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Welcome to personal finance for long-term investors, where we believe Benjamin Franklin's advice that an
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investment in knowledge pays the best interest both in finances and in your life. Every episode teaches you personal
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finance and long-term investing in simple terms. Now, here's your host, Jesse Kramer. Hello and welcome to
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episode 105 of Personal Finance for Long-Term Investors. My name is Jesse Kramer. Later today, Bill Y will be
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joining me. Bill is the co-host of Catching Up to Fi. FI as in financial independence. It's a podcast targeted
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toward late starters who now need to play a little bit of catch-up in their financial lives, but certainly still can
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achieve financial independence if they write the ship in time. And Bill has a lot of interesting lessons to share with
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us, especially targeted towards, you know, late bloomers to personal finance investing and financial independence.
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But before Bill joins us, I have some thoughts to share. And as always, we're
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going to start off with a quick review of the week. This one comes from MXXX. That is a lot of X's. And the
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title of this review, it's a five-star review on Apple Podcasts. The title is,
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"Great job explaining retiree issues. I recently spent a fair amount of time
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finding and educating myself on Roth conversions. Today, I listened to Jesse's podcast number 99, and it was
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all there in a few minutes of discussion." Well, MXXX, I'm glad this was helpful. The podcast has been
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helpful for you in your retirement planning. It's certainly a topic that I'd love to talk about and if you shoot
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me an email to [email protected], we'll get you hooked up with a supersoft podcast
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t-shirt. Okay, before Bill joins us today, I have a couple old articles, interesting thoughts I wanted to share.
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Again, targeted towards maybe some late bloomers or some people who are just discovering the world of personal
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finance and investing themselves. And then I'm recording this in in late March. And we've had a pretty tumultuous
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March and and part of February, too, in terms of investing in the stock market. So I want to share some thoughts with
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you guys about this concept of buying the dip which is essentially you know holding on to cash to some extent maybe
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hoarding cash waiting for a market to go into a minor correction a bare market an
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outright crash and then boom you pounce and invest once the price crashes. It's
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a concept that on its face makes a lot of sense but I think as you'll hear today there's much more to it than meets
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the eye and more often than not it actually might not be worthwhile. So, we'll get to that article and those
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thoughts eventually, but first a couple articles, some thoughts targeted towards
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again the late bloomer. So, the first one is called the stupidly simple secret sauce of personal finance. Some people
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out there, you'll hear them say, you know, take your income, divide it into five equal buckets, take each bucket,
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multiply it by your age, you know, if Mercury is in retrograde, convert two buckets to Bitcoin, otherwise use 14% of
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your future social security income, calculated Pratta, and buy lottery tickets, something like that. Well, that
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is stupidly complicated. But people understandably, they yearn for hidden knowledge, for secret knowledge, the
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secret sauce, and they hear things like that rambling that I just had, and they go, "Oh, that sounds like secret sauce
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to me. Maybe that's what I need to do." But personal finance does not have to be
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complicated. The real secret sauce of personal finance, in fact, is incredibly simple. So, we're going to talk about
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four stupidly simple rules first off the bat. the following four rules, they aren't highlighted enough in the
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personal finance space. Or or maybe they are, but I think maybe because they're
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so simple, we we overlook them. But these rules provide the easy answer to, for example, how a frugal teacher can
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end up in a better financial scenario than some slick Wall Street banker or than some doctor. As you'll hear later
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today, you know, Bill Bill Ya is a emergency room doctor. And despite spending the first maybe 20 to 25 years
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as a doctor after medical school, he still ended up in a position where, you know what, he was a little bit lost
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financially. And it's because I think you'll hear him attest to this fact. He
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didn't have all these four rules in place. And they are number one, spend less than you earn. Number two, double
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down on the above and spend way less than you earn. Number three, find ways to earn more money, but don't increase
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your spending while you do so. And then number four, invest. Make your money grow on itself. As hopefully we all
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know, but you know, even today, this morning with a client, I had this conversation that there are two equally
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important inputs to the final product of good financial planning. The first input
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is how much money comes in. The second input, or maybe it's an output, but it's
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how much money goes out. It's how much you spend. And we all love to focus on
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money coming in, right? Salary. uh if not for salary, how would I compare myself to another human being? asks many
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of the modern midases around us. But salary alone or income alone, that's an
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incomplete statistic. Much like in a way like batting average was described in Michael Lewis's Moneyball, if you're
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familiar with that, it accounts for some results, but it does not account for all
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results. And that's why savings rate is a much better statistic at least when it
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comes to personal financial health because you know saving 50% of your income is is noticeably better than only
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saving 10% of your income and it doesn't matter whether you're a teacher or a
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banker or someone else. Whereas if we only compare salaries alone and we say well someone's earning 50% more than
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someone else that's not enough to really come to a good conclusion. My second
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stupidly simple rule of personal finance is that the winners are loud but the losers stay silent. Now, what do I mean
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by that? Well, we've all seen a headline that looks something like this. 28-year-old turns $30,000 into 1 million
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with Tesla stock or with Bitcoin or with something like that. We love winners. We
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love the stories of, you know, woman gets rich off of great stock pick. Man shorts a company right before it goes
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bankrupt. Uh, dog digs a hole in the backyard and owner finds gold. We love those stories. Planet Money had a had a
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great episode a couple years ago on people making money off of Hertz, the rental car. They had a bankruptcy and
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then they had this subsequent roller coaster of their stock price and a bunch of people made a bunch of money off of
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that fact. And much like a roller coaster, making money creates this wild and exciting curiosity. You know, who
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doesn't like a story about someone making lots of money? It's a big short.
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It's one of my favorite books in movies. Making billions of dollars is is a cool
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story. But people are rarely publicized when they screw up. Mundane failures aren't in vogue. They never really have
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been. You know, man spends $50,000 on silver coins and never really sees a return. A woman neglects free retirement
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accounts and regrets her choice. Some bros buy crypto at the top and they lose their shirts. Oh, those aren't stories
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that stick with us. They aren't stories that are written about, but they should
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be, right? Those should be the stories that we hear and they should be cautionary tales of of what not to do.
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Instead, we hear stories through the filter of survivorship bias, right? The winners make the cut and we hear those
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stories. The losers don't get publicized. For every winner you hear about, you should consider the silent
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losers. Your slow and steady solution, it might seem lame compared to the people who are taking rockets to the
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moon, but a lot of those rockets actually blew up on the pad, and we shouldn't forget that fact. The next
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stupidly simple rule is that boring is best. Picking stocks, it's fun. So is
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picking horses, but unless you're really, really good at it, it's probably
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a losing bet for you. And let's face it, most of us are not really good at that.
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There's some really good breakdowns out there and I've I've written one or two
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I'll share in the show notes about luck versus skill in stock picking. You can't
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just be above average, right? That's not good enough. You've got to be consistently above average, far above
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average for a long period of time. The alternative to such complex stock picking analysis over over long periods
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is to invest in something like a boring index fund. It's what Buffett recommends
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to a lot of people like us. I mean, he does it his own way and he's really really good at doing it his own way. And
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you're right, he he doesn't invest his own money in index funds. Not yet. He
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said that a lot of his estate would go into index funds once he dies. But the idea is that if you know enough to be
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like Warren Buffett, well, go ahead, pick individual stocks, buy whole companies, and make your money that way.
