WEBVTT - Just Keep Buying with Nick Maggiulli #499 0:00:00.120 --> 0:00:02.880 Welcome to How the Money. I'm Joel and I am Matt, 0:00:03.000 --> 0:00:06.320 and today we're discussing why you should be saving less 0:00:06.440 --> 0:00:27.880 and just keep buying with Nick m Julie. That's right. 0:00:27.880 --> 0:00:30.600 Our guest today is Nick m Julie UH and Nick 0:00:30.880 --> 0:00:34.120 he's the chief operating officer for Rienholtz Wealth Management. He 0:00:34.159 --> 0:00:37.080 writes weekly on a site of dollars in data. But 0:00:37.159 --> 0:00:41.559 he wasn't always a finance UH and investing savant. Before that, 0:00:41.920 --> 0:00:45.200 he was a litigation consultant, which honestly doesn't even seem fair. 0:00:45.320 --> 0:00:47.800 Some folks just get all of the brains. But even 0:00:47.880 --> 0:00:50.479 though Nick he's had a heart for personal finance, it's 0:00:50.520 --> 0:00:52.120 only been in the past five years or so that 0:00:52.159 --> 0:00:55.680 he actually started seriously writing about money. And his new book, 0:00:55.920 --> 0:00:59.000 Just Keep Buying It actually comes out tomorrow. We were 0:00:59.040 --> 0:01:02.520 lucky enough to get an early copy and it is fantastic. Nick. 0:01:03.000 --> 0:01:07.040 We'se insightful stories with actionable advice that is gonna it's 0:01:07.040 --> 0:01:09.679 gonna help anyone who reads it. We can guarantee that 0:01:09.800 --> 0:01:13.119 we're excited to talk about the book much more today. Nick, 0:01:13.200 --> 0:01:15.600 thank you for joining us today on the podcast. Appreciate 0:01:15.640 --> 0:01:17.720 that man. Thanks Joel for having me on. Yeah, we're 0:01:17.760 --> 0:01:19.679 glad to have you Nick, And yeah, we've been reading 0:01:19.680 --> 0:01:21.880 your block for a couple of years now at least, 0:01:22.200 --> 0:01:24.480 and it's it's definitely one of those that we go 0:01:24.560 --> 0:01:28.080 back to every single Tuesday when it drops. Um. So 0:01:28.120 --> 0:01:30.640 the first question that we ask anybody who comes on 0:01:30.920 --> 0:01:33.039 the show is, you know, Matt and I we like 0:01:33.080 --> 0:01:35.399 to drink craft beer. Everybody knows that by now, but 0:01:35.440 --> 0:01:38.280 it's something that we splurge on right now while we're 0:01:38.440 --> 0:01:41.480 saving for the future and investing. Well, um, do you 0:01:41.480 --> 0:01:43.280 have something like that? What do you like to splurge on? 0:01:43.319 --> 0:01:44.920 I know you live in New York City. Is it 0:01:45.120 --> 0:01:46.920 just trying to find the best burger every week? Or 0:01:47.200 --> 0:01:50.240 what's your big splurge. I think my splurges restaurants, Like 0:01:50.280 --> 0:01:55.120 I like going to nice restaurant. It is burgers. It's 0:01:55.160 --> 0:01:57.640 more like dry age rib. I Like, that's really my splurge, 0:01:58.200 --> 0:02:00.480 you know. So I'm I'm a little more fancy on 0:02:00.520 --> 0:02:03.040 that bar. But yeah, outside of that, like I'll admit 0:02:03.080 --> 0:02:05.120 I'm a little bougie when it comes to restaurants, Like 0:02:05.160 --> 0:02:07.559 I I'll buy like eight dollar you know, v Nex 0:02:07.600 --> 0:02:09.920 from Amazon. But then if I go to a nice restaurant, Like, 0:02:09.960 --> 0:02:13.000 I have no problem you know, spending spending good money there, 0:02:13.080 --> 0:02:15.800 especially post COVID, Like I really support the rest of history. 0:02:15.919 --> 0:02:18.560 So do you feel like you're missing out on that 0:02:18.680 --> 0:02:21.120 splurge during COVID? Obviously a lot of restaurants in New 0:02:21.160 --> 0:02:23.120 York were able to kind of do the outdoor service, 0:02:23.200 --> 0:02:24.880 but there's only so many months that you can do 0:02:24.919 --> 0:02:27.560 that without freezing your tail off. Yeah, I mean that 0:02:27.720 --> 0:02:29.440 one of the reasons people live here is for like 0:02:29.480 --> 0:02:31.480 that's like, you know why. It's like I used to cook, 0:02:31.560 --> 0:02:33.120 so I cooked a lot basically, you know, and the 0:02:33.160 --> 0:02:34.480 one