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Speaker 1: Welcome to How to Money. I'm Joel and I am Matt,

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Speaker 1: and today we're answering your listener questions.

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Speaker 2: It's Monday, which means it's time to hear from some listeners. Joel,

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Speaker 2: we're gonna crack a beer, enjoy it, listen to some

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Speaker 2: voice memos. Get back to those folks right here on

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Speaker 2: this episode, right, we've got several to get to a

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Speaker 2: listener she's thinking about a career pivot to day trading.

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Speaker 2: We're gonna discuss who really needs life insurance. In fact,

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Speaker 2: it is not everybody who's listening to this podcast episode

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Speaker 2: right now. Some folks can be left out, that's right.

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Speaker 2: And you know, with a market at all time highs,

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Speaker 2: what rate of return can we expect in future years?

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Speaker 2: A listener's asking about that as he's trying to plan

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Speaker 2: out his financial future.

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Speaker 1: We get your crystal ball out in front, so make

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Speaker 1: your predictions and make some good predictions. Well know there,

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Speaker 1: I think there's a lot to say on that front.

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Speaker 1: And yeah, there's just a lot of good stuff to

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Speaker 1: get to on this on this episode before all that

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Speaker 1: and more before we dive in, though, Matt to the

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Speaker 1: actual listar questions. I wanted to mention something. My dad

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Speaker 1: one of my favorite people in the entire world.

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Speaker 2: He is Madam. He's a nice, fantastic human.

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Speaker 1: He texted me out of the blue the other day

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Speaker 1: and he's like, Hey, thinking about dittion cable and they've

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Speaker 1: had cable a long time, just or traditional whatever over

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Speaker 1: the air TV service. Here goes my opportunity to mooch

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Speaker 1: the occasional Atlanta United match. It sounds like, dude, I

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Speaker 1: was way off on how much cable actually costs people.

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Speaker 1: I thought it was drastically cheaper. But with his cable

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Speaker 1: and internet combined, something like two hundred and forty dollars

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Speaker 1: a month is what he's spending. D Yeah, oh my gosh. No,

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Speaker 1: Like he needs to switch it up regardless, right right,

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Speaker 1: Oh my gosh. He either needs to call in and

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Speaker 1: get a better deal or he needs to do something different.

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Speaker 2: Yes, yes, that's a lot of money.

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Speaker 1: So he's like, I'm thinking about cutting the cord finally, Yeah,

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Speaker 1: and which direction should I go in? And apparently there's

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Speaker 1: this new offering from Exfinity called Exfinity Now twenty bucks

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Speaker 1: a month for the Infinity Now streaming and then twenty

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Speaker 1: bucks a month for Exfinity Internet seems pretty reasonable. Cutting

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Speaker 1: it from two forty a month to forty a month.

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Speaker 2: My gosh, the massive savings.

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Speaker 1: Yeah, the only problem is though that and I was

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Speaker 1: like very much encouraging him to go in this direction.

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Speaker 2: But you got it.

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Speaker 1: Like, when you're looking at those different streaming services, especially

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Speaker 1: the live TV ones, some the reason they're keep it

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Speaker 1: to twenty bucks a month is because oftentimes they have

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Speaker 1: the channels that most people don't want to watch, right,

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Speaker 1: So okay, none of the sports, none, okay, none typically

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Speaker 1: of the of the news twenty four hour news networks

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Speaker 1: stuff like that.

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Speaker 2: Gotcha? Is he bummed out about the sports or is

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Speaker 2: he gonna be happy with this? That's what we're trying

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Speaker 2: to figure out. I was trying to say before it,

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Speaker 2: did he go for it? Not yet?

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Speaker 1: I was like, all right, listen, you should definitely get

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Speaker 1: rid of cable. You should, and but you should look

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Speaker 1: into these different streaming services, in the live TV streaming

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Speaker 1: services and figure out which one makes the most sense

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Speaker 1: for you.

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Speaker 2: Our friend Michael.

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Speaker 1: Saves does actually a really good job over at his

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Speaker 1: site and on YouTube docu and helping people think through

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Speaker 1: this exact problem. We should probably have them on the

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Speaker 1: show at some point. But one of the things I was, Hey,

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Speaker 1: you might even want to spend more and get something

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Speaker 1: like YouTube TV. It's like seventy three dollars a month,

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Speaker 1: but that's gonna have that's gonna be the most similar

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Speaker 1: to the cable package you currently have, so significantly more

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Speaker 1: affordable though than what we're still talking less than an

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Speaker 1: other bucks a month.

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Speaker 2: Then I like it. I like it, Yeah, it does.

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Speaker 2: I'm kind of surprised at how much TV. Like I

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Speaker 2: don't know, we watch so little TV over at our house,

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Speaker 2: especially when it comes to sports. I don't think there's

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Speaker 2: any family, any individual out there that watches as little

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Speaker 2: sports TV as this guy right here. But then I

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Speaker 2: also get it because you've just got way more time

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Speaker 2: on your hands, and like, what when you retired, do

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Speaker 2: you think you're gonna end up watching like more TV,

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Speaker 2: more sports, more like film? Hopefully just prices right, I'll

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Speaker 2: make time for that. Yeah, yeah, I don't know. I

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Speaker 2: think it makes sense that it might go up proportionally

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Speaker 2: to however it is that you're watching TV. But like

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Speaker 2: you see some of those reports about how many Americans

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Speaker 2: consider TV as like a hob Yeah, which is like

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Speaker 2: that part of it is the part that makes me

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Speaker 2: think I kind of hate how much TV that we watch.

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Speaker 1: Over here, I'm trying to watch Killers of the Flower Moon.

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Speaker 1: I'm halfway through. I've already had two sittings. It's gonna

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Speaker 1: take me four sit downs to watch this movie.

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Speaker 2: What is that on?

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Speaker 1: And probably a month? Like that's how long you take me?

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Speaker 1: It's on Apple TV.

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Speaker 2: Okay, so it's on there with did you have to

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Speaker 2: pay for it? Or is it?

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Speaker 1: Is it like anway like a free three month thing

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Speaker 1: or something. So yeah, and that was part of the that.

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Speaker 1: And I want to watch Napoleon when it comes out,

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Speaker 1: but it's gonna take me a month to watch both

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Speaker 1: of these also epicly long movies.

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Speaker 2: So that's why you gotta do it, man, get in there,

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Speaker 2: get your watching on, and then get Out is.

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Speaker 1: Also going to be on Apple TV, though I think so.

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Speaker 1: And I never have three and a half hours to

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Speaker 1: sit down and watch something, or like I just get

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Speaker 1: too tired, like truly, I fall asleep and Emily makes

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Speaker 1: fun of me. But well that's the way the cookie crumbles.

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Speaker 1: I've also gathered that that's a slower one. It's I've

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Speaker 1: heard good but also a bit slower. I'll report back

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Speaker 1: yeah when I finish and let me know if it's

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Speaker 1: worth it in March or something like that. But yeah,

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Speaker 1: it's just a good tip to tipped out there to folks.

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Speaker 1: If you currently have cable, it's worth being willing to

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Speaker 1: cancel asking for a disc.

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Speaker 2: How much are you actually watching TV? Yeah, and what

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Speaker 2: can you get by without? I mean, and reassess how

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Speaker 2: much you're paying and even just the digital the digital antennas. Man,

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Speaker 2: you can get so much. I mean, I'm just shocked

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Speaker 2: at how much TV we get for free via our Samsung.

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Speaker 2: To be completely honest, I don't know how these channels

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Speaker 2: are Like we get bonedup a tit we get Like cooking,

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Speaker 2: we got all these cooking channels, like multiple cooking channels,

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Speaker 2: and I don't know how we get them. We're not

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Speaker 2: paying for anything and we're plugged into the little box

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Speaker 2: and yeah, it's just amazing content that you get. Over

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Speaker 2: some of the newer team we cook on the live

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Speaker 2: TV thing on Roku. I'm just shocked at like the

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Speaker 2: mini hundreds of channels it looks like you get. I

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Speaker 2: usually stick to the basic ones.

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Speaker 1: Tell you turn on an NFL game or something like that,

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Speaker 1: which like once a year when I watch a football game.

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Speaker 1: But for the most I mean, it's amazing how many

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Speaker 1: channels there are, and you're into digging through to find

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Speaker 1: the gold, you might you be able to find stuff

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Speaker 1: you're interested in watching nothing, it's worth it.

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Speaker 2: All right, man. The beer, though that you and I

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Speaker 2: are gonna enjoy during this episode is called a color decay.

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Speaker 2: This is a dessert sour, another beer by Piedmont Brewery

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Speaker 2: down there and making Georgia. We will enjoy this one

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Speaker 2: and share our thoughts at the end of the episode,

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Speaker 2: no doubt. All right.

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Speaker 1: If you have a question we'd love to hear from you,

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Speaker 1: just go to have to money dot com slash ask

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Speaker 1: for simple instructions. Basically, you're recording a voice memo sending

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Speaker 1: it over to us via email so we can hopefully

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Speaker 1: take it on the next ask htm episode. We love

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Speaker 1: to get your questions and take them on the show.

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Speaker 2: Matt.

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Speaker 1: Let's get to the first one. This one comes from

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Speaker 1: a listener who's wondering, well, wait a second, my advisors

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Speaker 1: telling me returns aren't going to.

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Speaker 2: Be as good as they've been historically. Are they way

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Speaker 2: off base?

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Speaker 3: Hey, Joel and Matt. This is Spencer in Fort Lauderdale, Florida.

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Speaker 3: I have a question for you guys. I just met

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Speaker 3: with my financial advisor the other day and in making

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Speaker 3: projections for retirement, he suggested that we project somewhere about

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Speaker 3: six percent returns for my portfolio overall. That raised an

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Speaker 3: eyebrow a little bit for me because looking back at

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Speaker 3: the stock mart and I just looked at this just now,

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Speaker 3: but between nineteen seventy and two thousand, the stock market

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Speaker 3: produced closer to like almost eleven percent. So I question

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Speaker 3: him on that, you know, why are we projecting so conservatively?

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Speaker 3: And I get that part of the issue is that

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Speaker 3: we want to project conservatively so that my money lasts,

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Speaker 3: but it also seems like it may be overly conservative. Anyway,

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Speaker 3: he said something that his perception is that it's related

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Speaker 3: to the fact that so many people are invested in

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Speaker 3: stock market now because all of us have sort of

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Speaker 3: been forced into managing our own retirements through four to

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Speaker 3: one ks. And that kind of doesn't track either, because

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Speaker 3: even when we had pensions, that money was being invested somewhere.

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Speaker 3: So what gives Why is it that we expect lower

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Speaker 3: returns on the stock market moving forward that we've seen

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Speaker 3: in past decades. Thanks for what you do. Love the program,

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Speaker 3: listen to you guys all the time. Feel like it's

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Speaker 3: making me a little bit smarter and more confident as

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Speaker 3: I move toward retirement.

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Speaker 2: Thank you all right, Spencer, Indeed, what gives this is

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Speaker 2: a great question.

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Speaker 1: And the way I love that he's smarter and more confident.

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Speaker 1: That's like, that's what we want, man to boost that confidence.

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Speaker 2: That's true. Okay, So what I really like on the

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Speaker 2: confidence front, though, is that he's meeting with his financial

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Speaker 2: advisor and that he's actually pushing back in a healthy way. Like, Spencer,

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Speaker 2: you are being skeptical in the right ways. You are

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Speaker 2: informing yourself. You are asking good questions. And it's not

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Speaker 2: that our relationship with an advisor should be adversarial. But

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Speaker 2: I think way too many folks hire an advisor and

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Speaker 2: they just completely kick back, like they think of that,

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Speaker 2: they think of it like a like an uber ride. Right,

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Speaker 2: They're put the headphones in, they check out there, they're

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Speaker 2: standing at their phone staring out the window, and they

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Speaker 2: just wait to get to their destination. But this is

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Speaker 2: your money, and hiring an advisor should not mean handing

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Speaker 2: over the rams completely in our opinion, So I appreciate

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Speaker 2: the questions that you're asking. You are taking steps in

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Speaker 2: the right direction. Yeah.