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That's what he does all day every day. And he's been doing that for over 80
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years now, something like that, right? He bought his first stock, I think, before he was 13, and now he's 93 years
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old. For the rest of us, we might want to do something simpler so that we can go out and live our own lives. And
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that's not the only one where there there's a contrast in personal finance
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and investing between something that's exciting versus something that's good.
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Gold and Bitcoin can be exciting. Is saving tax dollars via investing in a 401k. Is that exciting? I don't know. It
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sounds pretty boring to me. And yet maximizing your tax advantage investing accounts. It's one of the best methods
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for the average American to achieve a healthy retirement. It's like saying, "Hey, eating carrots and jogging every
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day, it'll help you lose weight." Great. I bet it would. But isn't there a magic
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weight loss pill out there or some Himalayan calorie burning meditation technique? We yearn for solutions to be
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exciting and exotic. But they don't have to be. Boring and rich or exciting and
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broke. For me, it's an easy choice. My next rule is that you make the economy
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go. At least in part, you and I make the economy go around. It's our purchases
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that keep money flowing. And that flow of money greases the wheels of the economy. There's an enormous vested
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interest in ensuring that average Jane and average Joe spend a significant portion of their incomes. The
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advertising industry is predicated on that interest, right? Drink this beer because you'll be the most interesting
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man in the world. Buy this computer so you're not an Orwellian drone. That's a
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famous Apple ad from 1984. You know, these shoes will make you cool, just like insert your favorite athlete here.
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We're urged to consume until we're fat and broke. And once obese and opulent,
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we're urged to lose that weight and store that stuff. and the cycle continues. To the powers that be, you
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are a consumer. You make the economy go around. Well, something like the fulfillment curve is the antidote to
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that mindset. If you really know what you're spending and how it correlates to
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what makes you happy, you'll most likely spend less. And once you have your personal answer to that question,
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maintaining these stupidly simple rules of personal finance becomes a really easy task. The next one is that
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measurement is the key to management. frequent contributor to the the best interest blog, Peter Ducker, had this
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famous quote from the 60s or 70s when he was kind of at at his peak. And the quote is, "You can't manage what you
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don't measure." So to manage would be to analyze, take care of, and improve. And
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to measure would be to watch, to observe, to take notes, to quantify. Let me present two people to you. One of
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them tracks every single calorie she eats. The other one pays no heed to what she slides down her gullet. All else
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being equal, who do you think is going to end up healthier? Now, the first instinct, it's the woman who measures
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all of her food intake. Why? Well, because we know that her abundant self-nowledge is likely going to lead
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her to make smarter food choices. The woman who doesn't care, well, she doesn't care. And that's probably going
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to lead to worse food choices. And the same exact principle applies to personal finance. You don't have to track every
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single dollar, and you don't have to check your accounts on a daily basis, but you should have a really good idea
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of where your money is going and where your net worth stands. Are you improving? Are you slumping? Are you
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spending thousands of dollars on Nepalese meditation retreats? Measure your money and then improve. Now, what
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happens if you don't follow some of these stupidly simple rules? The secret sauce. The stupidly simple secret sauce.
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Well, you might end up something like Dave. And in uh July 2020, I wrote this article. Do you know Dave? Somewhere in
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middle America, there's a man named Dave. You might know him. Today, for the
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first time ever, Dave is realizing that he's in a financial death spiral. Dave
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makes about $60,000 per year. He knows he pays some taxes, but he's not sure
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how much. All Dave knows is that his monthly take-home income ends up around $3,000. Right off the top, Dave pays
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$1,200 for rent. His apartment is sick, or perhaps on fleek. Pick your parlance of the times. It's a modern, stylish,
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could easily fit another person in his apartment, but Dave likes to live alone. Fair enough, Dave. And after driving a a
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junky Honda Civic in high school and college, Dave is finally able to afford a nicer car. So, he leases changing cars
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every 2 years. Currently, he's behind the wheel of an Audi A3. It's 320 bucks
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a month, but insurance and gas brings it up to about 500 bucks a month. Dave's
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young, his friends are young. They all like to socialize around town. And a couple drinks and dinner later, the $35
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bill comes. And life gets a little slow in middle America. So Dave does this a few times a week. Spends about 250 bucks
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a month on dining out. What about some other stuff? Well, Dave isn't really sure, you know, whether it's Amazon
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purchases, groceries, gifts for his mom on Mother's Day. Dave knows that he buys
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these things. It's just that he doesn't really know how much or how often. He's
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unaware that he's spending another $400 a month on all these things. Like most
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his peers, Dave has student loans. He pays 500 bucks a month. And in the 5 years since college, he's paid about
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$30,000 towards his loans. That's crazy. Now, his statement says he still owes 90
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grand out of the original $100,000 in debt. But by Dave's math, 100 grand minus the 30 grand he's paid. Well, that
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means he only owes 70 left. So, the loan company must be wrong. He thinks, well,
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they're not. Dave's dad annoys him about saving for retirement. You know, get
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that compound. Dad suggests that compound. At 27, Dave isn't even halfway to retirement age. He's got more
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pertinent things to consider than retirement, he thinks. So, let's add it up. All of Dave's finances, we just laid
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them out. And if you've been keeping track, well, good for you, because Dave
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really hasn't. The first problem is that Dave's total expenses are greater than
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his income. He makes 3,000 a month, but he spends about 3100 a month. Now, it's
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not that big of a difference, right? But for the 5 years since college, that $100
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monthly deficit, it ends up on Dave's credit cards. $100 a month multiplied by
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five years. That's about $6,000 of credit card debt. Dave looks at his Visa bill, he sees a charge for $90 per month
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of interest, and that interest doesn't even affect his $6,000 in debt. What the
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heck is that? When Dave adds up his net worth, he finds that he's about $90,000
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in debt in total. And a lot of people are in lots of debt, he thinks, especially young people, college loans.
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It's normal, Dave thinks. Well, chronic smoking used to be normal, too. And much
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like an empisemic, Dave is in trouble. To the outside world, Dave's a reasonable example of a successful young
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guy. And I'll give Dave some credit. It seems like he has some nice things going
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for him. Education, steady income, nice apartment, nice car. What's not to like?
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Well, Dave's multiple and repeated financial mistakes are catching up to him. And let's call a few of them out.
