The video examines the intriguing question of why some intelligent and hard-working individuals are not wealthy, despite seemingly having all the right attributes for success. It emphasizes that wealth is often misattributed solely to intelligence and hard work, overlooking a significant determinant: luck. Drawing on studies and simulations by experts such as Alessandro Placino, it is revealed that luck plays a crucial role in determining financial success, sometimes outweighing personal merit and effort.

This is a must-watch as it demystifies common misconceptions about wealth and success. The video goes on to provide insights on how to increase one's "luck" through skill-building and by understanding the role of risk in achieving financial goals. It underscores the importance of financial literacy and continuous learning in making smart decisions regarding money management, career choices, and taking advantage of opportunities when they arise.

Main takeaways from the video:

Please remember to turn on the CC button to view the subtitles.

Key Vocabularies and Common Phrases:

1. recluse [rɪˈkluːs] - (noun) - A person who lives a solitary life and tends to avoid other people. - Synonyms: (hermit, loner, solitary)

But he wasn't. He died pretty young and was a recluse at the end of his life.

2. rugged individualism [ˈrʌɡɪd ˌɪndɪˈvɪdʒuəlɪzəm] - (noun phrase) - The idea that individuals are responsible for their own success through personal effort without needing help from others. - Synonyms: (self-reliance, independence, autonomy)

The Americans would call this rugged individualism Will say things like, it's on you.

3. affirmations [ˌæfəˈmeɪʃənz] - (noun) - Statements of positive belief or intention meant to foster self-improvement or mental well-being. - Synonyms: (assertions, declarations, positive statements)

The key to success is not five minutes of affirmations before sunning your bumhole every morning.

4. rational choice theory [ˈræʃənəl tʃɔɪs ˈθɪəri] - (noun phrase) - A framework for understanding social and economic behavior, asserting that individuals make decisions by weighing costs and benefits to maximize personal advantage. - Synonyms: (logical decision-making, benefit-cost analysis, reasoned choice)

rational choice theory is this idea that people make decisions based on sensible analysis.

5. lifestyle creep [ˈlaɪfˌstaɪl kriːp] - (noun phrase) - A gradual increase in one's standard of living, often leading to unnecessary spending when income rises. - Synonyms: (consumerism, spending increase, living standard rise)

Yet through a lack of basic financial education, most adults fall victim to lifestyle creep.

6. compounding wealth [kəmˈpaʊndɪŋ wɛlθ] - (noun phrase) - The process of growing wealth over time by reinvesting earnings to generate more earnings. - Synonyms: (wealth accumulation, financial growth, asset growth)

compounding wealth takes time. The slow route if you will.

7. adjacent skills [əˈdʒeɪsənt skɪlz] - (noun phrase) - Skills that are related or complementary to one's primary area of expertise. - Synonyms: (related skills, supplementary skills, complementary skills)

adjacent skills can transform and impact your current ones.

8. perpetual beginner [pərˈpeʧuəl bɪˈɡɪnər] - (noun phrase) - Someone who is continuously learning new things, always willing to step outside comfort zones to acquire new skills. - Synonyms: (constant learner, novice habit, continual student)

Intelligent people love to be experts. Your challenge though, is to become a perpetual beginner.

9. skill stacking [skɪl ˈstæking] - (noun phrase) - The practice of combining multiple skills to enhance one’s abilities and create unique opportunities. - Synonyms: (skill layering, competency building, ability combination)

But then bring that into your expert world and watch how skill stacking in that way is a two plus two equals ten activity.

10. imposter syndrome [ɪmˈpɑstə ˈsɪnˌdroʊm] - (noun phrase) - A psychological pattern in which individuals doubt their accomplishments and fear being exposed as a fraud. - Synonyms: (self-doubt, insecurity, inferiority complex)

Finally understand that self doubt imposter syndrome perfectionism.

If You're So Smart, Why Aren't You Rich?