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Speaker 1: It makes me think of if you start investing in

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Speaker 1: real estate and you decide to hire a property manager,

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Speaker 1: a lot of people think, oh, cool, I don't have

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Speaker 1: to think about this at all. I make the purchase,

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Speaker 1: hand it over, and boom, I'm going to make profit

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Speaker 1: year over year and this is going to be a

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Speaker 1: great thing for building my portfolio. And maybe maybe, but

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Speaker 1: when you hire a property manager, that doesn't mean that

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Speaker 1: you're off the hook for any sort of responsibility about

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Speaker 1: what happens to your property.

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Speaker 2: Still your property.

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Speaker 1: Yeah, you still need to be informed and you still

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Speaker 1: need to be asking the right questions. And it's okay

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Speaker 1: to hire a property manager. I finally did that recently,

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Speaker 1: Matt for a couple of my properties. But it doesn't

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Speaker 1: mean that you then don't have to think about it

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Speaker 1: and that it's completely off your plate. And on the

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Speaker 1: subject of expected returns, this is a great question and

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Speaker 1: it's well worth talking about because I think this is

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Speaker 1: something that people see headlines about, people see predictions about,

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Speaker 1: even from awesome investing firms that Matt and I recommend regularly.

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Speaker 1: There's there are research arms that are looking into this

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Speaker 1: and that have take away about what's likely to happen

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Speaker 1: over the next five or ten years. The truth is

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Speaker 1: so much depends on what you're invested in, right, So, Spencer,

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Speaker 1: let's say you're invested in a target date fund, well,

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Speaker 1: then those projections could be fairly realistic, right, you might

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Speaker 1: be invested a little more conservatively. It so much depends

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Speaker 1: on how your funds are allocated, and depending on the

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Speaker 1: funds you own, your advisor might be correct. If you're

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Speaker 1: almost exclusively invested in let's say, though a total stock

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Speaker 1: market fund or an S and P five hundred fund,

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Speaker 1: then those projections could be a.

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Speaker 2: Little bit low.

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Speaker 1: We're certainly not anti target date fund. It's just that

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Speaker 1: for folks in the wealth building phase of their lives

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Speaker 1: that route going that route is going to reduce volatility, yes,

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Speaker 1: but it's also going to reduce returns over the long haul.

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Speaker 1: And that is why we typically encourage folks to invest

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Speaker 1: one hundred percent in equities, especially if you're in your

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Speaker 1: twenties and thirties, and oftentimes in those early forties too,

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Speaker 1: as you're really like funneling money in you want to

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Speaker 1: see you want to have more exposure to the asset

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Speaker 1: class that over the years has produced the highest returns

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Speaker 1: because you have decades after that exactly to kind of

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Speaker 1: overcome any sort of downseling that might occur.

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Speaker 2: Yeah, it's about how long it's going to be before

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Speaker 2: you have to tap those funds. But by the way, Spencer,

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Speaker 2: like your your financial advisor, he's not alone in projecting

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Speaker 2: reduced returns in the coming years. So Joel kind of

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Speaker 2: mentioned some of the difference some of our favorite brokerages

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Speaker 2: and they oftentimes make these projections every single year about

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Speaker 2: what they think the next year, the next decade even

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Speaker 2: is going to look like. And Vanguard in particular, they've

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Speaker 2: said that US equities are likely to return between four

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Speaker 2: point two and six point two percent, which is even

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Speaker 2: more meager than what it is that your financial advisor

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Speaker 2: has predicted. Vanguard is more bearish than your financial advisor.

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Speaker 2: And will that actually panel will that come to fruition? Like, again,

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Speaker 2: we don't know. The folks over at Schwab that's another

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Speaker 2: great brokerage to go with, they've made similar projections and

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Speaker 2: Vanguard they also predict that global equity returns will actually

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Speaker 2: be a good bit more robust, within the seven to

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Speaker 2: nine percent range. And evidently that's because it's likely that

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Speaker 2: valuations on US S docs are pretty lofty. They're pretty high,

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Speaker 2: and they're a bit depressed on the global side, and

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Speaker 2: so basically Zawell everyone else is dig and so while

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Speaker 2: things they do tend to get out of whack from

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Speaker 2: a valuation standpoint from time to time, reversion to the

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Speaker 2: mean is something that we typically see over time, and

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Speaker 2: so that has a lot to do with why a

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Speaker 2: lot of you know, quote unquote smart people are saying that, hey,

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Speaker 2: you may not want to count on as high of

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Speaker 2: a rate of return from your investments in the coming years. Yeah,

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Speaker 2: but when how and like how much of a reversion

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Speaker 2: we see? That actually depends on so many factors though,

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Speaker 2: And you know, you were talking about pulling out the

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Speaker 2: crystal ball dule. That's literally what it would take. And

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Speaker 2: obviously none of us truly knows the future microclass enough

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Speaker 2: to make that case. I would have brought it in

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Speaker 2: for this episode, but mine's gone.

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Speaker 3: No.

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Speaker 1: I think it's you could do a similar thing with

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Speaker 1: the housing market, Matt, and you could say, my goodness

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Speaker 1: from two thousand and nine to twenty twenty three, housing

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Speaker 1: prices increased at an incredible rate, and so at some point,

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Speaker 1: like should I bank on that continuing? Probably not. At

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Speaker 1: some point you start to see housing prices, the price

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Speaker 1: of a home, and the increase in the price of

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Speaker 1: a home far outpace the increase in average wages, and

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Speaker 1: at some point that becomes unsustainable. So similarly, I wouldn't

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Speaker 1: assume that if I bought a home that it would

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Speaker 1: appreciate in a similar way that problems that are appreciated

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Speaker 1: over the last ten years. There is going to be

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Speaker 1: at least some of a reversion to the mean despite

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Speaker 1: kind of the housing shortage that we still have in

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Speaker 1: this country. Right, and so okay, what does the future

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Speaker 1: hold for the US and global stock market? Well, in

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Speaker 1: the short term we have no clue. Right in the

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Speaker 1: six month to one year to three years time even,

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Speaker 1: there's not much I think that your financial advisor can

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Speaker 1: offer you in regards to what you should expect, or

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Speaker 1: that we can offer you long term investing, though, staying

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Speaker 1: put for decades is what gives us the largest chance

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Speaker 1: for success. And so are we going to see reduced

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Speaker 1: market returns from twenty twenty four to twenty fifty four

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Speaker 1: for the next thirty years. I guess my answer would

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Speaker 1: be a big fat maybe, which probably isn't very comforting, Spencer.

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Speaker 1: It doesn't really give you very much here, But I

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Speaker 1: think historical return data can tell us a lot, but

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Speaker 1: it also doesn't tell us like the whole story, and

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Speaker 1: so higher current valuations are something to at least.

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Speaker 2: Be aware of.

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Speaker 1: But reported earnings from US companies in particular have continued

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Speaker 1: to be really good. So I guess i'd sum it

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Speaker 1: up this way. I would say planning for slightly lower

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Speaker 1: than historical returns would be wise, and if your portfolio

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Speaker 1: outperforms expectations, consider it icing on top.

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Speaker 2: That's right. And what's another thing that's interesting too is

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Speaker 2: the fact that the way Spencer talks about his financial planner,

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Speaker 2: because he said my financial planner, it sounds like he's

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Speaker 2: got a relationship with this financial planner, which makes me think,

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Speaker 2: do you know how it is that your financial planner,

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Speaker 2: your advisor, is being compensated, because that could be another

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Speaker 2: part of another piece of this puzzle, where some of

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Speaker 2: those earnings are getting siphoned off a little bit. If

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Speaker 2: this is somebody on their management fee. Yes, if it's aum,

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Speaker 2: then truly you might be paying one percent of your

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Speaker 2: total investments towards this towards this advisor. And so that's

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Speaker 2: something worth checking in on. And it's not to say

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Speaker 2: that there, I mean, there are plenty of assets at

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Speaker 2: under management models where you've got somebody who is really

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Speaker 2: smart and they're really looking out for their clients. But

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Speaker 2: you can also do that for much cheaper with a

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Speaker 2: fiduciary fee only advisor. And so that's that's just a

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Speaker 2: small warning flag that's worth raising. What's a good point

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Speaker 2: when you hear that, I feel like they are baking

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Speaker 2: some of that in AWE the advisor. Well, probably returns

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Speaker 2: is gonna be seven percent, but minus my fee six percent,

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Speaker 2: you can expect to see six percent. And that is why, like,

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Speaker 2: we're not completely against the hiring a fiduciary financial planner

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Speaker 2: who has the assets under management model, but you just

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Speaker 2: have to be aware of it. And we prefer the

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Speaker 2: pay per hour for advice from a financial advisor. It's

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Speaker 2: just the waters are muddied a whole lot less totally.

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Speaker 2: And the other thing too is I didn't really give

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Speaker 2: his advisor was saying that, hey, there's a lot more

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Speaker 2: folks who are self managing, and so you can expect

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Speaker 2: to see smaller returns like in the coming years. You

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Speaker 2: mentioned housing earlier too, but given the fact that it's

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Speaker 2: it's almost like we are in a housing crisis where

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Speaker 2: folks do not have the ability to force themselves to

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Speaker 2: say via equity via their home, which is a traditional way.

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Speaker 2: That not saying that it's good, but that has been

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Speaker 2: the reality over the past several decades. There are a

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Speaker 2: lot of folks who aren't doing that, and so you're thinking, Man,

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Speaker 2: I've got all this cash on hand, what do I

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Speaker 2: do with that? You funnel that into the market. So

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Speaker 2: if you're trying to be smart with it.

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Speaker 1: Some of those people who are renting longer than they

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Speaker 1: would hope are probably doing more investing.

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Speaker 2: That they've got way more dollars invested in the market

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Speaker 2: than their parents, and that's.

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Speaker 1: What we would encourage them to do. Okay, So what

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Speaker 1: should we do given kind of okay? Historical returns say

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Speaker 1: that the stock market returns what something like nine point

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Speaker 1: six percent over the last one hundred years, over the

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Speaker 1: last fifty years, even in modern investing, maybe a little

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Speaker 1: bit more than that, And of course we can't control

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Speaker 1: stock market returns. The biggest things that are in our control, though,

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Speaker 1: are how much we invest in what we invest in,

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Speaker 1: And so if Vanguard and your financial advisor are right,

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Speaker 1: it might make sense to try and increase the percentage

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Speaker 1: spencer that the tre able to stock away into those

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Speaker 1: retirement accounts. If you're investing ten percent of your money

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Speaker 1: hoping that you're gonna have enough for retirement, well even

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Speaker 1: just two percent more into your four one K over

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Speaker 1: the years is going to have a significant impact. Raising

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Speaker 1: it one percent this year, one percent next year, one

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Speaker 1: percent the next, all of a sudden, pretty soon you're

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Speaker 1: investing fifteen, seventeen, eighteen percent of your take home pay

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Speaker 1: and you're not experiencing a massive decline in your lifestyle

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Speaker 1: because of it.

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Speaker 2: And so that's something you one hundred percent have control

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Speaker 2: over how much it is that you're investing. You don't

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Speaker 2: have control over what it is the market is doing,

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Speaker 2: but you have control over what it is that you

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Speaker 2: are sitting aside into the market.

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Speaker 1: And I think some people would hear prognostications like this

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Speaker 1: and they would say, I need to get riskier with

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Speaker 1: my investing in order to ensure that I am not

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Speaker 1: in this Vanguard bucket of four point two to six

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Speaker 1: point two percent returns over the coming decade. If I

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Speaker 1: juice those returns, then I'm more prepared for retirement. And

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Speaker 1: I would just say that's a scary route to take

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Speaker 1: because you're at that point. You are you're taking more

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Speaker 1: of a gambling approach. So much of it comes down

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Speaker 1: to what you can stomach. You're going to be subject

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Speaker 1: subjected to increased volatility if you go in that direction.

