WEBVTT - Debunking Conventional Financial Advice #117 0:00:00.040 --> 0:00:03.000 Welcome to How the Money. I'm Joel and I'm Matt, 0:00:03.080 --> 0:00:26.080 and today we are debunking conventional financial advice. Yeah, Joe, 0:00:26.120 --> 0:00:29.480 this is gonna be like MythBusters, but the financial advised version. 0:00:29.800 --> 0:00:31.560 But I'm excited that we are going to cover just 0:00:31.640 --> 0:00:34.199 a ton of variety of different topics. It's gonna run 0:00:34.200 --> 0:00:36.720 the gamut between. Can we also do some science experiments too, 0:00:36.760 --> 0:00:37.960 As long as we can blow up like a water 0:00:38.000 --> 0:00:39.760 heater in the desert, I think that's that's all I 0:00:39.800 --> 0:00:43.440 care about. How how would science experiments translate to a podcast? 0:00:43.640 --> 0:00:45.919 Probably not very well. I think that's called alchemy, right, 0:00:45.960 --> 0:00:48.600 Like that's the whole premise of trying to turn lead 0:00:48.680 --> 0:00:51.680 into gold or whatever metal into gold. But yeah, I 0:00:51.720 --> 0:00:53.840 am excited that we're going to cover a variety of topics, 0:00:53.880 --> 0:00:56.280 everything from just something that you would hear at work 0:00:56.640 --> 0:00:59.600 talking with a coworker or maybe even h R because 0:00:59.640 --> 0:01:02.480 sometimes they're dispensing financial advice because that's part of what 0:01:02.520 --> 0:01:04.640 they do all the way, maybe even to something you 0:01:04.680 --> 0:01:08.160 would even hear like a money expert, a financial advisor, 0:01:08.240 --> 0:01:10.280 maybe on the radio even And we're gonna get to 0:01:10.319 --> 0:01:12.160 that later in the show. Yeah, there's a lot of 0:01:12.160 --> 0:01:15.319 financial advice floating around, and so not only are we 0:01:15.400 --> 0:01:17.720 going to to tell you some common financial advice that 0:01:17.800 --> 0:01:20.440 we think just isn't really all that good, we're also 0:01:20.520 --> 0:01:22.160 kind of towards the end of the show going to 0:01:22.280 --> 0:01:25.440 give you some ideas on where to go, some ways 0:01:25.480 --> 0:01:28.119 to think about how how you filter that financial advice 0:01:28.120 --> 0:01:30.319 that comes into your life. Okay, but but first, Matt, 0:01:30.360 --> 0:01:33.000 I wanted to tell you that my wife this week 0:01:33.200 --> 0:01:37.759 tried Kroger clicklist nice and she loved it. Oh, yeah, 0:01:38.120 --> 0:01:39.800 she loved it. But wait a minute, does that mean 0:01:39.800 --> 0:01:42.080 you're gonna go ahead and cancel your costco membership for 0:01:42.120 --> 0:01:44.520 the year? And uh you are you a clicklist convert? Now? 0:01:44.680 --> 0:01:46.560 I mean I can be loyal to both. They both 0:01:46.560 --> 0:01:49.440 have different Oh but can you really? Oh I can? Oh? 0:01:49.560 --> 0:01:51.640 I can so. And I know it's not Aldi. We 0:01:51.720 --> 0:01:54.160 like Aldi two, but Kroger Clicklist it's kind of this 0:01:54.200 --> 0:01:57.880 really cool tool where it's this happy medium between going 0:01:57.920 --> 0:02:01.320 into the store and shopping in true sational manner and 0:02:01.520 --> 0:02:04.240 going with something like instat cart or shipped where you 0:02:04.360 --> 0:02:06.560 order groceries and have them show up on your door. 0:02:06.880 --> 0:02:10.119 And the problem, in my opinion with the grocery delivery 0:02:10.160 --> 0:02:13.280 services is the additional expense. Not only do you pay 0:02:13.280 --> 0:02:16.079 a delivery fee and have to tip the driver, et cetera, 0:02:16.560 --> 0:02:19.919 but you pay an inflated price for groceries when you 0:02:20.040 --> 0:02:22.480 use those services. But Kroger click List is kind of 0:02:22.520 --> 0:02:24.120 a thing of its own. What you do is you 0:02:24.200 --> 0:02:27.079 kind of buy your groceries on Kroger's website and then 0:02:27.120 --> 0:02:29.320 you pick them up at the Kroger store. But you 0:02:29.360 --> 0:02:30.840 don't even have to get out of your car. As 0:02:30.880 --> 0:02:33.280 a mom of kids, you're trying to pick up the groceries. 