00:00:00
If your goal is to become financially
00:00:01
independent at a young age, this is a
00:00:03
very controversial thing to say, you
00:00:05
probably don't want to go buy a house
00:00:07
because people typically buy a house
00:00:09
they can't possibly afford. The bank
00:00:11
wants you to do that cuz that's how they
00:00:13
make the most money. So, you're putting
00:00:14
your capital into that house and now
00:00:16
it's not going to be earning thing. It's
00:00:17
going to be sitting idally. And people
00:00:19
say, "Well, you know, I can buy this
00:00:21
house cuz my mortgage is the same as my
00:00:23
rent." Well, yeah, but your mortgage is
00:00:26
just the starting point. So, what comes
00:00:28
to mind if I want to be financially
00:00:29
wealthy?
00:00:30
>> Okay, so we've got a lot to go through.
00:00:32
>> J Collins is a renowned financial expert
00:00:34
known for his book, The Simple Path to
00:00:36
Wealth.
00:00:36
>> He's teaching millions a straightforward
00:00:38
and realistic avenue for achieving
00:00:40
wealth
00:00:40
>> so that anyone can have financial
00:00:42
security.
00:00:43
>> What is the simple path to wealth?
00:00:45
>> So, first of all, avoid debt because you
00:00:48
can never be financially independent if
00:00:50
you're carrying around debt. Next, live
00:00:51
on less than you earn. But the problem
00:00:53
is the way our culture has taught us to
00:00:55
think about money is solely in terms of
00:00:57
what can you buy with it. But the more
00:00:59
musthaves you have in your life, the
00:01:01
less likely you are to become wealthy.
00:01:04
And then the final one, invest the
00:01:05
surplus. So stocks are the single most
00:01:09
effective, strongest wealth building
00:01:11
tool that's ever been created. But the
00:01:13
biggest push back I get is from people
00:01:15
who say, "Well, that's great. I mean, if
00:01:16
you got a big income, 100, 200, $300,000
00:01:19
a year, then yeah, the simple path to
00:01:21
wealth will work for you." That's not
00:01:22
the truth. For instance, a friend of
00:01:24
mine and he was making a million dollars
00:01:25
a year and he was broke because people
00:01:27
have large incomes are much more likely
00:01:29
to be drawn into the competing with the
00:01:31
Joneses, whereas the people who make
00:01:33
less money probably don't have those
00:01:35
same social pressures and are more
00:01:37
readily able to do it. So,
00:01:38
>> let's talk about investing then. Where
00:01:39
do you think we should be investing our
00:01:40
money at this moment of time? Should I
00:01:42
buy Bitcoin? Do I need a financial
00:01:44
adviser? So, my advice, and this is a
00:01:46
little different than the more common
00:01:48
advice out there, would be
00:01:51
>> this has always blown my mind a little
00:01:52
bit. 53% of you that listen to this show
00:01:55
regularly haven't yet subscribed to the
00:01:57
show. So, could I ask you for a favor
00:01:59
before we start? If you like the show
00:02:00
and you like what we do here and you
00:02:02
want to support us, the free simple way
00:02:03
that you can do just that is by hitting
00:02:05
the subscribe button. And my commitment
00:02:07
to you is if you do that, then I'll do
00:02:08
everything in my power, me and my team,
00:02:10
to make sure that this show is better
00:02:12
for you every single week. We'll listen
00:02:13
to your feedback. We'll find the guest
00:02:15
that you want me to speak to and we'll
00:02:17
continue to do what we do. Thank you so
00:02:19
much.
00:02:26
JL Collins,
00:02:29
you wrote a book, a very iconic book
00:02:31
that sold millions of copies called The
00:02:34
Simple Path to Wealth. Why did you write
00:02:37
this book?
00:02:38
>> I actually that book was an outgrowth of
00:02:40
my blog.
00:02:42
I started the blog to archive
00:02:44
information I wanted my daughter to have
00:02:47
available because if you get money
00:02:49
right, your life is so much better. You
00:02:52
have so many more options. And the world
00:02:56
offers so much to people who have the
00:02:59
resources with which to access it and so
00:03:02
little for those people who don't have
00:03:05
the resources to access those things.
00:03:07
And and if you don't have it, it life is
00:03:11
just so much harder than it than it
00:03:13
needs to be.
00:03:14
>> When you think about the average person
00:03:16
listening right now, what is what are
00:03:18
some of the fundamental sort of
00:03:20
misconceptions or misunderstandings or
00:03:23
what would you call it? Black spots that
00:03:24
they have as it relates to money, the
00:03:26
things they walk around assuming about
00:03:28
money that are incorrect
00:03:31
>> that that you were maybe trying to get
00:03:32
out of your daughter's mind.
00:03:33
>> Right? So there's a chapter in the book
00:03:35
called how to think about money. And the
00:03:39
fundamental way I think the vast
00:03:42
majority of people think about money
00:03:44
because this is what our culture has
00:03:45
taught us. The way our culture has
00:03:47
taught us to think about money is solely
00:03:50
in terms of what can you buy with it. So
00:03:53
if you go to the average person that
00:03:55
lottery for instance is like a billion
00:03:58
dollars at the moment. So people are
00:03:59
buying lottery tickets. And if you
00:04:01
interviewed people standing in line to
00:04:03
buy lottery tickets and said, "Okay, if
00:04:04
you win this million dollar, what are
00:04:06
you going to do with it?" Well, what
00:04:07
you're typically going to hear is,
00:04:08
"Well, I'm going to pay off my debts and
00:04:10
I'm going to pay off my mortgage and I'm
00:04:12
going to buy my parents a house and I'm
00:04:14
going to buy myself a Lamborghini. I'm
00:04:16
going to buy I'm going to buy I'm going
00:04:17
to buy." That's the way most people
00:04:20
think about money. And that's certainly
00:04:23
one of the things that money is very
00:04:24
good at. It is a means of exchange.
00:04:27
But the other thing your money can do
00:04:29
for you is work for you. Your money can
00:04:32
make you more money. So you can exchange
00:04:35
your time and effort and labor to earn
00:04:38
money. And that's what most of us do.
00:04:42
But you can also divert some of the
00:04:44
money you earn into investments into
00:04:47
what I call buying your freedom. And now
00:04:50
your money is working for you. So
00:04:52
instead of just thinking about what your
00:04:53
money can buy, you can start thinking
00:04:55
about what can your money earn.
00:04:57
>> You can buy your freedom.
00:04:59
>> You can buy your freedom, your financial
00:05:01
freedom.
00:05:02
>> Why is that an important refraraming of
00:05:05
the role of money in your view? What
00:05:07
does that do if I start thinking about
00:05:09
it through that lens? Well, because as
00:05:11
long as you are dependent on exchanging
00:05:13
your effort, time, and labor for money,
00:05:17
you are beholden to whoever is willing
00:05:20
to pay you to do that. That's a limit of
00:05:23
freedom. It's a it's a form of, without
00:05:27
being too dramatic, a form of slavery.
00:05:30
If you are always living paycheck to
00:05:32
paycheck to pay the mortgage or the rent
00:05:34
or whatever, if on the other hand, work
00:05:37
is optional, you're a good example. and
00:05:39
you've been a very successful guy.
00:05:42
You're not doing this podcast because
00:05:44
you need the money. If you were still
00:05:47
stuck at a job that paid you a wage, you
00:05:50
wouldn't have the option to do this
00:05:53
because you'd have to devote all your
00:05:54
time to that job so you could pay the
00:05:57
mortgage, so you could pay the rent, so
00:05:59
you could put food on the table. Money
00:06:01
buys freedom.
00:06:02
>> How does one get out of that situation?
00:06:04
you know, if I I used to work in call
00:06:06
centers um answering phones and selling
00:06:08
people things.
00:06:10
>> How does one in your view realistically
00:06:13
get from that place where you are kind
00:06:15
of beholden to the paycheck? And I was
00:06:17
I'd spend my wage within the first week
00:06:19
or so of the month and then I'd just
00:06:21
suffer for the next 3 weeks. In the UK,
00:06:22
we have like a four week paying cycle. I
00:06:24
think in the US it's 2 weeks typically,
00:06:25
but I took a I think a reckless road out
00:06:27
of that life. The thing that gave me the
00:06:30
proclivity to take the risk is like some
00:06:33
kind of insecurity and trauma where like
00:06:35
I couldn't I didn't have a plan B
00:06:37
because I wanted to be I wanted to like
00:06:39
validate myself or something. And so I
00:06:41
wonder if the the skill or the thing
00:06:43
that I was given that I'm most thankful
00:06:44
for is like some kind of chip on my
00:06:47
shoulder,
00:06:48
>> some kind of drama.
00:06:49
>> Yeah. But but on genuinely because I
00:06:51
think like what would make you take a
00:06:52
risk like some of the risks that I took
00:06:54
to leave university to then like be be
00:06:57
broke and I was like, well, I just I was
00:06:59
driven I was dragged by some kind of
00:07:01
trauma.
00:07:02
>> Right? One of the things that I've
00:07:04
observed, and I think to the extent that
00:07:06
I've had some success in my life, this
00:07:08
is true, that successful people do tend
00:07:12
to have trauma in their background. At
00:07:14
least that's my observation. Now, I'm
00:07:17
sure there are exceptions to that, but
00:07:19
it does seem that people like us are
00:07:23
striving to overcome
00:07:26
those past traumas, to have that chip on
00:07:28
the shoulder, to prove something.
00:07:31
I've also met people who are very
00:07:35
content to be completely lacking in
00:07:38
ambition
00:07:40
and to have enough to have a comfortable
00:07:43
life and kind of do what they want to do
00:07:45
to have financial independence maybe but
00:07:48
they don't have this drive to be
00:07:51
successful to to make a mark on on the
00:07:54
world and they tend to have had better
00:07:58
childhoods and and uh and I think that
00:08:01
there is that wasn't me. That doesn't
00:08:03
appear to be you. But I think there's a
00:08:05
lot to be said for for that, right?
00:08:09
>> You I mean you open the book about
00:08:10
talking about a parable of the monk
00:08:13
>> and the minister
00:08:14
>> and the minister.
00:08:15
>> Yeah.
00:08:15
>> Can you uh tell me about that parable
00:08:17
because it seems to somewhat relate to
00:08:19
what we're seeing here. I think
00:08:20
>> very very much so and that's the reason
00:08:22
I open the book with it. So the parable
00:08:24
is there are these uh two boys who grew
00:08:28
up together. their childhood friends. As
00:08:30
frequently happens, they go their
00:08:31
different directions in life as they
00:08:33
become adults. And one becomes a very
00:08:35
successful, powerful minister to the
00:08:37
king, and the other becomes a humble
00:08:40
monk in tattered robes with a begging
00:08:42
bowl and what have you. And years later,
00:08:44
they run into each other on the road.
00:08:46
And they're getting reacquainted.
00:08:48
And as they are, the minister, the king,
00:08:50
takes pity on on his povertystricken
00:08:53
friend and his tattered robes. And he
00:08:56
says, 'You know, if you could learn to
00:08:59
cater to the king, you wouldn't have to
00:09:01
live on rice and beans. To which the
00:09:04
monk replies, if you could learn to live
00:09:06
on rice and beans,
00:09:08
you wouldn't have to cater to the king.
00:09:11
And for me, I've always been a little
00:09:14
bit more towards the monk side. I'm uh
00:09:18
I'm not a very materialistic person, and
00:09:20
I'm comfortable and able to get along on
00:09:23
on very little. And I think there's
00:09:26
something beautiful about needing less.
00:09:29
>> I have from my interviews met people who
00:09:32
are very wealthy, even actually off
00:09:34
camera,
00:09:35
>> who are very, very wealthy and appear to
00:09:37
be happy. Yes.
00:09:38
>> But I think I I think it's safe to say
00:09:41
that the richest people I know are
00:09:43
amongst the least happy people I know.
00:09:45
So if I think about the very top, the
00:09:47
billionaires that I know off camera,
00:09:50
>> they are amongst the least happy
00:09:52
typically.
00:09:53
>> Mhm. Um because I think whatever's taken
00:09:56
them there is still haunting them while
00:09:58
they're there. So it could be the chip
00:10:00
on the shoulder, the insecurity,
00:10:01
whatever happened to them that made them
00:10:02
so driven and obsessed with validation
00:10:04
and climbing is still haunting them now.
00:10:07
But I do also I do know people like I
00:10:09
say that are very very rich and that
00:10:11
live remarkably content lives. And I
00:10:14
think part of it is their relationship
00:10:15
with the stuff. Like I think it is
00:10:17
possible
00:10:18
>> and they probably keep it at arms
00:10:19
length, right? They're a little psychic
00:10:21
distance from the stuff.
00:10:23
>> Yeah. And I just speaking from my own
00:10:25
journey at a very young age up until the
00:10:27
age of 25, I was convinced that buying a
00:10:29
Range Rover Sport was going to like
00:10:30
really make me really happy. And um the
00:10:33
anti-limax once I I got those things was
00:10:36
was like it was staggering. It was a
00:10:38
complete
00:10:39
>> mental it was like someone had shaken my
00:10:41
head. My reality distorted for a second
00:10:43
because I thought this was meant to be
00:10:44
it.
00:10:45
>> And now I can still get things that I
00:10:47
like. But um I was saying to Will the
00:10:49
other day that when I walked into my new
00:10:50
house in LA um I had pre-repped myself
00:10:53
to know that it was going to have zero
00:10:54
impact on my happiness and that meant
00:10:56
that I actually enjoyed it weirdly.
00:10:58
>> Right.
00:10:59
>> Like I was actually super grateful
00:11:00
because I'd pre-repped myself to have a
00:11:02
healthier relationship with the thing
00:11:04
>> to bring the expectation down.
00:11:05
>> Exactly.
00:11:06
>> So there are a couple things at play
00:11:07
there. I think one is it's the journey
00:11:09
that's really satisfying.
00:11:11
>> The destination tends to be less so. And
00:11:14
I think that's one of the problems with
00:11:16
being very materialistic because you
00:11:20
know if your definition of happiness is
00:11:22
if I only owned this watch, right? If I
00:11:25
only had this watch maker make me this
00:11:28
intricate watch, then I would be happy.
00:11:30
Well, I mean maybe, but probably not.
00:11:33
You're probably going to have that
00:11:34
watch. You're going to look at it and
00:11:35
say, "That's really nice. Wow, that's
00:11:38
good." And it'll and then well, what's
00:11:40
next? But if you enjoy the journey or
00:11:43
and I think you made a very wise
00:11:45
decision if you reset your expectations
00:11:49
and say, you know, I'm going to have
00:11:50
this nice house or this nice watch, but
00:11:53
I don't expect it to make me happy, but
00:11:55
it's going to be a nice thing to have in
00:11:57
in my life.
00:11:58
>> And somebody once said much wiser than
00:12:00
me, you know, money doesn't change who
00:12:02
you are. It it can magnify who you are.
00:12:05
So if you're an unhappy person and
00:12:07
you're have lots of money, you will
00:12:09
probably still be an unhappy person.
00:12:11
>> Mhm.
00:12:11
>> Uh if you're a happy person, I mean, one
00:12:14
of the happy, in fact, the single
00:12:15
happiest guy I know. His life was the
00:12:18
biggest financial disaster of anybody I
00:12:20
personally know. And this guy's he's the
00:12:24
literally the happiest human being I've
00:12:25
ever met.
00:12:26
>> Cuz he was happy before.
00:12:27
>> Because he was happy before. And there's
00:12:29
other things besides money that makes
00:12:31
you happy. Money. And the reason that I
00:12:34
I it was so important to me to teach my
00:12:37
daughter this, money gives you options,
00:12:40
right? Money allows you a lot wider
00:12:44
range of choices in life,
00:12:47
but it doesn't necessarily make you
00:12:49
happy, right? If it allows you to pursue
00:12:52
an option
00:12:54
that otherwise you couldn't pursue and
00:12:56
that option makes you happy, that's a
00:12:58
different thing. I think if I was
00:12:59
listening to this and I was broke, like
00:13:01
I used to be very broke, I would still
00:13:05
pursue wealth at all costs because I
00:13:07
know I heard this phrase the other day
00:13:09
which was it is easier to get rich than
00:13:13
it is to give up the idea that getting
00:13:15
rich will make you happy. And I I
00:13:19
thought to myself,
00:13:20
>> and if you haven't got rich, you would
00:13:22
always think
00:13:23
>> 100%. You'd always wonder if that was
00:13:25
And you know what? So much of the
00:13:27
unhappiness or anxiety that I had when I
00:13:30
was, you know, in my early early innings
00:13:32
of my life, my career came from looking
00:13:35
down and seeing the baiff letters or
00:13:37
came from the credit card debt or how am
00:13:39
I going to eat today or, you know, can't
00:13:41
go out and see my friends. So much of my
00:13:43
mind was occupied by my inability to
00:13:46
have freedom,
00:13:47
>> right? my lack of freedom, my need to
00:13:48
get up at 8:00 and walk for an hour and
00:13:50
a half to a call center was, you know,
00:13:53
so what I managed to remove was that I
00:13:55
wouldn't say I I added happiness, but I
00:13:57
removed the unhappiness.
00:13:58
>> Well, and that's a that's a key point.
00:14:00
You know, money doesn't necessarily make
00:14:02
you happy, but the lack of money.
00:14:04
>> Oh, yeah.
00:14:05
>> Can be terrible challenge, especially in
00:14:08
this modern culture we've created.
00:14:10
>> Okay. So, if you have kids listening
00:14:12
right now, please cover their ears cuz
00:14:13
I'm going to say a swear word. Parents
00:14:15
always message me and ask me to stop
00:14:16
swearing. going to say well um a lot of
00:14:19
people are obsessed with this idea of
00:14:20
[Â __Â ] you money
00:14:21
>> right
00:14:22
>> let me just give you a definition so fu
00:14:24
money refers to a financial situation
00:14:25
where a person has enough money to live
00:14:27
comfortably without needing to work and
00:14:28
it gives you the freedom to say f you to
00:14:30
anyone or anything you don't want to
00:14:33
tolerate such as a job a boss or a
00:14:35
situation that doesn't align with your
00:14:36
values what does that mean to you
00:14:40
>> yeah so for me so that's a good
00:14:41
definition but I would substitute in
00:14:44
that definition financial independence
00:14:46
FU money for me is the money you
00:14:48
accumulate on the way, right? So, for
00:14:52
instance, if you're a bodybuilder,
00:14:55
you know, financial independence is when
00:14:57
you're on the stage and you're winning,
00:14:59
you're at the elite level. But along the
00:15:02
way, from the moment you start working
00:15:03
out, you get a little bit stronger, a
00:15:05
little bit stronger, a little bit
00:15:06
stronger, right? Same thing financially.
00:15:09
The moment you start setting aside money
00:15:11
and investing it, you become a little
00:15:13
bit financially stronger. And that
00:15:16
builds over time. That in my mind is the
00:15:18
FU money because long before you're
00:15:22
financially independent, that money
00:15:25
gives you enormous freedom. You might
00:15:27
not be able to never work again, but if
00:15:31
you need to, you could leave a toxic job
00:15:34
knowing you could survive for months or
00:15:37
even years while you looked for the
00:15:40
better job because you have that FU
00:15:42
money. So it allows you to say f you in
00:15:44
that case to an employer.
00:15:46
>> And if your daughter daughter turned
00:15:47
around, what's her name?
00:15:48
>> Jessica.