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Speaker 1: So we would say opting to own a diversified basket

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Speaker 1: of mostly stocks is a worthwhile move, even if it

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Speaker 1: means you're not going to get the high potential returns.

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Speaker 1: And you might want to even consider adding more exposure

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Speaker 1: to the global stock market, kind of like Matt you

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Speaker 1: referenced there, just giving the current valuation disparity, I get

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Speaker 1: that too as a strategy having some sort of international

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Speaker 1: stock and if you're looking for a single fund that

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Speaker 1: would help you do just that, get US exposure and

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Speaker 1: world exposure, but be basically holy in stocks. Vanguard's Total

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Speaker 1: World Stock ETF is a great one to look into,

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Speaker 1: and that ticker symbol is VT pretty simple.

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Speaker 2: VT now Virginia Tech Vanguard total, I guess the whole world. Yeah,

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Speaker 2: or you can just root for the home team USA. Yeah,

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Speaker 2: go with the S ANDP. But Spencer, we hope that

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Speaker 2: gets you thinking through some of the right things. And

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Speaker 2: again you are asking the right questions. But Joe, we've

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Speaker 2: got more to get to, including we got a question

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Speaker 2: from a listener who's got a hypothetical ten thousand dollars.

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Speaker 2: We'll get to that plus more right after this.

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Speaker 1: All right, Matt, we're back and there's a lot more

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Speaker 1: to get to On this episode. We talk about a

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Speaker 1: lot of different aspects of people's financial lives, and the

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Speaker 1: truth is not everything we talk about applies to everyone.

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Speaker 1: That's true, and this question really comes straight out of

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Speaker 1: that bank.

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Speaker 4: Hi, Joel and Matt, this is LT from California. Thank

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Speaker 4: you for what you do show us create guys are

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Speaker 4: really down to earth. I have a question. I don't

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Speaker 4: have children, not married paying for life insurance term life

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Speaker 4: that is, do I really need it? Thanks?

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Speaker 2: All right, LT. She got us right to the point.

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Speaker 2: Do I need term life insurance? By the way, Eltie,

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Speaker 2: we appreciate you listening, but life insurance, Yeah, this is

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00:19:36,400 --> 00:19:38,399
Speaker 2: a great question, and of course, if you were to

436
00:19:38,440 --> 00:19:42,080
Speaker 2: ask a life insurance salesperson, they would probably say, yes,

437
00:19:42,359 --> 00:19:44,840
Speaker 2: it's kind of like a hammer nail scenario. Yeah, it's

438
00:19:44,880 --> 00:19:47,320
Speaker 2: like you go to the store, any store, whatever it

439
00:19:47,400 --> 00:19:49,679
Speaker 2: is they sell, you need what it is that we have.

440
00:19:49,840 --> 00:19:51,359
Speaker 2: Like you go to the like a golf store, do

441
00:19:51,400 --> 00:19:53,760
Speaker 2: you need new clubs? It doesn't matter how old, how

442
00:19:53,760 --> 00:19:55,439
Speaker 2: beat up your current clubs are, the answer is going

443
00:19:55,480 --> 00:19:55,800
Speaker 2: to be yes.

444
00:19:55,880 --> 00:19:58,320
Speaker 1: Oh, of course, there's this new titanium technology that's going

445
00:19:58,400 --> 00:19:59,680
Speaker 1: to send your golf ball twenty yards further.

446
00:19:59,760 --> 00:20:03,040
Speaker 2: Actually, the tungsten steel a driver, it sends it an

447
00:20:03,080 --> 00:20:03,840
Speaker 2: extra extra five.

448
00:20:04,000 --> 00:20:05,919
Speaker 1: I know you spent two grand two years ago, but

449
00:20:06,040 --> 00:20:07,320
Speaker 1: it's time to update your set.

450
00:20:07,640 --> 00:20:11,480
Speaker 2: But we have always said that life insurance exists specifically

451
00:20:11,560 --> 00:20:15,080
Speaker 2: for income replacement. And so what that means is that

452
00:20:15,080 --> 00:20:18,040
Speaker 2: if nobody depends on your income, right, you've got no spouse,

453
00:20:18,080 --> 00:20:20,800
Speaker 2: you've got no kids, Well, then life insurance isn't really

454
00:20:20,840 --> 00:20:25,000
Speaker 2: all that necessary. So the TLDR is, no, this probably

455
00:20:25,040 --> 00:20:26,880
Speaker 2: shouldn't be on your financial to do list.

456
00:20:26,960 --> 00:20:29,440
Speaker 1: Yeah, and again, Matt, you're right. I think a lot

457
00:20:29,440 --> 00:20:32,359
Speaker 1: of people would say life insurance is a necessity for

458
00:20:32,359 --> 00:20:34,600
Speaker 1: almost everyone. But no, there's a certain segment of the

459
00:20:34,640 --> 00:20:37,879
Speaker 1: population where life insurance just doesn't make sense. It doesn't

460
00:20:37,920 --> 00:20:40,840
Speaker 1: need to be an expense, and really, who are you

461
00:20:40,920 --> 00:20:43,560
Speaker 1: insuring at that point? Who are you leaving behind that

462
00:20:43,720 --> 00:20:44,960
Speaker 1: needs coverage?

463
00:20:45,320 --> 00:20:45,520
Speaker 2: Right?

464
00:20:46,080 --> 00:20:48,760
Speaker 1: In case you want to pass away prematurely, let's elaborate

465
00:20:48,800 --> 00:20:51,000
Speaker 1: just a little, right, because there might be other reasons

466
00:20:51,000 --> 00:20:54,400
Speaker 1: potentially though, why someone in your position LT would choose

467
00:20:54,400 --> 00:20:56,880
Speaker 1: to take out a life insurance policy, even if they're

468
00:20:56,880 --> 00:20:59,760
Speaker 1: not trying to replace their income for dependence.

469
00:20:59,840 --> 00:21:00,000
Speaker 2: Right.

470
00:21:00,359 --> 00:21:02,399
Speaker 1: They might want to make sure other loved ones are

471
00:21:02,440 --> 00:21:05,680
Speaker 1: taken care of, or that their future funeral expenses aren't

472
00:21:05,680 --> 00:21:08,520
Speaker 1: a burden to parents or friends. Sure, and that life

473
00:21:08,600 --> 00:21:11,439
Speaker 1: insurance policy it really could serve that purpose, but it's

474
00:21:11,480 --> 00:21:13,439
Speaker 1: also just not a necessity.

475
00:21:12,960 --> 00:21:15,560
Speaker 2: Right, So take the formal life insurance route.

476
00:21:15,560 --> 00:21:17,240
Speaker 1: You don't have to get like a half a million

477
00:21:17,240 --> 00:21:20,280
Speaker 1: dollar policy to cover funeral costs because it's highly unlikely

478
00:21:20,359 --> 00:21:23,240
Speaker 1: that your funerals typically cost that much to have a funeral.

479
00:21:23,280 --> 00:21:25,600
Speaker 1: And the truth is, there are other ways besides life

480
00:21:25,640 --> 00:21:29,359
Speaker 1: insurance to save and protect your loved ones for that

481
00:21:29,720 --> 00:21:30,720
Speaker 1: potential eventuality.

482
00:21:30,800 --> 00:21:32,480
Speaker 2: Yeah, well, there's AGAs would just be better funneled into

483
00:21:32,520 --> 00:21:35,880
Speaker 2: your savings account or like or just into investments instead

484
00:21:35,920 --> 00:21:40,040
Speaker 2: of paying for an outlined product something. It's like, this

485
00:21:40,080 --> 00:21:41,760
Speaker 2: is a very specific tool. It almost makes me think

486
00:21:41,760 --> 00:21:43,919
Speaker 2: of like getting a special tool in the kitchen, right,

487
00:21:43,920 --> 00:21:46,480
Speaker 2: Like there's all these different gadgets when in reality, maybe

488
00:21:46,520 --> 00:21:48,719
Speaker 2: you just need like a good chef's knife. That is

489
00:21:48,760 --> 00:21:50,000
Speaker 2: the Highyuels savings account.

490
00:21:50,119 --> 00:21:52,399
Speaker 1: I guess say, I still love the infomercials to try

491
00:21:52,440 --> 00:21:54,160
Speaker 1: to sell me those things because I'm always like, oh,

492
00:21:54,200 --> 00:21:55,760
Speaker 1: that potato spiral thing, like.

493
00:21:55,840 --> 00:21:58,560
Speaker 2: Look how well I can smash this garlic with incredible

494
00:21:59,000 --> 00:22:00,560
Speaker 2: with this and those.

495
00:22:00,640 --> 00:22:03,040
Speaker 1: It just goes to show how good of salespeople those

496
00:22:03,080 --> 00:22:05,199
Speaker 1: folks are, because I always like kind of sort of

497
00:22:05,200 --> 00:22:06,080
Speaker 1: want one, but I never.

498
00:22:05,960 --> 00:22:09,760
Speaker 2: Buy them exactly. Yeah, and your excess savings, your investments,

499
00:22:09,840 --> 00:22:12,679
Speaker 2: it should help cover any sort of expense after the

500
00:22:12,720 --> 00:22:15,399
Speaker 2: fact that some folks in your life might be faced with,

501
00:22:15,520 --> 00:22:18,280
Speaker 2: like funeral expenses. But just because you don't have life

502
00:22:18,320 --> 00:22:21,320
Speaker 2: insurance doesn't mean that you're dying destitute. Most likely, like

503
00:22:21,359 --> 00:22:23,720
Speaker 2: you're going to have some money on hand, and you know,

504
00:22:23,720 --> 00:22:26,600
Speaker 2: we're not talking about huge dollar amounts on that front.

505
00:22:26,680 --> 00:22:29,800
Speaker 2: Like generally speaking, ten thousand dollars should be more than

506
00:22:29,960 --> 00:22:33,199
Speaker 2: enough to cover like the average funeral the cover the

507
00:22:33,200 --> 00:22:35,520
Speaker 2: cost of a casket a burial, and it could be

508
00:22:35,520 --> 00:22:36,920
Speaker 2: done for a good bit less than that as well.

509
00:22:36,920 --> 00:22:39,520
Speaker 2: It doesn't necessarily have to be something where you're forking

510
00:22:39,560 --> 00:22:42,240
Speaker 2: out five figures in order to cover a funeral cost.

511
00:22:42,080 --> 00:22:44,840
Speaker 1: Especially if you go the cremation direction. It's a whole

512
00:22:44,840 --> 00:22:47,720
Speaker 1: lot less than kind of the traditional burial route. But

513
00:22:47,800 --> 00:22:49,800
Speaker 1: you're right, Matt, and there are sites now too that

514
00:22:49,960 --> 00:22:52,919
Speaker 1: help comparison shop for baril costs. There are funeral and

515
00:22:53,000 --> 00:22:56,240
Speaker 1: memorial societies locally that help to reduce the cost. So

516
00:22:56,760 --> 00:22:59,120
Speaker 1: as long as you have savings and investments on hand,

517
00:22:59,359 --> 00:23:01,320
Speaker 1: you don't necessar really need some sort of massive life

518
00:23:01,359 --> 00:23:04,720
Speaker 1: insurance paout to help your loved ones, you know, bear.