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After working for 5 years, he's decreased his debts by only 10%. He isn't aware of what he spends per month,
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and therefore, he's in credit card debt. Despite being in debt, he's still
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spending a significant amount of his money on luxuries and fun. And our young years, yes, we want to enjoy being
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young. They're also some of the best times to invest for retirement, and Dave
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hasn't done anything there yet. These mistakes are easy to avoid, but nobody
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ever really taught Dave about them. In fact, I would argue that our economy, much like we just described, it's
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actually a funnel designed to trap people like Dave. Even though Dave's in trouble, his path to improvement is
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pretty well defined. He should start off by setting some financial goals. Right now, he's foundering. He's got no real
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direction. And Dave, much like his dad said, he needs to get that compound, right? Dad is right. Our younger years
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are the best time to invest. And Dave really needs a budget or he needs to be tracking his finances somehow, right?
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Money in versus money out. I used to use the tool uh you need a budget. I currently use a tool called e-oney.
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Whatever tool you use, you've got to track your finances. You've got to track
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money coming in and money going out. Of course, Dave could find some pretty easy
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ways to spend less. He could get a roommate, drive a cheaper car, spend less at the Fish Fry Friday, whatever it
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is. And in my opinion, those are all secondary effects that occur after he sets a goal, after he creates some sort
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of budget or tracking system. I mean, maybe Dave really likes his Audi that he's driving. Fine, that's fine. But
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something in his budget needs to give. It's up to Dave to make that choice. Now, do you know Dave? Can you relate to
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Dave? Maybe you're even named Dave. At the end of the day, odds are we either
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know someone or maybe we were at one point this person, much like the first article I read from, it's very easy to
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slip into these traps in in personal finance, but at the same time, the way we get ourselves out of them can be
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stupidly simple. And now, changing gears, in the light of recent market volatility, and again, I'm recording
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this at the end of March where we've had some back and forth volatility. The S&P
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500 right now is about 8% off its highs, which okay, first off, we do need to zoom out and say it's not that big a
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deal, at least in terms of of market history, right? 8% drops happen probably something like 80 or 90% of years have a
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intraear 8% drop. So, it's not something there we need to be worried about. If we
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want to be worried about what's going on out in the world, politically, socially,
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internationally, those kind of things, totally. I get it. I get it. You know, there's nothing wrong with looking at
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the news, looking at world events and saying, "Huh, that that concerns me." I
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think there is something different though about tying that into your portfolio and saying, "Ah, because I'm
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worried about what's going on, I now need to make drastic changes in in investing for no other reason than just
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looking back at at history and realizing that chaos has always kind of been there
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in the background, whether we realize it or not. World War I, World War II, Great
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Depression, stagflation, oil crisis, nuclear arms race, Cold War. It goes on and on and on and on and on. There's
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always been a reason to sell. Did I mention pandemics yet? Anyway, there's always been a reason to sell. And that
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leads to some people saying, "Ah, I'm going to buy the dip." And much like
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birds chirping at the rising sun, investors talk about buying the dip at the first hint of a of a stock market
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pullback, correction, bare market. And yes, buying the dip makes sense at first blush because it suggests that we should
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buy assets at at lower or the lowest possible prices. But buying the dip is actually a suboptimal a bad investing
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strategy. And we need to talk about why. Now, the basic buy the dip argument is that buying stocks is a risk. The
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stocks, their prices, they might go down after you buy them. And holding on to cash, that's a risk, too. Now, the cash
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could be invested. It could grow with a rising market. That's the opportunity
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cost of not investing is that you miss market growth as it grows away from you. Now either choice to invest or not has
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some sort of risk and reward. The risk is that the market moves in the wrong direction. The reward is that the market
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moves in your favor. How do we answer whether to buy the dip, whether to wait for the market to drop in price before
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we buy? Well, we can't predict what the market will do in the future, but we can
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look at previous market data to back test a buy the dip strategy. And that's
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what professionals typically do. And and that's what we're going to do today.
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Usually what we do is if we have some sort of strategy in mind, we look and see how did it perform in in past
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history. Now before I insult too many people today, we do have to baseline ourselves a little bit. There are two
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common definitions of buying the dip. Kind of like there are two common definitions of dollar cost averaging. It
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is a little bit confusing. The first scenario of buying the dip is that you've been holding on to lots of cash
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for many years waiting for some sort of big crash. And then after that big crash, you choose to buy stocks is most
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likely. We're going to talk about stocks today. Now, that is certainly a form of
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timing the market. But is it the same as buying the dip? I say yes. We'll come
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back to this. The second scenario is that you're holding a small amount of cash expecting it to deploy into the
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market soon. Maybe you just you did a a quarterly or semiannual review of your financial plan and you realized, you
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know what, you've got a few thousand extra in your bank account that you really don't need. You should invest it.
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It should go into part of your portfolio. We don't want to find ourselves holding too much cash. So you
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have this cash, you want to deploy it, and rather than deploying it today, you say, "I'm going to give myself a month,
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and I'm going to wait for the first red day in the stock market, the first day
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of like a 1% drop before buying." Because even if the market only drops that 1%, you end up buying that dip. And
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then in future situations when you have a little bit of extra cash on hand, that's the way that you choose to
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invest. Now, I consider both of these scenarios to be a form of bad negative market timing. I say that both of these
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scenarios are a different form of buying the dip. Now, some people disagree with
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me. Some people they argue and say that since they're dollar cost averaging anyway since they're investing money on
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a monthly basis or on a you know bi-weekly basis anyway through their 401k or Roth IRA or something like that.
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Well, why not wait for a red day for a negative day in the market to execute their purchase? Buy low, right? That's
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the argument. Wait for a red day, buy low. It makes sense. And in those people's defense, I do see a significant
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difference between the two scenarios I outlined above. It's not just my opinion. The difference that I perceive
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in these two scenarios, it is backed up by convincing analytical data, which we'll talk about. holding on to cash for
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years, you know, stockpiling this cash, waiting for a big dip to then deploy that cash. That is a humongous losing
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scenario. It could literally cost an investor millions of dollars over the course of a 30-year investing timeline.
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It underperforms basic dollar cost averaging by as much as 800% in total returns in historical back tests. Now,
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the other scenario where you're only holding on to cash for a few days or a few weeks or a month, that's a little
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bit better. Well, I shouldn't say that. It's actually much better than the first
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scenario, but it's still a losing scenario. Over most historical 30-year investing periods when we back test this
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kind of wait and see, buy the dip. Let's wait a few weeks. Attempting to buy that
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dip, attempting to wait for that dip would drag your overall portfolio down by about 1% over a 30-year period. And
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for someone retiring with $1 million, holding on to cash to buy the dip would have cost them something like $10,000
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over 30 years. It's not a huge price to pay, but it's certainly not good, and
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it's not something that you just want to opt into. Why would you opt into losing
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out on $10,000 on a million-doll portfolio? Now, some people would argue, well, you have to wait for a little
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bigger dip. Wait for the market to crash by 2% before you invest or or wait for the market to crash by 5% before you
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invest. But the data is clear. The bigger a dip that you're waiting for, the bigger a dip you need to trigger you
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to turn your cash into stocks, the more painful, the more damage you're doing to
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your own portfolio. So, no matter how big of a dip you wait for, it'll impact
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your portfolio negatively. And the bigger the dip that you're waiting for, the worse it'll be. The best thing to do
00:21:33
is to not buy the dip at all. Some of you might be asking right now, but why? Cuz I mean, we already talked about it.