of the reasons I live here is because, like 0:02:34.680 --> 0:02:36.120 you know, I could cook, but I just it's not 0:02:36.120 --> 0:02:38.480 going to compare to the chefs and all the people 0:02:38.520 --> 0:02:40.320 that are cooking here. They're just so much better at it. 0:02:40.320 --> 0:02:42.200 It's like, why would I do that when I like food. 0:02:42.200 --> 0:02:44.119 I'm a big foodie. So for me, it's like I'd 0:02:44.160 --> 0:02:45.880 rather just go to restaurants. So yeah, it was not 0:02:46.000 --> 0:02:48.720 the greatest during that period, but you know, and just 0:02:48.800 --> 0:02:51.400 cook for myself and kind of went from there. So yeah, 0:02:51.480 --> 0:02:53.679 if if you give Nick a follow on Instagram, you 0:02:53.919 --> 0:02:56.840 can see his occasional plate of whatever it is that 0:02:56.880 --> 0:03:00.239 he's eating. Usually jealous and I see the post see 0:03:00.320 --> 0:03:03.239 at the different restaurants. But obviously you also post a 0:03:03.240 --> 0:03:04.839 lot about money, and that's what we're talking about today, 0:03:04.919 --> 0:03:08.600 Nick Um and specifically, you know, you begin the new 0:03:08.639 --> 0:03:11.240 book talking about your your grandfather, your grandpa who was 0:03:11.280 --> 0:03:14.000 addicted to gambling. Can you talk about that something like 0:03:14.040 --> 0:03:16.919 was was that one of your earliest money memories? Yeah? 0:03:16.960 --> 0:03:19.840 And so I don't like remember him like I actually 0:03:19.840 --> 0:03:21.880 never remember seeing him like in the casino or anything 0:03:21.919 --> 0:03:24.360 like that. I was very young, but we um he 0:03:24.480 --> 0:03:26.440 would do that, and I've heard stories from my father. 0:03:26.600 --> 0:03:28.160 There's a lot it's a lot worse than what I 0:03:28.200 --> 0:03:30.480 painted it out to be, like stuff where like he 0:03:30.520 --> 0:03:32.280 would like after he ran the money. I heard he 0:03:32.360 --> 0:03:35.040 used to like beg people at the casinos for more money. 0:03:35.160 --> 0:03:37.320 Just really just it's he had a he had a sickness, 0:03:37.320 --> 0:03:39.520 he really did, and it was it's unfortunate, you know, 0:03:39.640 --> 0:03:41.560 to to know that. And you know, he was a 0:03:41.640 --> 0:03:44.200 very good man. He was. He was a churchgoer, love, 0:03:44.360 --> 0:03:46.800 you know, very religious and everything. But at the same time, 0:03:46.840 --> 0:03:48.240 like he had his he had his demons, and I 0:03:48.280 --> 0:03:51.200 was gambling unfortunately. But um I really saw it. I 0:03:51.200 --> 0:03:53.320 mean we would we go to the you know, I 0:03:53.440 --> 0:03:55.440 was a child go to horse races and stuff, and 0:03:55.440 --> 0:03:56.800 so that was me. I was. I like, because I 0:03:57.000 --> 0:03:58.600 was seeing a little horses runner. I had no idea 0:03:58.600 --> 0:04:00.520 it was all about gambling and money or any that, right. 0:04:01.080 --> 0:04:03.360 But so for me, most of those memories I just 0:04:03.440 --> 0:04:04.960 enjoyed because I was with my father r and like 0:04:05.000 --> 0:04:07.440 we would go to the county, the Pomona County Fair 0:04:07.520 --> 0:04:10.400 right in southern California, and or the l A County Fair. 0:04:10.400 --> 0:04:12.760 Sorry it's some Pomona and we would just wash the 0:04:12.760 --> 0:04:14.880 horse races. In my grandfather they will be gambling or whatever. 0:04:14.880 --> 0:04:16.479 I didn't think anything of it, you know at the time. 0:04:16.520 --> 0:04:18.919 But yeah, he just gambled like his whole life. And 0:04:18.920 --> 0:04:20.960 like I said, I calculated it. When you see in 0:04:20.960 --> 0:04:22.920 the book, it's a lot of money that he gave away, right, 0:04:22.960 --> 0:04:24.600 you know, my father and I sat down, like he's 0:04:24.600 --> 0:04:27.240 gambling easily, over a million bucks easily, And it's kind 0:04:27.240 --> 0:04:29.760 of crazy to think about that. I understand that's a 0:04:29.800 --> 0:04:31.400 lot of money in itself, but like just thinking about 0:04:31.400 --> 0:04:33.040 what that could have done for, you know, whither our 0:04:33.080 --> 0:04:35.159 family or for he could have donated some of that whatever. 