0:02:33.280 --> 0:02:35.919 It's it's really nice that essentially someone just brings them 0:02:35.919 --> 0:02:37.640 and sticks them in your car and you pay the 0:02:37.680 --> 0:02:40.040 five dollar fee. That's the only thing. So there is 0:02:40.040 --> 0:02:42.600 a cost. So there is a cost, it's five bucks, 0:02:42.600 --> 0:02:45.360 but the prices of the actual food that you're buying 0:02:45.560 --> 0:02:47.040 are the exact same as what you would pay in 0:02:47.040 --> 0:02:49.840 the store, so you're not paying those inflated internet prices. 0:02:50.520 --> 0:02:52.519 But the coolest thing is that we're easily going to 0:02:52.639 --> 0:02:55.760 save that five bucks every time we do a Kroger 0:02:55.800 --> 0:02:58.960 clicklist order. Because when you're shopping online, you tend to 0:02:58.960 --> 0:03:01.600 do a couple of different things. You tend to a 0:03:01.800 --> 0:03:04.520 spend less money. You're not impulse buying certain things as 0:03:04.560 --> 0:03:06.799 you're walking around the grocery store, right. And then the 0:03:06.840 --> 0:03:09.440 other thing is Kroger does a great job of offering 0:03:09.440 --> 0:03:12.680 digital coupons, and so while you're shopping online, you're just 0:03:12.880 --> 0:03:15.000 gonna see the coupons and it's gonna make it a 0:03:15.040 --> 0:03:17.280 whole lot easier to apply those to your order. Yeah. Well, 0:03:17.320 --> 0:03:18.920 I will say the last time I was actually in 0:03:19.000 --> 0:03:21.760 Kroger buying some fancy seltzer because there's a certain kind 0:03:21.800 --> 0:03:25.560 of looking for actually for the Airbnb. I scanned it 0:03:25.560 --> 0:03:27.200 and I was getting ready to put it in the bag, 0:03:27.320 --> 0:03:29.040 and then right there on the spot, it's spit out 0:03:29.040 --> 0:03:30.880 a coupon. I didn't really read it. I just saw 0:03:30.880 --> 0:03:33.080 that it said peri air, which is the fancy sealzer 0:03:33.160 --> 0:03:34.920 that I buy for the Airbnb. And we're trying to 0:03:34.920 --> 0:03:37.520 make it nice down there, fancy dude. So at the 0:03:37.600 --> 0:03:39.600 end when you are supposed to kind of skin the coupons, 0:03:39.600 --> 0:03:41.160 I scanned it and it freaking took like a ton 0:03:41.200 --> 0:03:43.000 of money off. And so if Kroger is able to 0:03:43.040 --> 0:03:45.360 do the digital version of that online and I don't 0:03:45.360 --> 0:03:46.960 even have to go in the store that might be 0:03:47.160 --> 0:03:49.160 attempting for us to use as well. Man, Yeah, so 0:03:49.200 --> 0:03:52.000 we're gonna keep trying it out, especially as you know, 0:03:52.000 --> 0:03:54.000 you and I were both about to have newborn babies. 0:03:54.240 --> 0:03:56.280 The idea of sleeping babies, taking them out of the 0:03:56.320 --> 0:03:59.080 car seat, blah blah blah, going grocery shopping, it becomes 0:03:59.080 --> 0:04:01.920 a whole lot less appealing. And so this Kroger clicklist 0:04:02.120 --> 0:04:04.480 might be this happy medium solution for us, at least 0:04:04.480 --> 0:04:06.800 for a while. And yeah, we'll kind of keep folks updated, 0:04:06.880 --> 0:04:10.440 let them know if this click list experiment continues. Nice man. 0:04:10.600 --> 0:04:13.280 Are Kroger's nationwide? I think so, but I think in 0:04:13.320 --> 0:04:15.800 other cities they have different names. Yeah, I think they 0:04:15.840 --> 0:04:18.400 own a bunch of different grocery stores like Ralph's and 0:04:18.480 --> 0:04:21.080 a couple others. So yeah, they're they're a very big company. 0:04:21.120 --> 0:04:23.360 They think they're the nation's largest grocer if I'm If 0:04:23.400 --> 0:04:25.359 I'm not mistaken, maybe in South Carolina they call it 0:04:25.440 --> 0:04:29.560 k Rogers instead of Roger's. Well, I've been to South Carolina. 0:04:29.560 --> 0:04:31.480 That would make sense. I don't want to hate on 0:04:31.520 --> 0:04:34.160 South Carolina too much. Plus, man, Laws are from South Carolina, 0:04:34.200 --> 0:04:36.160 so now, dude, I love South Carolina. I'm just saying 0:04:36.160 --> 0:04:38.120 there's some weird stuff that happens from time to time, right, 0:04:38.400 --> 0:04:41.720 great people, though, beautiful scenery, It's it's a lovely state, 0:04:41.839 --> 0:04:44.520 but it's not quite as beautiful of a state as Hawaii. 