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Buying the dip on its surface makes sense because we want to purchase stocks. We want to invest at lower
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prices. The best way to explain it is with this simple example. Let's say Adam
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has money to invest. And it's uh based on when I wrote this article, it's April
00:21:52
2021. And this is using real data, by the way. So on April 1st, the S&P 500 was valued at 4,020 on April 1st, 2021.
00:22:01
And Adam decided to wait before buying. He wanted the market to drop so that he could buy the dip. Unfortunately for
00:22:06
Adam, the S&P 500 increased by 4.1% in the first two weeks of April 2021 from
00:22:12
4020 to 41.85. 85. Only then after a 4% increase did the S&P dip. It dipped by
00:22:19
about 1.2% in in midappril back down to 4135. So should Adam buy that dip at 4135 even though 4135 is much higher
00:22:31
than where he was previously sitting at the very beginning of April? It was 4020. 4135 versus 4020. Or should he
00:22:38
hold out for an even bigger dip? And what if that bigger dip never comes? Right? the market is unpredictable. I
00:22:44
bet Adam or these hypothetical Adams feel pretty conflicted, full of regret when those things happened. Now, April
00:22:50
2021 was a very typical uh month in the stock market. On the whole, the market increased about 4% that month, but there
00:22:56
were a couple times with a a 1 or 1.5% dip. For most months, just like April 2021, the best day to invest is the
00:23:04
first day of the month. And for most years, the best day to invest is January 1st. Early is better most of the time,
00:23:10
right? the market in general goes up and to the right. And if you know that, if you zoom out on that fact, you'll
00:23:17
realize, sure, I mean, the market might go down tomorrow or next week or next month or next year. It's possible. But
00:23:24
on average, if you just ask yourself this question over any month in market history, you will have realized that
00:23:30
investing sooner is better than investing later. Waiting for a dip is a losing proposition. A future dip might
00:23:37
come, but it usually gets swamped out by the larger gains in the meantime. That's
00:23:41
the other thing, right? There's always going to be another 2% down day or 4%
00:23:46
down day or even more, a six or an 8% down day. A really scary day in the market. Those days are going to come. I
00:23:53
guarantee it. That's the way the market works. But they usually get swamped out
00:23:57
by all the gains that occur between now and then. So, waiting for lower prices, yeah, it makes logical sense. But we
00:24:04
have to ask ourselves, what if lower never comes? The problem isn't buying the dip. The problem is waiting for the
00:24:11
dip. Here's a quick ad and then we'll get back to the show. Every week I send
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00:24:37
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bestinterest.blog. Again, that's a free, no strings attached subscription at
00:25:00
bestinterinterest.blog. blog. And with that, we're going to welcome Bill G onto
00:25:04
the podcast. Bill is a 57-year-old practicing emergency physician, happily married, family man, but he's got an
00:25:11
interesting backstory that's led him to now being the co-host of of one of the
00:25:15
biggest upand cominging podcasts out there, Catching Up to Fi. While Bill has spent much of his life caring for other
00:25:21
people's health, he never learned or didn't until recently learn how to care
00:25:25
for his own money and his own financial well-being. He spent first and saved second. didn't know much about investing
00:25:31
in personal finance. Seems that he made most of the mistakes in in the financial
00:25:35
books and Bill will attest that waking up from that reality was painful, full of whatif regrets about his past and
00:25:42
even some shame. And and we dive into that today. But the recovery has been hard but incredibly rewarding for him.
00:25:49
And now Bill's mission is to help other late starters start now, right? And get
00:25:53
others to start as early as possible on their individual journeys to financial independence. So without further ado,
00:25:59
let's welcome Bill Y to Personal Finance for long-term investors. [Music] Bill, thank you for joining us today.
00:26:10
And as the listeners are now aware of and and especially those who listen to Catching Up Defi, your story is so
00:26:17
resonant with so many people who feel like they're coming to personal finance,
00:26:22
they're coming to investing a little bit later in their life. So, what was the
00:26:25
moment for you that kind of flipped the switch inside your head? And then what were some of the first major steps you
00:26:31
took to turn your boat around as it were from whatever financial path you were on
00:26:35
before to this better financial path now? Oh, it's funny you mentioned boat because we had a boat named Yolo. That
00:26:42
was kind of the mentality. You know, as as you may have mentioned, I'm a physician. I came out of residency with
00:26:47
delayed gratification. I thought I deserved a lot of things like the new house, the new car, lived paycheck to
00:26:53
paycheck uh with my wife for the better part of 20 years. Uh we made every mistake in the book. We bought whole
00:27:01
life insurance. We had a so-called private investment advisor that was with now out them Northwest Mutual.
00:27:09
Unfortunately, bought a disability policy from them. Uh eventually we were in the private bank at JP Morgan and
00:27:16
paid them exorbitant fees to really do us nothing and they didn't even talk us
00:27:20
out of selling. Uh they tried to maybe but they didn't really try hard selling
00:27:25
at the bottom of the market in the great financial crisis and de-risking our portfolio. So we did that. We were house
00:27:31
poor because we'd renovated a house in 2007 that was underwater in 2008. Uh so
00:27:38
we were house poor. We had bottomed out in the market and sold and then we kind of missed because we weren't
00:27:45
aggressively saving a lot of the bull market in the 2000s. And so we made what I call the trifecta mistakes and we came
00:27:54
out the other side of that. I woke up at age 50, let's say. And that's late. How
00:28:00
did I wake up at 50? I turned 50 and I realized nobody was going to take care of me but me. And that was a shock. I
00:28:09
was ashamed. I had my head in the sand. I didn't know how to pull it out. There
00:28:14
began the journey of the late starter. Can we dive into some of those emotions, Bill? I know it it can maybe be a
00:28:19
challenging thing to talk about, but it's one thing to get someone to understand the numbers. We do plenty of
00:28:25
conversations here on this podcast talking about the numbers, but at the end of the day, a lot of these decisions
00:28:30
are emotional in some form or fashion. And you just used a word there, shame. Can you talk us through just some of the
00:28:37
some of the challenging feelings when you realize like, oh, I'm not exactly where I want to be, but I've got to do
00:28:42
something about this. There's kind of a universal path for late starters. And
00:28:48
there's always a shock to the system, whatever it be, like divorce, loss of a
00:28:53
job, there's always a financial shock. And you go, "Oh my god, I'm not where I
00:28:57
want to be. I can't, you know, escape this lack of emergency funds or FU money
00:29:03
that protects me from this shock. And so it was shock, it was awe, it was shame,
00:29:09
it was regret. You would realize that, as I said, you had your head in the sand. I I got lost, as I referred to it,
00:29:16
is in the funnel of life. We grew our family. We were focused on our kids. We had a child with developmental
00:29:23
challenges that took a lot of focus and money. Life just passed by so quickly in
00:29:28
this paycheck-top paycheck lifestyle. We unfortunately spent first and saved last
00:29:35
around tax time. We did exactly the reverse of what people should do. It's I
00:29:40
mean it's not complicated what you should do. But nobody took me aside and said plastics like in the graduate.