0:04:35.200 --> 0:04:36.320 It was, like, there's just a lot of money that 0:04:36.400 --> 0:04:40.120 was you know, it was just spend frivolously in my opinion, Right, 0:04:40.200 --> 0:04:41.360 do you do you feel like that that had an 0:04:41.360 --> 0:04:43.640 impact on you, like kind of in your earlier years 0:04:43.640 --> 0:04:45.240 and and certainly you know, I think kind of like 0:04:45.240 --> 0:04:47.680 our teen years is when we start to develop opinions 0:04:47.720 --> 0:04:50.080 and realize things about our past that start to shape us. 0:04:50.120 --> 0:04:51.440 Do you do you feel like that had an impact 0:04:51.440 --> 0:04:53.800 on you as you begin to grow up? Yeah, Like, 0:04:53.839 --> 0:04:56.520 I never I never gamble. I've never gambled a single dollar. 0:04:56.760 --> 0:04:58.840 Like in my life. The only thing I've ever done 0:04:58.880 --> 0:05:00.719 is like I've done like poker game with my friends 0:05:00.760 --> 0:05:02.720 or something. But that's more like for the soul, paying 0:05:02.720 --> 0:05:04.479 the fifty bucks is like a social thing. It's not 0:05:04.520 --> 0:05:06.360 like I look at losing the money. I'm not like, 0:05:06.400 --> 0:05:07.640 oh my god, I'm gonna come out of here and 0:05:07.640 --> 0:05:09.560 make I just take it as an l and just 0:05:09.560 --> 0:05:11.920 go in there and have fun. So um. But yeah, 0:05:11.960 --> 0:05:13.880 I think it affects just how you think about money 0:05:13.920 --> 0:05:15.560 and you realize like and then once once I started 0:05:15.600 --> 0:05:18.640 learning probability, and like, oh you know when you're gambling, 0:05:18.640 --> 0:05:21.200 there's a negative what we call expected value, like you're 0:05:21.200 --> 0:05:23.640 expected to lose money per play on average over the 0:05:23.680 --> 0:05:26.320 course of your lifetime. Right, So once you learn that, 0:05:26.320 --> 0:05:27.919 then you're like, oh, no, wonder, like this is how 0:05:27.960 --> 0:05:29.640 all these fancy casinos were built, you know. And I 0:05:29.720 --> 0:05:31.880 really love Vegas as a kid because if you're in 0:05:31.920 --> 0:05:33.800 southern California and you don't have a lot of money, 0:05:33.880 --> 0:05:36.600 your vacation is you go to Vegas. Right. It's a 0:05:36.640 --> 0:05:39.480 four hour drive, you do it, and that's like your vacation. Right. 0:05:40.000 --> 0:05:41.839 So I used to go to Vegas. Line is love that, 0:05:41.839 --> 0:05:43.279 you know. I was a little kid. I wasn't gambling 0:05:43.360 --> 0:05:45.000 or anything. I was like just love the lights and 0:05:45.040 --> 0:05:47.239 the casinos and how fun. It wasn't very family oriented 0:05:47.240 --> 0:05:50.159 in the early nineties, so um for me, it was 0:05:50.200 --> 0:05:52.040 like that's where we went a lot. And so I 0:05:52.240 --> 0:05:53.840 love that stuff. And now I know what how those 0:05:53.839 --> 0:05:58.800 casinos got built, you know, people like my grandfather gambling. Unfortunately. Well, 0:05:58.920 --> 0:06:01.520 thank thanks for sharing that, and yeah it does kind 0:06:01.520 --> 0:06:04.080 of it sets up your book in an interesting way. 0:06:04.160 --> 0:06:06.200 And but the main topic in your book you're really 0:06:06.560 --> 0:06:08.680 that you're really trying to combat, is that you know, 0:06:08.720 --> 0:06:12.320 when when you buy matters. We're talking about investing, right, 0:06:12.360 --> 0:06:15.360 and so, um, we were joking before we started recording 0:06:15.440 --> 0:06:17.719 that I don't think anybody has like spilled more ink 0:06:18.000 --> 0:06:19.960 when it comes to the topic of buying the dip 0:06:20.080 --> 0:06:22.680 than you Nick on your blog. Um. But yeah, let's 0:06:22.680 --> 0:06:25.000 talk about like kind of timing the market a little 0:06:25.040 --> 0:06:27.599 bit and and why is why is that something like 0:06:27.600 --> 0:06:29.480 if you go on personal finance Twitter, you're