519
00:23:04,520 --> 00:23:07,040
Speaker 2: That cost totally if you were to pass aw. Okay,

520
00:23:07,040 --> 00:23:10,920
Speaker 2: So another scenario where getting life insurance might make sense

521
00:23:11,000 --> 00:23:13,080
Speaker 2: even if you don't have kids or if you don't

522
00:23:13,080 --> 00:23:15,600
Speaker 2: have a spouse, And that might be a scenario where

523
00:23:15,600 --> 00:23:18,320
Speaker 2: you might be ensuring a business partner. And so Joel

524
00:23:18,359 --> 00:23:20,760
Speaker 2: for literally where you thinking about that, like, there are

525
00:23:20,800 --> 00:23:23,159
Speaker 2: some instances and I think about this and what it

526
00:23:23,240 --> 00:23:24,919
Speaker 2: is that you and I do, because there have been

527
00:23:25,040 --> 00:23:27,200
Speaker 2: times when I thought, should I get an insurance, the

528
00:23:27,280 --> 00:23:29,919
Speaker 2: life insurance policy on Joel, because if you were to

529
00:23:30,000 --> 00:23:32,840
Speaker 2: and then kill him, well he woul obviously look super

530
00:23:32,880 --> 00:23:36,359
Speaker 2: sus I just gotta wait like six months due Even then, man,

531
00:23:36,480 --> 00:23:38,040
Speaker 2: I don't think there's any period of time that you

532
00:23:38,080 --> 00:23:41,800
Speaker 2: could wait where all of a sudden, who could have

533
00:23:41,800 --> 00:23:44,640
Speaker 2: seen get, you know, cashing in getting a million dollar

534
00:23:44,760 --> 00:23:48,679
Speaker 2: check that folks aren't like, hmm, wait a minute. But again,

535
00:23:48,760 --> 00:23:52,200
Speaker 2: does it make sense to do that? Insurance companies allow

536
00:23:52,240 --> 00:23:54,480
Speaker 2: you to do that, Like you can basically ensure like

537
00:23:54,560 --> 00:23:57,399
Speaker 2: almost anybody, as long as they know, as long as

538
00:23:57,440 --> 00:24:00,239
Speaker 2: they approve, and that you can and that you can

539
00:24:00,280 --> 00:24:04,080
Speaker 2: prove that you have an ensurable interest basically that your life,

540
00:24:04,119 --> 00:24:06,520
Speaker 2: your income would be impacted by the death of that person.

541
00:24:06,960 --> 00:24:09,840
Speaker 2: But that doesn't necessarily mean that that's the best path forward,

542
00:24:09,920 --> 00:24:11,920
Speaker 2: and I guess it shouldn't necessarily be obvious. But I've

543
00:24:11,920 --> 00:24:14,040
Speaker 2: decided not to do that because again, there's other there's

544
00:24:14,040 --> 00:24:16,960
Speaker 2: plenty of other things I could do then carry on

545
00:24:17,000 --> 00:24:18,560
Speaker 2: with a podcast that I wouldn't be able to do

546
00:24:18,560 --> 00:24:21,000
Speaker 2: that because I wouldn't have a best buddy anymore. So

547
00:24:21,720 --> 00:24:23,560
Speaker 2: I guess I'd maintained the site. You have to go

548
00:24:23,560 --> 00:24:25,119
Speaker 2: to your number two, maybe get some other guys to

549
00:24:25,400 --> 00:24:28,639
Speaker 2: take over. Yeah, yeah, I mean that is true. Like,

550
00:24:28,720 --> 00:24:30,399
Speaker 2: that's something that you and I have actually had to

551
00:24:30,400 --> 00:24:32,120
Speaker 2: have discussions about, and I can see why it would

552
00:24:32,119 --> 00:24:32,840
Speaker 2: make sense, but you and I.

553
00:24:32,880 --> 00:24:35,200
Speaker 1: Have also opted not to in that direction. Yeah, and

554
00:24:35,280 --> 00:24:37,680
Speaker 1: let's talk about term life insurance for just a little

555
00:24:37,720 --> 00:24:40,120
Speaker 1: bit longer, because for folks who do need life insurance,

556
00:24:40,520 --> 00:24:42,560
Speaker 1: that's the best and the cheapest kind to get. Totally,

557
00:24:42,600 --> 00:24:45,560
Speaker 1: we almost never recommended any other kind. Whole life is

558
00:24:45,640 --> 00:24:47,679
Speaker 1: too expensive and it's ensuring you for longer than you

559
00:24:47,720 --> 00:24:50,359
Speaker 1: need because the goal is to reach greater and greater

560
00:24:50,440 --> 00:24:53,080
Speaker 1: levels of financial independence and need less and less life

561
00:24:53,119 --> 00:24:55,960
Speaker 1: insurance in your life over the years, over the decades.

562
00:24:56,520 --> 00:24:58,919
Speaker 1: You want to insure yourself during the years when you're

563
00:24:58,960 --> 00:25:01,920
Speaker 1: building wealth, and then let that wealth you built up

564
00:25:02,040 --> 00:25:04,920
Speaker 1: be your own version of life insurance decades down the road.

565
00:25:04,960 --> 00:25:06,840
Speaker 2: Yeah, at a certain like you're working up that hill

566
00:25:06,840 --> 00:25:08,960
Speaker 2: and at a certain point, you know what the whole

567
00:25:09,560 --> 00:25:11,720
Speaker 2: little stranger things for everybody? What's that new season coming up?

568
00:25:11,720 --> 00:25:12,960
Speaker 2: By the way, I don't know. I don't know either,

569
00:25:13,080 --> 00:25:14,560
Speaker 2: But at a certain point, it kind of levels off

570
00:25:14,560 --> 00:25:16,719
Speaker 2: and it gets a whole lot easier to push that.

571
00:25:17,000 --> 00:25:19,040
Speaker 2: But then at some point too you start going down

572
00:25:19,080 --> 00:25:21,159
Speaker 2: the other side and the ball just takes off and

573
00:25:21,200 --> 00:25:23,240
Speaker 2: without any effort at all, you're moving.

574
00:25:23,320 --> 00:25:24,960
Speaker 1: Think about how much progress you can really make in

575
00:25:25,000 --> 00:25:26,800
Speaker 1: thirty years when you can have a term life policy

576
00:25:26,840 --> 00:25:29,080
Speaker 1: to cover you, let's say from thirty five to sixty

577
00:25:29,160 --> 00:25:31,320
Speaker 1: five or thirty to sixty and all the debt you

578
00:25:31,320 --> 00:25:33,440
Speaker 1: can pay off, all the investments you can make, all

579
00:25:33,440 --> 00:25:35,359
Speaker 1: the force savings. If you buy a home and you're

580
00:25:35,400 --> 00:25:38,080
Speaker 1: paying off that mortgage as agreed every single month. That

581
00:25:38,200 --> 00:25:41,240
Speaker 1: kind of stuff allows you to it. Really it meets

582
00:25:41,280 --> 00:25:43,560
Speaker 1: the term life insurance, meets your ensurable need, but it

583
00:25:43,600 --> 00:25:46,040
Speaker 1: doesn't go beyond that costing you extra unnecessarily.

584
00:25:46,280 --> 00:25:48,359
Speaker 2: I think that's all that. The average policy for a

585
00:25:48,400 --> 00:25:51,600
Speaker 2: female who's thirty years old is around forty bucks, and

586
00:25:51,640 --> 00:25:54,080
Speaker 2: that's for a million dollars and for thirty years, which

587
00:25:54,080 --> 00:25:55,560
Speaker 2: is a million bucks. Might be more than people a

588
00:25:55,560 --> 00:25:57,760
Speaker 2: lot of people. Yeah, that's a ton of money. It's

589
00:25:57,760 --> 00:26:00,960
Speaker 2: a little bit more every month for dudes there. But

590
00:26:01,040 --> 00:26:02,960
Speaker 2: again that's for the average policy, and it can be

591
00:26:02,960 --> 00:26:05,560
Speaker 2: a lot more affordable if you are super active, if

592
00:26:05,600 --> 00:26:07,280
Speaker 2: you are a fit person.

593
00:26:07,320 --> 00:26:09,800
Speaker 1: If you just mentioned CrossFit in your life insurance application,

594
00:26:09,840 --> 00:26:10,959
Speaker 1: I believe you get twenty percent off.

595
00:26:11,080 --> 00:26:12,520
Speaker 2: But I think there might be some folks who push

596
00:26:12,600 --> 00:26:14,440
Speaker 2: back on you know, and hearing me say that, and

597
00:26:14,480 --> 00:26:17,560
Speaker 2: they're like, fifty bucks, dudes, that's actually that's a chunk

598
00:26:17,600 --> 00:26:20,639
Speaker 2: of money. Yeah, but compare that to whole life insurance,

599
00:26:20,640 --> 00:26:22,960
Speaker 2: where you're paying hundreds of dollars a month. It is

600
00:26:23,119 --> 00:26:25,520
Speaker 2: often tend to drop in the bucket compared to what

601
00:26:25,560 --> 00:26:27,439
Speaker 2: it is that you're paying for Term life. Yep, all right,

602
00:26:27,560 --> 00:26:29,720
Speaker 2: And for people who do have dependence of spouse, kids,

603
00:26:29,760 --> 00:26:32,040
Speaker 2: who depend on their income, term life really is a must.

604
00:26:32,040 --> 00:26:33,879
Speaker 2: Half Matt and I had to kind of for a

605
00:26:33,880 --> 00:26:35,600
Speaker 2: long time. I put this off. I put it off

606
00:26:35,680 --> 00:26:38,359
Speaker 2: longer than I should have, and at some point you

607
00:26:38,440 --> 00:26:40,600
Speaker 2: just can't avoid it any longer. We've got an article

608
00:26:40,640 --> 00:26:42,439
Speaker 2: that explains like how much you should get and how

609
00:26:42,520 --> 00:26:45,399
Speaker 2: long of a term you'll likely need, and kind of

610
00:26:45,440 --> 00:26:47,720
Speaker 2: how best practices for buying will link to that in

611
00:26:47,760 --> 00:26:50,280
Speaker 2: the show notes. But do a little research then start shopping,

612
00:26:50,400 --> 00:26:52,159
Speaker 2: because term life gives you the peace of mind and

613
00:26:52,160 --> 00:26:54,680
Speaker 2: it actually protects your family in the worst case scenario.

614
00:26:55,760 --> 00:26:57,960
Speaker 2: But again for you LT, going back to your question,

615
00:26:58,359 --> 00:27:00,879
Speaker 2: not even our favorite term life policy, see sounds like

616
00:27:00,920 --> 00:27:02,920
Speaker 2: a necessity in your case. There are just better things

617
00:27:02,920 --> 00:27:04,840
Speaker 2: you can do with that money. That's right. All right,

618
00:27:04,880 --> 00:27:07,440
Speaker 2: Let's get to our next question. And this is from

619
00:27:07,440 --> 00:27:10,080
Speaker 2: a listener who is asking what he should be doing

620
00:27:10,240 --> 00:27:12,360
Speaker 2: with some money that he might have.

621
00:27:13,119 --> 00:27:16,119
Speaker 5: Hey, guys, this is Riker from Wyoming. I have a

622
00:27:16,480 --> 00:27:19,880
Speaker 5: hypothetical question for you. Let's say that you had ten

623
00:27:19,920 --> 00:27:24,639
Speaker 5: thousand dollars and all these situations would say six percent interests.

624
00:27:24,960 --> 00:27:28,480
Speaker 5: So would it be best to put the money into

625
00:27:28,560 --> 00:27:32,680
Speaker 5: a CD that would earn you six percent versus pain

626
00:27:32,800 --> 00:27:35,320
Speaker 5: towards a home loan that's at six percent interest, or

627
00:27:35,400 --> 00:27:38,679
Speaker 5: pain towards student loans at a six percent interest. I

628
00:27:38,720 --> 00:27:40,800
Speaker 5: don't mean for this to be a should I invest

629
00:27:40,960 --> 00:27:45,040
Speaker 5: versus paying down debt? More of a what would provide

630
00:27:45,080 --> 00:27:46,639
Speaker 5: the best benefit for your money?

631
00:27:46,920 --> 00:27:49,439
Speaker 2: All right, Joel, it's time for a thought experiment for

632
00:27:49,480 --> 00:27:50,280
Speaker 2: these No. I love this.

633
00:27:50,920 --> 00:27:52,800
Speaker 1: It makes me think about like monopoly money. If I

634
00:27:52,840 --> 00:27:54,760
Speaker 1: had unlimited amounts of monopoly.

635
00:27:54,400 --> 00:27:56,399
Speaker 2: Money, you don't want to use it? Yeah, I know.