0:04:44.560 --> 0:04:46.919 And I think we can readily admit that. And the 0:04:46.960 --> 0:04:49.479 beer that we're drinking today on the show is from Hawaii. 0:04:49.800 --> 0:04:52.720 The beer is called Golden Sabbath. It's a Belgian style 0:04:52.760 --> 0:04:55.719 ale brewed with Hawaiian honey, made by the brewery Big 0:04:55.760 --> 0:04:58.440 Island brew House. And big thanks to listener Cody for 0:04:58.480 --> 0:05:00.360 sending this one our way. I like their litt saying 0:05:00.360 --> 0:05:02.720 on the bottle here says share the Aloha. I think 0:05:02.760 --> 0:05:05.520 another brewery in Hawaii. There. There's some lookings like Liquid Aloha, 0:05:05.560 --> 0:05:07.480 which is another good one. So yeah, I guess anything 0:05:07.480 --> 0:05:09.719 Aloha is quiet on brand for anything coming out of 0:05:09.760 --> 0:05:12.479 Why Yeah, for sure, for sure. But yeah, looking forward 0:05:12.480 --> 0:05:14.120 to sharing this one with you man, and we'll talk 0:05:14.160 --> 0:05:16.560 about this one at the end of the episode. Sounds good, 0:05:16.600 --> 0:05:20.600 everybody onto the topic at hand today, we are debunking 0:05:20.640 --> 0:05:23.640 conventional financial advice, and like we mentioned in the outset, 0:05:23.880 --> 0:05:26.840 there's a lot of financial advice floating around there's some 0:05:26.880 --> 0:05:29.120 good stuff, right, there's a lot of people delivering good 0:05:29.120 --> 0:05:31.279 financial advice, but there's also a lot of bad financial 0:05:31.320 --> 0:05:33.479 advice out there. And there are some sayings that you 0:05:33.520 --> 0:05:35.479 might hear all the time you're not even sure what 0:05:35.480 --> 0:05:39.040 they're based on. Maybe it's more of a proverbial phrase even, 0:05:39.279 --> 0:05:41.320 And some of these things are said by a whole 0:05:41.360 --> 0:05:44.240 lot of people. They get repeated and repeated, and some 0:05:44.320 --> 0:05:46.640 of these sayings deserve a second glance. They might not 0:05:46.680 --> 0:05:49.760 be completely off, we might not disagree with them, but 0:05:49.800 --> 0:05:52.040 it's important to tackle these things so that we can 0:05:52.040 --> 0:05:55.279 get a better perspective on what our response should actually 0:05:55.400 --> 0:05:58.720 be to the conventional financial wisdom that we hear touted 0:05:58.760 --> 0:06:01.039 out there. As Stephen bart would say, there's a certain 0:06:01.080 --> 0:06:03.560 amount of truthiness that some of these statements have, but 0:06:03.880 --> 0:06:07.920 are they actually true that their truth he has truthiness, Yeah, 0:06:07.920 --> 0:06:11.160 there's some sort of kernel right in there. Well, that's 0:06:11.160 --> 0:06:12.800 the thing though, that I mean, a reason I think 0:06:12.839 --> 0:06:15.640 a lot of this popular advice takes root is because 0:06:15.680 --> 0:06:18.760 there is typically some truth in it. And sometimes we 0:06:18.800 --> 0:06:20.400 may not have thought about it that much, but it 0:06:20.440 --> 0:06:23.520 seems fairly logical, so we just go with it, Okay, Joel. 0:06:23.560 --> 0:06:25.040 On that note, let's go ahead and kick it off 0:06:25.120 --> 0:06:28.440 with our first piece of financial advice. More money will 0:06:28.480 --> 0:06:32.400 make you happier, like me personally, you specifically, a little 0:06:32.440 --> 0:06:34.880 more might make me happier. Right, And that's a phrase 0:06:34.880 --> 0:06:38.040 that you're less likely to hear from a financial expert 0:06:38.200 --> 0:06:40.120 or someone giving you money advice. But it is this 0:06:40.200 --> 0:06:43.159 kind of general, vague notion out there that more money 0:06:43.560 --> 0:06:48.240 is always equivalent to greater happiness. It's an attitude, yeah, yeah, yeah, 0:06:48.240 --> 0:06:50.360 that I need to acquire more and if I get more, 0:06:50.480 --> 0:06:53.160 it will make me happier. And that's just not true. 0:06:53.480 --> 0:06:56.839 And in fact, although there are some instances in which 0:06:56.920 --> 0:06:59.440 a bit more money could make us happier. Yeah. For example, 0:06:59.440 --> 0:07:01.480 if someone's in poverty, right, if they're able to increase 0:07:01.480 --> 0:07:03.479 their salary to a certain amount and they're able to 0:07:03.520 --> 0:07:07.560 achieve some sort of baseline standard of living, certainly their 0:07:07.640 --> 0:07:09.520 quality of life is going to improve and there should 0:07:09.520 --> 0:07:11.920 be some happiness derived from that, right. Yeah, most definitely, 0:07:12.000 --> 0:07:15.080 If if we can't afford the basic necessities of life, 0:07:15.360 --> 0:07:18.200 then an increase in access to money would make a 0:07:18.200 --> 0:07:21.520 big difference. Right. But oftentimes, most of us, in middle 0:07:21.520 --> 0:07:24.440 class America, we end up buying ourselves more headaches than 0:07:24.480 --> 0:07:27.520 more money we get. We don't become happier by hoarding 0:07:27.560 --> 0:07:31.680 more or or even by pursuing happiness itself. Typically there's 0:07:31.840 --> 0:07:34.040 kind of a law of diminishing returns when it comes 0:07:34.040 --> 0:07:37.360 to having more money. Yeah, it's no surprise that the 0:07:37.480 --> 0:07:41.640 overconsumption of goods and services and just buying lots of stuff, 0:07:41.640 --> 0:07:44.080 how that does not lead to our happiness. And with that, 0:07:44.200 --> 0:07:45.840 over the past several years, I feel that there has 0:07:45.880 --> 0:07:49.720 been a shift towards folks pursuing experiences, right, Like you 0:07:49.760 --> 0:07:51.880 hear people say that, like, Oh, I'm all about the experiences. 0:07:51.880 --> 0:07:53.880 I'm not about stuff. You know, there's a little more 0:07:53.920 --> 0:07:58.040 mindfulness in that area, especially publicly. There's just a broader realization. 0:07:58.120 --> 0:08:01.520 I think that stuff matters less and experiences matter more. 0:08:01.720 --> 0:08:04.840 Right exactly, they can be better than stuff. They can 0:08:04.920 --> 0:08:07.440 change your life. You have an amazing experience, you learn 0:08:07.520 --> 0:08:09.800 something about yourself, you learn something about other cultures. But 0:08:09.920 --> 0:08:13.640 even trips, even vacations, even different experiences that you can 0:08:13.680 --> 0:08:15.600 go on, you can get used to those the same 0:08:15.640 --> 0:08:18.800 hedonic treadmill that we experience when it comes to purchasing 0:08:18.920 --> 0:08:21.920 things at home and the inflated lifestyle that we have 0:08:22.120 --> 0:08:24.920 that applies to vacations and trips and these different experiences 0:08:24.960 --> 0:08:27.960 as well. Our friend Carl Mr He's got a great 0:08:27.960 --> 0:08:31.440 post over on his site about that very thing. We'll 0:08:31.480 --> 0:08:33.240 link to that in our show notes. But the conclusion 0:08:33.280 --> 0:08:35.840 that he comes to, at least for himself personally, is 0:08:35.880 --> 0:08:37.840 that for him, it's not about stuff. For him, it 0:08:37.920 --> 0:08:41.160 is not about vacations and travel. It's about finding joy 0:08:41.280 --> 0:08:44.679 and contentment in the everyday life. The vast majority of 0:08:44.880 --> 0:08:47.800 our lives are spent doing very normal things, and if 0:08:47.840 --> 0:08:50.280 we're able to find enjoyment in those things, how much 0:08:50.360 --> 0:08:53.160 richer would our lives be? Right If you enjoy your 0:08:53.160 --> 0:08:55.720 coffee a certain way every single morning and you're able 0:08:55.760 --> 0:08:58.480 to recognize that, just imagine how much value that you're 0:08:58.480 --> 0:09:00.560 actually bringing to your life with something that does not 0:09:00.760 --> 0:09:03.160 cost very much money. If you know that by buying 0:09:03.160 --> 0:09:05.600 this one burg grinder, that you're gonna be able to 0:09:05.600 --> 0:09:08.240 make some fantastic coffee, which is, by the way, that's 0:09:08.280 --> 0:09:11.400 what you need. You need a burg grinder. We touched 0:09:11.440 --> 0:09:13.000 on coffee a few weeks ago. We didn't even talk 0:09:13.000 --> 0:09:14.640 about how to grind your beans. But I've got some 0:09:14.720 --> 0:09:18.600 crummy grinder. I need a burg Grinderrinder's that you guys do? No, man, 0:09:18.640 --> 0:09:22.640 you can need to get one, all right. It crushes 0:09:22.679 --> 0:09:25.240 the bean instead of chops it. Okay, it doesn't overheat 0:09:25.280 --> 0:09:28.439 it and spoil the flavor. That's I'm getting nerdy over here. 0:09:28.480 --> 0:09:31.160 But but if you know that just something as simple 0:09:31.200 --> 0:09:33.319 as that can can bring a lot of value and 0:09:33.440 --> 0:09:36.040 joy to your every day, that's something worth investing in. 0:09:36.160 --> 0:09:39.160 Think about the efficiency and the practicality of something like 0:09:39.200 --> 0:09:41.520 that and the impact that it could have on your life. Yeah. 0:09:41.559 --> 0:09:43.960 The last thing I really want to say about money 0:09:44.000 --> 0:09:46.200 not making us happier, because I think that's just not 0:09:46.280 --> 0:09:48.200 a truism, is that part of the way that we 0:09:48.240 --> 0:09:51.760 combat that is by developing an understanding of what enough 0:09:51.800 --> 0:09:54.000 looks like in our lives. And so if we can 0:09:54.160 --> 0:09:57.679 become okay with what we have, if we can practice thankfulness, 0:09:57.720 --> 0:10:00.240 a little bit more gratitude for what we have, and 0:10:00.240 --> 0:10:04.280 an understanding that more doesn't necessarily equate to better, I 0:10:04.360 --> 0:10:07.120 think really that's going to help us see that more 0:10:07.200 --> 0:10:10.160 money doesn't necessarily make us happier, that those things just 0:10:10.240 --> 0:10:12.560 aren't equivalent. All right, Matt, you want to debunk that 0:10:12.600 --> 0:10:15.040 next piece of financial advice. Yeah, let's do it, man. 0:10:15.480 --> 0:10:18.880 The next piece of advice. It takes money to make money. Obviously, 0:10:18.960 --> 0:10:20.840 this is something that lots of folks have heard. Right. 0:10:21.240 --> 0:10:24.080 While this is true for businesses maybe that are looking 0:10:24.080 --> 0:10:26.760 to grow, maybe get that venture capital money. I mean, 0:10:26.800 --> 0:10:29.319 I'm still looking for my own personal angel investor. Are 0:10:29.320 --> 0:10:33.680 you willing to auction off shares of your soul? Probably would. 0:10:33.679 --> 0:10:36.280 It would take things though, But that's you know, with businesses, 0:10:36.360 --> 0:10:39.040 but also for you personally as well. That might be 0:10:39.080 --> 0:10:41.520 true when it comes to investing in the stock market 0:10:41.640 --> 0:10:43.640 or saving for retirement. If you're trying to make passive 0:10:43.640 --> 0:10:45.640 income a real thing, you have to do that with 0:10:45.760 --> 0:10:49.280 money because that's the vehicle that's actually earning you money. Yeah, 0:10:49.320 --> 0:10:51.600 of course you need some sort of money to be 0:10:51.640 --> 0:10:54.440 able to invest, right. It does take, for instance, being 0:10:54.440 --> 0:10:57.000 able to invest a couple of thousand dollars into your 0:10:57.000 --> 0:10:59.720 i RA every year or to hit a certain percentage 0:10:59.720 --> 0:11:01.880 in your four oh one K in order to grow 0:11:01.920 --> 0:11:05.079 your wealth. Yeah, that's actually when you have money making 0:11:05.120 --> 0:11:07.080 you money. And like that's the truth of the statement, 0:11:07.160 --> 0:11:09.480 right right, right, right, So there is definitely this carnal 0:11:09.520 --> 0:11:12.640 a truth still. But but however today it's more often 0:11:12.760 --> 0:11:15.240 used as an excuse by folks as to why they 0:11:15.240 --> 0:11:17.840 can't get ahead and save more. It's a reason to 0:11:17.960 --> 0:11:22.800 justify not pursuing entrepreneurial endeavors that you just don't have 0:11:22.840 --> 0:11:24.719 the money in order to get started. And I think 0:11:24.760 --> 0:11:27.760 in today's day and age, this truism has actually become 0:11:27.880 --> 0:11:31.240 so much less true because of the ease of being 0:11:31.240 --> 0:11:34.800 able to invest. You're rounded up change on an app 0:11:34.840 --> 0:11:38.520 like Acorns, or open up a retirement account with five 