gonna see 0:06:29.480 --> 0:06:31.599 a lot of people like, you know, the markets down 0:06:31.600 --> 0:06:34.040 two percent today by the dip, and you kind of 0:06:34.080 --> 0:06:37.400 think that that's just um nonsense. So yeah, tell us, 0:06:37.440 --> 0:06:40.200 tell us why you're kind of against that mentality. I 0:06:40.240 --> 0:06:42.400 think the whole issue is buying the dip. And I 0:06:42.400 --> 0:06:45.440 mean this this is I mean you're discussing the book 0:06:45.440 --> 0:06:47.840 I've written on this is basically like, if you have 0:06:48.000 --> 0:06:50.200 cash to buy the dip, that means you were you 0:06:50.279 --> 0:06:52.880 had all this excess like investable cash that is right 0:06:53.240 --> 0:06:56.080 sitting on the sidelines, not earning you anything, and you're 0:06:56.080 --> 0:06:58.720 waiting for this dip to happen. No, two percent dips 0:06:58.720 --> 0:07:00.320 are small to happen all the time, you know, so 0:07:00.400 --> 0:07:03.520 that's nothing major. But most of the time as you're 0:07:03.520 --> 0:07:05.760 waiting for this dip, and if it never shows up, 0:07:05.800 --> 0:07:08.040 you end up sitting in cash for a very long time. So, 0:07:08.600 --> 0:07:10.560 you know, I think it's more of like the by 0:07:10.600 --> 0:07:12.680 the dip movement is more of like a cultural thing 0:07:12.720 --> 0:07:15.080 in an actual great investment strategy. I think it's funny 0:07:15.480 --> 0:07:18.240 um itself. But I mean, if you're sitting I'm saying, 0:07:18.240 --> 0:07:19.680 if you're sitting a lot of cash, I'm waiting for 0:07:19.680 --> 0:07:23.800 the next big tempercent dip. Statistically, by the time that 0:07:23.840 --> 0:07:26.480 dip comes, you're gonna be buying higher than when you 0:07:26.560 --> 0:07:28.360 bought when you could have bought originally. And I think 0:07:28.760 --> 0:07:31.360 a good example of this is I remember I was writing, 0:07:31.400 --> 0:07:33.120 you know when I wrote, I actually wrote a post 0:07:33.160 --> 0:07:35.920 called just keep Buying. You know, it's literally gonna come out, 0:07:35.960 --> 0:07:38.200 so five years to the day of when I wrote 0:07:38.240 --> 0:07:41.720 that post in April, five years later, the book comes 0:07:41.720 --> 0:07:44.119 out very ironic, right, It just because perfect It's funny 0:07:44.120 --> 0:07:45.560 because the book was that my book is actually was 0:07:45.640 --> 0:07:48.560 coming in February, but because the supply chain crisis, there 0:07:48.600 --> 0:07:50.000 was on paper all the stuff that happened. You so 0:07:50.120 --> 0:07:52.239 has kind of all that stuff you got affected everything 0:07:52.280 --> 0:07:54.320 because of that. It got pushed two months and I'm like, oh, 0:07:54.400 --> 0:07:55.840 that's weird. And then I looked I was like, wait, 0:07:55.840 --> 0:07:59.480 that's the exact same day, like perfect, Yeah, that's wild. 0:07:59.600 --> 0:08:03.320 Your books all the ever, given it was probably stuck 0:08:03.320 --> 0:08:05.640 on that. Yeah. Um So basically, like I wrote that 0:08:05.680 --> 0:08:08.160 five years ago, and people then were like, markets are 0:08:08.160 --> 0:08:10.800 over value, this is crazy. You can't be buying since then, 0:08:10.920 --> 0:08:14.360 the markets up has double basics, right, And even if 0:08:14.360 --> 0:08:16.320 you're the craziest part, even if you had the foresight 0:08:16.400 --> 0:08:19.520 to know, hey, mar is gonna be the biggest dip 0:08:19.560 --> 0:08:22.360 we've had in the last you know, decade, I'm gonna wait. 0:08:22.520 --> 0:08:25.000 So even if you had waited since I wrote that post, 0:08:25.040 --> 0:08:27.040 you know, or beginning of twenty seventeen, and you had 0:08:27.040 --> 0:08:31.520 waited until March and you had bought, then you still 0:08:31.560 --> 0:08:34.720 would have purchased at a seven percent higher price on 0:08:34.840 --> 0:08:37.560 the lowest day during the biggest crash we've had in 0:08:37.600 --> 0:08:39.520 the last decade than if you had just bought at 0:08:39.520 --> 0:08:42.600 the beginning of