636
00:27:56,440 --> 00:27:59,800
Speaker 1: I think a hypothetical question can can really help give

637
00:27:59,800 --> 00:28:01,960
Speaker 1: a lot of insight to kind of how we should

638
00:28:02,000 --> 00:28:04,920
Speaker 1: proceed in certain scenarios. And this is a really good

639
00:28:04,920 --> 00:28:06,399
Speaker 1: one because I think there's a lot we can learn

640
00:28:06,400 --> 00:28:08,119
Speaker 1: from it. Actually, so, Ryker, I love that you submitted

641
00:28:08,119 --> 00:28:08,320
Speaker 1: this one.

642
00:28:08,359 --> 00:28:08,679
Speaker 2: Thank you.

643
00:28:08,760 --> 00:28:11,560
Speaker 1: I think it can shed light on the nuance of

644
00:28:11,560 --> 00:28:13,960
Speaker 1: money on some of these gray areas that you and

645
00:28:14,000 --> 00:28:15,800
Speaker 1: I we do talk about, but maybe not quite to

646
00:28:15,840 --> 00:28:18,080
Speaker 1: the detail that it might be needed or might be helpful.

647
00:28:18,119 --> 00:28:21,240
Speaker 1: So the different reasons we might choose to do one

648
00:28:21,640 --> 00:28:24,880
Speaker 1: over the other based on a few different approaches, let's.

649
00:28:24,680 --> 00:28:27,199
Speaker 2: Talk about that. Yeah, that's right. First of all, though,

650
00:28:27,240 --> 00:28:29,200
Speaker 2: let's get nerdy with it. Let's talk about the math.

651
00:28:29,359 --> 00:28:33,120
Speaker 2: Because the truth is, Riker, if you've got in his case,

652
00:28:33,119 --> 00:28:35,240
Speaker 2: you say, six thousand dollars or he's got ten thousand

653
00:28:35,280 --> 00:28:37,280
Speaker 2: dollars just to put towards a bunch of different things

654
00:28:37,880 --> 00:28:40,360
Speaker 2: that might earn him six percent or might save him

655
00:28:40,400 --> 00:28:43,239
Speaker 2: six percent. But the truth is, when it comes to

656
00:28:43,280 --> 00:28:46,320
Speaker 2: some of these different scenarios, they're close, but they're not

657
00:28:46,480 --> 00:28:49,800
Speaker 2: exactly equal. So when you earn six percent on your money,

658
00:28:49,880 --> 00:28:52,600
Speaker 2: let's say in a CD or a savings account, you're

659
00:28:52,640 --> 00:28:54,920
Speaker 2: going to get a ten ninety nine I in it

660
00:28:54,960 --> 00:28:57,480
Speaker 2: stands for interest, I'm pretty sure. So you're going to

661
00:28:57,520 --> 00:29:00,280
Speaker 2: be taxs on his earnings, meaning that they're the real

662
00:29:00,360 --> 00:29:03,000
Speaker 2: rate of return isn't truly a full six percent, even

663
00:29:03,080 --> 00:29:05,200
Speaker 2: if that is what the headline rate is that you

664
00:29:05,200 --> 00:29:06,880
Speaker 2: see when you're you know, when you log into your

665
00:29:06,880 --> 00:29:10,240
Speaker 2: account there. So in that case, if we're purely looking

666
00:29:10,280 --> 00:29:12,600
Speaker 2: at the math, we're only looking at the numbers, Well,

667
00:29:12,720 --> 00:29:15,200
Speaker 2: paying off debt that carries the six percent interest rate

668
00:29:15,280 --> 00:29:16,920
Speaker 2: is going to be better than keeping that cash on

669
00:29:17,000 --> 00:29:20,560
Speaker 2: hand and earning six percent on it. But then again,

670
00:29:21,200 --> 00:29:24,280
Speaker 2: some debts even come with tax advantages like mortgage interest

671
00:29:24,360 --> 00:29:27,560
Speaker 2: deduction that you can itemize if you itemize your taxes

672
00:29:27,600 --> 00:29:30,440
Speaker 2: instead of taking the standard deduction, and so like, these

673
00:29:30,440 --> 00:29:32,760
Speaker 2: are some of those nuances on the math side of

674
00:29:32,760 --> 00:29:34,320
Speaker 2: things that are at least worth knowing, and it's at

675
00:29:34,360 --> 00:29:36,239
Speaker 2: least worth considering as you're trying to figure out and

676
00:29:36,680 --> 00:29:39,840
Speaker 2: maybe tweak and optimize for the absolute best thing that

677
00:29:39,880 --> 00:29:40,840
Speaker 2: you could do with the money.

678
00:29:40,840 --> 00:29:43,440
Speaker 1: So you mentioned like multiple variables already when it comes

679
00:29:43,480 --> 00:29:46,720
Speaker 1: to taxation on earnings or when it comes to tax

680
00:29:46,840 --> 00:29:49,840
Speaker 1: deductions for keeping certain debt in your life, that's also

681
00:29:49,880 --> 00:29:51,800
Speaker 1: not a great reason typically to keep debt in your life.

682
00:29:51,800 --> 00:29:54,120
Speaker 1: And the truth is on the mortgage insurant deduction, something

683
00:29:54,400 --> 00:29:56,320
Speaker 1: a lot of Americans think they're getting it, but they're

684
00:29:56,360 --> 00:29:58,600
Speaker 1: not because they are taking the standard standard man, and

685
00:29:58,600 --> 00:30:00,000
Speaker 1: a lot of people think I'm gona keep my mortgage

686
00:30:00,080 --> 00:30:03,560
Speaker 1: around specifically for the tax break. Tax breaks typically minimal,

687
00:30:03,600 --> 00:30:07,160
Speaker 1: people like overinflated in their minds, and many of the

688
00:30:07,240 --> 00:30:10,479
Speaker 1: marketing it anyway totally, But it is also worth messing

689
00:30:10,520 --> 00:30:11,120
Speaker 1: something else, Matt.

690
00:30:11,120 --> 00:30:11,920
Speaker 2: There's something that.

691
00:30:11,840 --> 00:30:16,400
Speaker 1: Those opportunity costs which is always there in firsteal finance. Right,

692
00:30:16,760 --> 00:30:18,400
Speaker 1: So you mentioned the mass side of the equation, but

693
00:30:18,400 --> 00:30:20,160
Speaker 1: when you look at the opportunity cost of paying off

694
00:30:20,200 --> 00:30:22,280
Speaker 1: that debt, it's also important to take that into consideration.

695
00:30:22,560 --> 00:30:27,200
Speaker 1: It's not purely a dollars and cents discussion and saying, oh, well,

696
00:30:27,280 --> 00:30:29,360
Speaker 1: wait a second, if I keep this money in my

697
00:30:29,440 --> 00:30:31,760
Speaker 1: savings account, I am going to pay a little bit

698
00:30:31,880 --> 00:30:34,440
Speaker 1: in tax based on the earnings that I get. There's

699
00:30:34,480 --> 00:30:37,120
Speaker 1: also real value in having a nest egg of cash

700
00:30:37,200 --> 00:30:40,239
Speaker 1: on the sidelines that goes beyond maybe that little bit

701
00:30:40,280 --> 00:30:42,719
Speaker 1: of taxation that you would experience. It can prevent you

702
00:30:42,760 --> 00:30:44,560
Speaker 1: from taking on worse kinds of debt in the future

703
00:30:44,800 --> 00:30:47,440
Speaker 1: or something awful to happen to you, right like if

704
00:30:47,440 --> 00:30:49,920
Speaker 1: you lost your job, instead of having to start purchasing

705
00:30:49,960 --> 00:30:52,360
Speaker 1: stuff on your credit card that you can't pay off,

706
00:30:52,600 --> 00:30:55,240
Speaker 1: those excess savings dollars can be used to help you

707
00:30:55,280 --> 00:30:57,960
Speaker 1: get through that tough time. So I think sometimes people

708
00:30:58,000 --> 00:31:01,040
Speaker 1: if you're thinking pure optimization. There was a article from

709
00:31:01,120 --> 00:31:03,920
Speaker 1: our friend Jack over at Young Money recently talking about

710
00:31:03,920 --> 00:31:07,400
Speaker 1: how he was trying to hyper optimize his finances and

711
00:31:07,440 --> 00:31:10,520
Speaker 1: he didn't actually keep as much cash on hand as

712
00:31:10,520 --> 00:31:12,440
Speaker 1: he should and it got him into a squirrely little

713
00:31:12,440 --> 00:31:14,960
Speaker 1: financial situation, costing him money. We'll link to that in

714
00:31:14,960 --> 00:31:17,280
Speaker 1: the show notes. But that is the kind of stuff.

715
00:31:17,480 --> 00:31:20,120
Speaker 1: It can feel like an opportunity cost of having cash

716
00:31:20,120 --> 00:31:22,000
Speaker 1: on the sidelines to not being able to earn as

717
00:31:22,080 --> 00:31:23,840
Speaker 1: much as you could putting it in the market. But

718
00:31:23,840 --> 00:31:25,719
Speaker 1: there's also the other side of the coin, the other

719
00:31:25,760 --> 00:31:28,320
Speaker 1: opportunity cost. We're not having enough in cash when you

720
00:31:28,360 --> 00:31:30,320
Speaker 1: actually need it can mean that you have to take

721
00:31:30,320 --> 00:31:31,920
Speaker 1: on even more than various kinds of debt.

722
00:31:32,040 --> 00:31:34,239
Speaker 2: That's right, it's the potential for what that money can

723
00:31:34,320 --> 00:31:36,640
Speaker 2: keep you from having to do in the future. But

724
00:31:36,720 --> 00:31:38,320
Speaker 2: let's say you pay off your debt, you get six

725
00:31:38,360 --> 00:31:40,400
Speaker 2: percent return. Well, that's not a bad thing, but it

726
00:31:40,440 --> 00:31:42,880
Speaker 2: also might not be the very best thing, and it

727
00:31:42,920 --> 00:31:45,480
Speaker 2: could mean that, you say, miss out on other opportunities

728
00:31:45,480 --> 00:31:48,560
Speaker 2: that could come along, like the opportunity to invest those

729
00:31:48,560 --> 00:31:51,200
Speaker 2: dollars and potentially earn more at some point in the

730
00:31:51,200 --> 00:31:54,040
Speaker 2: near future. So we're just talking about how having that

731
00:31:54,080 --> 00:31:56,959
Speaker 2: money on hand can keep you from making bad decisions. Well,

732
00:31:56,960 --> 00:32:00,440
Speaker 2: what about the ability to do potentially better things with

733
00:32:00,480 --> 00:32:03,120
Speaker 2: that money? And so right now it's the state's certing

734
00:32:03,120 --> 00:32:04,840
Speaker 2: six percent, but you might have let's say a real

735
00:32:04,960 --> 00:32:08,040
Speaker 2: estate deal come along that could reliably earn you eight

736
00:32:08,160 --> 00:32:10,760
Speaker 2: or nine percent, which would then be an even better

737
00:32:11,080 --> 00:32:13,520
Speaker 2: use of that cash. So basically, what we're saying here

738
00:32:13,560 --> 00:32:15,800
Speaker 2: is that cash on the sidelines that isn't getting crushed

739
00:32:15,800 --> 00:32:18,880
Speaker 2: by inflation is an asset that has the potential to

740
00:32:18,920 --> 00:32:22,840
Speaker 2: do something even bigger and even better than it's currently doing.

741
00:32:23,080 --> 00:32:24,719
Speaker 2: And if you pay off the debt, well, it's got

742
00:32:24,800 --> 00:32:27,440
Speaker 2: no opportunity to potentially do that bigger and better thing

743
00:32:27,480 --> 00:32:28,400
Speaker 2: off into the future.