00:15:49
>> Jessica. If Jessica turns around to you
00:15:50
and says, "Dad, what are what is
00:15:53
something I should not do with my money
00:15:55
if I
00:15:57
um want to be wealthy?
00:16:00
What is what are like the big what is
00:16:02
the first thing that comes to mind to as
00:16:03
a no no if I want to be financially
00:16:06
wealthy?"
00:16:07
The mo more common advice that I think
00:16:10
you should avoid if your goal is to
00:16:11
become financially independent at a
00:16:13
young age. You probably don't want to go
00:16:15
buy a house.
00:16:17
That's a very controversial thing to
00:16:19
say. The reason you want buy a house is
00:16:21
because houses dramatically inflate by
00:16:25
and large your cost of living. You know,
00:16:28
you're you're putting your capital into
00:16:30
that house and now it's not going to be
00:16:31
earning thing. can be sitting idally
00:16:34
along with owning a house. You have the
00:16:36
expenses of maintaining it, paying the
00:16:38
taxes on it, blah blah blah. If you stay
00:16:42
in a apartment that is just enough to
00:16:45
meet your needs, which by the way is
00:16:47
what my daughter has done and continues
00:16:50
to do, your costs will be lower.
00:16:53
>> Explain that to me. Explain why my cost
00:16:55
of living goes up if I buy a house.
00:16:56
>> Sure. So people, it doesn't have to, but
00:16:59
people people typically buy the most
00:17:02
house they can possibly afford. The
00:17:04
industry drives them that way. If you go
00:17:06
to a real estate agent, you say, "I
00:17:08
think I'm I want to buy a house." Right?
00:17:10
First question they're going to ask you
00:17:11
is, "How much do you make? How much do
00:17:13
you want to spend?" You know, and and
00:17:14
then you go to the bank and you say,
00:17:16
"Okay, I want to buy a house. How much
00:17:18
will you lend me?" And they'll say,
00:17:19
"Well, how much you make?" And then
00:17:20
they'll come back with the large number
00:17:23
of how much they're willing to lend you.
00:17:25
If you follow those guidelines, you're
00:17:27
going to wind up with a house that's
00:17:29
going to be a burden. You are not buying
00:17:31
it from a position of strength. You are
00:17:33
stretching to buy it. You are borrowing
00:17:35
the most money a bank's willing to give
00:17:36
you. You probably don't want to do that.
00:17:39
I mean, you can, that's the bank wants
00:17:41
you to do that cuz that's how they make
00:17:42
the most money, but that's not the best
00:17:44
thing for you to do. But that's what you
00:17:46
get drawn into. And then when you buy
00:17:48
that house, I don't know that I've ever
00:17:50
known anybody, including me, by the way,
00:17:52
and I've owned houses most of my adult
00:17:54
life, who's owned a house without doing
00:17:56
renovations on it. So, you've got those
00:17:58
costs. You're going to furnish that
00:18:00
house cuz you're probably buying more
00:18:01
square footage than you were renting
00:18:03
before. You're going to need new
00:18:05
furniture, or maybe you just want better
00:18:06
furniture for your new house, maybe new
00:18:09
appliances, landscaping, taxes,
00:18:11
maintenance. I mean, the the list is
00:18:14
endless. And people say, "Well, you
00:18:16
know, I can buy this house, and my
00:18:18
mortgage is the same as my rent."
00:18:22
Well, yeah, but your mortgage is just
00:18:25
the starting point. You've got all these
00:18:26
other expenses with the house. And the
00:18:28
other thing is they are variable
00:18:30
expenses.
00:18:31
>> Variable expenses.
00:18:32
>> Yeah. With your rent, you know, if if
00:18:34
you're renting an apartment, you're
00:18:36
paying $2,500 a month for your
00:18:38
apartment, right? you know exactly what
00:18:39
your housing costs are for the term of
00:18:41
your lease, right? $500 a month. If you
00:18:45
own a house, maybe your mortgage is
00:18:47
$2,500 a month. And then you need a new
00:18:50
roof. That's 20 grand. Or you need a new
00:18:53
septic system, which by the way, I'm
00:18:55
looking at having to put it in my
00:18:57
cottage, you know. Well, that's another
00:18:59
25 grand, right? And so, and you don't
00:19:02
necessarily know when those things are
00:19:03
going to come at you.
00:19:05
>> It is a bit of a trap, isn't it? It's a
00:19:07
trap that um I didn't realize this until
00:19:09
I bought a house and most people don't
00:19:11
>> like I even sit here on this podcast
00:19:12
doing this for a living and then I I
00:19:14
made this stupid mistake of buying a
00:19:16
house and I do think it was a stupid
00:19:18
mistake because I we'll talk about
00:19:20
opportunity cost in a second but I was
00:19:22
in hindsight it was like a terrible
00:19:23
decision. I spent all this money on this
00:19:26
house. It was a house abroad. It was
00:19:28
also like a holiday home I guess
00:19:30
>> and every time I come all I see is
00:19:32
things that I need to change.
00:19:33
>> Yeah. It's looking at the United States
00:19:36
for instance, if 20 years ago, 30 years
00:19:38
ago, you'd bought a house in San
00:19:40
Francisco,
00:19:42
well, you've done very, very well
00:19:43
financially. If you bought a house in
00:19:45
Detroit,
00:19:47
not so much. So then the question
00:19:49
becomes, and people will say, well,
00:19:51
obviously you don't buy a house in
00:19:52
Detroit, you buy a house in San
00:19:53
Francisco. Well, I'm not an expert in
00:19:56
real estate, but I am reading more and
00:19:59
more commonly that San Francisco is has
00:20:01
a lot of very challenging problems at
00:20:04
the moment. Detroit, on the other hand,
00:20:06
where I was just visiting a couple of
00:20:09
years ago, is enjoying a renaissance.
00:20:11
Detroit's coming back. So, who's to say
00:20:14
in 20, 30 years, people won't be saying,
00:20:17
"If you bought in Detroit back in 2025,
00:20:20
you were golden." And if you bought San
00:20:22
Francisco, yeah, not so much. Sometimes
00:20:25
real estate, buying a house can work out
00:20:28
in a spectacular fashion. And that's the
00:20:31
stories people tend to hear, but not
00:20:33
always.
00:20:33
>> And that's what I tend to see in the
00:20:34
comment section when we talk about this
00:20:36
issue of buying a house. I was just
00:20:38
looking at the comment section actually.
00:20:39
And on a previous conversation where we
00:20:41
talked about whether you should buy a
00:20:43
house, someone said, "I bought a house
00:20:45
and it's the best thing I ever did."
00:20:46
Right? It's launched my mindset in new
00:20:48
directions. Remember that having your
00:20:51
own space has profound psychological
00:20:53
impacts and can be life-changing for
00:20:55
some of that don't live in a healthy
00:20:58
environment. The psychological impact of
00:21:01
buying a house.
00:21:02
>> What that commenter just said is is can
00:21:05
be and for him obviously it's absolutely
00:21:08
true.
00:21:10
I am not anti- house. As I mentioned a
00:21:12
moment ago, I've owned houses most of my
00:21:14
adult life, but I've never bought them
00:21:17
because I thought they were an
00:21:18
investment. I bought them because I
00:21:20
thought they would enhance my life in a
00:21:22
way I wanted it enhanced. They would
00:21:25
make my life better. They are in my view
00:21:28
an expensive indulgence. I have nothing
00:21:31
against expensive indulgences. That's
00:21:33
one of the reasons we accumulate money,
00:21:35
right? I like some expensive and some I
00:21:38
don't care about, some I like. Um, but
00:21:41
that's what they are. And if you can
00:21:43
easily afford it, then by all means buy
00:21:46
the house. Looking at some stats here,
00:21:48
it says home buying was once a solid
00:21:49
investment due to rising property values
00:21:51
and lower mortgage rates. However, for
00:21:53
younger generations, this is no longer
00:21:55
the case because of skyrocketing home
00:21:57
prices. Since 1980, US home prices have
00:22:00
increased by over 300%, outpacing
00:22:03
inflation and wage growth. In 2023,
00:22:06
mortgage rates surged past 7%, making
00:22:08
monthly payments significantly higher
00:22:10
than before. And medium wages have only
00:22:12
risen by about 15% since year the year
00:22:16
2000. While home prices have more than
00:22:18
doubled, making home ownership less
00:22:21
affordable. And lastly, the cost of
00:22:22
renting is often cheaper than buying,
00:22:24
especially in cities where prices have
00:22:26
outpaced wage growth, leading many
00:22:27
younger people to choose renting for
00:22:29
flexibility. This point of flexibility
00:22:31
as well is one we don't talk about.
00:22:33
>> Right.
00:22:33
>> Which is the ability to go do something
00:22:35
else in another country.
00:22:36
>> Exactly.
00:22:37
>> And my brother said this to me when I
00:22:38
was 20. My brother's very smart. He's a
00:22:40
year older than me, a financial genius,
00:22:42
and has a much different brain to mine.
00:22:45
And I remember when I was 20, maybe 24
00:22:49
and I was talking about do I buy a house
00:22:50
and he both told me it was the worst
00:22:53
investment I could ever make. But he
00:22:54
also told me to think about flexibility
00:22:56
and my ability to get up and move.
00:22:58
>> Yes.
00:22:58
>> And I was what do you mean? And he said,
00:23:00
"Well, listen, you're in a certain era
00:23:01
of your career where
00:23:05
you might be called by someone in San
00:23:08
Francisco who offers you a great
00:23:09
opportunity and you might want to go
00:23:11
next week." And actually when I look at
00:23:13
how my career transpired, that's exactly
00:23:15
what happened. I was in Plymouth and
00:23:18
then I went to Manchester for business.
00:23:20
Then I went to London for business. Then
00:23:21
I went around the world to San Francisco
00:23:23
to New York for business. And I'm I'm
00:23:26
moving with the opportunity.
00:23:28
And if I was anchored somewhere because
00:23:30
a mortgage does
00:23:31
>> dragging that along.
00:23:32
>> Yeah. And a mortgage does like
00:23:33
psychologically anchor you. This is what
00:23:35
people don't talk about. It creates a
00:23:36
huge amount of guilt if you then want to
00:23:40
get up and go because you in your head
00:23:42
you're going, "Well, I'm going to be
00:23:42
paying double."
00:23:44
>> Well, so I agree with everything you
00:23:47
said. I agree I I agree with your
00:23:49
brother. Flexibility, especially when
00:23:52
you're young and your career is in a
00:23:54
dynamic phase, it is not to be
00:23:57
underrated. For my daughter, I mean, she
00:24:00
loves living in Savannah. They've been
00:24:01
there for 3 years, but she has an
00:24:05
adventuresome soul. And you know, she
00:24:08
said, "I don't know. I mean, maybe at
00:24:09
some point I'll want to go live in
00:24:11
Europe or somewhere else." Well, if you
00:24:14
have a house, that complicates that
00:24:16
decision. And even if you are fortunate
00:24:19
enough to buy in a market where your
00:24:22
values are rising, the cost associated
00:24:25
with buying and selling of houses are
00:24:28
enormous. the, you know, the real estate
00:24:30
commission and the taxes and what have
00:24:32
you. So, getting in and out of a house
00:24:35
is an expensive proposition. Getting in
00:24:38
and out of apartment doesn't cost
00:24:39
anything. I mean, maybe your security
00:24:40
deposit rate, but that's it. That's
00:24:43
that's very clean and simple, but if
00:24:46
you're if you were to buy a house in
00:24:48
Savannah and then just say, you know, I
00:24:50
think I want to go live in in Portugal,
00:24:53
well, now you got to sell that house. Or
00:24:56
maybe you have to rent it. Now you're a
00:24:58
landlord. You're an accidental r
00:25:00
landlord, which was subject to my second
00:25:02
book. You know, that's not optimal. I
00:25:06
mean, if you set out to be a landlord,
00:25:07
great. But if you become an accidental
00:25:09
landlord because you can't sell your
00:25:12
house that you don't want to live in
00:25:14
anymore, that's not so great. So
00:25:17
flexibility is is enormously important.
00:25:20
If I if I were to ask you, what is the
00:25:23
simple path to wealth? and you had to
00:25:25
respond in a sentence, what would that
00:25:28
sentence be?
00:25:29
>> Avoid debt. Live on less than you earn.
00:25:31
Invest a surplus.
00:25:33
>> So, let's talk about debt then.
00:25:35
>> Okay.
00:25:35
>> Why did you say avoid debt?
00:25:37
>> You can never be financially independent
00:25:39
if you're carrying around debt.
00:25:42
It's a ball and chain that you drag drag
00:25:44
along, especially consumer debt. Now, to
00:25:46
be clear, if you're in business and your
00:25:49
business is is carrying debt as a as a
00:25:53
function of of running the operation for
00:25:57
one reason or another, that's kind of a
00:25:59
different thing. But in terms of
00:26:01
personal debt, uh if you're running up
00:26:04
credit card debt, if you're leasing
00:26:06
expensive cars or or borrowing money to
00:26:09
buy expensive cars or what have you,
00:26:11
possibly a mortgage is in a slightly
00:26:14
different category, but it has all the
00:26:16
disadvantages we just talked about.
00:26:18
Yeah, debt's a ball and chain. It's it's
00:26:20
like asking a swimmer to compete and and
00:26:25
strapping a weight around their waist.
00:26:27
Uh it just is it possible? Well, sure. I
00:26:29
guess it is, but it's a whole lot a
00:26:31
whole lot more difficult. So, job one if
00:26:33
you have debt is to blow it out.
00:26:36
>> And I mean, blowing it out is a dream
00:26:38
for many, but it's uh easier said than
00:26:40
done. I guess
00:26:41
>> it simply means that you have to
00:26:43
organize your life in such a fashion
00:26:46
that you can divert some money to either
00:26:50
buying your freedom investments or if
00:26:53
you have debt paying off that debt. You
00:26:56
just you have to do that. And people
00:26:59
say, "Well, I can't do that. You know, I
00:27:00
I need to have this. I the you know, I
00:27:03
need to have the these the two least
00:27:05
luxury cars and we need to live in this
00:27:07
neighborhood and we need to send the
00:27:08
kids to these schools. We need to and I
00:27:11
call that the tyranny of the must-haves.
00:27:13
The more musthaves you have in your
00:27:15
life, the less likely you are to become
00:27:17
financially independent." Now, that's
00:27:20
your choice. That's an individual's
00:27:22
choice. It may very well be that those
00:27:25
things are more important to you than
00:27:28
buying your freedom. And it's your
00:27:30
money. It's not for me to tell anybody
00:27:33
how they should spend their money or
00:27:34
what's important to me or what's
00:27:36
important to them. For me, there was
00:27:39
nothing I could spend my money on that
00:27:41
was more important than my freedom.
00:27:43
Which is why from the beginning, I
00:27:44
diverted half of my income to buying
00:27:47
that thing. Was never deprivation.
00:27:50
Right? Most people say, "Oh, that's this
00:27:52
is a path of deprivation. I can't spend
00:27:54
my money." Well, not for me. I, you
00:27:57
know, I spent every dime that ever came
00:27:59
my way. It's just that I spent half of
00:28:02
those dimes on the thing that I wanted
00:28:05
to own the most, which was my freedom.
00:28:08
And you own that by owning assets. So, I
00:28:12
wasn't I wasn't depriving myself any
00:28:14
more than if somebody said, you know,
00:28:18
I'm looking at buying a a Mercedes or a
00:28:21
Volkswagen, right? If I'm buy the
00:28:24
Mercedes, I'm in this big fancy car and
00:28:26
people will be impressed. If I buy the
00:28:29
Volkswagen, yeah, I'm in this more
00:28:31
modest car, but then I've got a whole
00:28:33
bunch of money left over that I can
00:28:34
spend on a wardrobe or going out to
00:28:37
dinner or a more expensive apartment.
00:28:39
It's just a matter of choosing where you
00:28:41
spend your money on. Right? So, one of
00:28:44
the choices and I I do I am under no
00:28:47
illusion that most people who read my
00:28:50
book will actually follow the simple
00:28:52
path cuz I I think there's just way too
00:28:56
much cultural influence to spend your
00:28:58
money elsewhere. But at least the people
00:29:01
who read the book and listen to this
00:29:03
interview will be aware that there is
00:29:06
something else they could buy with their
00:29:07
money. and that's their personal freedom
00:29:11
and you do that by assets and there was
00:29:13
nothing more important to me nothing I
00:29:15
wanted more so it was not deprivation at
00:29:19
all
00:29:20
>> I amum I reflect back on
00:29:24
where I used to be in my life and if I'd
00:29:25
heard this conversation then I really
00:29:28
really struggled with um saving money
00:29:31
because saving spending money was so
00:29:33
closely linked to my sense of self and
00:29:35
my self-esteem
00:29:36
>> a lot of people feel that way I've
00:29:38
shared this story before, but when I I
00:29:40
was working in those call centers at uh
00:29:42
which one, Swinton Swinton's car
00:29:44
insurance where I used to work, I would
00:29:46
get my paycheck and it might be I don't
00:29:47
know, ÂŁ1,500 or ÂŁ2,000, whatever. And
00:29:51
like on my way home on payday, I'd go
00:29:53
buy a 60-in TV and I'd put it in the
00:29:56
house and then I'd try and see if I had
00:29:58
enough money to buy a PlayStation
00:29:59
>> and then about a week later when I
00:30:01
realized that I was broke, I would sell
00:30:03
both. And I look at that behavior as
00:30:05
such absolute like
00:30:07
>> it's objectively like crazy behavior
00:30:09
like repeated videos
00:30:11
but it shows the extent to which I got a
00:30:14
dopamine hit from having a nice thing
00:30:16
and I was trapped in that cycle of like
00:30:18
>> buy the nice thing dopamine hit feel
00:30:20
validated feel like I'm a successful
00:30:22
person and then have to sell it a week
00:30:24
later.
00:30:24
>> Yeah. So, I really have a huge amount of
00:30:26
empathy for people that are stuck in
00:30:28
this spending for self-esteem cycle. And
00:30:32
they hear these, you know, they hear
00:30:33
people like me and you talk about these
00:30:35
things now
00:30:37
and it feels easier said than done.
00:30:40
>> That to me seems kind of insane. And and
00:30:45
you know, one of the things that
00:30:46
somebody pointed out one time is if
00:30:48
you're driving around in a Ferrari, you
00:30:51
know, maybe you're thinking to yourself,
00:30:53
if you're bought the Ferrari because you
00:30:55
want to impress people, everybody's
00:30:58
looking at me and they're thinking,
00:30:59
"Wow, what a cool guy that is driving
00:31:01
driving that Ferrari." No, that's not
00:31:03
what they're thinking.
00:31:05
They're looking at you in that Ferrari.
00:31:06
And what they're thinking is, "Wow, I
00:31:08
would look cool if I was driving that
00:31:10
Ferrari." They're not thinking about you
00:31:11
at all. it doesn't it you're making no
00:31:15
impact on on what their opinion of you
00:31:17
is.
00:31:18
>> So on this point of debt, I did have
00:31:20
some people contact me that were
00:31:21
childhood friends of mine recently and
00:31:23
asked um asked me for advice on getting
00:31:25
out of debt.
00:31:26
>> Mhm.
00:31:26
>> And one particular friend said that he
00:31:28
had $40,000
00:31:30
worth of debt and asked me for advice on
00:31:33
it. And I I really I'm not an expert in
00:31:35
this so I kind of hesitated to give any
00:31:37
advice.