seventeen, like I originally said. So, of 0:08:42.640 --> 0:08:44.320 course that's not always gonna happen, right, If you had 0:08:44.360 --> 0:08:46.719 bought in twenty nineteen, you would have been better to wait. 0:08:46.760 --> 0:08:48.480 But you're not gonna know when the bottom is. You're 0:08:48.480 --> 0:08:50.840 not going to know how Like this is a ridiculous 0:08:50.920 --> 0:08:52.920 Like I'm already setting up the premise as being a 0:08:53.000 --> 0:08:56.400 ridiculous you know, a statement in itself right, And the 0:08:56.440 --> 0:08:59.000 fact it's like if you knew the future, Like, if 0:08:59.000 --> 0:09:01.400 you knew the future, you would have like underperformed. It 0:09:01.400 --> 0:09:03.680 would have been suboptimal to wait that long. You could 0:09:03.679 --> 0:09:05.600 have just bought earlier. You know, So if you knew 0:09:05.600 --> 0:09:09.000 the future, you wouldn't have bought that final Combrady touchdown football, 0:09:09.040 --> 0:09:11.760 you know. Yeah, a couple of quotes that you give 0:09:11.800 --> 0:09:13.599 when you're talking about that in the book, you say, 0:09:13.600 --> 0:09:15.920 buy investments like you buy food, which I think is 0:09:15.960 --> 0:09:17.400 just like a really good way to think about it. 0:09:17.600 --> 0:09:20.120 And then you go on to say, even God couldn't 0:09:20.160 --> 0:09:23.280 beat dollar cost averaging. And it's like, you know, and 0:09:23.320 --> 0:09:25.280 when we talk about dollar cost averaging, can you can 0:09:25.320 --> 0:09:28.080 you define that for us and maybe just kind of yeah, 0:09:28.400 --> 0:09:31.480 give your thoughts on just like doing it consistently and 0:09:31.760 --> 0:09:34.040 why that's just the best route to go. Yeah. So 0:09:34.080 --> 0:09:37.600 the I have a little bit of a uh beef 0:09:37.640 --> 0:09:39.800 with the term dollar cost averaging, not in a bad way, 0:09:39.840 --> 0:09:42.600 but because there's technically there are two definitions when people 0:09:42.640 --> 0:09:45.520 say dollar cost averaging, there's there's two different forms of 0:09:45.520 --> 0:09:48.480 dollar cost averaging, right, the dollar cost averaging and I support, 0:09:48.520 --> 0:09:52.000 which is like you're just buying consistently with as you 0:09:52.000 --> 0:09:54.080 get money. So basically, if you're buying your four one 0:09:54.120 --> 0:09:56.880 K every two weeks or whatever every once a month, 0:09:57.360 --> 0:09:59.839 that's call I consider that dollar cost averaging. But we're 0:09:59.840 --> 0:10:01.960 really doing is you're taking a small lumps some payment 0:10:02.040 --> 0:10:04.960 putting it in every time. The other definition, which a 0:10:04.960 --> 0:10:07.120 lot of people use as well, is like let's say 0:10:07.160 --> 0:10:09.079 you just sold a company and you have a million 0:10:09.080 --> 0:10:11.160 bucks or something. You've gotta inherit in some hundred thousand 0:10:11.240 --> 0:10:13.559 whatever it is. Instead of putting that a hundred thousand 0:10:13.559 --> 0:10:16.520 dollars into the market right now, you slowly average into 0:10:16.559 --> 0:10:18.880 the market. So I'm very specific in the book. I 0:10:18.960 --> 0:10:22.160 call that averaging in versus dollar cost averaging because it's 0:10:22.240 --> 0:10:24.920 very confusing. When we say dollar cost averaging, people mean 0:10:24.960 --> 0:10:27.320 two different things. So when I talk about dollar cost average, 0:10:27.320 --> 0:10:29.280 I'm just talking about just buying over time. It's like, 0:10:29.320 --> 0:10:31.280 just keep buying. They're basically the same thing. I just 0:10:31.320 --> 0:10:33.360 think the branding of just keep buying is a little 0:10:33.360 --> 0:10:38.560 bit better and there's less syllables, so that's helpful. Marketing matters, Yeah, marketing, 0:10:38.559 --> 0:10:40.760 any marketing matters, and so to say dollar cost averaging, 0:10:40.760 --> 0:10:42.839 that doesn't make any sense. But just keep buying a 0:10:42.880 --> 0:10:45.240 little bit clearer, and that's basically just rebranding that and 0:10:45.240 --> 0:10:48.200 trying to show with data why that's true. But um 0:10:48.240 --> 0:10:50.520 so I believe in. It's just like you're buying over time, 0:10:50.559 --> 0:10:54.120 and generally most markets you know, across the planet go 0:10:54.240 --> 0:10:56.160 up over time. There are are there a course exceptions. 