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welcome to the best interest podcast
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where we believe Benjamin Franklin's
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advice that an investment in knowledge
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pays the best interest both in finances
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and in your life every episode teaches
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you personal finance and investing in
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simple terms now here's your host Jesse
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Kramer hello and welcome to episode 76
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of the best interest podcast my name is
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Jesse Kramer today Jared dillian is
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going to to be joining the podcast Jared
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is a former Wall Street traiter at Leman
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Brothers he's the author of four books
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he writes a newsletter for financial
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professionals called The Daily dirt naap
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and I've heard Jared speak before and
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after talking to him for today's episode
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I think Jared he's almost a bit like a a
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sports radio personality in the way that
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he's sharp and witty you know he's got
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that kind of fast brain like you'd
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expect for someone on radio he's
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certainly not afraid of controversy and
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that's the other thing that kind of
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makes him like a a radio personality and
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you'll hear me nicely push back on Jared
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a couple times today asking for
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clarification asking him to explain
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further why he thinks things he thinks
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and personally I think it's fun to hear
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new opinions to hear different takes
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it's fun to talk to those people in
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general I enjoy bringing them on the
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podcast to explain some of their ideas
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to you all listening maybe they'll
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change our minds maybe not but either
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way it's it's just always interesting to
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know what other people think out there
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about personal finance and investing but
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first let's get to our review of the
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week as a reminder these reviews are
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from Apple podcasts I really enjoy
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reading the reviews you guys leave me on
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Apple podcasts you can also leave a
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rating there or you can leave a rating
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on Spotify most likely however you're
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listening here to the podcast you can
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leave some sort of review or rating this
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one comes from long
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b99 who wrote in and said one of the
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best I listened to several retirement
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investing podcasts and this is one of
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the best Jesse does a great job
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explaining things he has on interesting
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guests and he has an excellent and
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informative website I recommend well
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long bch thank you very much I
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appreciate the kind words and as always
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drop me a note Jesse best bestin
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interest. blog and I will get you hooked
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up with some bestest ge now before Jared
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comes on the podcast today I want to
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share with you some of my own thoughts
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the usual monologue and first because
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Jared is talking about maybe some unique
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takes I thought I would start by reading
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you from a very recent post I wrote
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which was called boring money topics
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that I find fun one of the first things
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I thought about when I was writing this
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article was the way that a lot of kids
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find some things in life very boring
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that somehow adults find fun now
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personally I didn't even know how to
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pronounce l miserable the the musical
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until about 2017 and now 7 years later I
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know all the songs uh my wife bought me
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tickets to lay Miz as a birthday present
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this year we're actually going next
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weekend and what a amazing musical uh
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99% of children I think they dislike art
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museums they dislike musicals they
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dislike reading the news but many adults
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we find beauty or Intrigue or interest
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in those same ideas and a similar boring
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to not boring transition occurs in
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personal finance the problem or at least
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the problem as I see it in personal
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finance is that the fun of something of
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it not being boring anymore that fun it
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doesn't usually last we had fun getting
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our personal finances under control we
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got hooked on that fund some of you
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listening might be hooked on that fund
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right now you might be in the process of
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improving and optimizing and you're
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you're feeling that fun and it can last
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for months or even a few years when
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money goes from some sort of scary
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unknown to an exciting area of
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optimization but then after we get it
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all figured out and that's when well as
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BB King famously saying that's when The
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Thrill Is Gone and thus you find
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yourself here listening to podcasts or
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or reading blogs or something like that
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looking for new ideas or just trying to
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keep the fun there I don't think that's
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a reason to despair though because the
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lack of financial fun ultimately is a
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good thing it's a sign that your
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finances are in a great place but
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despite my finances being in a in a very
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comfortable place I still still find
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lots of fun Financial things to think
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and learn about there are a few
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traditionally boring topics that I still
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find very exciting I I write about them
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sometimes I talk about them sometimes
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and here I'm going to share some of them
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with you and maybe it'll tickle some
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Intrigue in your brain as well the first
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one getting to know your taxes I'm not
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sure it can get more boring than taxes
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at least for the lay person but I