744
00:32:28,480 --> 00:32:30,760
Speaker 1: Yeah, you just never know, that's right, Yeah, And that

745
00:32:30,880 --> 00:32:32,440
Speaker 1: is the trade off that you make. And so that

746
00:32:32,560 --> 00:32:36,600
Speaker 1: is why we take a nuanced approach to debt on

747
00:32:36,640 --> 00:32:38,960
Speaker 1: this show, and much of the chagrin of some people

748
00:32:38,960 --> 00:32:42,040
Speaker 1: who think debt is the best way to finance their

749
00:32:42,120 --> 00:32:44,480
Speaker 1: financial future and other people who think debt is the

750
00:32:44,520 --> 00:32:46,560
Speaker 1: worst thing that could ever happen. So just depends, Man,

751
00:32:46,720 --> 00:32:50,000
Speaker 1: Debt is a great area that needs a lot of thought,

752
00:32:50,040 --> 00:32:52,720
Speaker 1: and it's very personal in nature, and some kinds of

753
00:32:52,720 --> 00:32:55,160
Speaker 1: debt can actually help set you up for future success,

754
00:32:55,400 --> 00:32:58,440
Speaker 1: but always done in moderation, right, That is something we

755
00:32:58,520 --> 00:33:00,760
Speaker 1: preach what we're talking about drink and craft beer, but

756
00:33:00,840 --> 00:33:03,440
Speaker 1: also when we're talking about how you you know, how

757
00:33:03,440 --> 00:33:04,680
Speaker 1: you think about debt in your life.

758
00:33:04,720 --> 00:33:05,320
Speaker 2: Totally man.

759
00:33:05,400 --> 00:33:07,480
Speaker 1: And there's a reason, Matt, that the company like Apple

760
00:33:07,720 --> 00:33:10,520
Speaker 1: is holding onto so much cash because that liquidity of

761
00:33:10,600 --> 00:33:13,080
Speaker 1: people's flexibility. Let's say there's a company out there that

762
00:33:13,080 --> 00:33:15,040
Speaker 1: they want to buy that they think ultimately is going

763
00:33:15,080 --> 00:33:17,280
Speaker 1: to make them a much better company over the next

764
00:33:17,360 --> 00:33:20,320
Speaker 1: few years and allow them to reach more consumers make

765
00:33:20,360 --> 00:33:22,760
Speaker 1: more money. Well, if they don't have a cash on

766
00:33:22,800 --> 00:33:25,400
Speaker 1: the sidelines to make that purchase.

767
00:33:25,080 --> 00:33:27,120
Speaker 2: As not a merger and acquisition that's going to happen,

768
00:33:27,160 --> 00:33:30,240
Speaker 2: that's right, but simultaneously they're like, there's winners and losers

769
00:33:30,280 --> 00:33:32,320
Speaker 2: on both sides, or I'm sorry, I should say there's

770
00:33:32,320 --> 00:33:34,560
Speaker 2: winners on those winners on both sides. Like it makes

771
00:33:34,560 --> 00:33:37,320
Speaker 2: me think about reading shootog if that's Phil Knight's memoir,

772
00:33:37,360 --> 00:33:39,600
Speaker 2: one of my favorite business books, basically the Rise of

773
00:33:39,720 --> 00:33:42,640
Speaker 2: Nike and how he did all that and what's fascinating.

774
00:33:42,640 --> 00:33:48,160
Speaker 2: Obviously Nike, they succeeded so much success over there with

775
00:33:48,280 --> 00:33:51,040
Speaker 2: Nike or originally it was Blue Ribbon Sports, it was

776
00:33:51,040 --> 00:33:53,800
Speaker 2: the name of the company initially. But a recurring theme

777
00:33:53,880 --> 00:33:56,040
Speaker 2: is the fact that they never had cash on hand, yeah,

778
00:33:56,040 --> 00:33:58,560
Speaker 2: because they kept taking any profit and plowing it right

779
00:33:58,560 --> 00:34:01,040
Speaker 2: back into the business to the sagar in of everybody,

780
00:34:01,240 --> 00:34:03,080
Speaker 2: including Phil Knight and everybody else that worked there.

781
00:34:03,080 --> 00:34:04,560
Speaker 1: But they were just they had to keep getting bigger

782
00:34:04,600 --> 00:34:07,600
Speaker 1: loans too, and they were constantly stress growth, and man,

783
00:34:07,640 --> 00:34:09,960
Speaker 1: they were like living on the edge, like they're on

784
00:34:10,000 --> 00:34:11,640
Speaker 1: the precipice constantly.

785
00:34:11,960 --> 00:34:14,239
Speaker 2: And that is something that they could have completely done

786
00:34:14,239 --> 00:34:16,400
Speaker 2: away with have they had more cash margin, And so

787
00:34:16,640 --> 00:34:18,239
Speaker 2: a lot of it comes down to what it is

788
00:34:18,800 --> 00:34:20,560
Speaker 2: that is more important to you. Obviously we're not talking

789
00:34:20,600 --> 00:34:22,839
Speaker 2: about this picture capital back then in the same way. Yeah,

790
00:34:22,840 --> 00:34:24,520
Speaker 2: what we're talking about is you, as an individual, think

791
00:34:24,560 --> 00:34:27,040
Speaker 2: about running your life like you would run a business

792
00:34:27,280 --> 00:34:30,400
Speaker 2: and thinking through, well, what do I want to optimize

793
00:34:30,480 --> 00:34:32,960
Speaker 2: my life for, like, what are my goals for me

794
00:34:33,000 --> 00:34:35,120
Speaker 2: as an individual? What about my days to look like?

795
00:34:35,280 --> 00:34:36,960
Speaker 2: And then you can start making decisions based on that.

796
00:34:36,960 --> 00:34:41,360
Speaker 2: Because let's say you picture yourself being an investor. Maybe

797
00:34:41,600 --> 00:34:43,719
Speaker 2: you love reading about Warren Buffett and his billions and

798
00:34:43,760 --> 00:34:46,000
Speaker 2: all the different companies that he invests in. Well, changes

799
00:34:46,000 --> 00:34:47,680
Speaker 2: are you're probably going to keep around them. Mortgage, You're

800
00:34:47,680 --> 00:34:50,919
Speaker 2: going to maybe even keep around some medium size interest

801
00:34:51,000 --> 00:34:52,960
Speaker 2: rate debt because you're plowing so much money into the

802
00:34:53,000 --> 00:34:56,120
Speaker 2: stock market because that's important to you as an investor,

803
00:34:56,160 --> 00:34:58,040
Speaker 2: that's who you want to be. But if you're somebody

804
00:34:58,080 --> 00:35:02,080
Speaker 2: who prefers simplify, dedication and being able to pair things down,

805
00:35:02,440 --> 00:35:05,400
Speaker 2: will you that individual? For that person, they might find

806
00:35:05,480 --> 00:35:08,319
Speaker 2: that for them, paying off a mortgage, even if it's

807
00:35:08,320 --> 00:35:10,640
Speaker 2: a lower interest rate mortgage, for them is the absolute

808
00:35:10,640 --> 00:35:13,000
Speaker 2: best decision. It just comes down to what you want

809
00:35:13,000 --> 00:35:13,719
Speaker 2: in your life to look like.

810
00:35:13,800 --> 00:35:16,040
Speaker 1: Oh, you're exactly right, and that is that is well

811
00:35:16,080 --> 00:35:17,799
Speaker 1: we always that's why we have to give like these

812
00:35:17,800 --> 00:35:20,279
Speaker 1: full throated answers every single time, because so much of

813
00:35:20,320 --> 00:35:23,160
Speaker 1: it depends on you and how you're going to react.

814
00:35:23,360 --> 00:35:26,480
Speaker 1: And for instance, somebody doing a balance transfer credit card,

815
00:35:26,520 --> 00:35:28,480
Speaker 1: we always have to talk about how that can be

816
00:35:28,520 --> 00:35:31,040
Speaker 1: a win if you are disciplined and dedicated to paying

817
00:35:31,040 --> 00:35:35,480
Speaker 1: off that credit card debt within that zero percent interest

818
00:35:35,640 --> 00:35:38,000
Speaker 1: rate timeframe. So the same thing is true here, right

819
00:35:38,080 --> 00:35:40,640
Speaker 1: as long as the money isn't getting consumed, as long

820
00:35:40,680 --> 00:35:42,800
Speaker 1: as the cash isn't burning a hole in your pocket,

821
00:35:42,960 --> 00:35:44,840
Speaker 1: like keeping it on hand while things are kind of

822
00:35:44,840 --> 00:35:47,399
Speaker 1: break even is aoka in her book, Like not paying

823
00:35:47,480 --> 00:35:50,160
Speaker 1: off the six percent interest rate debt and keeping that

824
00:35:50,200 --> 00:35:53,239
Speaker 1: money in an account bearing six percent interest can make

825
00:35:53,280 --> 00:35:55,080
Speaker 1: a whole lot of sense. But if having that cash

826
00:35:55,120 --> 00:35:57,919
Speaker 1: on hand, if it starts to make you think maybe

827
00:35:57,920 --> 00:36:00,480
Speaker 1: we should take that trip that we hadn't actually budgeted

828
00:36:00,520 --> 00:36:03,040
Speaker 1: for because we've got extra savings on hand, well then

829
00:36:03,040 --> 00:36:03,840
Speaker 1: we would rather see you.

830
00:36:03,840 --> 00:36:05,200
Speaker 2: Put that towards the debt totally.

831
00:36:05,200 --> 00:36:08,080
Speaker 1: When we make proactive and strategic choices with debt, I

832
00:36:08,080 --> 00:36:10,840
Speaker 1: think we can build wealth even faster, Matt with this,

833
00:36:11,239 --> 00:36:13,360
Speaker 1: and this isn't a Matt and Joel signing off on

834
00:36:13,520 --> 00:36:15,440
Speaker 1: using as much debt as you want or using.

835
00:36:15,239 --> 00:36:16,439
Speaker 2: The crappiest forms of debts.

836
00:36:16,520 --> 00:36:19,279
Speaker 1: No, but it is, hopefully, And if you wanted like

837
00:36:19,280 --> 00:36:21,200
Speaker 1: a whole episode on this, you go back and listen

838
00:36:21,239 --> 00:36:23,400
Speaker 1: to episode six thirty seven. That's an episode where we

839
00:36:23,719 --> 00:36:26,279
Speaker 1: brought on a guest to talk about specifically that using

840
00:36:26,320 --> 00:36:27,440
Speaker 1: debt to your advantage.

841
00:36:27,560 --> 00:36:29,960
Speaker 2: It's possible. You just have to be careful on how

842
00:36:29,960 --> 00:36:31,680
Speaker 2: you do it. Yeah, it'd be smart about it. All right, man,

843
00:36:31,719 --> 00:36:34,720
Speaker 2: We've got more to get to. Specifically, we're gonna tackle

844
00:36:34,800 --> 00:36:37,000
Speaker 2: the question whether or not you can day trade your

845
00:36:37,000 --> 00:36:39,839
Speaker 2: way to riches. We'll get to that right after this.

846
00:36:47,880 --> 00:36:50,439
Speaker 1: All right, we're back if we're still taking your listener questions. Matt,

847
00:36:50,480 --> 00:36:53,840
Speaker 1: I was just thinking about like old school mascots recently,

848
00:36:54,080 --> 00:36:54,800
Speaker 1: you know how I kind.

849
00:36:54,640 --> 00:36:56,600
Speaker 2: Of miss I don't watch TV, so I don't the

850
00:36:56,640 --> 00:36:58,920
Speaker 2: Taco bel Chihuahua. Come on. I think he was one

851
00:36:58,920 --> 00:37:01,600
Speaker 2: of the best, right, yeah, yeah, it's a classic.

852
00:37:01,719 --> 00:37:04,160
Speaker 1: Well, another good one was the E Trade Baby, and

853
00:37:04,200 --> 00:37:06,040
Speaker 1: the e Trade Baby I think made a whole lot

854
00:37:06,040 --> 00:37:07,680
Speaker 1: of people think the day trading was cool.