0:10:56.200 --> 0:10:58.320 I know them all. Don't worry. You know you're gonna 0:10:58.320 --> 0:11:01.040 be like, what about Crease and you know, oh eight, 0:11:01.200 --> 0:11:02.760 I know about that. What about Russia in the last 0:11:02.760 --> 0:11:05.680 two months it went down? I know about that. But Spain, 0:11:05.720 --> 0:11:08.600 see yeah, I know, like Japan, like I trust me. 0:11:08.600 --> 0:11:10.760 I've known them all. I've studied them, I study the nightmares. 0:11:10.800 --> 0:11:13.480 They they happen, but they're rare. And so most markets, 0:11:13.520 --> 0:11:15.760 most of the time, is across the world generally go up. 0:11:15.960 --> 0:11:18.160 So if you're diversified investor, you'll probably do find even 0:11:18.200 --> 0:11:19.640 if you have a couple of markets that don't do 0:11:19.679 --> 0:11:22.080 as well. So that's kind of the main main theory 0:11:22.120 --> 0:11:24.679 of owning assets. If you're betting on that downside too, 0:11:24.960 --> 0:11:27.640 like and you then it's it's less about like when 0:11:27.720 --> 0:11:29.240 to put money in, and it's more like you should 0:11:29.240 --> 0:11:31.800 be putting your money towards a root seller and non 0:11:31.800 --> 0:11:37.920 perishable foods, right, yeah, exactly, Ken Goods, guns and ammo. Yeah. Right, Well, 0:11:38.160 --> 0:11:41.360 one of the alternatives to investing, nick is just taking 0:11:41.360 --> 0:11:43.640 that money and sticking it in the bank. So we 0:11:43.960 --> 0:11:45.719 kind of wanted to talk about savings here for a 0:11:45.760 --> 0:11:49.080 second because in your book, chapter one, it's subtitled why 0:11:49.120 --> 0:11:51.440 saving is for the poor and investing is for the rich, 0:11:52.000 --> 0:11:54.200 and then you follow up in chapter two saying that 0:11:54.240 --> 0:11:56.680 you should be saving less than you think. And so, yeah, 0:11:56.679 --> 0:11:59.160 I talk to us a little bit about your essentially 0:11:59.200 --> 0:12:02.800 your disdain we're saving money. I would say, there's a sting. 0:12:03.000 --> 0:12:05.439 I don't know, Okay, I caught it loud and clear. Yeah, 0:12:05.520 --> 0:12:08.520 I think. So when I say savings, let's there's a 0:12:08.520 --> 0:12:10.280 lot there to impact. So when I say savings for 0:12:10.280 --> 0:12:13.000 the poor, investing is for the rich. Um, you'll you'll 0:12:13.000 --> 0:12:15.960 see in the first chapter it's that is a relative statement, 0:12:15.960 --> 0:12:17.800 that is not an absolute statement. So when I say, 0:12:17.800 --> 0:12:20.600 savings for the poor, you have to like every person, 0:12:21.000 --> 0:12:24.040 I basically create this idea called the save invest continuum, 0:12:24.080 --> 0:12:28.280 and everyone is on this continuum, like, regardless of you know, 0:12:28.280 --> 0:12:30.640 what they're doing their financial life, everyone's on the continum. 0:12:30.640 --> 0:12:32.520 You gotta figre out where you are. And the question 0:12:32.600 --> 0:12:34.520 is like, Okay, how much money can you save in 0:12:34.559 --> 0:12:36.679 the next year. That's like a dollar amount. Let's see, 0:12:36.679 --> 0:12:38.200 you could save you know, five hundred bucks a month 0:12:38.240 --> 0:12:41.400 over the next twelve months. Okay, six grand? Okay. The 0:12:41.440 --> 0:12:44.160 other option is okay, how much money can my investments 0:12:44.160 --> 0:12:45.760 earn me in the next year. So let's say you 0:12:45.800 --> 0:12:48.320 have twenty grand invested and you own and you're gonna 0:12:48.400 --> 0:12:51.199 get you know, five percent here, let's say, right, that's 0:12:51.240 --> 0:12:54.040 a thousand bucks. Remember you could save six grand or 0:12:54.080 --> 0:12:56.680 your investments can earn you