Have you ever asked yourself, why am I not rich yet? And I will be rich forever? And when will that be? Maybe you've been trying. Maybe you're intelligent, well educated, and you work hard and then. Yeah, where is it? Seriously, where is it? If you find it, please let me know. Because it turns out we're not the only ones asking this question. There's extensive academic research into this topic. Kind of love it, really. A load of academics, smart people focusing their efforts, trying to answer the question, why the hell am I not rich? But it is a good question, isn't it? And today I'm going to answer that question for you. I'm also going to show you what you can do about it.

I want to start by looking at the single biggest determinant of financial success, a characteristic we rarely focus on, but we really should. I got some of my trusty green tape again. So this line represents wealth. At this end of the line, you're the poorest person on the planet. At this end, you're the richest. And each piece of pasta in this cup represents some of the world's wealth. And what we know is that this group of people down here, which represent about 50% of the global population, share amongst them as much wealth as about 10 to 20 people up here. So these 10 to 20 people have as much money combined as around about the bottom 50% of the global population.

Why are they smarter? Did they work harder? Maybe, yes. But surely past a certain point, the influence of those factors diminishes. I mean, how much smarter can you be? People, in a way, are sort of like pasta. What I mean by that is each shape is different, different size, different quirks and features to it. But they're all, you know, much of a muchness within a realm of normality, if you will. 95% of the human population has an IQ between 70 and 130. Albert Einstein's was 160. William James Silas could read the New York Times by 18 months old, taught himself eight languages by the age of eight and attended Harvard at 11. One of the smartest people ever. His IQ was believed to be between 250 and 300. If being smarter makes you richer, he should have been absolutely wadded.

But he wasn't. He died pretty young and was a recluse at the end of his life. I mean, it was pretty sad. But my point is there are limits to the human potential, to human talent. No one is a thousand times smarter than anyone else. And no matter what hustle culture wants us to believe, no one can work a million hours more than anyone else. But wealth at these levels ignores those limits. Is Jeff Bezos right here and a billion times smarter than whoever's down here? No, he's not. Whether we like to admit it or not, humans are all pretty similar. And the range of our talents is not broad. Not to this level, anyway. So what's dictating success at this level? What's really going on here?

Because to be a billionaire, there's one thing every billionaire has in common. There's something that happened that made him lucky. Alessandro Placino is a world expert in mathematical modeling. He wanted to understand how big of an impact skills have on success. Intelligence, knowledge, hard work. How did they impact wealth? Because like it or not, we tend to use wealth as a measuring stick for success. So they created this simulation with different people of different levels of skill and personality traits, all within a normal human range. But, you know, some people were smarter than others, some were harder workers, and some had better social skills. All skills that you would often associate with being successful.

Then they ran the simulation. They ran it over and over, and every time, the results were the same. Wealth accumulated at the top 80% of it went to the top 20% of people, just like in the real world. But there was no correlation between the traits. Sometimes it was the hard workers that came out on top. Sometimes it was the charismatic people. There wasn't a personality trait that they could say, this is the dominant thing. This is the thing that makes people successful. Well, that's a lie. Actually, there was one thing. As part of the study, they mimicked everyday life. They threw random events at the simulations. Some unlucky events that hurt their wealth, and some lucky ones that helped them build more wealth.

Overwhelmingly, the subjects that won the simulation over and over again were the lucky ones. An averagely talented individual with good luck would be a gifted person with bad luck. In Western society, we often prescribe success and failure to skill. The Americans would call this rugged individualism Will say things like, it's on you. The winner deserves their success, and the loser, it's their fault that they lost this idea that successful people have skills or habits that we don't.

This leads us to do weird things, quite frankly, like study the morning routines of billionaires, because we think they must be doing something that I'm not. But I hate to break it to you. The key to success is not five minutes of affirmations before sunning your bumhole every morning. I know You've seen that guy. But the mad thing is he's probably richer than all of us. I want to stop and say, though, of course skill is important in how successful you are. If you're smart and you work harder, you will on average go further. But there's a limit to this, that human limit that we explored before.