00:31:38
>> But the advice I'm hearing from you is
00:31:40
essentially you have to make a
00:31:41
concession. You have to pull back your
00:31:43
spending and get things back under
00:31:45
control. You have to I know sell your
00:31:47
house.
00:31:47
>> So, here's some good news. So, you're
00:31:49
carrying to your friend. He's carrying
00:31:50
$40,000 in debt, right? My advice would
00:31:54
be, and this is a little different than
00:31:56
the more common advice out there, but I
00:31:59
would look at all my debts and I would
00:32:01
pick the one that was charging me the
00:32:02
highest interest rate and I would I'd
00:32:05
pay the minimums on all the others and I
00:32:07
would focus on paying that one down as
00:32:09
fast as I could because that's the
00:32:11
biggest return on my investment. And
00:32:13
when that one was gone, I'd go to the
00:32:15
second until I worked my way through.
00:32:17
It's going to be hard. And the more
00:32:21
quickly you do it, the harder it's going
00:32:23
to be cuz you're going to have to make
00:32:24
more dramatic adjustments to your life.
00:32:27
That's the bad news. Here's the good
00:32:29
news is once you are out of debt, if you
00:32:31
do this, you've developed a wonderful
00:32:34
discipline of living on less than you
00:32:36
earn and diverting the excess to
00:32:38
something else that you want more. In
00:32:40
this case, to something else you want
00:32:42
more is being out of debt.
00:32:44
If you continue with that discipline,
00:32:46
you now have the cash flow to begin
00:32:48
building those assets and becoming
00:32:50
wealthy. You've already developed that
00:32:52
lifestyle and that discipline. So that's
00:32:55
the one ray of sunshine, if you will, in
00:32:57
in the process of getting out of debt.
00:33:00
>> Okay. Play devil's advocate with me then
00:33:02
on this one.
00:33:02
>> Sure.
00:33:02
>> So when I was 18, 19 years old, my
00:33:05
strategy I was well aware that I'd
00:33:06
[Â __Â ] up my financial situation. Like I
00:33:08
was it was plainly clear that I'd
00:33:10
figured out what a credit score was and
00:33:11
I realized that I destroyed mine. I also
00:33:13
had these letters that
00:33:16
these fail letters and and I had I had
00:33:19
mounting issues. I was avoiding
00:33:22
finances, bills, envelopes, you name it.
00:33:25
I just thought if I don't look at it, it
00:33:27
doesn't exist,
00:33:28
>> which I know a lot of people do because
00:33:30
when I was writing a previous book that
00:33:32
I wrote, I looked into some of the stats
00:33:34
about humans ability to avoid. Mhm.
00:33:36
>> Whether it's health situations, if a
00:33:38
friend of yours gets a bad diagnosis, I
00:33:40
was reading a study that said some
00:33:41
people are more likely to not go get
00:33:43
checked
00:33:44
>> even if their friends had a because they
00:33:46
just want to avoid it.
00:33:47
>> Um, and then with national finances, I
00:33:49
was reading a study that said we're
00:33:50
incurring billions and billions and
00:33:51
billions and billions of debt as a
00:33:53
society just because we don't look at
00:33:54
our bank balance. We don't open
00:33:56
envelopes. So, I know I'm not the only
00:33:58
one.
00:33:59
>> No, not at all.
00:34:00
>> My strategy was my This is such a dumb.
00:34:04
>> I'm not sure I want to hear this.
00:34:06
Well, go ahead.
00:34:07
>> Honestly, and this sounds like crazy
00:34:09
talk, but it's just the truth. In my
00:34:10
head, my strategy was
00:34:13
>> I'm going to get so rich that I outpace
00:34:14
this debt
00:34:15
>> and then I'll deal with it later.
00:34:17
>> My strategy was if I can just get really
00:34:19
rich, which is kind of the inverse of
00:34:21
what you're advising,
00:34:23
>> then this debt won't be a problem.
00:34:26
>> At 18 or 19 years old, you don't know
00:34:28
the world. You are guessing,
00:34:30
>> right?
00:34:31
>> And I was guessing that I could earn my
00:34:33
way out of it. The probability says I
00:34:35
was wrong.
00:34:36
>> The probability says that I was like
00:34:38
delusional or some or just like I
00:34:40
watched too many rap videos or
00:34:42
something,
00:34:42
>> right?
00:34:43
>> Um, so objectively that is a reckless
00:34:46
choice. Even if even if it's true and it
00:34:49
ends up being true for you, you end up
00:34:50
being what it's still a bad choice
00:34:52
because probability is stacked against
00:34:54
you.
00:34:55
>> Well, that's true. And but you just made
00:34:57
a critical point in that you can make a
00:35:00
bad choice where things work out well
00:35:03
for you.
00:35:03
>> Yeah, exactly. It's a bad choice.
00:35:05
>> So, a great example of that is investing
00:35:07
in Bitcoin, right? I'm not I'm not a
00:35:10
proponent of investing in Bitcoin.
00:35:13
Certainly, for those people who bought
00:35:15
Bitcoin 10, 15 years ago, they've done
00:35:17
extraordinarily well.
00:35:20
They got lucky. Lots of speculations
00:35:23
don't work out that well. So if you are
00:35:25
speculating
00:35:27
then you it might work out
00:35:29
extraordinarily well for you but it's
00:35:32
you're taking some pretty heavy risks in
00:35:34
doing that right it's same thing with a
00:35:37
lottery ticket I mean the chances of
00:35:39
winning the lottery are infantestimally
00:35:41
small but people buy lots and lots of
00:35:43
lottery tickets somebody somebody does
00:35:45
win it but that's probably not a good
00:35:48
way to spend your money
00:35:50
>> Bitcoin
00:35:51
>> you're not a fan of Bitcoin No. And I'm
00:35:55
not I'm not opposed to Bitcoin existing
00:35:57
in the world.
00:35:59
Uh but for me, it's a speculation and
00:36:02
I'm not a speculator.
00:36:04
>> When you say spec, give me some color
00:36:05
because I'm sure there's some people who
00:36:07
are listening now that are either
00:36:09
thinking about Bitcoin or have invested
00:36:10
in Bitcoin.
00:36:11
>> I mean, if you want to speculate that
00:36:13
Bitcoin, so I I would recommend against
00:36:16
it. So, and people and they might push
00:36:18
back and say, "Well, but JL, you know,
00:36:21
you were recommending against against it
00:36:23
10 years ago, which I was, and you
00:36:26
you've been wrong. I mean, absolutely
00:36:28
wrong. It's been great 10 years. It's
00:36:30
blown. It's done far better than the S&P
00:36:32
500." Well, that's true. If you'd had a
00:36:36
crystal ball, if I'd known that 10 years
00:36:39
ago, yeah, well, I would have been in
00:36:40
Bitcoin, right? We don't have crystal
00:36:43
balls. So the question isn't how is
00:36:45
Bitcoin done in the last 10 years. It's
00:36:48
how how is it going to do in the next 10
00:36:49
years. I don't know the answer to that.
00:36:52
But that's the question. Is it worth
00:36:55
$100,000 a coin now? Is it going to
00:36:57
continue to grow at that pace that you
00:37:02
regret that you missed over the last 10
00:37:04
years? That's the question you have to
00:37:05
ask yourself.
00:37:07
But I could say its success is evidence
00:37:12
that it's serving some kind of utility
00:37:14
for some people somewhere. Its success
00:37:18
means that there is demand for it by
00:37:20
very nature that the price has increased
00:37:21
so crazily over the last 15 years.
00:37:24
>> Yeah. That and that's an argument that
00:37:26
people make and there's a lot of debate
00:37:28
around that, right? is, you know, what
00:37:32
is the function that it has or that it's
00:37:35
going to develop? And you might well be
00:37:38
right. I don't I don't know the answer
00:37:39
to that question. It's not currently at
00:37:42
least a currency because it's way too
00:37:44
volatile to serve as a currency unless
00:37:46
you're doing illegal things that
00:37:49
make it more attractive than the
00:37:51
volatility makes it unattractive. So
00:37:53
that's not necessarily good for society,
00:37:55
but but so it can't function as a
00:37:58
currency. So, right now it's just a
00:38:01
speculation. Is it going to grow into
00:38:03
something that's more functional? Well,
00:38:07
you know, listening to one of the other
00:38:08
interviews you you you did,
00:38:13
that woman absolutely believes that
00:38:15
that's what's happening. And they Kathy
00:38:17
Wood, so that's why she's in Bitcoin.
00:38:19
And she may be right, but she's
00:38:22
speculating. And again, I have nothing
00:38:25
against speculating as long as you
00:38:27
understand, as I'm sure she does, that
00:38:29
that's what you're doing.
00:38:30
>> You'd prefer investing.
00:38:32
>> I prefer to have an engine creating
00:38:35
wealth behind where I put my money.
00:38:37
>> I had um a text message from a really
00:38:38
good friend of mine who my audience will
00:38:40
know because they've been on the show
00:38:41
before as a guest and uh they're very
00:38:43
well known in the UK. Um they text me
00:38:45
and said, "Please, can I ask you a
00:38:46
question? If you had mortgages and you
00:38:50
had a lump sum of money, thinking about
00:38:53
the future of AI, potential market
00:38:55
crashes, would you pay off chunks of the
00:38:58
mortgage or would you invest? My feeling
00:39:01
is that stocks aren't really safe. Am I
00:39:03
being paranoid?
00:39:05
>> Well, there that's there are a couple
00:39:06
questions embedded in that. So, the
00:39:08
first question is would I pay off a
00:39:11
mortgage? And the second question is are
00:39:13
stocks safe? Right? So the mortgage one
00:39:17
first to me is is pretty easy. It kind
00:39:19
of depends on your interest rate.
00:39:22
>> What is an interest rate?
00:39:23
>> So an interest rate is what you pay to
00:39:25
borrow money. So when you when you get a
00:39:28
mortgage, you're borrowing money, right?
00:39:29
You're borrowing it from a bank or a
00:39:31
financial institution
00:39:33
and they they want to be paid for
00:39:35
letting you use their money. And three
00:39:38
three and a half% or less, that's really
00:39:42
cheap money. I would hold on to that. I
00:39:45
I would be in no hurry to pay that off.
00:39:48
On the other side, if you have a
00:39:50
mortgage rate that's say 6% or higher,
00:39:54
well, when you pay off that mortgage,
00:39:56
essentially you're locking in a
00:39:58
guaranteed return of that interest rate,
00:40:02
right? So, if you pay off an 8%
00:40:04
mortgage, you've locked in an 8% return
00:40:07
on that money effectively. And then to
00:40:09
finish the thought is if your interest
00:40:11
rates between those those two like three
00:40:14
and a half percent to five and a half
00:40:16
six percent then I would say it would
00:40:18
depend whether you pay it off or not is
00:40:20
what makes you emotionally more
00:40:22
comfortable and there's value in being
00:40:24
emotionally comfortable. So if you are
00:40:26
comfortable carrying the debt you might
00:40:28
say well I think I can do better in the
00:40:30
stock market so I'm going to carry it.
00:40:32
If emotionally like me you just would
00:40:34
rather not have any debt at all than you
00:40:36
then you blow it off. Maybe we could use
00:40:38
the coins as a an example of what an
00:40:41
interest rate is.
00:40:42
>> Sure. Let's say I'm sitting on this pile
00:40:44
of gold and you want to borrow some of
00:40:47
my gold. I'm happy to loan you, Stephen,
00:40:50
these 10 very valuable old pieces. But I
00:40:54
don't like you well enough to just let
00:40:55
you borrow them for free.
00:40:58
I want to be paid. I want to get a
00:41:00
reward back for that. So, when you
00:41:02
return these gold pieces to me in a
00:41:04
year, you're going to return 11 gold
00:41:07
pieces to me. You're going to pay me
00:41:08
10%. Cuz an extra gold piece is 10% of
00:41:13
these 10, right? Make sense?
00:41:14
>> Yeah.
00:41:15
>> That's what interest is.
00:41:16
>> So, I if I say, "Okay, I'm going to buy
00:41:18
a house,
00:41:19
>> right? You're going to take you're going
00:41:20
to take those 10 gold pieces. Go ahead
00:41:21
and take them."
00:41:22
>> So, I'm buying a house that costs 10
00:41:24
gold pieces, right? Right. So, I'm going
00:41:26
to accept your 10% interest rate.
00:41:29
>> Okay. Am I paying 10% a year on the to
00:41:34
on the total
00:41:35
>> on the balance? So, the way a mortgage
00:41:36
works is in the let's say it's a 30-year
00:41:39
mortgage, you're going to be sp giving
00:41:42
me a certain amount of money every
00:41:43
month, right? That's your mortgage
00:41:45
payment. And in the beginning, most of
00:41:48
that payment is going to be interest to
00:41:50
me. And a very tiny sliver of it will be
00:41:53
paying down the principal part of the 10
00:41:56
gold pieces that you bought or that you
00:41:58
Yeah. that you borrowed. A very tiny
00:42:01
sliver. And then over the course of 30
00:42:03
years that ratio changes as you pay down
00:42:06
the debt and less and less of it is
00:42:09
interest payments and more and more of
00:42:11
it is paying down the principal until at
00:42:14
the end of 30 years you've paid all the
00:42:16
principal and you've paid me a fairly
00:42:18
enormous amount of money in debt over
00:42:20
that or in uh interest over that 30
00:42:22
years.
00:42:23
>> And how do I get a good interest rate?
00:42:24
How do I get a very very low interest
00:42:26
rate? And what is a low interest rate
00:42:28
>> on a mortgage?
00:42:29
>> Yeah. So the only way you can get a So
00:42:32
first of all, you're going to pay
00:42:33
basically whatever the current interest
00:42:36
rates are.
00:42:36
>> Who sets the current interest rates?
00:42:38
>> So the Fed sets an overall interest
00:42:41
rate. You've heard the Fed will raise or
00:42:43
lower interest rates and that will
00:42:45
influence what lenders like bank and
00:42:48
mortgage companies will charge. It
00:42:51
doesn't require them to do a certain
00:42:53
level, but it will influence up or down
00:42:55
how much they're going to expect in
00:42:57
return for their money. The Fed is a
00:42:59
government.
00:42:59
>> Yeah, the Fed is a government agent
00:43:00
partially because the the Fed is
00:43:03
anticipating inflation
00:43:06
by how they set interest rates. So if
00:43:08
I'm lending you money and I'm worried
00:43:11
about inflation, if I lend you my 10
00:43:14
gold pieces and say I want 11 back in a
00:43:17
year, 10%. But inflation is 15%. Well,
00:43:21
I've just made a very, very bad deal. So
00:43:24
if I think inflation is going to be 15%,
00:43:26
I'm going to want two gold pieces back
00:43:29
and maybe or you know, so I so I'm I'm
00:43:32
making a profit above and beyond
00:43:34
inflation. So going back to your
00:43:36
question, how do you get a good mortgage
00:43:38
rate? Well, you shop around to various
00:43:41
lenders at the time you want the
00:43:42
mortgage and see, you know, who's
00:43:44
offering what? And there'll be some
00:43:45
variation within a eighth of a percent
00:43:48
or a quarter of a percent or something,
00:43:50
but for the most part, they're all going
00:43:52
to be very tightly put together because
00:43:54
they're looking at the overall
00:43:56
projection of what inflation's going to
00:43:58
be, what they can charge, what the cost
00:44:01
of money is, what they can charge in
00:44:02
interest, and then competitively what
00:44:04
they what they have to do to get your
00:44:06
business. So, there's not going to be a
00:44:09
lot of variation. you're not going to
00:44:10
get a a significantly better interest
00:44:14
rate than somebody else, but if you shop
00:44:16
around, you can probably do a little bit
00:44:17
better. And interest rates have been
00:44:19
fluctuating quite a lot over the last 20
00:44:21
odd years. In the early 2000s, interest
00:44:23
rates in the US were relatively high,
00:44:25
peaking at almost 7%
00:44:28
in 2006 due to efforts to curb
00:44:30
inflation. And then after the financial
00:44:32
crisis, um they dropped a little bit.
00:44:34
Um, and I was looking here. Post 2008,
00:44:37
central banks around the world adopted
00:44:39
ultra low interest rates to revive
00:44:41
economies. US rates were slashed to near
00:44:44
0% by 2008 and remained there for nearly
00:44:47
a decade.
00:44:49
>> Right.
00:44:50
>> Damn. Um, COVID 19 pandemic uh interest
00:44:54
rates led to another record in cuts
00:44:57
globally with the US Fed lowering
00:44:58
interest rates to 0% to 0.25% to combat
00:45:03
economic disruption. So, does this mean
00:45:05
I should really be waiting for a time
00:45:07
when the interest rates are really
00:45:08
really low if I want to buy a house?
00:45:10
>> Well, not necessarily because you never
00:45:12
know when that's going to happen. I
00:45:14
mean, some some people have said
00:45:16
predicting what the stock market is
00:45:18
going to do is very very difficult.
00:45:20
Predicting where interest rates are
00:45:21
going to go even more so. So I think if
00:45:25
you're going to if you're going to buy a
00:45:26
house then again you buy it based on
00:45:29
whether you can easily afford it,
00:45:30
whether it meets your needs at a given
00:45:32
time and you deal with the interest
00:45:34
rates you have to deal with. And of
00:45:35
course they'll be part of the equation
00:45:37
in terms of how much you can afford
00:45:39
because the interest rate on your
00:45:40
mortgage is going to have a lot to do
00:45:42
with how much you have to pay every
00:45:43
month
00:45:44
>> and it's quite high at the moment.
00:45:45
Interest rates
00:45:47
>> high compared to what? So the fir you
00:45:49
know right now mortgage rates are 6% 7%
00:45:52
somewhere in there. The first mortgage I
00:45:54
took out was 18%.
00:45:56
>> 18%. That would have been in 1979
00:46:00
because in the 1970s we had really high
00:46:04
inflation. And when you have high
00:46:05
inflation, you have high interest rates,
00:46:08
right? So to me, I hear a 6% mortgage
00:46:12
rate and it's doesn't sound bad to me,
00:46:14
but for people who grew up where
00:46:17
mortgage rates were 2 and a half, 3%.
00:46:21
Well, yeah, I mean, it's huge. It
00:46:23
depends on your perspective.
00:46:24
>> And the other half of the lady's
00:46:26
question who sent me that text message
00:46:27
was around is investing in stocks safe
00:46:30
right now? and she did sort of preface
00:46:32
it by saying the questions in the
00:46:34
context of AI all of this disruption
00:46:36
that's going on in the world people are
00:46:38
going to lose their jobs etc et like is
00:46:40
it safe to invest in stocks right now
00:46:42
>> so depends on your time horizon so
00:46:46
stocks are are the single
00:46:51
most effective strongest wealth building
00:46:53
tool that's ever been created but they
00:46:56
are also very very volatile so when she
00:46:59
says are stocks safe to invest in right
00:47:01
now.
00:47:03
What I hear is very shortterm thinking
00:47:06
and stocks are never safe to invest in
00:47:09
for the short term because they're
00:47:12
volatile at any given moment. They can
00:47:14
take a deep plunge and that's a
00:47:16
perfectly natural part of the process.
00:47:18
People get all create especially if you
00:47:21
watch the news they people go insane and
00:47:24
panicked. But crashes and pullbacks in
00:47:26
the stock market are perfectly natural
00:47:28
part of the process. They are very very
00:47:31
difficult if not impossible to predict
00:47:33
when they're going to happen. But that's
00:47:35
the reason you never
00:47:37
want to invest in stocks for money that
00:47:40
you're going to need in the new near
00:47:41
term. If you zoom out for longer periods
00:47:46
of time, which is I re is what I
00:47:48
recommend, stocks are stunningly
00:47:51
reliable. I mean, there are very few
00:47:54
times over the course of 10 years where
00:47:56
stocks have not given you a good return.