a thousand. So it sounds 0:12:56.720 --> 0:12:58.040 like what you need to do is you need to 0:12:58.040 --> 0:12:59.960 get your investments to earn you more. Right, they need 0:13:00.040 --> 0:13:01.760 to earn you more money. You want to remember trying 0:13:01.800 --> 0:13:03.720 to move to more passive income. You're trying to become 0:13:03.720 --> 0:13:06.800 financially free. All of that is like moving money from 0:13:06.960 --> 0:13:08.840 one calling to the other. You want, you want more 0:13:08.880 --> 0:13:11.160 investment income. To do that, you have to save more 0:13:11.200 --> 0:13:13.640 money and you have to invest that money, right, And 0:13:13.679 --> 0:13:15.800 so savings for the poor is like when you're relatively 0:13:15.840 --> 0:13:18.560 poorer or when you're like younger, especially, you're not gonna 0:13:18.600 --> 0:13:20.880 have much investment income, so you need to focus on 0:13:20.920 --> 0:13:22.640 your savings and you just spend a lot of time 0:13:22.880 --> 0:13:25.000 thinking about how to save money whether and I think 0:13:25.000 --> 0:13:27.480 that's really gonna come from income, but you're gonna save money, 0:13:27.640 --> 0:13:30.920 get invested that, and then over time that's gonna build 0:13:30.960 --> 0:13:33.319 and you're gonna start earning a lot more from your investments. 0:13:33.840 --> 0:13:35.599 So that's one piece of that. So I'm gonna I 0:13:35.600 --> 0:13:37.240 want to say savings for the poor investings for the rich. 0:13:37.800 --> 0:13:39.640 By the time you're like have a lot of money 0:13:39.679 --> 0:13:42.680 coming in from investments, Like basically the rich have to 0:13:42.679 --> 0:13:44.760 care a lot more about their investments because their savings 0:13:44.840 --> 0:13:48.120 can't affect like their lifestyle as much anymore. You know, 0:13:48.120 --> 0:13:51.560 like like like Elon must savings rate has no impact 0:13:51.600 --> 0:13:55.839 on his lifestyle. Yeah, it's like, oh my gosh, I 0:13:55.920 --> 0:13:57.719 need to you know, cut out my spending here, Like no, 0:13:57.800 --> 0:13:59.640 it doesn't matter. It's all about what happens to Tesla 0:13:59.720 --> 0:14:03.800 and all the other investments, right, like seven houses and he, 0:14:04.040 --> 0:14:06.000 you know, got like a hundred thirty million. I'm like, 0:14:06.040 --> 0:14:09.679 that means nothing, man, Yeah, exactly. So I'm saying I 0:14:09.720 --> 0:14:11.760 can use extreme examples, like someone that has no money, 0:14:11.800 --> 0:14:13.480 all that matters to them is how much they can save, 0:14:13.559 --> 0:14:15.800 Like they can have the greatest investment portfolio in the world, 0:14:15.840 --> 0:14:19.560 but thousand dollars to invest it's irrelevant, right, So that's 0:14:19.600 --> 0:14:21.480 that's that point, right, So that those are obviously on 0:14:21.520 --> 0:14:23.880 the extremes, it's very obvious for most of us were 0:14:23.880 --> 0:14:26.680 not on those extremes, are probably somewhere closer to the middle. 0:14:26.720 --> 0:14:27.920 And so you have to figure out where you are 0:14:27.920 --> 0:14:30.200 and where you spend your attention. I, for example, I 0:14:30.240 --> 0:14:31.920 have to spend time on both. Right, I'm at a 0:14:31.960 --> 0:14:34.400 point now where, like you know, I can I basically 0:14:34.480 --> 0:14:36.600 can save as much as my investments earn me. But 0:14:36.680 --> 0:14:38.760 like there's a really bad year in the market, like 0:14:39.040 --> 0:14:40.800 on paper, I will lose more than I could save 0:14:40.840 --> 0:14:43.320 in a year, you know, So and that really depends, right, 0:14:43.320 --> 0:14:44.720 And that's kind of scary. But that's where you have 0:14:44.760 --> 0:14:46.200 to think about both of them, right, And most people 0:14:46.240 --> 0:14:48.240 you should see that early on. You shouldn't spend that 0:14:48.320 --> 0:14:50.320 much time on your investments in terms of like, yeah, 0:14:50.320 --> 0:14:52.520 I get them, you know, figure out what to invest in, 0:14:52.640 --> 0:14:55.440 buy some stuff, low cost index funds, et cetera, but 0:14:55.680 --> 0:14:58.320 don't obsess over them. What you should be obsessing over 0:14:58.400 --> 0:15:00.120 is your career and other things you can do to 0:15:00.160 --> 0:15:01.760 earn more money. That's what I think you should be 0:15:01.800 --> 0:15:03.720 obsessing over when you're young. As you get older, you 0:15:03.760 --> 0:15:05.600 can care less about that and more about your investments. 