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actually like taxes and over the past
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two years especially I've realized that
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the tax code is somewhere between a
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puzzle and a game and I personally I
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love puzzles and games the rules of the
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game are very well defined although
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there are a ton of rules certainly I I
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do not know all the rules at this point
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but I've learned a lot over the last
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couple years and the more rules I learn
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about taxes the better my strategies in
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that game become the various pieces if
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you will in in the tax code they
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interact in different and sometimes
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surprising ways and there are always
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multiple ways to solve a tax problem
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sometimes a solution will decrease this
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year's taxes sometimes a solution will
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decrease future taxes sometimes we trade
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off lots of effort and paperwork just to
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save a few bucks and we have to ask
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ourselves is that a worthwhile trade I
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mean this is all kind of game theory
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game strategies do we want improvements
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now do we want improvements for the long
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run and there are many ways to skin a
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cat if you will there are many ways to
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solve these different tax problems now
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if you're a young w you to worker like
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me there's not too much to know our tax
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scenarios are fairly simple I will say
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for me the best interest is an LLC so
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that adds a little bit of a hiccup in
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there which is why I do actually use a
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tax preparer I use an enrolled agent to
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help me file my taxes but for most young
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W2 employees it's not too complicated
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but if you're a retiree and you're
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earning social security income you're
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making Ira withdrawals you're realizing
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capital gains hopefully long-term maybe
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some short-term capital gains or you're
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doing tax loss harvesting you're earning
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interest and dividends well you've got a
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very interesting tax puzzle lying before
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you and the interactions on your simple
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1040 tax return can be quite complex and
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can involve thousands of tax dollars per
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year if you're a business owner or you
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own say rental real estate you own
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multiple real estate properties that
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that tax puzzle intensifies and that's
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why a good CPA accountant is worth their
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weight in gold now to be clear tax
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planning in this way or tax optimization
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is not about cheating the tax system
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when accountants tell me they're
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aggressive I take that as a euphemism
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for I bend the tax code Until It Breaks
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now that's bad and it's usually just
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straight up illegal and I recommend you
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avoid that I don't think you should be
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looking to work with an aggressive
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accountant and I think that idea of an
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aggressive accountant isn't a good one
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and so you if you're an honest
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accountant listening to this my
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recommendation is you find find a
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different word than aggressive but
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working with a tax professional who one
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knows the rules of the tax code inside
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and out and then two enjoys optimally
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solving the puzzle that you bring to
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them well odds are that person can solve
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your puzzle much better than you can
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alone and so at the very least a pro tip
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I have for all you guys listening is
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starting this year review your 1040
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federal tax return or whatever your
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country's equivalent tax return is try
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to go through it line by line and if you
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don't understand what a particular line
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item means look it up or teach yourself
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and over time you'll understand a little
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bit more about this interesting puzzle
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game called taxes the second boring
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topic is to wait for a decade or to now
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many of you know by now that the best
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interest is a big proponent of long-term
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investing which as you might have
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noticed includes the words long term
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we're not talking weeks or months we
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measure in decades we beat a slow tempo
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drum of basic tenants like Buy and Hold
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and diversify and don't look for needles
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just buy the whole Hy stack now those
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tips are boring so to spice things up
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I'd like to remind myself and you of
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Market history one of my favorite
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cautionary tales is that returns are
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never promised and we have suffered
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Decades of zero returns I'm going to
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link an article in the show notes about
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that idea that concept the very real
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historical concept of Decades of zero
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returns and there's a chart in that
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article that is worth looking at that
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shows four unique periods one to start
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the 1900s it was kind of like 1900 to
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1921 a second period which is right
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around the Great Depression uh a third
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period which starts in the 60s and goes
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to the 80s and then a fourth period that
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was from the.com Bubble to the great
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financial crisis these four periods
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which the shortest one was about 14
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years long the longest one was about 20
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years long when there was essentially no
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return from the S&P 500 if you adjusted
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the S&P 500 for inflation and even if
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you reinvested all your dividends you
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could draw a straight line from an early
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Peak to a later Valley that was
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somewhere between 15 and 20 years long