00:29:47
Nobody told me that save in your 401k, max it out. That's all somebody needed
00:29:52
to tell me. And you know, I'd been saving here and there, but we were singledigit savers. It was what was left
00:29:58
over at tax time when we go, okay, there was no dollar cost averaging. I didn't
00:30:01
know what that was. I didn't know what a net worth statement was. I didn't know
00:30:05
what an expense report was. I just knew if I had money left at the end of the month in my checking account to make
00:30:11
sure I could pay off these big credit card bills was, you know, literally handtomouth.
00:30:17
I hate to say and I'm a physician remember I was highly trained, highly educated in how to help people with
00:30:24
their health but I could not help myself with my wealth. So yeah, there's a lot
00:30:30
of emotions associated with this and then it migrates. You know, you wake up and you go, okay, let's give myself
00:30:36
grace. Let's pause, try and figure out what happened. Where do I stand? What is
00:30:42
my net worth? What are my assets? What are my liabilities? What are my expenses? What am I spending every
00:30:48
month? Just figure out where you stand. And then so you plan at that point. You write your investor policy statement.
00:30:55
You don't jump in and start working the numbers. You got to work the emotions,
00:30:59
which is 80% of the battle, and you get to the numbers, but that's the last step. Investing is really the last step.
00:31:07
So, you pause, you plan, and then you pivot. You change what you you've learned from your mistakes hopefully,
00:31:13
and then you ask for help. You know, you go down the rabbit hole. You whether it's books, podcast, vlogs, your
00:31:19
podcast, my podcast that catching up to five. I I call it me search because I get to learn from experts like yourself
00:31:27
that we have as guests on the show. New nuances to investing every time we record. So you just need to open your
00:31:35
ears, open your eyes, ask for help, do your own research, and then with your investor policy statement, which is
00:31:41
comprehensive. It isn't just what investments am I going to invest in? you know, it's kind of my estate planning,
00:31:48
it's my insurance, it's all these other facets of a financial plan, my giving
00:31:52
plan. There's a comprehensive look at this and people need like yourselves, financial advisors sometimes to work
00:31:59
through these things and put together this plan and then you invest. I took back my money from JP Morgan. I took it
00:32:08
back, put it in vanguard and I had read things like the simple path to wealth, set for life, you know, I will make you
00:32:15
rich by Sethi. I read these things. Actually, if you can see behind me, I've
00:32:19
got two or three shelves of books. Yeah. The thing that happened to me as a physician was I was in analysis
00:32:25
paralysis, which is kind of the next emotion. You're like, what do I do? It's
00:32:29
overwhelming. and know how do I but then you got to learn how do I take a bite out of this elephant one small bite at a
00:32:35
time to get where I need to go that hopefully that answers your question. Oh it totally does. It totally does. You
00:32:41
hit on a few things there that that kind of got my brain spinning. One being you're right. So even in this world of
00:32:47
professional financial planning which certainly can get into some complexities where do we almost always start the
00:32:53
conversation? Well there's that emotional part of it or just trying to understand the person we're sitting
00:32:57
across from. But when it gets into the numbers, you mentioned four things in your response there, Bill. You said I
00:33:03
needed to understand my income against my expenses and I needed to understand my assets versus my debts. I call those
00:33:09
the big four and they really are the foundation numerically speaking at least of any financial plan. And it's not
00:33:16
rocket science. It is something that everybody out there listening can start to do themselves and and can get to
00:33:22
completion themselves if they want to, right? It's just this idea of if you don't understand those numbers and and
00:33:27
how they interact with your life, you will find yourself in a position where you just say to yourself, I'm
00:33:32
uncomfortable with my money situation because I don't understand it. Often you
00:33:36
start with your debts if you have debt and you work those out and then you work towards you have your emergency fund,
00:33:43
your debts, then your savings plan. You follow a cash flow waterfall that I'm
00:33:47
sure you've talked about on your show with buckets that you put your money in
00:33:52
as you flow down that cash flow waterfall. And that's where the boring middle start. That's really the second
00:33:57
phase of being a late starter. You go down the rabbit hole. You learn all these things. You get advice. You get
00:34:02
help. You've overcome your regret, shame, and awe. You've given yourself
00:34:06
grace. And then you got to work the plan. You know it. There's no magic buttons here. You've got to follow, as I
00:34:13
didn't actually, the KISS principle of keep it simple, stupid. I went complex.
00:34:18
I went all in on the Paul Marman 10 Funds for Life portfolio. You know, the first book I'd ever read was by Bill
00:34:24
Bernstein, the intelligent asset allocator, where I had to learn how to use a financial calculator in order to
00:34:31
figure out some of the things he said. It's not that complex. Start with, say,
00:34:35
the simple path to wealth. That may give you enough knowledge to really get started. That's one thing that we always
00:34:41
come back to as kind of the gospel of simple index investing. It can get a little more complex later, but you just
00:34:48
got to get started because you don't necessarily have the time of an early starter. You know, 35 year olds, as we
00:34:55
said, can feel late. 45 year olds can feel late. 50 year olds, 55 year olds, but it's never too late. You know, when
00:35:01
was the best time to plant a tree? 20 years ago. When's the second best time?
00:35:05
Today. Mhm. Late starters got to learn is, you know, you you may be working a little longer, but actually it's not
00:35:12
necessarily the case. The boring middle can be 10 to 12 years. If you get it right and read the shockingly simple
00:35:19
math of early retirement by Mr. Money Mustache, you know what you need to save and invest in order to find financial
00:35:25
freedom and independence within 10 to 12 years. Can you talk about your journey a
00:35:31
little bit more? And specifically, I'm thinking about what your rabbit hole period looked like and how long it was
00:35:37
from that moment you you kind of woke up at 50. You spent some time just deep diving into the Paul Maryman's and the
00:35:43
Bill Burn scenes of the world, the JL Collins as well. But now, is it fair to say you're in the boring middle? And
00:35:49
since you have an understanding of your future financial plan, how long do you foresee that boring middle period being
00:35:56
for you? Well, the analysis paralysis probably lasted a year. It's scary. I mean, it's scary to take over your money
00:36:04
and do it yourself. I mean, maybe 20% of the people do it and 80% of the people still have a financial advisor and that
00:36:10
is okay, but you need to find the right one. So, the boring middle for me is looking like because we didn't save
00:36:17
nothing. I don't know what our net worth was when I woke up at 50. I could probably figure it out, but it'd be
00:36:23
pretty complicated. I know where it stands now, and we're about 80% of the way to financial freedom. And so I've
00:36:30
gone from 50 to 59. I've got three or four years left in my 12 to 14 year journey. The problem we have is we
00:36:38
downsized our life, but we didn't necessarily downsize all our expenses. And we're needing to pursue a fat fire
00:36:45
lifestyle. Lean Fi, as you may have talked about, is one thing. Coastf is another. Standard FI is 25 times your
00:36:54
expenses. And then fat FI may be 30 times your expenses. So, you know, that's where we're kind of at. And I
00:37:01
plan on, you know, retiring essentially on time as most people do at 62 or 63. And what does that mean? You know, I've
00:37:09
got to have a plan for what happens after that. It isn't margaritas, my ties, the beach, and golf. It's going to
00:37:15
be this podcast. It's going to be educating people on these issues to try and create generational financial
00:37:21
literacy where our kids are better off than we were. Because my generation, I refer to it as the average American. The
00:37:30
average American is a late starter. I'm in the silent generation. We don't talk
00:37:34
about it because of the shame. We are also the lost generation because we went from defined benefit plans to defined
00:37:41
contribution plans. And nobody told me the difference. My dad had a pension and all of a sudden in Gen X, I wasn't going
00:37:48
to have one and I had to do it myself and nobody told me really what a 401k was. So, we need to wake up this
00:37:55
generation. so that our kids generation doesn't fall into the same traps we did.