00:47:58
and you go out 20 years and I I mean
00:48:00
it's very rare. So if you look long-term
00:48:04
stocks are extremely safe and extremely
00:48:07
powerful in building in building wealth,
00:48:09
but they are very volatile along the
00:48:11
way. So you have to be willing and able
00:48:15
to endure that volatility. If you're
00:48:17
going to panic and sell when the market
00:48:19
drops, not if because the market will
00:48:22
drop. It's a perfectly natural part of
00:48:24
the process. If you're going to panic
00:48:26
and sell when that happens, you do not
00:48:28
want to invest in stocks because they
00:48:30
will leave you bleeding on the side of
00:48:31
the road. Following my advice will leave
00:48:34
you bleeding on the side of the road if
00:48:36
you panic and sell. It's 100% dependent
00:48:40
on tying yourself to the mass during the
00:48:43
storm and ignoring the volatility and
00:48:47
continuing to invest into it because now
00:48:50
you're actually accumulating shares on
00:48:53
sale because prices are down because the
00:48:56
storm never lasts. It always blows over
00:49:01
and the sunshine comes back out and
00:49:04
prosperity returns. You're talking here
00:49:05
about the emotional side of investing,
00:49:07
which
00:49:07
>> which is critical.
00:49:08
>> Yeah.
00:49:09
>> If you if you can't control your
00:49:10
emotions, you're you're going to be
00:49:13
selling at the wrong time and buying at
00:49:14
the wrong time.
00:49:15
>> So, this is such a huge part of it that
00:49:17
people don't talk about enough. They
00:49:18
talk about tactics, strategies, what to
00:49:19
invest in, etc. But they don't talk
00:49:21
about the emotional side, which is
00:49:23
really like arguably a even bigger
00:49:26
element of this because if you think
00:49:28
about even how the brain is set up and
00:49:30
what drives us most, it's it's fear.
00:49:33
It's it's emotion.
00:49:35
>> You're in greed.
00:49:36
>> And when the when the prices drop, you
00:49:38
know, I mean, we've all got a story. So
00:49:40
many people listening. I remember my
00:49:41
first ever investment. I put ÂŁ10,000
00:49:43
into Facebook stock a long long long
00:49:45
long time ago. And then it went down and
00:49:47
I sold.
00:49:48
>> I thought, I'm never investing again.
00:49:50
>> And if I just left it,
00:49:53
>> Yeah.
00:49:53
>> Um, God, that would be worth so much
00:49:55
money. It probably be worth six figures
00:49:57
now,
00:49:57
>> right?
00:49:57
>> But I I hadn't, no one had ever taught
00:49:59
me about the emotional side. And
00:50:01
actually part of the reason I sold it
00:50:02
was because I needed that money.
00:50:04
>> So there's two things there. One is the
00:50:06
emotional side of selling it. The other
00:50:08
thing is investing money that is not for
00:50:11
the long term cuz you turned out you
00:50:13
should never invest in money in the
00:50:15
stock market that is you're not willing
00:50:16
to commit for decades. This is a
00:50:19
longterm horizon because that's what
00:50:21
allows you to weather the storms. If
00:50:23
you're saving for a house for instance,
00:50:25
well you probably don't want to be in
00:50:26
the stock market. The best investor I've
00:50:28
ever met is my girlfriend. Uh because
00:50:30
she she loses the password
00:50:34
to the investing app. And honestly,
00:50:35
every like two years I go, "Babe, do you
00:50:37
remember?" I was like, "You bought loads
00:50:39
of that index fund or Bitcoin or
00:50:41
whatever it is."
00:50:42
>> I was like, "Do you know the price of
00:50:43
it?" And she's like, "No, I forgot. I've
00:50:45
forgotten the password to the app." And
00:50:47
we always like log back in once every
00:50:49
two years and look at it. I'm like, "Oh
00:50:50
my god, babe. You're rich." And she's
00:50:51
like, "Oh, okay." And then she loses the
00:50:53
password again. She forgets it. This is
00:50:55
an incredibly important point you just
00:50:56
touched on. So Jack Bogle, the guy who
00:51:00
created retail index funds that we can
00:51:02
invest in now, created the Vanguard
00:51:04
Group in 1975.
00:51:07
Bogle once said, you know, invest in the
00:51:10
S&P 500 and don't even open your
00:51:13
statements when they come. Just let them
00:51:15
stay. Don't even open them for 20 years
00:51:19
and then open the final one and have a
00:51:21
cardiologist standing by because you
00:51:23
will be stunned at the level of wealth
00:51:26
that you've accumulated. One of the
00:51:29
things that I wrote this this book for
00:51:31
my daughter, right? My daughter is
00:51:34
sounds like she's kind of like your
00:51:35
girlfriend. She's very smart, but she
00:51:37
has zero interest in this financial
00:51:39
stuff.
00:51:41
That is a superpower because unlike me
00:51:46
and maybe a lot of people listening to
00:51:47
us who are interested in this stuff and
00:51:49
who are watching the market all the
00:51:51
time, she and your girlfriend are never
00:51:54
going to be tempted to panic when the
00:51:56
market drops because they're not going
00:51:58
to notice the market dropped, right?
00:52:00
Because they're they don't they don't
00:52:01
care. And the less you tinker with your
00:52:04
investments.
00:52:05
Charlie Munger, who was Warren Buffett's
00:52:08
partner, once said, "The worst thing you
00:52:09
can do as an investor is get in the way
00:52:11
of compounding, right? And that means
00:52:15
dancing into the market trying to sell
00:52:17
and buy back in and what have you. Just
00:52:19
let the compounding run." I get so many
00:52:21
people who read my work and they say,
00:52:24
"Wow, JL, I I I really get it and it's
00:52:26
wonderful and you're absolutely right
00:52:27
about everything, but if we just did
00:52:30
this one little thing differently, it
00:52:32
would be even better." And they are I've
00:52:35
come to think of them as the tinkerers,
00:52:37
right?
00:52:38
>> Are they men?
00:52:39
>> They I think a lot of them are men. I
00:52:41
think I think women are a little less
00:52:43
inclined to tinker because men put their
00:52:46
masculinity on the line in doing these
00:52:48
things and that's not useful.
00:52:51
>> I asked the question about men and women
00:52:53
because I got some stats here from
00:52:54
actually from Vanguard that says men are
00:52:57
70% more likely to invest in high-risisk
00:53:00
assets like individual stocks versus
00:53:02
safer assets than women. Men's portfolio
00:53:05
are 50% more volatile, which leads to
00:53:08
higher potential returns, but also huge
00:53:11
greater losses. As it relates to men,
00:53:13
again, despite having higher
00:53:15
risk-taking, men underperform women in
00:53:17
long-term returns annually due to
00:53:20
overtrading, tinkering,
00:53:23
>> and timing mistakes, tinkering. And men
00:53:25
trade 45% more often than women,
00:53:29
resulting in more fees because every
00:53:30
time they make a trade, they pay a fee
00:53:32
and lower gains. That's according to
00:53:34
Berkshire Hathaway.
00:53:36
The summary here is that men take more
00:53:38
risks, but in the long term tend to earn
00:53:40
less because of frequent mistakes and
00:53:42
emotional trading, whereas women are
00:53:44
more cautious and their approach tends
00:53:46
to yield better returns.
00:53:48
>> So, you know what we've learned here?
00:53:49
>> Yeah.
00:53:50
>> I have a very strong feminine side.
00:53:53
>> Well, gosh. Yeah. Damn.
00:53:56
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00:54:10
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00:55:00
>> You talked about compounding. You talked
00:55:02
about how one should maybe not open the
00:55:04
envelope that has the state.
00:55:06
>> That's Jack Bogle has said that, but I
00:55:07
agree with it. Yeah.
00:55:08
>> I I don't have to explain the graph I've
00:55:10
just passed you for you to know what
00:55:11
that is, right?
00:55:12
>> On the bottom, the red line is 11%
00:55:15
>> Mhm. returns. So the blue line that's
00:55:18
that's running fairly flat is the
00:55:20
contributions to this hypothetical
00:55:22
investment and the red line is the value
00:55:26
that that how it how it grows. And
00:55:29
what's striking, and this is this is
00:55:31
what's striking about compounding in
00:55:33
general, is that the two track each
00:55:36
other almost exactly for a surprisingly
00:55:39
long time, and then they begin to
00:55:41
diverge, and then the compounding makes
00:55:45
the value of the investment skyrocket.
00:55:48
It hockey sticks.
00:55:51
And I didn't know you were going to show
00:55:52
this to me, but what's interesting to me
00:55:55
about this is I used to do these
00:55:57
shitakas. They were events where we'd
00:55:59
take a small group of people to some
00:56:00
cool place in the world and hang out.
00:56:02
And there were people who followed my
00:56:03
work and and I would have one-on-one
00:56:06
sessions with them and we talk about
00:56:08
whatever they wanted, but mostly it was
00:56:10
their finances. And very commonly these
00:56:14
people would lay out their their
00:56:16
investments, their their finances, and
00:56:18
and
00:56:20
they would ask, "Am I financially
00:56:22
independent?" And that's a there's a
00:56:24
very simple mathematical formula about
00:56:26
that. How much did you spend? I spend
00:56:28
$100,000 a year. Okay. If you take the
00:56:31
4% guideline, what's that?
00:56:33
>> Withdrawal. So, a guy named Bill Ben
00:56:36
came up with the idea that you could
00:56:39
safely withdraw 4% of your portfolio and
00:56:42
it would continue to survive over time
00:56:46
and it would so you could you could pull
00:56:48
that out without depleting the
00:56:51
portfolio. There was a woman who came to
00:56:53
one of our [Â __Â ] talk. She was a banker.
00:56:55
So obviously knows her way around basic
00:56:58
math, right? She was at the end of Stuck
00:57:02
where she was going to take a new job
00:57:05
starting that Monday was going to pay
00:57:06
her a million dollars a year and we're
00:57:08
going over her finances and she said,
00:57:11
you know, I've got $5 million invested.
00:57:14
Okay.
00:57:15
Am I financially independent? Well, I
00:57:17
can't answer that question until I know
00:57:19
how much are you spending. Said, well,
00:57:20
I'm spending $100,000 a year. Okay.
00:57:24
Well,
00:57:25
$100,000 a year, if you multiply it by
00:57:29
25, you get $2.5 million.
00:57:33
4% of 2 and a.5 million is 100,000,
00:57:37
right? So, that's how that math works.
00:57:39
So, if you need 100,000 to live on, you
00:57:42
need 2.5 million invested. Make sense?
00:57:45
>> Yeah.
00:57:45
>> Okay. So, you can look at it either way.
00:57:47
You can say, I've got two and a half
00:57:48
million. If I take 4% of that a year,
00:57:51
that's 100,000. or I I I'm spending
00:57:55
100,000. How much do I need? You
00:57:56
multiply that by 25 two and a half.
00:57:59
>> So, just to make sure I'm clear,
00:58:02
>> if I look at my investment portfolio and
00:58:05
I have $100 in there,
00:58:07
>> if I can live, are you saying that if I
00:58:09
live on $4,
00:58:11
which is 4% of my investment portfolio,
00:58:13
then I'm financially independent.
00:58:15
>> Right. That's a good Now, it's a good
00:58:17
guideline. I mean there's lots of
00:58:20
variations but this is a guy guideline
00:58:22
this financial adviser Bill Benin came
00:58:24
up with
00:58:26
u and then there was a thing called the
00:58:27
Trinity study which was done I want to
00:58:29
say in the '9s that looked at a lot of
00:58:31
these scenarios and basically verified
00:58:33
that this was a very good baseline. Um,
00:58:37
so 4% is I don't like the word rule
00:58:41
because that implies that it's hard and
00:58:44
fast, but it's a great guideline. If you
00:58:46
want to have a have an idea of whether
00:58:48
or not you're financially independent or
00:58:50
not, this is a good guideline. So
00:58:51
anyway, this woman says she's spending
00:58:54
$100,000 a year and she's got 5 million.
00:58:56
She wants to know, am I financially
00:58:59
independent in financially independent?
00:59:01
And I said, times two. I mean, you have
00:59:05
twice as much money as you need given
00:59:07
your level of spending. So, the question
00:59:09
that I always had going back to this
00:59:11
little chart is how and I would get this
00:59:14
question a lot, Stephen. You know,
00:59:16
they'd show me their numbers and they
00:59:19
would very clearly be financially
00:59:21
independent on that based on that math
00:59:22
we just discussed. And these were smart
00:59:25
people who can easily do basic
00:59:27
arithmetic. Said, how how is it that
00:59:30
they're asking me this this question?
00:59:32
And suddenly it dawned on me, this is
00:59:34
how
00:59:36
because compounding
00:59:39
is a is a hockey stick. It goes along
00:59:42
and and kind of doesn't appear to be
00:59:44
happening and then it's slowly starts to
00:59:46
happen and all of a sudden it's way up
00:59:48
here. It happens so quickly and so
00:59:50
stunningly they can't quite believe it.
00:59:54
It turned out is not that they couldn't
00:59:55
do the basic math. They certainly could
00:59:58
do the basic math.
01:00:00
What it was is they couldn't quite
01:00:02
believe what the math was telling them
01:00:05
and they wanted me to. It's like
01:00:08
you you see what's on that wall over
01:00:10
there. I mean, are you seeing what I'm
01:00:13
seeing? Cuz I can't quite believe that
01:00:15
I'm seeing that. I need you to confirm
01:00:17
that. Yeah, you're seeing the same thing
01:00:19
I'm seeing. And in this example, all it
01:00:22
is is someone has, you know, they've
01:00:25
started with zero
01:00:26
>> and they've paid in a small contribution
01:00:29
every year to their investment. The
01:00:31
investment is getting 11% return a year
01:00:34
>> and suddenly the thing goes
01:00:37
>> I think that was one of the most pivotal
01:00:38
moments in my life where I went online
01:00:40
>> five six years ago and looked at a
01:00:42
compounding interest calculator. So
01:00:45
>> it's stunning.
01:00:46
>> It's it is stunning.
01:00:46
>> It is absolutely stunning.
01:00:50
And it shows that if you just leave your
01:00:51
money in a place where it's getting this
01:00:55
kind of return
01:00:57
over time,
01:01:00
everything seems to take care of itself.
01:01:02
>> So let me let me close the circle in a
01:01:06
sense on on that subject because one of
01:01:10
the things that I think gets overlooked
01:01:12
with my book is this is the simple path
01:01:15
to wealth.
01:01:17
Which means if you follow it, you will
01:01:19
become wealthy, right? So we go back to,
01:01:25
you know, buying those things that
01:01:26
people maybe want to buy, whether it's
01:01:28
the fancy car or the or the house. Well,
01:01:33
once you become wealthy, you can not
01:01:35
only buy those things, but you're buying
01:01:37
them from a position of power, right?
01:01:40
You can easily afford them. you become
01:01:42
financially independent, which means
01:01:44
that your investments are throwing off
01:01:46
more money than you're spending. My wife
01:01:48
and I are basically uh pretty naturally
01:01:50
frugal people. And that's one of the
01:01:53
ways I suppose that we got to where we
01:01:54
are. But that doesn't necess necessarily
01:01:58
serve us at the level of wealth now. And
01:02:01
so we still have this tendency to say,
01:02:04
"Oh, we're thinking about getting this
01:02:05
stuff. How much does it cost? And do we
01:02:07
really want to spend that money?" And
01:02:09
depending on who it is, either she'll
01:02:10
turn to me or I'll turn to her and say,
01:02:12
"Doesn't matter. It's free. Everything's
01:02:14
free. It doesn't." And that's a very
01:02:16
liberating way to look at things. So
01:02:18
that's where the simple path ultimately
01:02:20
will will get you. That's what I bought
01:02:24
all those years ago.
01:02:26
>> One of the thoughts that I had, which I
01:02:27
do think is somewhat illogical, was my
01:02:30
brother and me are very different
01:02:31
people. So he was very, very frugal and
01:02:33
I was reckless. And one of the ways that
01:02:36
I self-justified my recklessness was,
01:02:38
well, you know, you've got to enjoy
01:02:39
life. And I'm only young once, so I'm
01:02:42
only going to get the opportunity to do
01:02:43
some of these things that are part of
01:02:46
being young once, going to a nightclub
01:02:48
and buying champagne and partying, you
01:02:50
know? So, I thought, yeah, I could save
01:02:52
and save and save and save and I could
01:02:54
get to, you know, 70, 80 years old and
01:02:55
have all this money, but what is the
01:02:57
point if I haven't like enjoyed myself?
01:03:00
I think it is a mistake to think that
01:03:03
you need to spend money to be happy, to
01:03:05
enjoy yourself. And the other thing I
01:03:06
will say is that
01:03:10
it's a lot more useful having money at
01:03:12
this age than it would have been in my
01:03:14
20s because
01:03:17
money buys comfort among other things
01:03:19
and comfort becomes much more important
01:03:21
to you as you age.
01:03:23
They did a study where they put people
01:03:25
in a brain imaging scanner and they
01:03:28
asked them to think about themselves
01:03:30
tomorrow. Then they asked them to think
01:03:31
about themselves in a couple of years.
01:03:32
Then they asked them to think about
01:03:34
themselves in 10 years time and they
01:03:35
looked at the brain. And then they did
01:03:37
another study where they got the same
01:03:39
people to think about a celebrity.
01:03:43
>> Mhm.
01:03:43
>> That they didn't know. I think it was
01:03:44
Matt Damon or someone famous like that.
01:03:46
And what the study proved was that we
01:03:49
think about ourselves in 10 years time
01:03:52
in the same way that we think about Matt
01:03:54
Damon. The further away
01:03:57
the time horizon, the more it becomes a
01:03:59
total stranger, right?
01:04:00
>> And so I was writing I was writing
01:04:02
recently for a chapter in my upcoming
01:04:03
book about this idea that our future
01:04:05
self is a stranger. To the brain,
01:04:07
thinking about me when I'm 60
01:04:09
>> is like thinking about Matt Damon,
01:04:11
right?
01:04:11
>> I don't know a [Â __Â ] guy.
01:04:12
>> So why do I care? Why do I care about
01:04:14
protecting him? And I think this kind of
01:04:17
speaks to what we were saying there is
01:04:19
young people and even me as a young
01:04:20
person kind of didn't really give a [Â __Â ]
01:04:22
about 60-year-old me,
01:04:23
>> right?
01:04:24
>> Like I I it's so far away that I I don't
01:04:27
really care about protecting his
01:04:28
interest. I almost think that's a
01:04:30
different person. He can figure that
01:04:32
out,
01:04:32
>> right?
01:04:33
>> And you know, you are How old are you
01:04:35
now?
01:04:35
>> I'm 75.
01:04:36
>> So you have the the wisdom of hindsight.
01:04:39
So you can tell me as a 33y old what
01:04:41
it's like to be both 33 and 75. When I
01:04:45
was 33, I didn't think about
01:04:48
me at an older age at all. I mean, it
01:04:51
never crossed my mind to do such a
01:04:52
thing. Right? So, I was not doing what I
01:04:55
was doing for the benefit of 75year-old
01:04:59
JL. I was doing it for the benefit of
01:05:02
25-year-old JL, 30-year-old JL. Right?
