low income and

struggle to build any kind of savings or

wealth. When I got a Wall Street job in

my 20s, I entered a new type of social

circle, and I met many wealthy people

who didn't seem to work all that hard.

It seems unfair and arguably it is

unfair. I mean this is what Karl Marx

was complaining about long ago, right?

But the reason why this is comes down to

basic economics. To produce something to

create value in the world, you need

inputs. You need labor. Yes. So that's

work. But you also need land and

capital. So after value is created,

that's also who gets paid. Labor, land,

and capital in various proportions. Now,

most of the income in the global economy

actually goes to labor. While the labor

share of income has been falling today

in most European countries, it's still

well over half. But the problem is

there's billions of people competing for

this labor share. I mean, if you ever

need a reminder, just go on LinkedIn and

see all the competition you've got in

your profession. So if you want to build

real wealth, it is in your interest to

participate in the other side of the

equation to earn some of the income that

goes to land and capital. So that's the

third concept that you need to

understand. Half of global wealth goes

to the owners of land and capital and

investing simply means joining their

club. You save some money. You buy some

land and capital of your own. And then

you get rewarded for sharing these

resources so that companies and

individuals can use them to create

economic value. Which brings us to our

fourth and final concept, which is all

about identifying the best investments

to use. When I first decided to start

investing 19 years ago as a young banker

on Wall Street, I really struggled with

this. I was totally new to the markets

and I had no idea what was a smart

investment. But eventually my boss at

the time helped me figure out that the

answer is quite simple. The best

investments provide the economy with

either land or capital. I mean the most

obvious choice is to invest in

companies. So basically to buy shares or

stocks on the stock exchange. This is

the cleanest form of providing capital

to the global economy. But there are

many alternatives such as lending

company's money, for example, by buying

company bonds. Or you can buy some real

estate and rent it out to a company

that's going to use it in its business.

And then there are more indirect

investments like buying real estate and

renting it out to people who need

somewhere to live. And then they're

going to pay you out of the income they

get by providing labor to companies. Or

you can lend money to governments which

provide the infrastructure that is

necessary for companies to be able to

create value. All of these investments

can be very profitable because they help

create wealth instead of just

redistributing it. When you look at

centuries of market results, there are

only three major types of investment

that have been the most profitable. It's

stock investing, lending, which also

includes bonds, and real estate

investing. Now, in my personal view, for

most beginning investors, there is one

fundamental investment that stands head

and shoulders above the rest. This is

the primary investment I've been using

to build wealth for myself and my family

over the past two decades. It's

investing in stocks because when you buy

shares in a company, you own part of the

company. You are participating directly

in the global economy and over time that

really adds up. So if you live in Europe

and you want to learn how to start

investing in stocks, you should watch

this video next where I explain

everything step by step.