0:11:38.880 --> 0:11:42.360 bucks or zero dollars depending on who you're with, with 0:11:42.480 --> 0:11:46.320 no minimum balances, no minimum monthly contribution. It's just gotten 0:11:46.360 --> 0:11:47.960 so much easier. It doesn't take a lot of money 0:11:48.000 --> 0:11:50.240 to get started. It just takes something. It just takes 0:11:50.280 --> 0:11:54.000 prioritizing it. And when we're talking about entrepreneurial endeavors, becoming 0:11:54.000 --> 0:11:56.959 an online entrepreneur, creating something and putting it out there, 0:11:57.080 --> 0:12:00.440 the barrier to entry has been demolished. And there's something 0:12:00.440 --> 0:12:03.000 that almost all of us could do if we would 0:12:03.040 --> 0:12:05.280 just take the time and the energy to learn how 0:12:05.320 --> 0:12:07.120 to do it and to just get started. Ye Joel, 0:12:07.160 --> 0:12:10.280 So what it takes to pursue that entrepreneurial endeavor is 0:12:10.520 --> 0:12:13.640 that hard work, and that hard work over time. That's 0:12:13.640 --> 0:12:16.120 the thing, right, is to not get burnt out and think, yeah, 0:12:16.160 --> 0:12:17.760 I can you know, hit this hard for maybe a 0:12:17.760 --> 0:12:20.240 couple of months, but often it takes a long time. 0:12:20.640 --> 0:12:23.080 And that's the sort of sweat equity that it takes 0:12:23.120 --> 0:12:25.680 to get something off the ground. And on a personal level, 0:12:25.679 --> 0:12:28.760 it doesn't absolutely require you to make a lot more money. 0:12:28.840 --> 0:12:31.240 You could also just spend less. So what that means 0:12:31.360 --> 0:12:34.240 is cutting back, and I know that can be really difficult. 0:12:34.240 --> 0:12:36.760 Once you've sort of gotten to a certain level of comfort, 0:12:36.840 --> 0:12:38.800 it's a lot harder to remove that from your life 0:12:38.840 --> 0:12:40.400 than it is to have never gotten there in the 0:12:40.400 --> 0:12:42.920 first place. So it's easy to say, oh, yeah, I 0:12:42.920 --> 0:12:45.280 just cut back, but I know that that's difficult. And 0:12:45.280 --> 0:12:48.040 that's why priorities are so important to give you that focus, 0:12:48.040 --> 0:12:50.440 in that drive to actually accomplish what it is that 0:12:50.480 --> 0:12:52.680 you truly want to accomplish. So you're saying, I don't 0:12:52.679 --> 0:12:54.600 have to sell part of my soul to that angel investor, 0:12:54.880 --> 0:12:57.679 just work hard and uh spend less. All right, it's 0:12:57.679 --> 0:12:59.800 so easy. It's so easy when you say it. All right, Well, 0:12:59.800 --> 0:13:03.240 there are some more conventional financial mantras that Matt and 0:13:03.280 --> 0:13:05.400 I feel compelled to tackle, and we'll get to a 0:13:05.400 --> 0:13:17.040 few more after the break. All right, Joe, we have 0:13:17.160 --> 0:13:21.080 talked through two of these conventional financial pieces of advice 0:13:21.440 --> 0:13:23.880 or truisms. We're kind of calling them truisms too, aren't we? 0:13:23.920 --> 0:13:28.160 More like false is um? There's truthiness involved here. Let's 0:13:28.160 --> 0:13:29.959 get to our next one, though, which is save ten 0:13:30.000 --> 0:13:33.160 percent of your income. That sounds nice, right, It does 0:13:33.200 --> 0:13:35.400 sound nice, and honestly, that is a great place to start, 0:13:35.679 --> 0:13:38.480 but don't stop there. If you're looking to achieve any 0:13:38.480 --> 0:13:41.280 sort of financial independence while you still have some energy 0:13:41.360 --> 0:13:44.200 left to actually enjoy financial independence, you're going to need 0:13:44.240 --> 0:13:46.960 a savings rate that is more than ten percent. Yeah. Man, 0:13:46.960 --> 0:13:48.560 I feel like when I was just starting out, I 0:13:48.600 --> 0:13:52.319 was listening to financial experts, I was trying to garner wisdom, 0:13:52.360 --> 0:13:53.840 and I heard a lot of people say to save 0:13:53.880 --> 0:13:56.079 and invest ten percent of your income. I heard others 0:13:56.200 --> 0:13:58.560 go out there on a limb and say fift And 0:13:58.600 --> 0:14:00.760 I think because I wasn't challenge us to save more, 0:14:01.160 --> 