01:05:05
remember going back to an early part of
01:05:07
our conversation
01:05:09
what my definition of FU money it's the
01:05:12
money that you're accumulating
01:05:15
before that gets you ultimately to being
01:05:17
financially independent which is when
01:05:20
you no longer need to trade your labor
01:05:22
for money right your money is doing all
01:05:24
that
01:05:26
I wanted that right now so when I was 25
01:05:30
I'd saved the princely sum of $5,000
01:05:35
adjusted for inflation to be about 25
01:05:37
$30,000 today. U and I wanted to go back
01:05:42
around Europe, right? But that meant
01:05:44
quitting my job, which I kind of liked.
01:05:48
But the fact that I had that money gave
01:05:52
me the financial strength to go in and
01:05:56
negotiate that deal. If I was living
01:05:59
paycheck to paycheck, I wouldn't have
01:06:01
had that. I was far from being fully
01:06:03
financially independent. So, I wasn't
01:06:06
doing this for 75 year old JL. I was
01:06:09
doing this right now for 25 year old JL.
01:06:12
And it's just like when you work out,
01:06:14
and clearly you do, right? You don't go
01:06:17
to the gym thinking, at least I'm making
01:06:19
a presumption here, I'm doing this for
01:06:22
75year-old Steven. You're doing this
01:06:25
because you want to be stronger tomorrow
01:06:27
than you are today. for 33 year olds
01:06:30
even. So that's my way of thinking about
01:06:33
it. I I never did this for future me.
01:06:37
Maybe some people do and that's probably
01:06:39
not a bad exercise. It's probably a bit
01:06:41
of wisdom in that. I wasn't that smart.
01:06:44
>> So you would you would save $5,000 a
01:06:46
year.
01:06:48
>> Well, in those days, so my first
01:06:49
professional job paid me $10,000 a year
01:06:52
and I saved 5,000. Yeah, I saved half of
01:06:54
it. Going back to this point of
01:06:56
compounding and how how important it is
01:06:59
to start investing in things that will
01:07:01
offer you compounding returns.
01:07:04
>> If you started investing $500 per month
01:07:09
and you got an annual return of 8%
01:07:12
because you're investing in some of the
01:07:13
things that we'll talk about in a
01:07:14
second.
01:07:16
>> In 35 years
01:07:19
you will be a millionaire. You'll have
01:07:21
more than a million dollars. You'll have
01:07:23
1.043 043 million
01:07:27
>> over those 35 years you would have
01:07:28
invested about $200,000 but you would
01:07:31
have made $850,000
01:07:34
from the interest over that period of
01:07:36
time.
01:07:37
>> Well, just to be clarified, not
01:07:38
necessarily the interest, but the growth
01:07:40
cuz that 11% is not interest. It's it's
01:07:44
growth. Some of it might be uh dividends
01:07:46
in the case of which is a kind of a form
01:07:48
of interest you can think of but it's
01:07:50
not just just to be technically correct
01:07:54
right which is which is interesting. So
01:07:57
if I was when I was born if my parents
01:08:01
had put $500 a month away in a
01:08:04
investment that we'll talk about now
01:08:06
>> by the by the age I am now I would have
01:08:09
roughly been a millionaire just from
01:08:11
them putting $500 a month away from me.
01:08:13
Right.
01:08:14
>> Pretty crazy.
01:08:15
>> Yeah. But that's the power of
01:08:17
compounding. I mean, the, you know, it's
01:08:19
it's very gratifying to me that twice a
01:08:22
year I I'm a guest lecturer for a friend
01:08:24
of mine who's a professor at uh
01:08:26
University of Colorado in Boulder. And
01:08:29
it's always fun to talk to her students
01:08:31
because they're exceedingly bright. They
01:08:32
ask great great questions and it's just
01:08:34
stimulating for me. But I think about
01:08:38
these young people. I mean, these are
01:08:39
18, 19, 20 year olds who are thinking
01:08:42
about doing this stuff at that age. And
01:08:46
the remarkable amount of time that they
01:08:49
have for this compounding to work for
01:08:51
them, it's it's just incredible. They
01:08:53
are going to be so much better off than
01:08:56
if not. Um, so let me throw out a tip
01:09:00
for for you if and when you ever have
01:09:02
kids and for anybody who's listening who
01:09:04
has has young children, you know, as
01:09:06
your kids start to grow and hopefully
01:09:10
they get part-time jobs, right? They
01:09:12
start whether it's shoveling snow or
01:09:15
busting tables at a local restaurant or
01:09:17
whatever it is and they start earning
01:09:19
some income. Well, you can take that
01:09:22
income and up to I think it's $7,000 is
01:09:26
the limit now. Put that in a Roth IRA
01:09:30
which will never be taxed. It will grow
01:09:33
tax-free forever and they're going to be
01:09:37
by definition because they're making
01:09:38
almost no money in in they're not paying
01:09:40
any income tax. So, you don't need any
01:09:42
any deduction from that. And it doesn't
01:09:45
have to be their money. So, let's say
01:09:47
your kid makes $3,000 during the course
01:09:49
of a year.
01:09:51
you can take $3,000 and fund a Roth IRA
01:09:54
for them. Imagine just if they never
01:09:58
added anything other than that, you
01:10:00
know, you do that until they they get
01:10:02
out of college or whatever. You know,
01:10:05
that baseline is going to grow tax-free
01:10:07
for an extended period of time. That's
01:10:10
one of the great keys to wealth building
01:10:12
is just time. And and is that advice
01:10:16
that you still believe in that people
01:10:17
should be saving 50% of their income?
01:10:20
>> Yeah, I think it's a good rule of thumb.
01:10:21
It gets you to financial independence in
01:10:23
a pretty reasonable depending on what
01:10:25
the market does in say a 10 to 15 year
01:10:29
time period. The push back that you
01:10:31
might anticipate is from people who say
01:10:32
that's impossible. Nobody can save 50%
01:10:34
of their money. Just that's that's
01:10:36
that's silly. And I'm sorry, but I've
01:10:40
did it and I've now at this point I've
01:10:41
known countless people who've done it.
01:10:43
So, it's certainly you may choose not to
01:10:46
do it, but it's certainly possible.
01:10:48
>> Let's say you're earning $40,000
01:10:52
a year, which is the low end,
01:10:55
>> the average medium. So, that would be
01:10:57
let's say $3,000 a month.
01:10:58
>> Mhm.
01:10:59
>> So, you're you're earning $3,000 a
01:11:02
month. You're then going to pay tax on
01:11:03
that. This is what my my math says here.
01:11:05
It says very little tax would be would
01:11:07
be paid after all of your taxes. And so
01:11:11
you're still you've still got roughly
01:11:12
$3,000 a month, about 2,900 um which you
01:11:15
you would take home.
01:11:18
>> I so I would need to save 1,400 of that
01:11:21
which means my total expenses need to be
01:11:23
1,400 a month. So first thing I need to
01:11:25
do is live somewhere very very
01:11:29
affordable
01:11:30
>> depending where I live, you know, what
01:11:31
city I live in.
01:11:32
>> Then I need to basically radically
01:11:34
reduce my my expenditure, right,
01:11:36
>> to be able to save 50% a month. And I
01:11:38
guess the question is most people
01:11:41
would assume they wouldn't like that
01:11:42
lifestyle.
01:11:44
They wouldn't like to prepare their own
01:11:45
lunches every day. They wouldn't like to
01:11:47
not have a Starbucks coffee. They
01:11:48
wouldn't like to live in a small small
01:11:50
shoe box and probably socialize a lot
01:11:52
less.
01:11:54
>> So I guess that's the key rebuttal is I
01:11:56
guess yeah, it's possible.
01:11:59
There's a chapter that talks about this
01:12:00
with an even lower uh because when I was
01:12:02
writing the book um I think I used a
01:12:05
$25,000
01:12:07
annual income. So the math works is is
01:12:11
it easy? No. But it goes back to
01:12:13
fundamentally
01:12:15
what is it that you want? You said well
01:12:17
I may not want like that. I might want
01:12:19
to have lattes and all these other
01:12:20
things. Well it's your money. That's
01:12:23
your prerogative.
01:12:25
But time is going to happen regardless
01:12:28
of what you do. And if you say, "Instead
01:12:31
of having those things now, I'm going to
01:12:34
spend my money on buying my freedom,"
01:12:36
you will get to the point where
01:12:38
everything is free, including those
01:12:40
lattes.
01:12:41
>> So, let's talk about investing then.
01:12:44
>> Um, we have two buckets here on the
01:12:46
table for an analogy
01:12:48
>> around tax advantaged investing.
01:12:53
I'm going to take your lead on this.
01:12:55
>> Okay. So, if you dump that bucket in
01:12:57
there, I'll dump this bucket in here.
01:13:04
Okay.
01:13:06
The idea is that and I'm going to speak
01:13:10
in terms of the United States. The
01:13:12
government provides
01:13:14
savings vehicles that are tax advantage
01:13:18
to encourage people to acquire money for
01:13:22
their for their old age. Right? So in
01:13:24
the United States there's things called
01:13:26
a 401k or 403b.
01:13:30
Uh these are employer related plans
01:13:32
where you can divert part of your income
01:13:35
and the government specifies how much
01:13:37
you can divert and they won't tax you on
01:13:40
that and you put it into an investment
01:13:42
bucket into an investment account of
01:13:44
some sort. you get to choose how you
01:13:46
want to invest it, but that would be the
01:13:49
bucket. And that means that if you had
01:13:52
however much money this represents
01:13:54
uh went into your 401k or your IRA,
01:13:58
which is something you would do on your
01:14:00
own privately, which is also tax
01:14:02
advantaged, right? So, in the example
01:14:06
that you've just handed me, they're
01:14:09
saying that this would represent
01:14:11
$20,750,
01:14:13
which is uh before tax and with a match.
01:14:16
So, 401ks companies will frequently
01:14:19
match part of your contribution. So, you
01:14:22
say, "I'm going to do 5%." And they
01:14:24
might say, "Okay, we're going to match
01:14:25
the first 2% or whatever," which you
01:14:27
should always take advantage of because
01:14:29
that's that's free money. So this is not
01:14:32
taxed immediately and you invest this
01:14:35
money. Let's say you invest it in a
01:14:36
total stock market index fund which
01:14:38
would be my recommendation. So you get
01:14:41
to invest all this money in your total
01:14:42
stock market index fund. If instead you
01:14:45
do it after you pay taxes on the same
01:14:48
amount of money, well, by the time you
01:14:50
pay taxes, you're going to have about
01:14:52
half of what it was before, which is
01:14:54
$10,340,
01:14:57
which is what represented in here
01:14:59
roughly half the number of of gold
01:15:01
coins. Now, both of these things grow at
01:15:05
the same rate because we've invested
01:15:06
them in the same thing, right? So,
01:15:08
they're making 11% a year, whatever it
01:15:10
is. So this is obviously going to grow
01:15:12
into a much bigger pile at the end of 30
01:15:15
years or 40 years or whatever it is than
01:15:18
this is because you're starting with a
01:15:20
bigger pile. So that's the advantage of
01:15:24
deferring taxes. Now, the thing that
01:15:28
people tend not to think about or talk
01:15:31
about that's incredibly important is
01:15:34
that it is not avoiding taxes. It is
01:15:38
deferring taxes. Which means that
01:15:41
ultimately the government is going to
01:15:43
want their money. They're going to want
01:15:45
their cut. And typically that happens, I
01:15:49
think in the United States the age is 73
01:15:52
or something when you're required to
01:15:54
begin taking money out of these
01:15:56
accounts. It's called an RMD, a required
01:15:58
minimum distribution.
01:16:01
So, if you haven't started withdrawing
01:16:04
money from these accounts, by then the
01:16:06
government will require you to begin on
01:16:09
a schedule based on your life expectancy
01:16:11
to start pulling that money out because
01:16:14
they figure they've waited long enough
01:16:16
and now they want their cut. Okay? So,
01:16:20
it's not tax-free, it's tax deferred.
01:16:23
Important thing to understand if you
01:16:25
start taking this money out before a
01:16:28
certain age and if memory serves me it's
01:16:30
59 and a half in the US then you will
01:16:33
pay tax on it as you do whenever you
01:16:35
withdraw the money and also a penalty
01:16:38
right so they want you to keep it in at
01:16:41
least until you're 59 and a half but
01:16:44
they want you to start taking it out at
01:16:47
some point in this case I think when
01:16:49
you're 72 or 73 or something like and
01:16:52
That's when they collect their money. So
01:16:55
you say, well, okay, if that's the case,
01:16:57
then what am I doing here? Because I got
01:16:59
to pay the taxes eventually anyway. And
01:17:02
mathematically, if your tax rate is the
01:17:04
same, it doesn't matter if you're tax
01:17:07
deferred or not. The end result of
01:17:09
amount of money that you have will be
01:17:10
exactly the same.
01:17:13
The speculation is, and it's true in the
01:17:16
vast majority of cases, that when you
01:17:18
retire and you start living on this
01:17:21
money, you start pulling it out, you
01:17:22
will be in a lower tax bracket. So, you
01:17:25
will have to pay some taxes, but you
01:17:27
won't have to pay as much as when you
01:17:29
were working and you were in a higher
01:17:30
tax bracket. So, that's the gamble
01:17:33
you're taking. Now, looking at me
01:17:36
personally as an example, this didn't
01:17:38
work out for me. So, I did IAS and 401ks
01:17:42
when I was working in my corporate
01:17:44
career. Put aside a fair amount of money
01:17:47
in them. Now, as it turns out, I'm in a
01:17:51
higher tax bracket than I have ever been
01:17:52
in because of the success of the
01:17:55
activities that I do today. I had no
01:17:58
idea that that was going to happen. And
01:18:01
now I'm at that age where I have to take
01:18:03
RMDs. So RMDs are coming out at a higher
01:18:07
tax rate for me than when I than the tax
01:18:10
benefit I got deferring it. But that's
01:18:12
unusual. Most people will benefit from
01:18:15
doing this because in their retirement
01:18:17
they won't have an income or their
01:18:18
income will be very modest and their tax
01:18:21
rate will be equally modest and it will
01:18:23
work out very nicely for them. But
01:18:25
that's basically how that works. Does
01:18:28
that make sense?
01:18:29
>> It does. Yes. And and to try and
01:18:30
summarize it um in a way that I fully
01:18:33
understand to check I understand is
01:18:35
every month when I'm paid I have an
01:18:37
opportunity before that money comes to
01:18:39
me to invest some of it and around the
01:18:42
world whether it's Japan, Switzerland,
01:18:44
India, South Korea, Germany, Australia,
01:18:45
UK, Canada, there's always some kind of
01:18:47
system
01:18:48
>> of this, right?
01:18:49
>> Yeah. So I can say okay I'm going to get
01:18:50
paid
01:18:52
$1,000 this month. I'm gonna put a $100
01:18:56
of that before I even get it into one of
01:18:58
these investment accounts. It's not
01:19:00
going to be taxed until
01:19:03
>> and your employer might match part of it
01:19:04
or all of it.
01:19:05
>> Yeah. So, my employer might also add
01:19:08
$100 to it or or part of it. That's
01:19:10
going to compound over time. I can take
01:19:13
it out whenever I want, but if I take it
01:19:14
out early, I get a penalty.
01:19:16
>> And you pay tax.
01:19:17
>> And I pay tax. But assuming that I'm not
01:19:21
going to be earning as much as I do now
01:19:22
when I'm older, when I take it out at 65
01:19:25
years old, I'm still going to pay tax,
01:19:27
but a low rate of tax.
01:19:29
>> There's no penalty at that point, but
01:19:30
and presumably you'll be at a lower tax
01:19:32
rate, right?
01:19:33
>> So it really only works if you're at a
01:19:35
lower tax rate when you're older.
01:19:36
>> Exactly. So most people work and then
01:19:39
and then they retire at a certain age
01:19:42
and that income from their job goes
01:19:44
away. So by definition, they're in a
01:19:46
much lower tax bracket. So for the vast
01:19:49
majority of people, this works out very
01:19:50
nicely.
01:19:51
>> And you talk about, you know, because
01:19:54
people will will still have to make a
01:19:56
decision what they want to invest in,
01:19:58
>> right?
01:20:00
>> Where do you think we should be
01:20:01
investing our money at this moment of
01:20:02
time? The for the average person, what
01:20:04
what should they be putting their money
01:20:05
into with everything you see happening
01:20:06
in the world?
01:20:07
>> Yeah.
01:20:08
>> You said not Bitcoin, but what where
01:20:10
should we put it?
01:20:10
>> I'm an advocate of investing in
01:20:13
broad-based lowcost stock index funds.
01:20:16
>> What is that? That is an example of that
01:20:19
is VTSAX which is Vanguard's total stock
01:20:22
market index fund. It invests in
01:20:24
virtually every publicly traded company
01:20:27
in the United States of America. That's
01:20:30
very the number of those varies, but
01:20:32
it's roughly 3,600 companies.
01:20:34
>> So you're basically investing in
01:20:35
America.
01:20:36
>> There are a lot of private companies
01:20:37
that I that I'm not invested in, but I'm
01:20:39
in every publicly traded company in in
01:20:42
the country. And that means everybody
01:20:44
from the factory floor to the CEO is
01:20:47
working to make me richer. Now, some of
01:20:50
those companies are going to do
01:20:52
extraordinarily well and they're going
01:20:54
to succeed dramatically. And because
01:20:57
this fund, as most funds like it are, is
01:21:00
cap weighted and I'll explain that in a
01:21:03
minute. The more successful the company
01:21:06
is, the more of it I will own. So cap
01:21:09
weighted simply means that the largest
01:21:12
larger the market capitalization of the
01:21:15
company is
01:21:16
>> the valuation
01:21:17
>> the valuation right the market capital
01:21:20
the larger that is the greater the
01:21:22
percentage of the fund it will
01:21:24
represent. So, you may have heard people
01:21:26
say that the top 10 companies in the S&P
01:21:30
500 have an outsized representation
01:21:35
uh percentage- wise of what they well
01:21:37
that's the reason it's it's cap
01:21:38
weighted. So, I benefit from that
01:21:41
success. Right now, if one of those
01:21:44
companies falters
01:21:46
and
01:21:48
starts failing on their execution or a
01:21:51
more aggressive, better organized
01:21:55
competitor comes along and displaces
01:21:57
them, then they will drift away. But I'm
01:22:01
okay with that because whatever that new
01:22:03
competitor is, I don't have to predict
01:22:05
who it is. I will own them. And that's a
01:22:09
process that I refer to as
01:22:11
self-cleansing. I'm very proud of that
01:22:13
term that I that I coined. So, a great
01:22:15
example of that is Sears. When I was a
01:22:18
kid, Sears, company you may not even be
01:22:20
aware of, but Sears was the Walmart and
01:22:23
Amazon of its time combined, but Sears
01:22:28
at the turn of the last century, the
01:22:30
turn of the 1800s, looked around and
01:22:32
said, you know, we have these
01:22:33
brickandmortar stores, but there are all
01:22:35
these people living out in rural areas
01:22:37
who are never going to get to our
01:22:38
brickandmortar stores. We could send
01:22:40
them cataloges. Does this begin to sound
01:22:43
familiar? And then they could send us
01:22:46
letters and money ordering things from
01:22:49
our catalog that we could then ship to
01:22:51
them. So they became, you know, Walmart
01:22:54
with the brick-andmortar stores and then
01:22:56
Amazon of his time absolutely dominated
01:22:58
for 100 years. If you had said to
01:23:00
somebody when I was first uh investing
01:23:04
in the 1970s that Sears Sears built the
01:23:09
biggest building on the planet back in
01:23:11
the '7s, what was then known as the
01:23:14
Sears Tower in Chicago. If you had said
01:23:16
Sears its days are numbered, you would
01:23:19
have been laughed at. But its days were
01:23:22
numbered because leaner, more aggressive
01:23:25
competitors came along and ate its
01:23:26
lunch. Nobody could have predicted that.