0:15:05.720 --> 0:15:07.400 I was just like, can we talk about growing the income, 0:15:07.400 --> 0:15:09.040 because that's something you talk about a lot too, right, 0:15:09.520 --> 0:15:12.240 is is you do talk about making more money, earning 0:15:12.280 --> 0:15:16.120 more money, and how frugality maybe is even like overdone. 0:15:16.280 --> 0:15:17.800 Maybe we talked about that too much in the personal 0:15:17.840 --> 0:15:21.280 finance space. And and how growing the you know, how 0:15:21.360 --> 0:15:23.920 much you're bringing home every single month, every single year, 0:15:24.080 --> 0:15:27.440 How maybe that's even even more important. Yes, I think 0:15:27.480 --> 0:15:28.840 if you if you look at the data from the 0:15:28.840 --> 0:15:32.160 Bureau Labor Statistics, basically you just like look at, okay, 0:15:32.440 --> 0:15:35.200 how much if you look at the bottom of households, 0:15:35.240 --> 0:15:39.000 like they spend more than their income than they bring in, right, 0:15:39.000 --> 0:15:40.360 and you look at like actually put the amounts in 0:15:40.400 --> 0:15:42.720 there here, what wuch they spending rent here, they spending food, etcetera. 0:15:43.040 --> 0:15:46.120 The amounts aren't ridiculous. These people aren't living these lavish lifestyles. 0:15:46.120 --> 0:15:47.760 And it's like, oh, you know why if they just 0:15:47.760 --> 0:15:50.080 cut their spending, they would be rich. Like it's not true. 0:15:50.160 --> 0:15:51.880 It's just the data is not there. It's just a 0:15:51.920 --> 0:15:53.600 lot of these people, like how they spend more than income. 0:15:53.640 --> 0:15:55.800 Will they take out debt and that's how consumer credit 0:15:55.840 --> 0:15:57.480 card debt and different types of debt, or they borrow 0:15:57.520 --> 0:15:59.200 from friends or something. There's debt there. Right, it's the 0:15:59.200 --> 0:16:00.640 only way it can be done. You know. Obviously the 0:16:00.680 --> 0:16:03.280 bottom households changes over time. Some of those people are 0:16:03.320 --> 0:16:06.080 college students. They'll get jobs later. Some have a low 0:16:06.120 --> 0:16:08.160 paying job, I get a higher paying job. Right. People 0:16:08.160 --> 0:16:10.200 are always moving out of you know, where they are 0:16:10.240 --> 0:16:13.240 in life. But if you look at the data, like spending, 0:16:13.240 --> 0:16:16.840 cutting spending works a little bit um, but for most people, 0:16:16.880 --> 0:16:18.280 it's not going to be the way you build wealth. 0:16:18.320 --> 0:16:21.080 Like like I love the examples like, oh my gosh, 0:16:21.080 --> 0:16:23.520 like look at these celebrities like you know, Lindsay lohand 0:16:23.640 --> 0:16:26.840 or um Nicholas Cage. All these people like went bankrupt 0:16:26.880 --> 0:16:29.160 are almost bankrupt multiple times because of all they're spending. 0:16:29.200 --> 0:16:31.320 It's like it's all about spending. It's like, yeah, you 0:16:31.360 --> 0:16:33.760 have like five or six or maybe even ten examples 0:16:33.760 --> 0:16:36.600 of celebrities and bankrupt, But like, what data do I have? 0:16:36.680 --> 0:16:40.040 I have every other celebrity. Every other celebrity is not bankrupt, 0:16:40.080 --> 0:16:42.280 Like why because they have high income? So like, yes, 0:16:42.320 --> 0:16:45.400 if you have really bad spending habits, like yes, you can, 0:16:45.720 --> 0:16:47.840 you know, get into ruin. But for a lot of people, 0:16:47.840 --> 0:16:50.440 it's income. Really, it's income that's driving that. And I 0:16:50.480 --> 0:16:53.040 think the data is pretty clear, right, And so like 0:16:53.080 --> 0:16:54.600