0:14:04.120 I didn't save more. And ultimately, now that I'm older 0:14:04.160 --> 0:14:06.560 and I've seen what the numbers look like and what 0:14:06.679 --> 0:14:08.680 I'll actually need to save in order to reach any 0:14:08.720 --> 0:14:11.640 sort of financial independence goals I have. It's just gonna 0:14:11.679 --> 0:14:14.199 take saving at a much higher clip. And so we 0:14:14.200 --> 0:14:17.400 would say that is a great minimum goal to aim for, 0:14:17.679 --> 0:14:19.360 which might sound crazy to some people. I mean, the 0:14:19.440 --> 0:14:21.920 national savings rate is what like five to seven percent 0:14:22.040 --> 0:14:24.280 something like that, And a great way to portion out 0:14:24.600 --> 0:14:28.160 that savings rate is to put half of your money 0:14:28.200 --> 0:14:30.560 in a savings account with a good rate to return 0:14:30.960 --> 0:14:33.320 for nearer term goals that you have, and then and 0:14:33.360 --> 0:14:35.880 in the other half in retirement accounts like your four 0:14:35.880 --> 0:14:39.080 own k roth, Ira, h s A, etcetera. Yeah, with 0:14:39.120 --> 0:14:41.840 those near term goals in addition to those long term 0:14:41.840 --> 0:14:44.600 goals of retirement, you have some balance, right, You have 0:14:44.640 --> 0:14:46.840 those near term goals of maybe saving up enough money 0:14:46.920 --> 0:14:49.120 to put down a nice down payments or paying for 0:14:49.200 --> 0:14:52.240 that new used car that you're gonna buy in cash. 0:14:52.560 --> 0:14:54.680 I think striking that balance is so important when it 0:14:54.720 --> 0:14:57.400 comes to staying motivated and feeling like that you're able 0:14:57.440 --> 0:15:00.320 to enjoy the benefits of your hard work now while 0:15:00.360 --> 0:15:02.600 at the same time setting yourself up for the future. 0:15:03.040 --> 0:15:05.000 And I want to say as well too that these 0:15:05.000 --> 0:15:06.800 are awesome goals to have, and this is something that 0:15:06.800 --> 0:15:09.280 we work towards. But you know, in particular me being 0:15:09.280 --> 0:15:11.760 self employed, some years are better than others, and there's 0:15:11.880 --> 0:15:14.760 years where I don't actually hit that percentage, and that's okay, 0:15:14.760 --> 0:15:16.600 Like it's not the end of the world. But knowing 0:15:16.640 --> 0:15:18.640 what it is that you're seeking after, what the goal is, 0:15:18.760 --> 0:15:21.120 that's the high bar that we're trying to set here. Yeah. Man, 0:15:21.160 --> 0:15:24.120 sometimes I just feel like a bigger challenge helps me 0:15:24.240 --> 0:15:26.560 rise to the occasion. It helps give me that subtle 0:15:26.600 --> 0:15:28.560 shift in mindset. And it might be a goal that 0:15:28.600 --> 0:15:31.320 even feels almost a little bit impossible, but but having 0:15:31.320 --> 0:15:33.200 it on your radar at least something that you want 0:15:33.200 --> 0:15:34.880 to aim for in the distant future can be really 0:15:34.920 --> 0:15:37.120 helpful even now to kind of tweak some things to 0:15:37.120 --> 0:15:39.400 start getting you headed in that direction. It sounds to 0:15:39.400 --> 0:15:41.800 me like maybe you would enjoy a nice Friday Night 0:15:41.880 --> 0:15:44.560 Lights like kind of locker room speech like that, you're 0:15:44.560 --> 0:15:47.280 all about the underdog. I've never seen Friday Night Lights, 0:15:47.320 --> 0:15:49.840 but yeah, I mean either, but I'm guessing there's awesome 0:15:49.880 --> 0:15:52.640 halftime speeches that are given in the locker room. Right now, 0:15:52.680 --> 0:15:55.320 You're probably right, You're probably right. Yeah, I'll take it, go, go, 0:15:55.360 --> 0:15:58.280 get it, go, save, take home pay. Yeah, make it happen. 