A Swedish study showed that the correlation between intelligence and earnings flatlines above €60,000 a year. This relationship, this level of being rich right here, there is a huge amount of luck involved. Maybe you were born lucky. The Pew Research center found that children of wealthy parents will go on to earn three times as much as kids from a lower earning background. Or maybe you were born in the right place at the right time. The National Bureau of Economic research in 2017 concluded that 90% of children born in 1940 earn more than their parents. Whereas today, children born in the 80s, in my generation, 50% of them earn more than their parents did.

Or what about just those kind of sliding door moments where your whole life changes? I'm in no way rich, you know, not the type of wealth that we're discussing. Before using rice, it's pasta. But I got furloughed for four weeks and I started a YouTube channel at the exact same moment the UK population got really interested in investing. I work really hard. I honestly do. My ego wants to sit here and go, I did this. But the truth is, I have to acknowledge this. No Covid, no me.

Fast forward three years later, I'm sitting here and at the end of a random video, I just mentioned the fact that I'm looking for a video editor. A guy watches that, sends the link to his friend, who then applies for the job and is now my editor. The other day he told me that I've changed his life in a message. I'm just such a nice guy. I'm only messing. He deserves the money he has paid. He works super hard, he's very talented. But, you know, I think about this thing that if his friend hadn't watched all the way to the end of the video, none of that would have mattered. He may have been successful in another way later down the line. I'm sure he would have. But he got that job due to a series of fortunate events that kind of compounded on top of each other over time.

Placino's work shows us how luck, fate, right place, right time, whatever you want to call it, is a factor in success, especially when we're talking about massive amounts of it. I'm going to say it again. I don't want to play down the influence of intelligence and hard work, and I also don't want to make it out like the people at the top don't deserve their position, that they didn't earn it in some way. But I also want to point out that there are plenty of people out there who are probably just as talented, working just as hard, who ultimately won't get those outcomes. Smart only gets you so far. We need a little bit of luck.

So, UK garage aside, let's shift focus now and ask how can we make ourselves luckier in the context of building wealth? Because it is actually possible to improve our chances here. Do you know the answer to these three questions? They've been put forward as a test of financial literacy that's now been adopted by more than 20 countries. I'm going to reveal the answers in 3, 2, 1. If you got them all right, congratulations. If you didn't, don't worry about it. You're in the right place. rational choice theory is this idea that people make decisions based on sensible analysis. That they weigh up the cost and the benefits of any action that they take and that they come to a decision that's good for them overall.

But then you hear stats like 30% of 17 to 24 year olds admit to making a video call while driving and around 9% of all drivers do this. It's not rational or sensible behavior, is it? So when it comes to education, the idea is that we teach people to think and learn and then they will go out and make good decisions. They will drive their life sensibly, if you will, but okay then. Why have fewer than half of all of Americans ever asked themselves how much they need in retirement? That was a question posed by this paper published in in the National Library of Medicine.

How is that rational? The answer is it's not. Because the truth is a traditional education is not enough to guarantee good financial decisions or good financial outcomes because you can be book smart and money dumb all at the same time. A basic grasp of financial concepts has been shown to improve your wealth, health and overall well being. One answer to the question of if I'm so smart, why am I not rich yet is time. The average age of an American millionaire is 61. compounding wealth takes time. The slow route if you will. Anyone with a little bit of an understanding about how money works would understand that. Yet through a lack of basic financial education, most adults fall victim to lifestyle creep.

They're too cautious with their savings and they're not engaged with their retirements at all. There are intelligent people that will never get rich because they were never shown the basics of finance. Look, I know that I'm just preaching to the choir here. You're watching finance content at the end of the day. But there is another part to this. The fast way of making cash, if you will, and having a solid understanding of personal finance. Just simply knowing where you should park your money to produce a long term return will allow you to build up the reserves. So if and when opportunity comes, when luck strikes, you're ready.