01:23:28
Certainly not me, but I didn't have to
01:23:31
if I own the index because then when
01:23:33
Walmart came along and then later Amazon
01:23:36
and Sears faded away, I own those as
01:23:39
well. That's that self-cleansing
01:23:41
process.
01:23:41
>> And just for anyone that really doesn't
01:23:43
understand this at all, you're not
01:23:44
actually having to do anything because
01:23:46
that index fund is just automatically
01:23:48
making the decisions.
01:23:49
>> Exactly. I don't have to do anything. I
01:23:51
just have to own it and I can own it
01:23:53
forever. So, if I went and I bought
01:23:56
Sears stock as an example back in the
01:23:59
day, well, whenever you own an
01:24:01
individual stock, you're going to be
01:24:03
thinking about, okay, how long am I
01:24:04
going to own this? And what is going to
01:24:07
trigger my sale of this particular
01:24:10
asset? And what I mean, what has to
01:24:13
happen to it that would make me not want
01:24:15
to own it anymore? And then, if I want
01:24:17
to get rid of it and I want something in
01:24:18
the same space, what do I buy? Do I buy
01:24:20
this new upstart Walmart? you know, do I
01:24:23
buy this Amazon that back in the 90s is
01:24:25
run by this wacko guy, Jeff Bezos, who
01:24:27
kept saying, "No, profits don't matter.
01:24:29
Profits don't matter." What who's who
01:24:31
invests in a CEO that says profits don't
01:24:34
matter? I mean, that's nuts, right? But
01:24:36
those are the kinds of things you have
01:24:37
to be have to be thinking about if you
01:24:39
own individual stocks. I don't have to
01:24:41
think about any of that owning the index
01:24:43
because if Jeff Bezos turns out that his
01:24:47
wackiness is brilliance, which it turns
01:24:50
out it was, then he's going to rise to
01:24:53
the top, which it turns out Amazon did,
01:24:56
and I benefited from that. If it turns
01:24:58
out it was just wackiness, it would have
01:25:00
just faded away as a lot of companies
01:25:01
have. But that wouldn't have mattered
01:25:04
cuz whatever succeeds, I will I will own
01:25:07
and benefit from. I was asking um the
01:25:10
research team beforehand
01:25:13
>> in the last 10 years which index fund
01:25:16
has performed the very very best
01:25:18
>> and it said that the NASDAQ 100 which is
01:25:23
very techheavy
01:25:24
>> right
01:25:26
>> has performed at almost 20% a year for
01:25:28
the last 10 years and when I think about
01:25:30
what's going on in the world at the
01:25:31
moment and the advent of this new
01:25:33
technology called AI which is driving
01:25:35
everything it seems and our lives are
01:25:36
going to become way more technological
01:25:37
with robots bots and automation and full
01:25:40
self-driving. It appears to me like if
01:25:43
there was ever a great time to be
01:25:46
investing in an index fund, one should
01:25:47
aim at the very techheavy index funds
01:25:50
like the NASDAQ 100.
01:25:51
>> Mhm.
01:25:51
>> Is that is is that logical thinking or
01:25:54
is that
01:25:54
>> it's it's logical think? Yes. So first
01:25:56
of all it's logical thinking and
01:25:59
actually had you done that same analysis
01:26:02
10 years ago you would have done better
01:26:05
than than uh VTSAX right because
01:26:08
technology has absolutely dominated for
01:26:11
the last 10 years it is a reasonable
01:26:13
speculation that that will continue into
01:26:16
the future.
01:26:17
>> So why don't you
01:26:18
>> for some period of time?
01:26:19
>> Well because the truth is that
01:26:23
technology has not always dominated.
01:26:25
We're not going to go backwards though,
01:26:26
are we?
01:26:27
>> Well, no, but the point is that that it
01:26:29
changes. So, just like in my Sears
01:26:32
example, Sears would have been at the
01:26:34
top of the index for a long time and
01:26:36
then it drifted away and got replaced.
01:26:39
So, that's an individual stock. Sectors
01:26:42
of stocks have also done that over time,
01:26:47
right? So, right now the dominant sector
01:26:49
is tech. Wasn't always the case. might
01:26:53
not always be the case in the future. I
01:26:55
don't know cuz I can't see the future. I
01:26:58
understand people who would say that
01:27:01
clearly that's the best bet to go with
01:27:03
tech and your crystal ball is clearer
01:27:07
than mine and you might very well be
01:27:09
right. But I don't have a crystal ball
01:27:12
and I don't have to worry about that
01:27:15
owning the total stock market because if
01:27:17
you're right, I will still benefit very
01:27:19
nicely. Thank you very much.
01:27:21
If you're wrong,
01:27:23
whatever replaces it, I will own.
01:27:26
>> So, you have an analogy you came up with
01:27:29
that involves beer and a glass,
01:27:31
>> right? Probably came up with a drinking
01:27:33
beer. We go ahead.
01:27:34
>> Well, show me show me the analogy.
01:27:37
>> So,
01:27:39
thanks for not Whoa.
01:27:40
>> Oh, here we go.
01:27:41
>> I was going to say, thanks for not
01:27:42
shaking up the can.
01:27:44
>> So, beer, right? So, I'm pouring it
01:27:47
right down the middle. So, we get a nice
01:27:49
thick head. That's even a little thicker
01:27:52
than I hoped for. Okay. So,
01:27:56
imagine for a second. Right now, we have
01:27:58
a glass and we can see exactly how much
01:28:00
foam there is and how much actual beer
01:28:03
there is, right? But imagine this was
01:28:06
that I poured it into this vessel
01:28:08
instead where we couldn't see that.
01:28:11
The analogy is the stock market. So,
01:28:13
when most people think of the stock
01:28:15
market and when most people turn on uh
01:28:19
CNBC, they turn on, you know, they look
01:28:22
at at at the investment news and what
01:28:24
have you, it's all this churning and
01:28:27
trading, you know, what stocks are hot
01:28:29
now, what stocks are rising, what stocks
01:28:31
are falling, what's, you know, it's all
01:28:32
this trading. That's not the simple path
01:28:35
to wealth. That's the foam, right? So
01:28:39
the value in a stock, whatever the stock
01:28:43
is, what makes up the price of that
01:28:46
stock is a combination of two things. It
01:28:48
is the beer and it is the foam. And the
01:28:53
problem is unlike that glass,
01:28:56
it's in a vessel like this. So it's hard
01:28:59
to see exactly how much beer there is as
01:29:02
opposed to how much foam there is.
01:29:04
>> And the beer is the value. The foam is
01:29:06
the speculation.
01:29:07
>> Exactly. The beer is the fundamental
01:29:10
operating value of the company, right?
01:29:13
The sales and the expenses and the money
01:29:16
that's left over that you call profits,
01:29:18
right?
01:29:18
>> Yeah.
01:29:19
>> So that's the beer. The foam is what the
01:29:22
market
01:29:23
determines that's worth at any given
01:29:26
moment based on emotion,
01:29:29
>> based and hype and speculation and fear
01:29:32
and greed. And so up here, right, is the
01:29:36
total value of the stock,
01:29:38
>> right? Exactly. The total value of the
01:29:40
stock. But this is all foam that can
01:29:43
come and go very quickly, right? So let
01:29:46
think about Tesla for an example, right?
01:29:48
Tesla has a lot of foam cuz a lot of
01:29:53
people are speculating about the great
01:29:56
things Tesla's going to do in the
01:29:57
future. robotic cars, humanoid robots,
01:30:01
you know, all these kinds of things
01:30:02
which very may well come to pass. I
01:30:04
mean, Elon Musk is a stunningly
01:30:07
brilliant guy. So, who knows? But that's
01:30:12
the speculation. That's the foam. The
01:30:14
underlying beer of Tesla, the actual
01:30:16
operating company, does not justify the
01:30:20
price of the stock. I mean, the the PE
01:30:22
ratio of Tesla, you can look it up, is
01:30:25
some huge number, right? So there's a
01:30:28
lot of speculation, a lot of foam in
01:30:30
Tesla. Now if things go to plan, then
01:30:34
that foam will become as as in our
01:30:37
example, you notice the foam is
01:30:39
dissipating. We're getting more and more
01:30:40
beer. If things go to plan for Tesla,
01:30:42
that's what will happen. The foam will
01:30:44
will eventually settle out into more and
01:30:46
more beer, and Tesla will justify that
01:30:51
high price and maybe then some. And I
01:30:53
guess Warren Buffett's greatness, if
01:30:55
I've interpreted his writing correctly,
01:30:57
and why he was often considered as the
01:30:59
greatest investor of all time, was he
01:31:00
was able to pay for stocks where it was
01:31:04
mainly beer. And he paid at the price of
01:31:06
the beer, not for the foam.
01:31:08
>> Or he he looked for times where the
01:31:12
sentiment was so negative that he was
01:31:15
actually paying a little less than the
01:31:18
price of the beer. Benjamin Graham who
01:31:21
who wrote uh the intelligent investor
01:31:23
who was a mentor to Warren Buffett
01:31:26
uh basically said what you should do is
01:31:28
look for value companies and try to
01:31:30
determine where the beer is and then try
01:31:33
to see if you can get a buying
01:31:35
opportunity watch it where you can buy
01:31:37
it for less than the actual value of the
01:31:40
operation. That's ideal. And in those
01:31:43
days when there wasn't so much
01:31:45
information freely available that was
01:31:47
probably a little easier to do. What
01:31:49
Warren Buffett has said since then and
01:31:51
that's a great foundation if you're
01:31:53
going to pick individual stocks. But
01:31:55
what Warren Buffett has said since then
01:31:58
is he learned and I think and you don't
01:32:00
quote me on this but I think it was
01:32:02
Charlie Munger who actually made this
01:32:03
point to him that it's going to be very
01:32:07
very hard in this day and age even when
01:32:10
they started back in the 60s to find
01:32:13
companies where you can actually buy it
01:32:15
for less than the actual beer value. So
01:32:20
don't try to do that. Just try to find
01:32:23
companies that you can pay a fair price
01:32:25
for that have a lot of beer in the mix
01:32:29
that are mostly beer. Because if you buy
01:32:32
those companies, they are by definition
01:32:35
very well-run companies, strong brands,
01:32:39
big moes around them, which makes them
01:32:41
hard to compete.
01:32:42
>> I guess to do this, you're going to have
01:32:44
to have a framework for valuing a
01:32:45
company.
01:32:46
>> Exactly. And you're going to have to
01:32:47
have great discipline,
01:32:49
>> which is
01:32:49
>> Yeah.
01:32:50
>> hard. And that's what you know as Warren
01:32:52
Buffett said I was blessed with an
01:32:54
ability to allocate capital effectively
01:32:58
and that's basically what he has done.
01:33:01
He's has capital and he is got the
01:33:05
ability to look at different companies
01:33:07
and say of all the different companies I
01:33:09
could allocate capital to he's pretty
01:33:12
skilled at at picking the ones that are
01:33:14
are the best bets. One of the things
01:33:16
that I really admired about Warren
01:33:17
Buffett was his ability to do nothing,
01:33:21
>> which is one of the key things because
01:33:23
that goes back to Charlie Munger's
01:33:25
thing, don't get in the way of your
01:33:26
compounding, right?
01:33:27
>> And there has been recent times where I
01:33:29
think we can all think of where
01:33:31
using your beer analogy, something
01:33:33
happens in the world and the true value
01:33:37
of a company
01:33:39
is higher than the selling price. I.e.
01:33:41
If you go back to March 2020 during the
01:33:43
the market selloff when the pandemic
01:33:45
happened and everybody panicked, Amazon,
01:33:47
for example, the stock briefly dropped
01:33:49
below roughly to about $1,500
01:33:52
per share.
01:33:53
>> Mhm.
01:33:54
>> Well below its intrinsic value um
01:33:56
because people were panicking, right?
01:33:58
>> Uh and then it quickly rebounded again
01:34:00
past $3,000
01:34:02
a share. So theoretically, if you had
01:34:05
noticed that drop, you could have made a
01:34:08
100% return on your money. Um,
01:34:10
>> and by the extension, the whole market
01:34:12
did that.
01:34:12
>> The whole market dropped, too. Yeah.
01:34:14
>> So, you could have done that with your
01:34:15
index fund. This is why if you panicked
01:34:17
and sold.
01:34:18
>> Yeah.
01:34:19
>> Let's say you owned Amazon or you owned
01:34:21
VTSAX and you panicked and sold, well,
01:34:24
you would have you would have lost
01:34:26
everything and then it it recovered. So,
01:34:29
it works both ways. That's why I said
01:34:31
earlier in our conversation, you you
01:34:33
have to stay invested so that the dip
01:34:36
doesn't matter. and if anything take
01:34:38
advantage of the dip and buy more. So
01:34:40
you own Amazon, you see it dip, you say,
01:34:43
"Well, I still believe in the company. I
01:34:45
still think it's a good company and it's
01:34:46
got a good future." Or then maybe you
01:34:48
buy some more in the dip and you do
01:34:50
still better. But the important thing is
01:34:52
you don't sell when it's down because
01:34:54
there's panic in the air.
01:34:56
>> And I think this is um this speaks to a
01:34:58
broader sentiment throughout this
01:34:59
conversation which is to do what others
01:35:01
don't do. You know, and Warren Buffett's
01:35:03
famous for saying be fearful when others
01:35:05
are greedy and greedy when others are
01:35:07
fearful. But generally the sentiment on
01:35:10
social media, especially for younger
01:35:11
generations and especially for men,
01:35:12
which is supported by the data, is that
01:35:15
the way to make money is by like trading
01:35:18
crypto or by right
01:35:20
>> I mean there's so many people that sell
01:35:21
this is such a we need to address this.
01:35:23
>> You know, it's a platform.
01:35:25
>> It's a gambling. It's just gambling.
01:35:26
>> It's it's a gambling platform. And so
01:35:28
that's going, you know, people sometimes
01:35:30
say to me, you know, I'd never invest in
01:35:32
the stock market. It's just gambling. I
01:35:34
say, well, you're half right. Our foam
01:35:37
is all dissipated. But if there were
01:35:38
still foam here, I would say yes. If
01:35:40
you're doing it short-term and you're
01:35:43
playing with the foam, absolutely is no
01:35:45
different than going to Las Vegas. If
01:35:48
you're investing for the beer, it's an
01:35:49
entirely different story. And you're
01:35:51
investing for the long term. And there's
01:35:54
lots of young people that are being
01:35:56
tempted into buying a course that's
01:35:58
going to help them learn how to trade.
01:36:00
>> That's great for the people selling the
01:36:02
course.
01:36:03
>> There's such an there's such an
01:36:04
incredible like ir obvious irony to the
01:36:08
idea that I have some secret about
01:36:12
trading that's really going to make, you
01:36:15
know, that is capable of making one
01:36:16
wealthy,
01:36:17
>> right?
01:36:18
>> And I'm going to give it to you
01:36:20
>> or even sell it to you.
01:36:21
>> Why would I need to if it worked,
01:36:22
>> right? Like this is such an obvious
01:36:24
question to me. Like why would I need to
01:36:26
sell it if it worked?
01:36:27
>> It it is the obvious question. I mean,
01:36:30
you know,
01:36:30
>> and I feel sorry. I have great empathy
01:36:32
because the people that buy these things
01:36:33
are people that are desperate to get out
01:36:34
of their financial situation and they
01:36:36
run out of options and so it's very
01:36:37
compelling to hear that there's some
01:36:39
secret that you can predict the stock
01:36:41
market. It's very compelling.
01:36:42
>> You know, in another interview I I said
01:36:44
one time we were talking about this same
01:36:47
line of conversation we're having and I
01:36:48
said, you know, I blame my mother. I
01:36:52
would be a lot richer if she hadn't
01:36:54
instilled a conscience in me. You know,
01:36:57
she's cost me millions of dollars
01:36:59
instilling this conscience. I could have
01:37:01
courses. I could be, you know,
01:37:03
>> but no, I am saying that there is a path
01:37:08
that will give you great results
01:37:11
and it's a pretty well proven path at
01:37:13
this point.
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01:38:11
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01:38:13
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01:38:15
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01:39:15
Do I need a financial adviser?
01:39:17
Cuz a lot of people out listening now
01:39:19
will be thinking, "Yeah, I will figure
01:39:20
out my money situation when I have
01:39:22
enough money to pay a financial
01:39:23
adviser." Yeah, I think uh my attitude
01:39:27
is by the time you know enough to choose
01:39:30
a good financial advisor, which is no
01:39:32
easy task, you probably know enough to
01:39:35
do it on your own, at least on the
01:39:37
investing part. Now, there are life
01:39:41
kinds of decisions where maybe advisors
01:39:44
would be more useful, but again, you
01:39:47
have to be careful and and it takes you
01:39:50
you need to really educate yourself as
01:39:52
to how advisers get paid. For instance,
01:39:54
my attitudes, by the way, are colored by
01:39:56
the fact that I I hear so frequently
01:39:59
from my followers about bad experiences
01:40:02
with financial advisors. So, I have a
01:40:05
negative opinion. To be fair, I know
01:40:07
there are good ones out there, and all
01:40:08
due respect to those good ones, but
01:40:10
let's suppose you have a financial
01:40:12
advisor who gets paid based on the
01:40:16
assets under management, right?
01:40:19
>> The amount of the amount that you've
01:40:20
given them.
01:40:21
>> Exactly. Right. So, maybe it's 1%. So,
01:40:23
you give them a million dollars and they
01:40:25
get 1% a year to manage that money for
01:40:27
for you. Let's suppose you go to that
01:40:30
advisor and you say, "You know, Stephen,
01:40:33
I've I've been thinking about paying off
01:40:35
my mortgage. I've got a half a million
01:40:37
dollar mortgage on this house. It's 6%.
01:40:41
Let's say it's 5%. So, in that middle
01:40:43
range, it's 5%. I'm thinking about
01:40:45
paying it off. What do you think?" Okay.
01:40:47
Well, now Stephen has a bit of a dilemma
01:40:50
because
01:40:52
he can certainly give you the most
01:40:55
accurate financial advice he is capable
01:40:57
of giving you and answering that
01:40:58
question.
01:41:00
But if that leads him to say yes, pay
01:41:02
off the mortgage,
01:41:05
he has just reduced his income by half
01:41:10
because when you pay off that mortgage,
01:41:11
half a million dollars is going to go
01:41:13
out from his management and paying off
01:41:15
the mortgage company. So you have just
01:41:18
asked Steven to give you advice
01:41:20
potentially that is bad for Steven. Now
01:41:23
if Steven's a honorable, capable,
01:41:27
honest guy, then maybe Steven does that.
01:41:31
But let's suppose Stephen has two kids
01:41:33
in college.
01:41:35
Let's suppose Steven just bought a boat.
01:41:38
Let's suppose Steven is going through a
01:41:40
divorce.