855
00:37:07,880 --> 00:37:09,880
Speaker 2: That's what this question is about. This one from Laurna,

856
00:37:09,920 --> 00:37:13,200
Speaker 2: and she said I've always been an invest and hold person.

857
00:37:13,440 --> 00:37:15,960
Speaker 2: Now I'm at a career change and I'm interested in

858
00:37:16,000 --> 00:37:18,680
Speaker 2: possibly doing day trading. Does anyone here do that? So

859
00:37:18,719 --> 00:37:20,120
Speaker 2: that was in the how to Money Facebook group. That

860
00:37:20,160 --> 00:37:22,200
Speaker 2: was in the Facebook group, which is just a.

861
00:37:22,120 --> 00:37:26,000
Speaker 1: Bunch of lovely people who would never shame Laura over

862
00:37:26,040 --> 00:37:29,200
Speaker 1: this question. But that's just not what how the money

863
00:37:29,280 --> 00:37:31,920
Speaker 1: listeners are typically into, because Matt, that's not what you

864
00:37:31,960 --> 00:37:34,279
Speaker 1: and I are typically into. But let's talk about day

865
00:37:34,320 --> 00:37:35,800
Speaker 1: trading for a secon because I don't know we've actually

866
00:37:35,840 --> 00:37:39,279
Speaker 1: dedicated much airtime to talking about that in general, and

867
00:37:39,320 --> 00:37:42,880
Speaker 1: so we have talked about the perils of single stock investing,

868
00:37:42,920 --> 00:37:44,759
Speaker 1: which is one thing that's still a very different thing

869
00:37:44,760 --> 00:37:46,840
Speaker 1: because you might say, listen, I believe this in this

870
00:37:46,920 --> 00:37:49,920
Speaker 1: in this company or this sector is going to outperform

871
00:37:50,000 --> 00:37:53,319
Speaker 1: because like for instance, I mentioned artificial intelligence earlier, I

872
00:37:53,320 --> 00:37:56,200
Speaker 1: would understand why you might think that investing in AI

873
00:37:56,239 --> 00:37:58,279
Speaker 1: stocks is going to outperform over the next fifteen or

874
00:37:58,320 --> 00:38:00,319
Speaker 1: twenty years. And if you have a long term you

875
00:38:00,320 --> 00:38:03,640
Speaker 1: you might outperform your peers. But there's a big difference

876
00:38:03,680 --> 00:38:06,680
Speaker 1: between having that sort of conviction about a sector like

877
00:38:06,680 --> 00:38:08,480
Speaker 1: I said, or a couple of individual stocks that you're

878
00:38:08,480 --> 00:38:12,120
Speaker 1: really passionate about than day trading. So day trading is

879
00:38:12,160 --> 00:38:15,040
Speaker 1: typically done with the desire to make a quick buck

880
00:38:15,200 --> 00:38:19,200
Speaker 1: off of daily or weekly stock market gyrations. And so yeah,

881
00:38:19,239 --> 00:38:22,080
Speaker 1: we're not big single stock dudes, but day trading is

882
00:38:22,080 --> 00:38:23,600
Speaker 1: a far worse option in our opio.

883
00:38:23,640 --> 00:38:26,680
Speaker 2: It is much more like gambling as opposed to looking

884
00:38:26,719 --> 00:38:29,480
Speaker 2: at an industry or looking at a sector. But there

885
00:38:29,520 --> 00:38:31,960
Speaker 2: are a couple of things to note here. One, when

886
00:38:32,000 --> 00:38:35,040
Speaker 2: you trade stocks regularly, even if you make money, well,

887
00:38:35,080 --> 00:38:37,320
Speaker 2: you're going to pay more tax on the earnings because

888
00:38:37,360 --> 00:38:40,520
Speaker 2: you're not going to qualify for the advantageous capital gains

889
00:38:40,760 --> 00:38:43,080
Speaker 2: tax rate. So you kind of come out on the

890
00:38:43,080 --> 00:38:44,840
Speaker 2: short end of the stick at the end of the

891
00:38:44,920 --> 00:38:46,040
Speaker 2: year from that perspective.

892
00:38:46,200 --> 00:38:49,160
Speaker 1: Just to mention how how complicated your taxes might be

893
00:38:49,400 --> 00:38:51,440
Speaker 1: if you're trading that much.

894
00:38:51,280 --> 00:38:53,520
Speaker 2: It does get a lot more complicated. It might be

895
00:38:53,560 --> 00:38:55,200
Speaker 2: you're paying your CPA a whole lot ax. Well, that's

896
00:38:55,200 --> 00:38:58,400
Speaker 2: like all the folks who were doing stalks that's during

897
00:38:58,440 --> 00:39:00,759
Speaker 2: the pandemic and they get that statement.

898
00:39:00,480 --> 00:39:02,480
Speaker 1: For you get one hundred and thirty seven page Robinhood

899
00:39:02,480 --> 00:39:03,879
Speaker 1: statement and they're like, oh my gosh, this is gonna

900
00:39:03,880 --> 00:39:04,279
Speaker 1: take a while.

901
00:39:04,239 --> 00:39:06,319
Speaker 2: But then the top of that, making money day trading,

902
00:39:06,400 --> 00:39:09,560
Speaker 2: it's just really freaking hard to do. If it was

903
00:39:09,600 --> 00:39:12,080
Speaker 2: that easy, I think it would be something that everybody

904
00:39:12,200 --> 00:39:14,640
Speaker 2: is doing. And so I guess at the end of

905
00:39:14,640 --> 00:39:16,000
Speaker 2: the day here, what we'd ask you to do is

906
00:39:16,040 --> 00:39:19,440
Speaker 2: just to think about what your motivation is for trading

907
00:39:19,440 --> 00:39:21,280
Speaker 2: on the rig like that, and if it's to build

908
00:39:21,280 --> 00:39:24,200
Speaker 2: wealth more quickly, and we certainly understand that desire, but

909
00:39:24,239 --> 00:39:26,640
Speaker 2: the truth is it's likely to have the opposite effect.

910
00:39:26,880 --> 00:39:30,799
Speaker 2: It's incredibly difficult to day trade and this is just

911
00:39:30,840 --> 00:39:33,200
Speaker 2: a maybe juice your returns or maybe have a little

912
00:39:33,239 --> 00:39:34,960
Speaker 2: bit of extra money on the side. But if we're

913
00:39:34,960 --> 00:39:38,120
Speaker 2: actually talking about maybe even making this a career choice

914
00:39:38,239 --> 00:39:40,560
Speaker 2: or like a career pivot, I think it's even it's

915
00:39:40,560 --> 00:39:41,320
Speaker 2: even more fraud.

916
00:39:41,400 --> 00:39:43,520
Speaker 1: Yeah, I couldn't tell if she was saying that she's

917
00:39:43,560 --> 00:39:45,640
Speaker 1: going to pivot her career into day trading or she's

918
00:39:45,680 --> 00:39:48,480
Speaker 1: like just pivoting in her career and maybe just during

919
00:39:48,520 --> 00:39:50,080
Speaker 1: this interim this is a way to make some extra

920
00:39:50,120 --> 00:39:51,120
Speaker 1: money either way.

921
00:39:51,200 --> 00:39:52,880
Speaker 2: Either way, though, it's not like it's just something that

922
00:39:52,920 --> 00:39:54,920
Speaker 2: you pick up and start doing. It's not like I

923
00:39:54,920 --> 00:39:56,680
Speaker 2: think a lot of times folks are equating it with

924
00:39:56,760 --> 00:39:59,120
Speaker 2: like picking up gigwork on an app, where it's just like,

925
00:39:59,160 --> 00:40:01,560
Speaker 2: you know what, just thinking about doing some day trading,

926
00:40:01,560 --> 00:40:03,600
Speaker 2: but instead I'm gonna go maybe do some task Rabbit

927
00:40:03,960 --> 00:40:06,879
Speaker 2: or vice versa. It's not interchangeable. No, this isn't something

928
00:40:06,920 --> 00:40:07,799
Speaker 2: that anybody can do.

929
00:40:07,920 --> 00:40:10,840
Speaker 1: Yeah, and there's a lot of people who sell courses

930
00:40:11,440 --> 00:40:13,279
Speaker 1: who might say that they can teach you to day

931
00:40:13,320 --> 00:40:15,600
Speaker 1: trade successfully. The truth is, if those people are day

932
00:40:15,600 --> 00:40:19,600
Speaker 1: trading as successive as successfully as they're purporting, they wouldn't

933
00:40:19,600 --> 00:40:21,000
Speaker 1: need to sell a course to you because they would

934
00:40:21,040 --> 00:40:21,480
Speaker 1: be crushing it.

935
00:40:21,520 --> 00:40:25,960
Speaker 2: They wouldn't be into the content course management publishing industry.

936
00:40:26,040 --> 00:40:28,080
Speaker 2: They would be making millions and billions.

937
00:40:28,120 --> 00:40:31,399
Speaker 1: They would be taking out as many loans cheap loans

938
00:40:31,440 --> 00:40:34,800
Speaker 1: as and investing and getting rich themselves. That's how you

939
00:40:34,840 --> 00:40:36,840
Speaker 1: would do it instead of trying to sell you something.

940
00:40:37,040 --> 00:40:38,400
Speaker 1: And the worst thing I think that can happen to

941
00:40:38,440 --> 00:40:41,160
Speaker 1: a day trader typically is having an amazing day or

942
00:40:41,160 --> 00:40:43,440
Speaker 1: an amazing week. It starts to make you think that

943
00:40:43,480 --> 00:40:46,160
Speaker 1: you've got this thing figured out. Ah, easy money, baby.

944
00:40:46,160 --> 00:40:47,960
Speaker 1: It's kind of like going to the casino you put

945
00:40:48,000 --> 00:40:50,279
Speaker 1: it on black, boom, it lands on black, and you're like,

946
00:40:50,560 --> 00:40:51,320
Speaker 1: all right.

947
00:40:51,080 --> 00:40:51,640
Speaker 2: This rocks.

948
00:40:51,800 --> 00:40:54,600
Speaker 1: The truth is Vegas or wherever it is that you're gambling,

949
00:40:54,719 --> 00:40:57,080
Speaker 1: they go and get their money back. That's just how

950
00:40:57,160 --> 00:41:00,160
Speaker 1: things work, that's how the odds are stacked, and that

951
00:41:00,280 --> 00:41:03,399
Speaker 1: often matt that success, that instant success can often lead

952
00:41:03,400 --> 00:41:05,759
Speaker 1: to hubrist to pride that costs you even more over

953
00:41:05,800 --> 00:41:07,879
Speaker 1: the long haul. And there aren't really very many good

954
00:41:07,920 --> 00:41:10,160
Speaker 1: stats on the failure rate of day trading. There's just

955
00:41:10,280 --> 00:41:14,640
Speaker 1: not much. I guess self identified day traders maybe aren't

956
00:41:14,760 --> 00:41:16,399
Speaker 1: a dime a dozen. And the people who are willing

957
00:41:16,480 --> 00:41:19,920
Speaker 1: to be interviewed about how successful they've been, I think

958
00:41:19,960 --> 00:41:22,640
Speaker 1: maybe they tuck their tail between their legs and they

959
00:41:23,040 --> 00:41:25,560
Speaker 1: walk off in shame and they don't necessarily subject themselves

960
00:41:25,600 --> 00:41:28,839
Speaker 1: to those interviews. But from everything we've read, only five

961
00:41:28,880 --> 00:41:31,360
Speaker 1: to twenty percent of day traders consistently make money. And

962
00:41:31,400 --> 00:41:34,520
Speaker 1: I would even say that that twenty percent would be massively.

963
00:41:34,080 --> 00:41:36,480
Speaker 2: overWe probably closer to that four to five percent, yes

964
00:41:36,560 --> 00:41:39,040
Speaker 2: side of the scale, that's what I would imagine.