00:38:00
So when you wake up someone in this generation, what are the most effective levers that you've seen either for
00:38:05
yourself, Bill, or I'm just thinking of of so many experiences you have from
00:38:08
your listeners? The most effective levers that a late starter can pull on to start making up for lost ground? Is
00:38:14
it simply about earning more? Simply about just saving first, saving more aggressively? Looking at their budget
00:38:21
and really starting to trim the fat? What helps the most? Well, you've got to
00:38:25
maximize your savings rate and create the gap, which means earning more. And that's one of the levers that late
00:38:31
starters have to pull. They're in their high income years. Take advantage of
00:38:34
that. We went from a say 10% savings rate to a 35 40% savings rate within a year. And guess what? We didn't really
00:38:44
feel a difference in our lifestyle. And I was like, "Oh my goodness, where did
00:38:50
all that money go? It just trickled through the civ of life. And as soon as we harnessed the holes, took our house
00:38:58
from 4,500 ft² to 2,800 square feet. We paid cash for cars where we hadn't done
00:39:03
that before and and bought used. You know, we got control of our food budget and well, we haven't gotten control of
00:39:09
our travel budget, but you got to let something go there. I mean, you've got
00:39:12
to look at a balanced life. Personally, I think the live on one income and the two-income family or live on half,
00:39:20
meaning 40 to 50% is a great rule of thumb and you need to start that early because as soon as you let lifestyle
00:39:27
inflation run away from you, it is hard to unwind that. So, you know, downsizing
00:39:32
is a lever. Increasing your income, increasing your savings rate, decreasing your expenses, those are all levers. But
00:39:38
you can't forget that late starters have social security. That is a backs stop
00:39:43
and a lever that you have to plan on and pull in your investment plan. It's going
00:39:47
to be there in some form or another. Whether it's 80% of what it is now, but
00:39:52
don't forget about that. It is also a powerful lever. Diving into that social
00:39:57
security, any recommendations or in general for the late starters, does it make sense for them to wait as long as
00:40:04
possible? Is it really just a case- by case basis as to when they elect to start collecting social security? Well,
00:40:10
if personal finance is personal, social security is very personal. I have to recommend in making this decision, you
00:40:16
go to open sec opensocial securitycurity.com. It's a website founded by Mike Piper. And generally in
00:40:24
a married couple, the high-income professional, the higher income professional should try and wait till
00:40:30
70. The advantages are tantamount. They're huge. And then with regards to the other spouse that's the lower
00:40:37
earning spouse, especially if it's a female who has a longer lifespan, you can take it earlier. You can take I mean
00:40:43
your full retirement age these days is 67, but you could potentially take it at 63, four or five and as long as you have
00:40:50
longevity on your side. The crossover point tends to be in your early 80s. That's exactly align with my
00:40:57
understanding of the question too. Going back though to your previous answer, Bill, and the interesting changes that
00:41:03
you made in your lifestyle and how it seems like to some extent you barely even notice the changes. I would think
00:41:10
that's more common for the average listener than they suspect it is. And I guess the other way of putting it is we
00:41:15
spend all this money in our life currently and there's sometimes we don't
00:41:20
quite notice that the marginal benefit for having spent that money. Do you have any specific stories? I mean, you did
00:41:25
share some specifics already, but whether it's a a listener story or something from Jackie's story or from
00:41:30
your your own story where it's just like, wow, I can't believe I was spending X per month on this thing and I
00:41:36
cut it off and I barely even noticed it. I want to tell you who Jackie is first.
00:41:40
Jackie, my partner, my co-host on the podcast Catching Up to Five, her story is incredibly inspirational. She woke up
00:41:48
at 38 with a net worth under say $100,000 and by 49 she was retired with a net worth of 1.3 million just by
00:41:57
making the right decisions. And inspirationally she never made more than five figures. She came from poverty. She
00:42:06
knew the value of money and setting her free. She knew the value of an education
00:42:10
in increasing her income. And she's a single mom that did it with a daughter.
00:42:15
It's just incredible. And another incredible story was my previous co-host Becky Heptig. I mean she and her husband
00:42:22
had a net worth of zero zero at 50. And by 63 they were retired with 1.3 1.4 million just because of making the right
00:42:32
decisions with their money. That that speaks to the path of 12 to 13 years. Both of them kind of followed that path
00:42:40
and everybody has that available to them should they wake up make a few right decisions and just follow the path. We
00:42:49
had bought luxury cars and actually we didn't buy them, we leased them. And that's a huge difference. You know, buy
00:42:55
a three to five year old car for cash. Let somebody else take the depreciation hit. It makes a huge difference. I mean,
00:43:02
Rob Burgerer, who was on our show, said cars are kind of a retirement buster. Think about cars over your lifetime. And
00:43:09
if you and just like Rammit Sethi says, who cares about the lattes? Make the $30,000 decisions right. and you know,
00:43:18
keep your car expenses lower. For example, we were buying luxury cars for $50,000 when we could have been buying a
00:43:24
Honda or a Toyota for $25,000. And guess what happens to the difference? You invest it and there's opportunity costs
00:43:32
there that you give up if you buy the expensive car and it can mean a million dollars, right, over 20 years in
00:43:38
portfolio, literally. I mean, do the math, right? Yeah. Yeah. I mean, especially, you know, one of the other
00:43:43
big costs is housing. And someone might listen to this and say like, well, should I stretch for housing? And well,
00:43:48
the answer there is at the very least if you go a little bit beyond your means to
00:43:53
buy a house. It is expensive. Mortgage costs can be quite expensive, the interest costs you pay. I will say
00:43:58
though, at the end of the day, you have an asset that is most likely appreciating even if in a small way.
00:44:04
Now, personally, I don't view residential like my personal home as an investment. But I am comforted by the
00:44:10
fact that it's most likely going to retain its value in the long run. Well, it's a store of equity. It's a store of
00:44:15
equity, but it's a let's say it's a savings vehicle, but I don't view it as
00:44:20
an investment either. Correct. I view it as a liability because the cash flows out. No inward cash flow. So, I think
00:44:27
very strongly that a house is a liability. Renting is not a bad thing. You know, you don't have those all those
00:44:34
ancillary maintenance costs, all the big surprises. You don't have the headaches.