0:15:58.480 --> 0:16:01.440 It's all night. That's not Friday night lights. That's the 0:16:01.680 --> 0:16:04.120 other one. Who knows? Who knows? Okay, all right, let's 0:16:04.120 --> 0:16:06.840 get to the next conventional piece of financial wisdom that 0:16:06.880 --> 0:16:09.640 we have to debunk here, which is that stock market 0:16:09.680 --> 0:16:12.400 investing is risky. And we went into a good bit 0:16:12.440 --> 0:16:14.760 of depth hill on this back in episode sixty nine. 0:16:14.880 --> 0:16:19.160 And it's true that investing haphazardly is risky, and money 0:16:19.160 --> 0:16:22.400 in the stock market will fluctuate, there will be great 0:16:22.480 --> 0:16:25.480 highs and there will be low lows, but that's not 0:16:25.720 --> 0:16:30.480 necessarily risk. The true risk in stock market investing is 0:16:30.520 --> 0:16:33.560 not doing it, because inflation eats at your money. And 0:16:33.600 --> 0:16:36.239 another risk is thinking that you can time or outsmart 0:16:36.320 --> 0:16:39.240 the market. Both of those are much worse outcomes than 0:16:39.360 --> 0:16:42.480 slowly and steadily investing the money that you have. And 0:16:42.560 --> 0:16:45.680 so the true solution to avoiding that risk while investing 0:16:45.680 --> 0:16:48.640 in the stock market is to invest in index funds, 0:16:48.680 --> 0:16:52.960 widely diversified index funds, but over the long term, because again, 0:16:53.200 --> 0:16:54.920 the market is going to have those ups and downs. 0:16:54.960 --> 0:16:57.440 But when you are invested over the long haul, thirty 0:16:57.440 --> 0:16:59.880 to forty years of ups and downs. When you're zoomed, 0:17:00.280 --> 0:17:02.800 it looks pretty smooth. It's smooth riding. You don't notice 0:17:02.840 --> 0:17:05.240 those bumps along the way. So that's the lens, right, 0:17:05.240 --> 0:17:06.960 that's the mindset that I want to have when it 0:17:06.960 --> 0:17:09.640 comes to investing in the stock market. You know, related 0:17:09.680 --> 0:17:12.280 to investing the stock market is bonds. There's a piece 0:17:12.280 --> 0:17:14.439 of financial advice out there that says that you should 0:17:14.440 --> 0:17:17.800 hold a percentage of your bonds that's equivalent to your age. 0:17:18.119 --> 0:17:20.880 And it's true you want to minimize that volatility as 0:17:20.920 --> 0:17:23.760 you near retirement. But what if you don't start saving 0:17:23.760 --> 0:17:27.400 and investing for retirement until you're much much older. For example, 0:17:27.440 --> 0:17:29.280 if you're fifty years old, you don't want half of 0:17:29.280 --> 0:17:32.639 your portfolio in bonds if you don't have much value 0:17:32.680 --> 0:17:35.119 in your portfolio. Regardless of your age, if you're in 0:17:35.160 --> 0:17:38.440 that wealth building stage of investing, you need the majority 0:17:38.520 --> 0:17:41.560 of your investments in stocks. Yeah, there's a big difference 0:17:41.560 --> 0:17:45.360 between wealth accumulation and wealth preservation, right, Matt. And and 0:17:45.520 --> 0:17:49.199 it's not necessarily dependent on the age you're at. You 0:17:49.280 --> 0:17:51.800 might be in the wealth building phase at age fifty 0:17:51.800 --> 0:17:54.119 five because you're brand new to investing and you're just 0:17:54.160 --> 0:17:57.200 getting started. That fifty year old you mentioned might still 0:17:57.240 --> 0:17:59.760 be in the wealth building phase, even though experts would 0:17:59.760 --> 0:18:03.159 be them towards a less risky portfolio. We think that 0:18:03.200 --> 0:18:05.760 when you're in the beginning stages of investing, it doesn't 0:18:05.800 --> 0:18:07.840 matter what age you are, you need to have a 0:18:07.880 --> 0:18:11.000 portfolio that's more open to risk, which is more open 0:18:11.040 --> 0:18:14.280 to volatility, which means having more of your money in 0:18:14.520 --> 0:18:17.879 stock type choices. While we're still talking about investing, another 0:18:17.960 --> 0:18:19.879 quick piece of advice that you often hear is that 0:18:19.920 --> 0:18:22.200 you need to educate yourself on investing and make sure 0:18:22.240 --> 0:18:26.120 that you stay informed. Oftentimes, in lots of areas of life, 0:18:26.119 --> 0:18:28.399 it's important to know what you're doing and to make 0:18:28.440 --> 0:18:30.680 sure that you've done the research. But a little bit 0:18:30.800 --> 0:18:33.040 goes a long way, and in the world of investing, 0:18:33.480 --> 0:18:36.600 too much reading and too much screen watching can actually 0:18:36.720 --> 0:18:40.320