01:41:42
Let's think about that. Maybe Steven, as
01:41:46
honest and capable and and decent as he
01:41:49
ordinarily is, has financial pressures
01:41:51
that might play a role, right? There is
01:41:54
a conflict of interest frequently. So,
01:41:57
you have to understand how your advisor
01:41:58
is being paid.
01:42:00
>> How does your portfolio look? Where have
01:42:03
you allocated your money in terms of
01:42:04
percentages? How much money do you have
01:42:06
in real estate versus cash versus index
01:42:08
funds?
01:42:09
>> Well, I don't even think about about the
01:42:11
real estate. We have this cabin in
01:42:13
Wisconsin on the lake and then we have a
01:42:15
condo in Florida. Um, they're both very
01:42:19
modest, so pretty small part of our net
01:42:21
worth. I like to buy things from a
01:42:23
position of power.
01:42:26
My stocks, I'm probably about 80% in in
01:42:30
VTSAX, total stock market index fund,
01:42:34
and probably 15% in bonds, a total bond
01:42:40
market index fund, and then the other 5%
01:42:42
in money market fund. I keep some money
01:42:45
in uh the checking account to pay the
01:42:47
bills. And to break it down a little
01:42:50
further for you, my wife and I both have
01:42:53
IAS. We have a regular IRA and a Roth
01:42:55
IRA. So there are four IAS. All four of
01:42:59
them hold VTSAX. We have taxable
01:43:02
accounts and part of that is VTSAX. Part
01:43:05
of it is the bonds.
01:43:07
>> What is a bond?
01:43:08
>> A bond is money that you have lent to a
01:43:11
company or to the government. So when
01:43:16
you buy a bond, you are essentially
01:43:18
lending money to a company or a
01:43:21
government entity. So they pay you
01:43:24
interest. So you will they companies and
01:43:28
the governments sell bonds of various
01:43:31
maturities. So they can be very short
01:43:33
like a money market fund is basically
01:43:35
very short-term bonds, you know, like 30
01:43:38
days or less, right? Which makes it the
01:43:40
equivalent of cash. But you could buy a
01:43:43
a certificate of deposit is a kind of a
01:43:45
bond. So you could buy one of those for
01:43:47
3 months or 6 months or a year, 5 years,
01:43:50
10 years, buy US treasuries going out 30
01:43:53
years.
01:43:53
>> Why would I do that instead of buying
01:43:54
the index fund?
01:43:55
>> So the index fund is stocks. It's it's
01:43:58
very stocks as we talked about big
01:44:01
growth engine, great long-term, very
01:44:03
volatile. So if you want something to
01:44:05
smooth the ride, bonds are not very good
01:44:09
for long-term growth, but they are not
01:44:10
nearly as volatile.
01:44:12
>> Are they so they're safer? short-term,
01:44:14
yes, because they're less volatile.
01:44:16
Long-term, they tend to lose value to
01:44:19
inflation.
01:44:21
Stocks, on the other hand, are riskier
01:44:23
short-term because of the volatility,
01:44:25
but long-term they outpace inflation and
01:44:28
so they are safer long term. So, it
01:44:30
depends on your time horizon is which is
01:44:33
which is safer. But traditionally people
01:44:35
think of bonds as being safer and really
01:44:39
the way you should hear that is less
01:44:41
volatile and stocks being riskier.
01:44:44
You should hear that is more volatile.
01:44:46
>> So is it broadly true to say that if we
01:44:48
exclude your real estate 70% of your
01:44:51
assets are in stocks, 20% in bonds and
01:44:54
5% in cash?
01:44:55
>> Probably more 80 155.
01:44:58
>> 80% stocks, 15 bonds cash. Okay. It's
01:45:02
interesting because um
01:45:03
>> which would be considered very very
01:45:05
aggressive and I wouldn't necessarily
01:45:08
recommend that for most people my age.
01:45:11
>> I thought it would be curious cuz we now
01:45:13
have this new alien amongst us called
01:45:14
AI. I thought it would be curious if I
01:45:17
went on Chatt and I asked Chatt the
01:45:19
question. I'm a normal person who earns
01:45:22
$50,000 a year. I want to be financially
01:45:25
free in the future. Give me a one-s
01:45:27
sentence answer based on all of the
01:45:30
wisdom in the world taken from every
01:45:33
expert in investing ever.
01:45:35
>> Why? I know what the right answer is. I
01:45:37
don't know what the answer.
01:45:39
>> What do you think it's going to say?
01:45:40
>> Read the simple path of wealth. I don't
01:45:42
think that's what it's going to say, but
01:45:43
that's the right answer.
01:45:43
>> And the the simple path of wealth talks
01:45:45
about three principles, right?
01:45:46
>> Right.
01:45:47
>> What are those three? I'm going to check
01:45:48
it against what it says.
01:45:49
>> Avoid debt.
01:45:50
>> Yeah.
01:45:50
>> Live on less than you earn. Invest the
01:45:52
surplus. It said, "Focus on saving and
01:45:57
consistently invest in lowcost
01:45:59
broad-based index funds like the S&P 500
01:46:01
while living below your means and
01:46:03
allowing compounding to work over time."
01:46:06
I then asked another question. How do I
01:46:08
earn more?
01:46:09
>> I should sue them for mining my book.
01:46:11
>> Yeah, they probably did.
01:46:14
I said, "How do I earn more?" What do
01:46:16
you think? You know if you if you
01:46:17
thought if your daughter came to you and
01:46:19
said
01:46:19
>> earn more in a job or
01:46:20
>> I just asked a very broad question which
01:46:22
is I now and now how do I earn more was
01:46:24
my question.
01:46:26
>> I would say develop develop your skills.
01:46:29
>> Okay.
01:46:29
>> It said to earn more focus on developing
01:46:32
high demand skills.
01:46:33
>> Oh there you go.
01:46:34
>> Seek opportunities for career
01:46:35
advancement. Explore side hustles or
01:46:37
invest in assets that generate passive
01:46:38
income like real estate or dividends.
01:46:41
But I really think that you know I
01:46:42
really think there's a really important
01:46:43
part there about developing high demand
01:46:46
skills.
01:46:47
>> What are those going to be in the
01:46:48
future?
01:46:49
>> Yeah.
01:46:49
>> With AI because programming for instance
01:46:53
used to be a very high demand skill and
01:46:55
people said learn how to program. Yeah.
01:46:57
>> From what I understand in the age of AI.
01:46:59
Yeah. That's not so much.
01:47:01
>> I even think about my own life. At 18
01:47:03
years old I started learning about
01:47:06
social media. I dropped out of
01:47:07
university doing my business management
01:47:08
degree after one lecture and I started
01:47:10
learning about social media because I
01:47:12
was building a business in social media
01:47:13
and technology and although that first
01:47:15
business failed I I was 19 years old in
01:47:20
201 what 14 or something really
01:47:23
understood this thing called social
01:47:24
media which led me to spend a year as a
01:47:27
consultant flying around the world to
01:47:28
all these companies doing social media
01:47:30
one of those companies turned around and
01:47:31
said it's been so great could you turn
01:47:32
this into a company I said no I've been
01:47:34
through the founder PT of starting a 3
01:47:37
months later I said yes turned into a
01:47:39
company called social chain and that
01:47:41
changed my entire life
01:47:42
>> that worked out well
01:47:43
>> high demand skill I had even though I
01:47:46
failed I had this high demand skill that
01:47:48
was honestly at the time paying me
01:47:50
ÂŁ70,000 a month
01:47:51
>> you probably had it because you went
01:47:52
through the process of failing
01:47:54
>> yes
01:47:54
>> failure is you know it used to be in
01:47:56
some cultures that if you failed once
01:47:58
that was it you were a pariah nobody
01:48:00
would even look at you anymore failure
01:48:03
in our culture is just a stepping stone
01:48:06
I've heard venture capitalists say they
01:48:08
won't even look at an entrepreneur to
01:48:10
fund if they haven't failed at least
01:48:11
once.
01:48:12
>> The advice I'd now give to my kids based
01:48:14
on that is I would ask if my kids came
01:48:16
to me and said, "Dad, what should I go
01:48:17
learn?" I would say
01:48:20
go and work for a startup. I said
01:48:23
startup because you're going to be very
01:48:25
close to the CEO and founder because
01:48:27
there's going to be less desks. So,
01:48:28
you're going to be closer to the
01:48:29
proximity. That is failing at the
01:48:32
cutting edge. So if it's AI, I'd say go
01:48:35
work for an AI startup. I I probably not
01:48:37
going to work out. You're probably going
01:48:39
to be the company will be bust in a
01:48:40
couple of months time, but you're going
01:48:42
to be so close to the failure.
01:48:43
>> You will learn so much.
01:48:45
>> Yes.
01:48:45
>> I wish somebody had given me that
01:48:47
advice.
01:48:47
>> And that's that's like in a way I guess
01:48:50
roundabout way. What I did is I started
01:48:52
a company that failed at the very
01:48:54
forefront of a wave coming into shore,
01:48:57
which meant that as I hit, you know, as
01:48:59
the wave crashed down and I was left
01:49:00
there on my surfboard, I now had this
01:49:02
high demand set of skills that people
01:49:04
were like begging me for, which set
01:49:07
myself up. And frankly,
01:49:09
>> the D of a CEO would not be successful
01:49:12
had I not spent the previous 10 years
01:49:15
understanding how social media, content
01:49:17
creation, growth worked.
01:49:21
Is there a favorite story in this book
01:49:24
of yours?
01:49:25
>> Well, there's so many great ones. So,
01:49:27
>> share some.
01:49:28
>> I already I already alluded to my
01:49:30
favorite one, which is my friend Tom.
01:49:32
You know, because he has I mean, Tom was
01:49:34
a guy who got to the age of 62. He'd
01:49:38
been through multiple divorces. He lost
01:49:41
his house to foreclosure. He lost his
01:49:43
job. He was broke. He went bankrupt. And
01:49:47
yet, his life has turned out pretty
01:49:49
well. He's an extraordinarily happy guy.
01:49:52
That's my favorite story. But the one of
01:49:56
the reasons I like this book so much and
01:49:58
one of the reasons candidly I did it is
01:50:00
if you read through it, you will find
01:50:02
there are some stories from people who
01:50:05
were tech bros, right, who made big
01:50:07
incomes and they read the simple path to
01:50:09
wealth and applied and it worked very
01:50:11
well for them. But there are many, many
01:50:14
more stories of people who have
01:50:16
accomplished this from much more humble
01:50:18
beginnings. Give me an example of
01:50:20
>> I have a very good friend of mine, high
01:50:22
school buddy. I don't think he's ever
01:50:24
made more than $40,000 a year. He is
01:50:27
financially independent because he
01:50:30
followed the basic principles that I
01:50:32
talk about in that book. I have a
01:50:34
different friend and he was in the
01:50:35
financial business. He was living in
01:50:37
Chicago and over lunch he told me that
01:50:40
his Christmas bonus had come in at
01:50:42
$800,000.
01:50:43
That's back in the mid '90s when that
01:50:45
was real money, right?
01:50:47
And he was already making, I don't know,
01:50:49
a million dollars a year or whatever it
01:50:50
was, big income. And he was broke.
01:50:55
And you see, most people listening this
01:50:58
thing, I said, "What are you talking
01:50:59
about? This guy got a bonus for 8.
01:51:01
People paid me $800,000 for a year. I'd
01:51:03
be done forever, right? And that'd be my
01:51:06
nut. I'm good. How can he be broke?"
01:51:08
Well, when you listen to him talk about
01:51:11
the house, the cars, the schools, and
01:51:15
you start doing the math, you realize
01:51:17
that no, his income is not enough. He's
01:51:21
barely barely making it. So, here's a
01:51:24
guy with a big income who is, unless he
01:51:27
changes his ways, is never going to be
01:51:29
financially independent. Financially
01:51:31
independent. Here's my guy with a tiny
01:51:33
income comparatively who got there. I've
01:51:37
come to believe that a large income
01:51:41
actually can be an impediment to
01:51:44
accomplishing it. And my reasoning for
01:51:46
this is that I think people who have a
01:51:48
large income are much more likely to be
01:51:51
drawn into the competing with the
01:51:53
Joneses scenario because they associate
01:51:55
with other people have large incomes and
01:51:57
they're all driving a certain car,
01:51:59
living in a certain neighborhood,
01:52:01
sending their kids to certain schools
01:52:03
and that probably becomes very hard to
01:52:05
disengage with and making it perhaps
01:52:09
even less likely that they are going to
01:52:12
decide to spend a large portion of their
01:52:14
income on buying their freedom. Whereas
01:52:17
the people who make less money probably
01:52:19
don't have those same social pressures
01:52:21
and are more readily able to do it.
01:52:25
So starting from humble beginnings is no
01:52:27
obstacle and that's was the point of
01:52:29
doing Pathfinders.
01:52:31
>> Interesting.
01:52:33
>> It does track that. I think the
01:52:36
goalposts continue to move in different
01:52:37
ways and
01:52:38
>> yeah,
01:52:39
>> I guess you go from competing to the
01:52:41
Joneses to competing with the size of
01:52:43
someone else's yacht, which is all
01:52:46
slippery slopes to bad places
01:52:47
>> or your own or your own demons
01:52:51
as we talked about earlier, right?
01:52:52
>> Yeah. You mentioned a word in there as
01:52:54
well. You mentioned I think you were
01:52:55
talking about your friend Tom. Tom had a
01:52:56
divorce.
01:52:57
>> Multiple divorces. Yeah.
01:52:59
>> I
01:53:00
>> which is bad for your wealth.
01:53:02
>> Yeah. I didn't real I didn't I didn't
01:53:04
realize this cuz I've never been through
01:53:05
one before. Um I spoke to James Ston on
01:53:08
the show who's a divorce lawyer who kind
01:53:10
of opened my eyes to it. But actually I
01:53:13
had a private conversation with a friend
01:53:14
here in New York City, I'd say a couple
01:53:17
of months ago who's going through a
01:53:18
divorce and he he sat me down and he
01:53:21
talked me through the specific
01:53:23
consequences of of divorce that he's
01:53:26
going through.
01:53:27
>> He said to me, he's a very successful
01:53:28
person. I reckon he's probably worth 500
01:53:30
million, right? He said the divorce
01:53:33
proceedings have now dragged on for five
01:53:36
or 6 years. So I'm I'm having to go and
01:53:39
see lawyers all the time. And he said to
01:53:41
me as well that he is paying for her
01:53:43
lawyer which I was I didn't really
01:53:45
understand. But he was like no I have to
01:53:46
also cover her lawyer costs because you
01:53:49
know I'm the the bread winner so she
01:53:51
doesn't have money so I'm covering her
01:53:52
lawyer costs which is what I have to do.
01:53:54
And he said the law firm have gone from
01:53:56
being a very very small practice in
01:53:58
those six years. Now they have a massive
01:54:00
building and he goes, "I know it's my
01:54:03
money. I bought it. I bought it."
01:54:04
>> He literally is like, "I have paid for
01:54:06
her lawyer and now they're doing really
01:54:07
really well and they're milking this
01:54:09
this case. They're drawing it out
01:54:10
because they have no incentive to this
01:54:13
to this ending." Yeah.
01:54:14
>> So he's like, "I've spent tens of
01:54:15
millions on her lawyer who is basically
01:54:17
dragging me. Um, and now they've got
01:54:20
this massive building." What else did he
01:54:21
say to me? He said, "Because some of my
01:54:24
assets are subjective in value, like my
01:54:27
company, her lawyer is inflating the
01:54:30
price of my assets because she's going
01:54:32
to get half of whatever they can
01:54:34
convince a judge my assets are worth."
01:54:36
So he, you know, for example, his
01:54:37
business might be worth 100 million, but
01:54:39
the lawyer is making the case to the
01:54:41
judge that it's worth 500 million so
01:54:43
that she gets 250 million. He also said
01:54:46
to me,
01:54:46
>> which really isn't there,
01:54:47
>> which really he doesn't have, right? And
01:54:49
then he was saying to me, he goes, you
01:54:50
know, I bought this particular stock.
01:54:52
>> So he is, I'm sorry to interrupt you,
01:54:53
but now he's forced to fight it.
01:54:55
>> He's fighting.
01:54:56
>> It's not like he could just say, okay,
01:54:57
she can have half.
01:54:58
>> Yeah.
01:54:59
>> Because this is a judgment
01:55:01
that is going to create a a an
01:55:03
obligation on his part for assets that
01:55:06
don't actually exist.
01:55:07
>> So it's more than half.
01:55:08
>> She could end up taking 60 70. And the
01:55:11
other thing he said to me, which was
01:55:12
quite sad, he was like, you know, I was
01:55:13
one of the f He was one of the early
01:55:14
investors in a big company that we all
01:55:16
know. and um he said to me, I bought
01:55:20
that stock 15 20 years ago. It's
01:55:22
actually quite emotional to him that he
01:55:23
was so early in back in the company and
01:55:26
now he's forced to sell that. So he has
01:55:28
to liquidate investments he made 20
01:55:31
years ago because again she's entitled
01:55:33
to half
01:55:33
>> and that'll be a huge tax hit.
01:55:35
>> A huge tax hit,
01:55:36
>> right? And I think some people don't
01:55:38
realize that wealthy people can
01:55:42
get a loan against that stock without
01:55:45
ever having to sell it.
01:55:47
>> So he's probably, if he's wrong, he's
01:55:49
probably got a big loan against that
01:55:51
stock,
01:55:52
>> right?
01:55:53
>> Probably a 50% loan. So, just for anyone
01:55:55
that doesn't understand this, because I
01:55:56
only understood this in the last couple
01:55:57
years where where I started doing
01:55:58
similar things, is if the stock is worth
01:56:00
a h 100red million, he can get 50
01:56:02
million tax-free from a bank just by
01:56:05
keeping that stock there and really
01:56:06
never have to pay it back because it's
01:56:07
such a great stock. Um, and it was also
01:56:12
just looking in his face and just seeing
01:56:14
the stress and the toll of having to go
01:56:15
to court all the time and fight this
01:56:17
thing for six or seven years that I
01:56:19
thought, wow, we we give people
01:56:21
financial advice all the time about the
01:56:23
best stocks to pick or invest in index
01:56:25
funds. We don't talk enough about the
01:56:28
how divorce can just destroy your life.
01:56:31
>> You know, you have to be so careful in
01:56:32
choosing your spouse. I've had push back
01:56:35
on that and people say, "Well, then
01:56:37
you're choosing your spouse is not a
01:56:38
financial decision. It's, you know, it's
01:56:40
emotional, it's romantic, it's well,
01:56:42
yeah, it's all those things, but it you
01:56:44
better take finance into account for all
01:56:47
the reasons that we're discussing." This
01:56:49
also, by the way, loops us back to an
01:56:50
earlier part of our conversation where
01:56:53
does money buy happiness? Does, you
01:56:55
know, being richer,
01:56:57
is that always necessarily better? Well,
01:57:00
this guy is more of a target because of
01:57:02
his wealth than he would be if he were.
01:57:04
So, is his money really making him
01:57:07
happier at this point in his life? Yeah,
01:57:08
probably not so much, you know.
01:57:11
>> You know, and he's he's going to be fine
01:57:12
either way, like sure, you know, um
01:57:14
which is a point worth saying of nuance,
01:57:17
but also and the other point of nuance
01:57:18
worth saying is that
01:57:19
>> he's going to be fine financially, but
01:57:20
emotionally it's he's still going to go
01:57:23
and she's probably going through it too
01:57:24
on the other side.