Before I mentioned a Swedish paper that pointed out the impact of intelligence on earnings. This idea that it plateaus at around €60,000. The paper that put this idea forward also claimed something else. The top 1% of earners are less intelligent than the people below them on the earning scale. That finding grabbed headlines all over the world. This idea that being too smart is bad for your wallet. But there's important detail here that we need to look at and I think really this is a conversation around risk. The highest paid jobs in any economy tend to be specialized professionals that require high levels of education. Solicitors, finance professionals, engineers.

If you're coming out of school and you're deemed to be one of the most intelligent people in your class, you're naturally going to be funneled towards one of these career paths as they offer the best prospects on paper for high earnings. You then go on to do years of study, you pass all the qualifications that you need and then you get that great income. But that income won't put you in the top earners, will it? For that you would need to be a business owner. There's a paradox of sorts here. The brightest people get the best jobs and as such earn less than they might have done because they're less incentivized to take a risk on being self employed. Most businesses fail, even though started by really smart people.

If you're earning hundreds of thousands of pounds a year, that jump, that risk feels massive. Then if you're earning minimum wage, the jump might feel like a necessity and not a risk. There's also this point though that there's a lot more averagely intelligent people than there are hyper intelligent people. So just by sheer numbers alone, you're going to get more businesses run by people with average IQ than you are really intelligent. But back to that original point, it's not the fact that people who are intelligent take less risk. In fact, it's quite the opposite. A 2015 brain scan experiment revealed something counterintuitive. When participants were put through a driving simulation with amber lights, researchers discovered that the more intelligent individuals were actually more likely to take risks.

Brain scans showed that these quick decision makers had significantly more white matter than neural highway that enables rapid decision processing. Those who took the risk did not hesitate. But the researchers also noticed something else. The ones who identified as being skilled drivers took that gamble. And if we come back to the Placino study from before, the way the lucky events panned out was if a simulation encountered a lucky event, they needed the specific skill set to be able to act on them. You have to have the required skills and these have to be learned. Sadly, many fail during this learning process with tragic consequences.

It takes brains to take risks. How could this point around education and risk taking be stopping smart people from getting wealthy? It reminds me of this quote. It goes something like an expert was a fellow who was afraid to learn anything new because then he wouldn't be an expert anymore. We all get really comfortable in our circle of competence. No one wants to push themselves. No one wants to step outside of their comfort zone and feel like a beginner again. But it's nearly 2025 and if you're looking to do something next year to level yourself up, I would encourage you to learn about a topic outside but adjacent to your circle of competence.

Skills stack on top of each other and compound to produce huge returns. The link between finance and me learning to use a camera and edit might not have been all that clear. But now we sit here with this YouTube channel, don't we? What can learning about AI do for a HR professional? What can improving public speaking do for a doctor? adjacent skills can transform and impact your current ones. I've learned in life that basically all you need to be is 1% better than your peers and you get all of the rewards, the promotions, the pay rises, whatever. The winner takes it all. And the difference between pole position and just staying in your current position is often a few percentage points, a fraction of a second sometimes.

Yet all the glory goes to the winner. Take a chance, a risk at learning something outside of your sphere of knowledge. Become a beginner again. It's really fun. It's pretty humbling. But then bring that into your expert world and watch how skill stacking in that way is a two plus two equals ten activity. The learning never stops. Below in the description, I put together a list of what are seen as some of the most high value skills that you can learn in 2025 and beyond. Intelligent people love to be experts. Your challenge though, is to become a perpetual beginner.

Intelligence isn't about having all of the answers all of the time. It's about being brave enough to ask new questions, to take calculated risks, to learn new skills, and to embrace the discomfort of not knowing. Because in that space of vulnerability, that's where true growth happens. 12 months ago someone posted this on Deep Thought subreddit. Many intelligent people with doubts and uncertainties are overlooked in favor of less intelligent people who seem sure of themselves. I'm going to speak about being a YouTuber here, not because I think it's the pinnacle of success, quite the opposite, but because it's where my perspective comes from. First of all. And I think there are some parallels to other areas of life.