00:44:39
And so these days with the cost of housing and the interest rates, I think there's going to be a generation of
00:44:44
longerterm renters. Quite possibly. Quite possibly. But I think if you compare that to going back to the car
00:44:50
example, right? Whether you're buying new or buying used or leasing, at the end of the day, call it 10, 12, 15 years
00:44:58
from now, you are going to have a rusty car that no longer works and has no appreciable value. I mean, one way or
00:45:03
the other, it's we all know it's a depreciating asset. And to your point, I
00:45:08
think what you're saying is you just want to minimize the pain of that depreciation asset as best you can,
00:45:14
however that the math works out for you. That's correct. I mean, minimize the
00:45:18
holes in the bucket. You know, make it leak proof and then, you know, it'll fill up and flow into your next bucket.
00:45:24
Money is potential energy. You create a dam and then you you fill up the lake behind it and then you release the
00:45:32
energy as you need it. I mean, it it flows. It's infinite, but it's really in
00:45:36
in the end of the day is not something we own beyond our death and it transfers to other people, but you want to try and
00:45:42
make a perpetual store of energy that lasts for generations, not just yours. Here's a quick ad and then we'll get
00:45:49
back to the show. I still remember it was 2019 and a guy from Fidelity came in to speak to my then employer about
00:45:56
personal finance in general and about our 401k plan in particular. There were 60 or so of us who attended, mostly 50
00:46:02
plus years old, clearly with retirement on their minds. And nothing against this
00:46:07
individual from Fidelity, but unfortunately the guy just didn't really know what he was talking about. It ended
00:46:11
up being a major disappointment. And a bunch of my colleagues afterwards said, in short, you know, man, we're really
00:46:17
thirsty for good financial retirement information. Where do we go find it? Now, does that sound true, listeners,
00:46:23
for you and your colleagues? Last year, either in person or via Zoom, I spoke to
00:46:28
about 800 employees at 11 different organizations. Sometimes about personal finance in general, sometimes about
00:46:34
specifics of their retirement plans, sometimes about the the nitty-gritty details of social security and
00:46:39
withdrawal planning and retirement math. The point being, if you're interested in
00:46:43
inviting me to come talk money to you, to your colleagues where you work, that is absolutely something I'm interested
00:46:49
in talking to you about. Simply drop me an email to [email protected] blog
00:46:53
and let's start a conversation. Something on on catching up to FI. I mean, have you found anybody who
00:46:59
started, you know, was very much a late starter, but now has gone not only to the point of their own retirement
00:47:05
planning, but is starting to think about that next generation and and all the assets they're going to be able to leave
00:47:10
behind or the the long-term impact that they're going to be able to leave behind, whether it's charity or their
00:47:15
children or or some other long-term cause. There's a Bill Perkins book that says, you know, die with zero. Sure.
00:47:21
that there's that option where you don't create generational wealth and then you
00:47:25
maximize your quality of life during life. That's not part of our investor policy statement. I think we do want to
00:47:33
live something for the next generation. It would be nice to have a perpetual money machine that helps them, their
00:47:39
kids, their grandkids. You can look at 529s that way. Build up an educational fund that passes down to generations so
00:47:47
they don't have to worry about educational costs. build up a donor adise fund where you can have perpetual
00:47:54
giving and they learn about giving as part of their portfolio. Generational wealth is to us important and you have
00:48:01
to plan for that because that means that your number that you need to save maybe
00:48:06
need to be a little bit more. I'm thinking about the late starters who are tuning in right now or even I mean I can
00:48:12
think of some people Bill who are my age and I know they listen to this podcast and they're probably considering
00:48:16
themselves a late starter. So, it's not just the 50 and 55 year olds. We're
00:48:19
going down into the 30s, too. But either way, there's always going to be that
00:48:23
roadblock in their minds of I'm a little late to this game. And therefore, they
00:48:28
might be susceptible to some of the I'll call them the biggest myths out there
00:48:33
when it comes to financial planning in general, or more specifically latestage financial planning. What are some of the
00:48:38
more interesting myths that you and Jackie have heard through your Facebook group, say, Catching Up to Fire, or just
00:48:44
your work over there? And and how have you helped people overcome those mythological false mindsets? Well, one
00:48:51
myth is that risk is to your advantage. You know, there's no magic buttons and
00:48:55
to take on too much risk as a late starter is probably unwise. You know, you really need a 10-year runway for
00:49:02
equities and you could be potentially 100% equities for 10 years, but you need to wind that down as you get closer to
00:49:08
retirement. Within five years of retirement, that should be wound down. But then you got to be able to sleep at
00:49:14
night and you got to know your risk tolerance. You know, your ability and your need to take risk. Those are two
00:49:20
different things. And late starters do need to take some risk. You can't be too
00:49:25
conservative because you need growth and but their ability may not be commensurate with their need. And trying
00:49:31
to assess that may take somebody as a coach or an adviser to help you figure that out. It may be hard to figure out
00:49:38
on your own because, you know, you make a mistake like recent days where you went all in and now we're in a 10%
00:49:44
correction and who knows how far that's going to go because of what's happening
00:49:49
sort of as a manufactured crisis in the economy that we might have expected and some people did, but you know, not
00:49:56
getting too political. You got to stay the course. That's another really important thing for late starters is
00:50:03
don't like I did let your fear dictate what you do next. And don't time the
00:50:09
market. Don't, you know, try and go all out on January 20th and then figure out
00:50:15
when you need to go back in. You know, they call it the whipssaw. You have to be right twice to take advantage of
00:50:21
timing the market. Don't do it. That's a myth, too. What other myths are there?
00:50:26
There's no magic button. You've got to stay the course and, you know, do what
00:50:31
you would do if you were 35. Do it the same thing at 55. The path doesn't change except for the fact that the
00:50:39
older you are, the more aggressive you need to be with savings and having a big gap. And just as a time capsule,
00:50:45
listeners, Bill and I, we're chatting here on March 11th. This episode probably won't come out for a few weeks,
00:50:50
but the the S&P 500 right now live is 5573, as Bill alluded to, down about 10%
00:50:58
from its highs. We'll see by the time this episode comes out where the market
00:51:01
is at. You you never quite know. It's a fun uh this is one of the fun side effects of podcasting, I think, is you
00:51:06
get to have conversations at a point in time and then see what happens from there. I said, "Yahoo, let's buy." And I
00:51:13
also said, "Yahoo, let's tax Lost Harvest." And I'm sure you explained
00:51:17
those uh things and I mentioned it in my community today was, you know, this is your opportunity. Don't forget to tax
00:51:22
lost harvest in your taxable accounts. Take the losses now. Let the government help you stomach those losses and then
00:51:29
uh lower your basis and, you know, let it ride. It's only going to go up and to
00:51:33
the right. Don't let shortterm swings dictate your long-term vision. Did you
00:51:38
chat about the wash sale rule at all in your in your group when talking about the tax loss harvesting bill? Yeah, you
00:51:43
got to be careful with 30 31 days, but as long as you buy a different index, for example, if you trade total market
00:51:50
US for S&P 500, you've avoided the wash sale and you can do it on the same day.