01:57:26
>> Yeah. And the other point of nuance here
01:57:28
is that she did raise the four or five
01:57:32
the the three or four kids
01:57:35
>> while he was off building the business
01:57:37
for, you know, 20 odd years. So, one
01:57:39
could argue that he wouldn't have that
01:57:41
wealth without her being at home to look
01:57:43
after the kids and she'd made huge
01:57:44
sacrifices to her own career,
01:57:46
>> right?
01:57:47
>> So, you know, there's balance. But I I
01:57:49
just think with um
01:57:51
James Ston said to me, even if you don't
01:57:53
get a prenup,
01:57:55
there's still a prenup. You either use
01:57:56
the government's prenup,
01:57:58
>> which is
01:57:59
>> or you create your own,
01:58:00
>> or you create your own. Either way,
01:58:01
there's a prenup.
01:58:02
>> Absolutely.
01:58:03
>> Do you want to let some judge decide
01:58:05
>> or do you want to be intentional before
01:58:07
you get married with your partner about
01:58:09
how things will be split?
01:58:11
>> And even when I think about my partner
01:58:12
at the moment, and we're probably going
01:58:13
to get married soon.
01:58:15
>> Congratulations.
01:58:15
>> Thank you. I haven't proposed just yet,
01:58:17
but I'm working on it. Don't tell her
01:58:18
that.
01:58:18
>> We We just let the secret out.
01:58:20
>> She doesn't She doesn't WATCH THIS
01:58:21
ANYWAY.
01:58:23
>> Someone's going to do
01:58:24
>> Wait a second. But I'm on this time, so
01:58:26
this is the one episode she's going to
01:58:28
watch.
01:58:29
>> True.
01:58:29
>> Well, I'm very fortunate as if this
01:58:31
spring I will have been m married 44
01:58:33
years.
01:58:33
>> Damn.
01:58:34
>> And I I tell people I I married my wife
01:58:38
out of the gate. Why wait? Do you have a
01:58:41
framework for choosing the person or for
01:58:44
sustaining for 44 years? Cuz I'm what,
01:58:46
six, seven years in with my girlfriend,
01:58:48
but you got 44 years in.
01:58:50
>> Funny story about that is people used to
01:58:54
ask me, did you and Jane sit down and
01:58:56
discuss money before make sure you were
01:58:58
on the same page financially before you
01:59:00
got married? And I always used to say,
01:59:03
you know, it's a great idea. You should
01:59:05
do that. But no, we never did that. I
01:59:07
just I just got lucky. you know, we
01:59:09
never talked about it, but as it
01:59:11
happens, we got married and we were
01:59:13
very, very compatible financially, which
01:59:15
we are, but just got lucky. Well, I told
01:59:18
that story in front of her one time and
01:59:21
she leaned back in her chair and she
01:59:23
said, "What are you talking about? On
01:59:25
our first date, you said to me, you need
01:59:28
to be saving 50% of your income." You
01:59:30
said, "What do you mean we never talked
01:59:32
about money?"
01:59:34
I guess that's such a natural part of my
01:59:36
persona. I didn't even remember doing
01:59:37
it.
01:59:38
>> Interesting.
01:59:40
>> My last question for you is about
01:59:42
regret.
01:59:43
You said you're 75.
01:59:44
>> I am.
01:59:45
>> What are your biggest regrets?
01:59:48
>> So, I I think regrets are are tricky and
01:59:51
and I will I'll answer your question
01:59:54
directly and it's a couple of things
01:59:56
that or at least one thing that occurs
01:59:58
to me that might be surprising.
02:00:00
The reason they're tricky is because
02:00:02
there is an assumption like you re you
02:00:04
regret doing A and you think if only I'd
02:00:07
done B, things would be better. But you
02:00:10
don't know that that's true. But you
02:00:11
might say, "Boy, I regret starting that
02:00:13
company that failed because it was a
02:00:15
failure." Well, yeah, but it led to
02:00:17
something much bigger. You learned so
02:00:19
much. Now maybe if you'd said instead of
02:00:23
starting that company that failed, maybe
02:00:26
I took this highpaying job and and I
02:00:29
worked my way up through the corporate
02:00:30
organization. And you'd be saying there,
02:00:33
you know, you'd be sitting at some high
02:00:35
executive level in this corporation and
02:00:37
looking back and saying, "Wow, am I glad
02:00:39
I didn't do that startup that failed,
02:00:43
right?" And yet you're so much further
02:00:44
ahead now than if you So who knows? Who
02:00:48
knows what choice you made that appears
02:00:50
to be the wrong choice as to whether it
02:00:53
really was. Maybe it was exactly right.
02:00:55
Maybe things would have turned out
02:00:56
better, maybe they wouldn't. So, I'm
02:00:58
very hesitant to look back on. There are
02:01:00
many things I can look back on and say,
02:01:02
"Gee, I do wonder what if I'd gone down
02:01:06
the right path instead of the left path.
02:01:08
What would that have looked like?" But
02:01:10
there's no guarantees it would look
02:01:12
better and my life has been pretty damn
02:01:13
good. So, in that sense, I have no
02:01:16
regrets.
02:01:17
Two regrets I do have, very personal
02:01:20
regrets. I don't I've never shared these
02:01:22
publicly.
02:01:24
When I was a kid,
02:01:27
my father was a very handy guy. He loved
02:01:31
building things, working on the house,
02:01:32
that kind of stuff.
02:01:34
I was not that kind of kid. And I don't
02:01:37
know, I was eight or 10 years old at one
02:01:39
point. And for my birthday or Christmas,
02:01:42
I don't remember, he brought me a bought
02:01:45
me a jigsaw, which is a for people who
02:01:49
don't know, it's a it's an electric saw.
02:01:51
It's got a little blade. It goes up and
02:01:52
allows you to cut wood and very fine
02:01:55
kinds of patterns.
02:01:57
Last thing in the world this kid wanted.
02:02:02
And I let my dad know and he was crushed
02:02:06
because for him
02:02:09
it was the best gift he could possibly
02:02:12
think of to give to an eight or
02:02:13
10year-old or whatever it was. And so
02:02:16
one of the regrets and I give myself
02:02:17
some grace cuz I was very young and
02:02:21
reasonably you could expect that I
02:02:23
didn't have the maturity to deal with it
02:02:25
the way I would. But I I do regret
02:02:28
because I could see the pain in his face
02:02:31
when I I kind of rejected that gift,
02:02:35
right?
02:02:37
And maybe that taught me a good lesson
02:02:40
in being more empathetic going forward.
02:02:42
So again, do I really regret it? Well, I
02:02:44
regret that I hurt my father, but I
02:02:47
learned something pretty valuable.
02:02:49
>> And you've let you've remembered that
02:02:51
for 70 years.
02:02:52
>> I've remembered that for 70 years. Yeah.
02:02:55
Yeah. I've got similar stories of things
02:02:58
ways I reacted as a kid.
02:02:59
>> I think most people do.
02:03:01
>> You know, yeah, it sucks.
02:03:03
>> And then my second one, and this is even
02:03:05
bigger. I was 24 when my dad died
02:03:09
and he died of emphyma
02:03:11
and slow lingering death. He died in the
02:03:14
hospital.
02:03:16
And
02:03:18
the night before he died, the day before
02:03:21
he died, I was visiting him and um he
02:03:25
was sitting on the edge of the bed
02:03:28
and he said to me, "Uh,
02:03:33
I'm going to die now.
02:03:36
You know, I'm I'm going to die tonight."
02:03:42
Turns out, of course, he was right. He
02:03:44
did. That was the night he died.
02:03:48
And instead of recognizing that
02:03:52
this was a moment where
02:03:55
he wanted to talk to his son about this
02:03:59
this probably the most momentous event
02:04:02
that any of us will ever face.
02:04:05
Right? Instead of recognizing that,
02:04:10
I went to the typical trope of, "Oh,
02:04:12
dad, don't don't talk like that. You
02:04:13
you're not going to die. you got a long
02:04:15
way to go. You're going to be fine. I
02:04:17
went to all that [Â __Â ]
02:04:19
instead of just recognizing whether he
02:04:23
was right or wrong
02:04:26
that
02:04:28
he was facing a momentous thing and he
02:04:32
didn't want to hear
02:04:34
don't don't think about that think more
02:04:36
positively. He he wanted to share with
02:04:39
his son
02:04:43
what he was facing.
02:04:46
And I regret that I wasn't there for him
02:04:50
in that moment.
02:04:52
But I regret that I didn't get to
02:04:54
experience that with him in that moment.
02:04:58
So that's my biggest.
02:05:03
>> I can still see it still in your face.
02:05:09
That was 50 years ago.
02:05:14
>> Is there a reason why you think in that
02:05:17
moment you didn't
02:05:19
want to go in that direction with him?
02:05:22
>> Was it a matter of what I wanted? Cuz
02:05:24
it's not like I considered
02:05:27
I can either blow it off, which is what
02:05:29
I did, or embrace it and go there with
02:05:32
him. I I didn't even think that way.
02:05:33
It's not like
02:05:36
it's not like I made the wrong choice. I
02:05:39
wasn't mature enough to recognize there
02:05:41
was a choice. I wasn't mature enough to
02:05:44
recognize
02:05:46
the real dynamic of what was happening.
02:05:49
>> And for that you deserve grace.
02:05:52
>> Thank you. And I agree with that. But I
02:05:55
still regret it because how much better
02:05:58
for both of us would it have been
02:06:02
if I had recognized it? JL, we have a
02:06:05
closing tradition on this podcast where
02:06:06
the last guest leaves a question for the
02:06:07
next.
02:06:09
>> What is something that you think is true
02:06:12
that you haven't yet been able to
02:06:14
validate? I think at at this point in my
02:06:18
life, I'm I feel pretty comfortable
02:06:22
about what I think is true. Right? So,
02:06:27
I'm not sure this answers the question,
02:06:29
but uh
02:06:32
but a good example is I am pretty sure
02:06:36
that there is no afterlife,
02:06:38
right? I I have a high degree of
02:06:42
confidence to that. But of course, as
02:06:44
the song once said, we never know by
02:06:47
living and only our dying will tell. And
02:06:50
I am very curious about death. I am very
02:06:55
curious as to
02:06:59
what is on the other side, if anything.
02:07:02
So, in a perverse way, I guess I'm I am
02:07:06
looking forward to my death, right? I I
02:07:09
don't want to get there too soon. I
02:07:10
mean, I'm as long as I'm mentally and
02:07:12
physically capable, I'm happy to
02:07:14
continue living. Thank you very much.
02:07:16
But I do have a great curiosity about
02:07:18
death, and I'm almost 100% sure that
02:07:22
when I'm dead, that's just it. It's
02:07:24
over.
02:07:25
But I'm curious, and it'll be
02:07:27
interesting if I die, and it's like,
02:07:30
whoops. You know, it's like, oh, there
02:07:33
is a guy with a white beard and
02:07:36
okay, I'll just show myself out. Thank
02:07:37
you very much.
02:07:39
There was one last question I wanted to
02:07:40
ask you which is kind of just about the
02:07:41
subject of happiness. Again at 75 years
02:07:43
old you have a retrospective clarity
02:07:44
that I don't yet have on what actually
02:07:46
mattered.
02:07:48
What actually matters?
02:07:50
>> Nothing.
02:07:54
Nothing really matters ultimately.
02:07:57
>> Nothing.
02:07:58
>> Yeah. I think
02:08:01
that's kind of like asking what's the
02:08:03
meaning of life, right?
02:08:05
And I don't think there is a meaning to
02:08:08
life when you look at the scale of the
02:08:10
universe, the scale of the cosmos.
02:08:14
The concept that
02:08:18
we as individuals bear some meaning
02:08:22
seems to me to be silly. Human beings
02:08:25
have been around for I don't know two
02:08:27
300,000 years depending on when you
02:08:30
define homo sapiens. I mean that's
02:08:33
that's a infantestibly small smudge of
02:08:38
time
02:08:39
in that has happened already and that
02:08:41
will happen in the future even if humans
02:08:44
last for another few million years. It
02:08:47
will be an infinitely
02:08:49
tiny bit of time against this huge
02:08:52
cosmic universe and our individuality
02:08:57
within that is infantessimally small and
02:09:01
I think there's some great meaning
02:09:03
behind that seems to be to be the height
02:09:04
of arrogance. So I think that if you go
02:09:08
through life and you treat people pretty
02:09:12
well and you have a a pretty good good
02:09:15
run of it, I think you've done well. I
02:09:19
don't but I don't think there's
02:09:20
something profound in that.
02:09:23
>> So So what is the point then? Is there a
02:09:26
point? Is that the real question?
02:09:27
>> There is no point. I mean the the point
02:09:29
is we happen to be here and it can be a
02:09:33
good fun ride. It can be a very
02:09:35
difficult ride depending on what you
02:09:36
make of it and in some cases depending
02:09:39
on your circumstances. There have
02:09:41
certainly been people in history that
02:09:42
have born been born into circumstances
02:09:45
that
02:09:46
you know made it a a miserable existence
02:09:50
with no options out of it. I mean what's
02:09:52
the meaning of that? You know, you and I
02:09:55
and the vast majority of people
02:09:57
listening to us, probably I venture to
02:10:00
say 100% of them have a lot more
02:10:02
autonomy over over how we can make our
02:10:06
life. And
02:10:08
will it have great meaning? No,
02:10:10
ultimately not. But it's the only life
02:10:13
you have and you may as well make the
02:10:14
best of it.
02:10:16
>> I actually listened to something last
02:10:17
night by a guy called Lucas Jones who is
02:10:20
an actor. Um, he has some great books.
02:10:22
He's also a poet as far as I'm aware.
02:10:24
I'll link his books below. Um, but he he
02:10:27
made wrote this poem which I thought was
02:10:28
quite related to that that I'm just
02:10:30
going to play for you cuz I think it's
02:10:31
kind of captures the essence as well of
02:10:32
what you're saying.
02:10:33
>> He starts by saying, "I saw God on the
02:10:35
train."
02:10:35
>> Okay.
02:10:35
>> Saw God on the train.
02:10:36
>> A pretended I didn't. So, I sat far away
02:10:39
from the seat he was sitting in. And
02:10:41
then he got up, I think probably to piss
02:10:43
and he noticed me there and said, "All
02:10:45
right, what's this? What are you saying?
02:10:47
You hiding from me?" I said, "Ah, mate,
02:10:49
nah, just a comfy seat." And he looked
02:10:51
at me like I was a kid covered in
02:10:53
chocolate surrounded by rappers saying,
02:10:54
"Don't know what happened." And he go,
02:10:57
"It's coming then, mate. I've got a few
02:10:58
minutes. Tell me what's wrong, but don't
02:11:00
[Â __Â ] around with it." And it shocked me
02:11:02
then that it fit in one sentence. I
02:11:04
said, "Just think heaven's a stupid
02:11:06
incentive." Like what a [Â __Â ] life for a
02:11:09
beautiful death. And those who are evil
02:11:11
can suddenly repent like a killer or not
02:11:13
can live like a monster. Then right at
02:11:15
the end say, "I'm sorry, dear God, sir."
02:11:17
And end up in heaven right there with my
02:11:19
nana. She's doing some knitting. He's
02:11:21
waving a hammer. He's like, "Jesus god,
02:11:23
what a horrible deal." And he goes,
02:11:24
"Yeah, it's [Â __Â ] I know how you
02:11:26
feel." I'm like, "Mate, you're the one
02:11:28
spinning the wheel." And he goes,
02:11:29
"Listen, I'll tell you a secret." All
02:11:31
that stuff, mate. I didn't speak it.
02:11:33
Like the old joke says about liars and
02:11:35
men. If God wrote the book, why are you
02:11:37
holding the pen? Now, the rules I wrote,
02:11:39
I wrote on your heart. Truth I spoke,
02:11:42
you've known from the start, be kind,
02:11:43
don't harm, isn't that hard. Heaven is
02:11:45
just life if you're doing your part. You
02:11:47
want white clouds and endless skies. Uh,
02:11:49
yeah. Look around. You don't have to
02:11:51
die. I know it probably brings you some
02:11:53
pain to think of the dead as just dust
02:11:55
in a grave. But humans can't comprehend
02:11:57
it when I say life is the cloud and
02:12:00
death is the rain. And I got to my stop
02:12:03
and felt kind of mad. Not sure he
02:12:05
answered the questions I had. Then I
02:12:07
looked up and saw the sun rising. Said,
02:12:10
"You're looking for heaven, but you're
02:12:12
the one hiding."
02:12:16
>> LJ, thank you. Thank you for writing
02:12:18
these incredible books that I highly
02:12:20
recommend anybody who is on their own
02:12:22
journey to financial freedom and is
02:12:24
looking for a free life, a financial
02:12:26
independence or just independence from
02:12:28
one's own tormenting psychology should h
02:12:32
should uh should buy this book. The
02:12:35
simple path to wealth has been an
02:12:36
absolute smash hit for um understandable
02:12:39
reasons once you read it. Sold many
02:12:41
millions of copies from what I
02:12:42
understand, more than a million copies
02:12:43
at least. And I highly recommend
02:12:45
everybody goes and starts with this book
02:12:46
and then picks up Pathfinders. I'm going
02:12:49
to link both of these books below. And
02:12:50
there is a third book, it's slightly
02:12:51
smaller, called How I Lost Money in Real
02:12:53
Estate Before It Was Fashionable, A
02:12:54
Cautionary Tale. Um, I'm going to link
02:12:57
all of them below. And if anybody else
02:12:59
wants to find more of your work, is
02:13:00
there anywhere else that they can get in
02:13:02
contact with you, read your work that I
02:13:04
should recommend? So probably the
02:13:06
easiest thing is the blog which is
02:13:08
jlinsnh
02:13:10
at uh or.com and uh you know you'll find
02:13:14
a lot of my writing. I don't write on
02:13:16
the blog too much anymore but the
02:13:18
material that's there is evergreen. It's
02:13:21
the source material for the books that
02:13:23
you were kind enough to share. Uh the
02:13:25
last book the how I lost money in real
02:13:27
estate is if somebody wants to have a
02:13:29
laugh at my expense that's the book they
02:13:31
want to pick up.
02:13:32
>> Thank you for doing so much of what you
02:13:33
do. Um, I know what the comments are
02:13:34
going to say already. They're going to
02:13:35
be people talking about how soothing
02:13:36
your voice is, and I I happen to I
02:13:39
happen to agree. Thank you so much.
02:13:42
>> My pleasure. Thank you for having me.
02:13:47
>> If there's anything we need, it is
02:13:49
connection, especially in the world
02:13:51
we're living in today. And that is
02:13:53
exactly why we created these
02:13:54
conversation cards. Because on this
02:13:56
show, when I sit here with my guests and
02:13:58
have those deep, intimate conversations,
02:14:00
this remarkable thing happens time and
02:14:02
time again. We feel deeply connected to
02:14:05
each other. At the end of every episode,
02:14:07
the guest I'm interviewing leaves a
02:14:09
question for the next guest, and we've
02:14:10
turned them into these conversation
02:14:13
cards, and we've added these twist cards
02:14:14
to make your conversations even more
02:14:16
interesting. And there are so many more
02:14:18
twists along the way with the
02:14:20
conversation cards. This is the brand
02:14:21
new edition and for the first time ever,
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I've added to the pack this gold card,
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which is an exclusive question from me.
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But I'm only putting the gold cards in
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the first run of conversation cards. So
02:14:33
get yours now before the limited edition
02:14:35
gold cards are all gone. Head to the
02:14:37
link in the description below.