So first things first. The people on YouTube who are successful in any given niche, pick any niche, are almost never the best at what they do. They're just simply the ones who had the confidence to pick up a camera and slap whatever they made on the Internet. Have you heard of the Dunning Kruger effect? This idea that when you start a skill, you see rapid improvement in your ability at the beginning as you go from knowing nothing to something. And then this leads to overconfidence. Eventually you reach a point where you realize, hold on, there's a lot more to this than I thought. And your confidence in your own ability declines, even though you know more than you did when you were confident in yourself.

If I made a video today that looked like the ones I made when I first started this channel, I wouldn't post it. I shudder every time I see them, the quality is so bad. But those videos were successful. People still watch them today. But what I see as acceptable has raised to the point where now I often hold myself back. If I make more content, I earn more money. But I make a whole video and then I scrap it because I don't think it's right. Wasting a week's worth of effort on my part and all the money I spend on editing it and stuff.

I once made a video where I needed a Matthew McConaughey voiceover thing. You know, as you're doing finance content. The reason is if you use a clip from the Oscars, they copyright strike you and take all the money the video earns. So I paid this impersonator on Fiverr to do some voiceover for me, but it just. It just wasn't quite right. So in the end, I just used a clip from the Oscars anyway and earned nothing for the video. Again, that took about a week to make.

Well, that was a waste of money. Yeah, thanks for that, Matt. DJ Locke and McNit are gonna do pretty well out of this video as well. Maybe you can relate. Perfectionism, imposter syndrome. That feeling that your work isn't good enough or an addiction to bad baseline, Bad bass, bad bass, bad baseline. Whatever it is, all of these are traits that register higher the further up the expertise scale you go.

A PhD in economics can feel less certain about the future of digital currencies than a 19 year old lad who just listened to an hour long podcast on the topic. The blind confidence of that young lad could lead him to throw a load of money into a meme token. Get lucky and become a millionaire instantly. Everyone then studies the strategies of this genius kid and the PhD finance professional goes, hold on, there's a few flaws to his strategy here and the feedback will be, well, if you're so smart, why aren't you rich? There are so many elements to this question, so many bits that we could talk about. This whole intelligence and wealth thing. I could have spoken about this for hours, honestly. I mean, I probably have by the time this is done, but I don't think I've done the topic justice. But let's not think about that too much, otherwise this thing will never see the light of day.

Let's just focus on the practical steps. Luck is a huge factor in success, but it's those with the skills to grab a lucky event when it happens that benefit. Financial literacy is the first skill. It improves life outcomes and allows you to pounce on opportunity when it presents itself. I've created a playlist. I'll link it below. There's just a collection of my videos that I think talk about the basics of finance. Then beyond that, you need to continually improve and update your skill set. The best thing is a little bit of a new skill can really help your expert skill.

A little bit of an understanding of AI can really benefit your HR expertise. Say, finally understand that self doubt imposter syndrome perfectionism. These are common in people who consider themselves experts. And when you find yourself having those negative thought patterns, try and remind yourself that a lack of confidence can be a sign of higher competence. The more I know, the more I realize I need to know. I've got a checklist I put together of things that you can do in the comments. Steps that you can follow to try and get past perfectionism and those negative thought processes when they start creeping in. It's all shared on my website. Financial interest.

Again, I'll link everything below for you. There is a final factor though that I want to discuss, a really simple one. You need to care about being rich. Some people just don't care about becoming wealthy, so they won't. That's probably, you know, the right way to be, to be honest. But on the basis that you click this video, maybe you do. So watch this video next where I show you that you're probably richer than you think you are.

FINANCE, ECONOMICS, MOTIVATION, WEALTH INEQUALITY, LUCK AND SUCCESS, FINANCIAL LITERACY, DAMIEN TALKS MONEY