00:51:55
If you try and buy the same thing on the same day or within 30 days prior to and
00:52:00
after, you're going to get into a little bit of trouble and you won't gain all
00:52:04
those losses. Yeah. Yeah. It's interesting. I've maybe what we'll do is
00:52:07
we'll throw an article in the show notes that I wrote about tax loss harvesting
00:52:10
cuz on net there definitely is a benefit there but as you alluded to you are lowering the basis of your portfolio and
00:52:19
essentially it kicks the tax can down the road right eventually that those capital gains will be realized or
00:52:27
eventually you'll die and then pass the assets along to your heirs at a stepped
00:52:31
up basis and so I guess what I'm saying is most likely for most people The taxes
00:52:36
will come due eventually. It's just a matter of, you know what, maybe you're
00:52:39
in a really high tax year this year and it makes sense to tax lost harvest to your to your advantage because when you
00:52:44
kick that can down the road, you'll have some more control over realizing them in
00:52:48
a in a lower tax year. Something like that. You asked about inspirational stories and it doesn't have to be all
00:52:53
paper assets. We had a guest on our show, Monica Scodieri. The name of the show was Mama Are We Poor? and she had
00:53:01
come from poverty but used real estate to her advantage to get where she needed to go again in 10 to 12 years and that
00:53:08
was her vehicle. You don't have to use stocks, bonds and alternatives in paper
00:53:13
assets to get where you want to go. You can start a business. All these things are maybe a little bit more risky and
00:53:18
the more work because it's a job. Yeah, I personally choose to be passive. Well,
00:53:23
let's end on thinking about some of the traditional investment advice or traditional just personal finance,
00:53:30
financial planning advice that either needs to be drastically modified or tweaked for the late starter. Does
00:53:37
anything come to mind as something that you say to yourself, Bill, like, yeah, that that really does work if you're 25
00:53:42
or 30 and just getting going, but if you're coming to this situation at age 50, we have to rethink what's going on
00:53:48
here. Compound growth works great if you're young. It works better. It works
00:53:54
a little bit better. Not better, but as you age, you have less time for doubling. Remember the the rule of 72.
00:54:01
Generally, 7 to 10 years, uh, you'll double your money and you're losing
00:54:05
doubling time. So, you have to save more aggressively. That's a big difference.
00:54:10
You have to downsize your life so you have a a bigger gap. That's, you know,
00:54:14
people need to live within their means, not have too much house as we talked about, not have too much car, you know,
00:54:22
and but then again, remember, you're investing for the long run. It isn't
00:54:26
just a 10 or 15 year runway to your retirement. You've got 30 years ahead of
00:54:30
you if all things go well. So, it is a long time long-term investment and you will more than likely have more than you
00:54:39
started with when you retire. So, you have to make a plan for that. Yeah. You just hit on something there. Speaking of
00:54:45
myths or m misconceptions, that runway or that timeline that we're talking about,
00:54:50
right? Let's say I'm I'm 55. I'm listening to this podcast right now.
00:54:53
You're right. Some of your dollars might have this five or sevenyear timeline
00:54:57
until you hopefully retire and start spending them. But a lot of your dollars have a a runway until you're 70 or 80.
00:55:04
They have a 15 or a 25 or a 30 plus year timeline ahead of them. And it's each
00:55:09
dollar has its own unique timeline and it kind of all comprises a total portfolio. So a misconception that I
00:55:16
hear is someone says, "Oh, I'm 58. I'd like to retire by 60 and that's why I've
00:55:20
moved my entire portfolio to bonds because it's only two years away." And I
00:55:24
kind of hear that and say, "Whoa, so much of your timeline is still a decade
00:55:28
plus away." Well, you need you need to beat inflation. You know, you can't
00:55:32
forget. Absolutely. And bonds won't necessarily get you there. You got to have a have a gap there. you know, keep
00:55:38
your cost of your investments low so that the gap works for you. But remember, inflation is a huge cost.
00:55:45
Taxes are a huge cost, and unless you have growth assets, you could be in real trouble later on as your money loses
00:55:51
value over 30 years. Oh, exactly right. I feel like we've covered a lot of interesting, you know, little little uh
00:55:57
little pockets of information that apply to the late starter today, Bill. And if
00:56:01
anyone wants to join your community, cuz that's really it's more than just tuning
00:56:05
in to the Catching Up to Thai podcast. It really is a community that you've built. How can someone get in touch with
00:56:11
you, get in touch with Jackie, and join the conversations that you guys are having? The first thing I'd recommend a
00:56:17
new late starter to do is listen to episode 100. That is the odyssey of the late starter. We tell you exactly as
00:56:23
we've talked about today, the things you need to do. But as far as joining the
00:56:27
community of Catching Up to Fi, we have a Facebook community of over 17,000 members. We have great moderators. It's
00:56:34
a great place to be vulnerable. It's a great place to crowdsource some of your
00:56:38
questions. It's a great place to meet people, to take things offline. We have
00:56:42
a lot of like yourself, we have a lot of really intelligent people in that community that are ready, willing, and
00:56:47
able to help you with your journey and your questions. And a lot of people will tell their stories. And what you realize
00:56:53
is there's commonalities to all of them. And the best part about it is you're not
00:56:58
alone. You know, in the podcast, we're trying to have a dialogue. In the community, we're having a dialogue.
00:57:03
We're going to start a newsletter that will also allow for a dialogue. So, join
00:57:07
us at Catching Up Defy. We've had people binge on all 120 some odd podcasts and
00:57:13
leave us a review and it just warms our hearts. As a physician, I've been taking
00:57:18
care of people for better part of 30 years. And I've received more gratitude
00:57:23
for what we were created at Catching Up Defy in the last two years than all those 30 years. So, it's an incredible
00:57:30
thing. It's a great thing to be a part of this creative community and it's a
00:57:34
great legacy for me to leave this behind. Awesome. Well, thank you so much, Bill, for for all the work you do,
00:57:40
and I I can't recommend catching up to VI highly enough. What else can I say
00:57:45
other than than thank you and extend my gratitude? And so once again, thank you,
00:57:48
Bill Y, for stopping by Personal Finance for Long-Term Investors. Well, thank you
00:57:53
for having me. Thanks for tuning in to this episode of Personal Finance for Long-Term Investors. If you have a
00:57:59
question for Jesse to answer on a future episode, send him an email over at his blog, The Best Interest. His email
00:58:05
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00:58:14
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00:58:21
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00:58:25
for long-term investors. Personal Finance for Long-Term Investors is a personal podcast meant for education and
00:58:32
entertainment. It should not be taken as financial advice and it's not prescriptive of your financial
00:58:37
situation.