965
00:41:39,080 --> 00:41:41,360
Speaker 1: So investing in the stock market, we always say this

966
00:41:41,480 --> 00:41:44,080
Speaker 1: is not gambling, but day trading hoping to make money

967
00:41:44,120 --> 00:41:47,960
Speaker 1: on daily market shifts. It is gambling. So over the

968
00:41:48,000 --> 00:41:50,400
Speaker 1: long haul, the stock market is a weighing machine. But

969
00:41:50,440 --> 00:41:53,600
Speaker 1: if you are trying to make money overnight, you're putting

970
00:41:53,600 --> 00:41:56,319
Speaker 1: those dollars at risk, and those dollars would be better

971
00:41:56,360 --> 00:41:59,399
Speaker 1: off put patting you in during this career change or

972
00:41:59,440 --> 00:42:02,319
Speaker 1: invested for the long haul. So there's just so much

973
00:42:02,400 --> 00:42:05,319
Speaker 1: info that you need in order to day trade successfully.

974
00:42:05,480 --> 00:42:07,279
Speaker 1: You have to have the ability to process it well

975
00:42:07,480 --> 00:42:09,439
Speaker 1: and just so much patience to even have a chance

976
00:42:09,680 --> 00:42:13,160
Speaker 1: at success. That's why we're all about long term wealth building,

977
00:42:13,440 --> 00:42:15,520
Speaker 1: low and slow for the win. And if you do

978
00:42:15,560 --> 00:42:18,120
Speaker 1: opt to go this route, Laurna, don't put more money

979
00:42:18,120 --> 00:42:19,520
Speaker 1: in your day trading account than you can.

980
00:42:19,520 --> 00:42:21,000
Speaker 2: Afford to lose. I want you to be able to

981
00:42:21,000 --> 00:42:23,160
Speaker 2: sleep at night. And the truth is percent or less.

982
00:42:23,239 --> 00:42:25,239
Speaker 1: The more you put at risk and the more you're like,

983
00:42:25,560 --> 00:42:28,560
Speaker 1: the more you're frightened about the outcome of a specific trade,

984
00:42:28,600 --> 00:42:31,120
Speaker 1: it's weighing on you. It's going to impact you mentally

985
00:42:31,120 --> 00:42:32,000
Speaker 1: in a meaningful way.

986
00:42:32,040 --> 00:42:34,480
Speaker 2: Yeah, So I was talking about how it's almost like

987
00:42:34,680 --> 00:42:36,239
Speaker 2: asking whether or not you should pick up a new

988
00:42:36,280 --> 00:42:38,520
Speaker 2: hobby or not. Like day trading is just something that

989
00:42:38,560 --> 00:42:41,719
Speaker 2: you can easily just choose. Like another scenario is sort

990
00:42:41,719 --> 00:42:43,680
Speaker 2: of like choosing to be a world class athlete. Like

991
00:42:44,160 --> 00:42:46,560
Speaker 2: if you're asking whether or not you should be the

992
00:42:46,600 --> 00:42:49,279
Speaker 2: next Usain Bolt, you probably aren't going to be the

993
00:42:49,320 --> 00:42:52,719
Speaker 2: next one hundred meter world record holder. Like you either

994
00:42:52,760 --> 00:42:54,719
Speaker 2: have it or scouts watching you in middle school. Yes,

995
00:42:54,719 --> 00:42:57,080
Speaker 2: like you just know that this is something you should

996
00:42:57,120 --> 00:42:59,759
Speaker 2: be doing, as opposed to like almost consciously making it

997
00:42:59,800 --> 00:43:01,800
Speaker 2: as decision. If you have to actively make a decision

998
00:43:01,840 --> 00:43:03,279
Speaker 2: as to whether or not this is something you should do,

999
00:43:03,400 --> 00:43:05,600
Speaker 2: that should be an indicator that this is not something

1000
00:43:05,600 --> 00:43:06,240
Speaker 2: that you should.

1001
00:43:06,000 --> 00:43:08,560
Speaker 1: Be And it's always amazing the smartest best investors in

1002
00:43:08,640 --> 00:43:10,799
Speaker 1: history who often look for value companies that they can

1003
00:43:10,840 --> 00:43:13,799
Speaker 1: improve and improve their bottom line because of it. Thinking

1004
00:43:13,800 --> 00:43:16,600
Speaker 1: about somebody like Warren Buffett, their recommendation is to go

1005
00:43:16,640 --> 00:43:18,920
Speaker 1: the passive route and not attempt to go the route

1006
00:43:19,239 --> 00:43:22,160
Speaker 1: that they have gone because they know they have special talent.

1007
00:43:22,040 --> 00:43:23,879
Speaker 2: Because they know how the sausage is made as well,

1008
00:43:23,920 --> 00:43:26,640
Speaker 2: because they I mean, they've dedicated their life to doing this.

1009
00:43:26,760 --> 00:43:29,440
Speaker 2: The quantity even at his old age that Warren Buffett

1010
00:43:29,480 --> 00:43:32,600
Speaker 2: reads on companies, I mean that is literally all he does.

1011
00:43:32,600 --> 00:43:33,360
Speaker 2: That and he plays.

1012
00:43:33,160 --> 00:43:35,480
Speaker 1: Bridge right like that is all he does, so there's

1013
00:43:35,520 --> 00:43:38,040
Speaker 1: no wonder he has a special knack for it. Yes,

1014
00:43:38,560 --> 00:43:40,320
Speaker 1: but just kind of like I think in my pivot

1015
00:43:40,320 --> 00:43:42,200
Speaker 1: in of a day trading now, it's probably gonna end

1016
00:43:42,239 --> 00:43:43,200
Speaker 1: in misery, that's right.

1017
00:43:43,760 --> 00:43:46,279
Speaker 2: Nice. Mean, I feel like we dedicated a more than

1018
00:43:46,320 --> 00:43:48,319
Speaker 2: usual to investing, but it's good that we did. We're

1019
00:43:48,320 --> 00:43:50,640
Speaker 2: able to talk about interesting ones on investing. Yeah, in

1020
00:43:50,680 --> 00:43:53,400
Speaker 2: some ways maybe that we haven't talked about investing recently.

1021
00:43:53,480 --> 00:43:55,560
Speaker 2: But let's get back to our beer. And during this

1022
00:43:55,600 --> 00:43:59,960
Speaker 2: episode we enjoyed a color Decay, another beer by Piedmont Brewery. Joel,

1023
00:44:00,400 --> 00:44:03,000
Speaker 2: what were your thoughts on this one? This was smooth

1024
00:44:03,080 --> 00:44:05,160
Speaker 2: vanilla and chillberry vibes.

1025
00:44:05,360 --> 00:44:08,000
Speaker 1: Chill berry, right, it's like that berries coming through, but

1026
00:44:08,000 --> 00:44:10,000
Speaker 1: it's not like it's not smacking you in the mouth.

1027
00:44:10,040 --> 00:44:12,719
Speaker 1: This is a really laid back sour. We haven't had

1028
00:44:12,840 --> 00:44:15,440
Speaker 1: like a really good berry sour in a while. I

1029
00:44:15,480 --> 00:44:18,160
Speaker 1: loved it, so I'll say as I poured it, man,

1030
00:44:18,200 --> 00:44:21,520
Speaker 1: it poured like the super deep dart, like a ruby

1031
00:44:21,600 --> 00:44:22,920
Speaker 1: red kind of color.

1032
00:44:22,640 --> 00:44:26,279
Speaker 2: Almost like purplish. It's beautiful, really pretty. But then yeah,

1033
00:44:26,320 --> 00:44:28,839
Speaker 2: it was nice and tart, nice fruit kind of coming through,

1034
00:44:28,840 --> 00:44:31,080
Speaker 2: but it also wasn't overly sweet, and I think a

1035
00:44:31,080 --> 00:44:34,560
Speaker 2: lot of times if it like tastes too fragrant, like

1036
00:44:34,600 --> 00:44:36,200
Speaker 2: that might be where the berry where it feels like

1037
00:44:36,200 --> 00:44:37,920
Speaker 2: it's kind of beating you over the head with it

1038
00:44:37,960 --> 00:44:42,480
Speaker 2: is real subtle, right, But more than anything else, the

1039
00:44:42,520 --> 00:44:45,560
Speaker 2: one word that came to my mind was capt'n crunch

1040
00:44:45,840 --> 00:44:49,480
Speaker 2: crunch berries because it it had and I don't know,

1041
00:44:49,520 --> 00:44:52,600
Speaker 2: maybe's multiple words, by the way, but it had it

1042
00:44:52,640 --> 00:44:54,000
Speaker 2: had the berry flavor going on, but it kind of

1043
00:44:54,000 --> 00:44:56,960
Speaker 2: have like this weedy Vanillay backbone. I guess maybe that

1044
00:44:57,040 --> 00:45:01,480
Speaker 2: you get with the milk interplay with the the serial perhaps,

1045
00:45:01,880 --> 00:45:03,719
Speaker 2: but this isn't a week beer, but I don't know.

1046
00:45:03,800 --> 00:45:06,560
Speaker 2: In my mind, it's totally captain crunch berryes all the way.

1047
00:45:06,600 --> 00:45:07,360
Speaker 2: I can totally see why you.

1048
00:45:07,640 --> 00:45:09,640
Speaker 1: Yeah, I definitely enjoyed it, yep. And that is kind

1049
00:45:09,640 --> 00:45:11,359
Speaker 1: of fun and beer form every now and again. Yeah,

1050
00:45:11,400 --> 00:45:13,520
Speaker 1: So all right, Mattle, that's gonna do it for this episode.

1051
00:45:13,640 --> 00:45:15,879
Speaker 1: For folks who are listening, will have copious show notes

1052
00:45:15,880 --> 00:45:18,080
Speaker 1: with links to some of the references that we mentioned

1053
00:45:18,280 --> 00:45:20,440
Speaker 1: in this episode up in there, up on our website

1054
00:45:20,520 --> 00:45:23,080
Speaker 1: at how toomoney dot com. And if you haven't signed

1055
00:45:23,120 --> 00:45:24,480
Speaker 1: up for the how to Money newsletter, we'd love to

1056
00:45:24,480 --> 00:45:27,200
Speaker 1: have you joined. Comes out every Tuesday morning, so you know,

1057
00:45:27,280 --> 00:45:28,719
Speaker 1: if you sign up today, you'll get it in your

1058
00:45:28,719 --> 00:45:31,319
Speaker 1: inbox Tomorrow's right, and you can go find that at

1059
00:45:31,360 --> 00:45:34,399
Speaker 1: how to money dot com. Slash newsletter obviously free, put

1060
00:45:34,480 --> 00:45:37,319
Speaker 1: chock full of helpful information help you continue doing the

1061
00:45:37,360 --> 00:45:39,000
Speaker 1: right stuff with your money. That's right, and if you

1062
00:45:39,080 --> 00:45:41,680
Speaker 1: enjoy it, leave us a review over at Apple Podcasts

1063
00:45:41,800 --> 00:45:44,160
Speaker 1: or wherever it is that you listen to your podcast,

1064
00:45:44,160 --> 00:45:46,279
Speaker 1: because those reviews truly do help other people to find

1065
00:45:46,280 --> 00:45:49,200
Speaker 1: our show. It's just you're talking about the stock market

1066
00:45:49,280 --> 00:45:51,840
Speaker 1: and it being a weighing machine as opposed to like

1067
00:45:51,840 --> 00:45:53,799
Speaker 1: a voting machine, essentially is sort of the other way

1068
00:45:53,800 --> 00:45:54,399
Speaker 1: of looking at it.

1069
00:45:54,800 --> 00:45:59,040
Speaker 2: Positive solid reviews over in the different podcast apps. Is

1070
00:45:59,080 --> 00:46:02,040
Speaker 2: a weighing machine, and it does make a difference, for sure.

1071
00:46:02,080 --> 00:46:03,880
Speaker 2: We appreciate all of you who have already done that,

1072
00:46:04,440 --> 00:46:06,000
Speaker 2: and Buddy, I think it's gonna be it for this one.

1073
00:46:06,040 --> 00:46:09,359
Speaker 2: So until next time, best friends Out and best Friends Out.