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with zero return and now as I realized
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in hindsight there's a small problem
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with that idea now all everything I just
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said is factually correct the the the
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chart if you decide to go look at the
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chart is completely factually correct
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but it presents data differently than
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most people think inflation adjusting
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the data is usually a good idea in my
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opinion but when you do that a chart
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that is inflation adjusted it does not
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measure dollars and cents instead it
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measures purchasing power most of us
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though we measure our accounts in
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dollars and cents we understand the
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reality of inflation that it's
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constantly gnawing at our purchasing
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power but we don't inflation adjust our
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conception of the world right if $1
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grows to $2
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we see exactly that we don't say oh but
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inflation was 14% so really it's like I
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only have a186 no we think we have2 doll
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so to fix that problem I reconstructed
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that original plot to show nominal
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dollars I'll link this article that I'm
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reading from right now the boring money
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topics article so that you can see this
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adjusted chart as well and the adjusted
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chart looks a little bit different it
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looks a little bit more optimistic but
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it's still very eye opening to realize
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that you can have four or five or six
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year periods where your stock investment
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essentially will not grow it will not
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grow even if measured in nominal dollars
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imagine someone had started investing
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they put a million dollars in the stock
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market sometime in the early 90s they
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would have seen their account grow quite
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a bit between then and now however that
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person could have drawn a straight line
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from about
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1997 to about 2009
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with zero growth and that includes if
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they reinvest all their dividends that
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can be really depressing if you're
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sitting there in 2009 you look at your
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account value it's 1.6 million and then
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you look back in time and you say oh how
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is at 1.6 million in 12 years ago that's
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not great that's not what any of us hope
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will happen to our stock portfolios but
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it's a very real possibility now if that
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person in 2009 with 1.6 million had
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stayed the course and they held their
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portfolio till today 1.6 million it
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hasn't quite 10x in these past what 12
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years but they are significantly better
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off today they're probably somewhere
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like 12 to 14 million dollar today if
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they'd stayed the course but again the
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boring idea about investing for decades
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and Decades of time that idea is boring
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but to me the exciting part is the
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realization that it's not going to be a
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smooth ride right it's going to be a bit
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of a roller coaster and one of the
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downsides of that is that it's a
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realistic possibility to think that you
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might go through a three or five or even
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a 10-year period where ostensibly your
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stock portfolio won't grow one little
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bit now to me that's exciting in the
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same way that base jumping is exciting
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it's a far stretch from the lazy
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shorthand that we often hear which is
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you know the S&P returns 10% per year
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too many Financial influencers used that
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idea I've been guilty of that shorthand
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and I I do understand its usage if we're
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using it as a shorthand to for example
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calculate 30 years of compounding 10% a
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year for 30 years gets you to X but I
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despise that shorthand when I hear it
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used to explain expected stock market
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returns to a new investor new investors
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need to know that Stock Investing is not
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a smooth ride it's not always up and to
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the right it involves years if not
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Decades of what can feel like wasted
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time five years is a long time 10 years
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according to my math is even longer now
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are you excited to stay the course that
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long through both the thick and the thin
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of course the analysis that I'm talking
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about today assumes a lump some
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investment and of course dollar cost
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averaging Smooths out that ride
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immensely in fact dollar cost averaging
00:13:45
actually takes advantage of the bad
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times and the volatility I'm a huge fan
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of dollar cost averaging and I invest
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monthly or even more frequently than
00:13:53
monthly in my 401k my Roth IRA those
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kind of things the third boring top IC
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is to know your flow that is cash flow
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cash flow is like a cinder block of
00:14:04
personal finance it's boring it's basic
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it's plain every other synonym thereof
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but like cinder blocks it is also
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foundational you cannot build strong
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personal finances without healthy cash
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flow and you won't know if you have
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healthy cash flow unless you measure it
00:14:23
that is the financial fundamental that
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most people Overlook and speaking of
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base jumping the four boring topic that
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I like to think about is buying
00:14:31
protection because the exciting part
00:14:34
about extreme sports is the jump itself
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but it's someone's job to consider the
00:14:38
boring questions like is that parachute
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packed correctly or can that bungee
00:14:43
Cable support a 300 pound man or maybe
00:14:45
something like if he doesn't make it and
00:14:47
he lands inside the pit of burning tires
00:14:50
what's our rescue plan okay that's kind
00:14:52
of funny but on a more serious note what
00:14:55
about the modern miracles of say CPR and
00:14:58
aad automated external def fibulator
00:15:00
Christian Erikson if you don't know him
00:15:02
he's a Danish soccer player he's
00:15:04
currently on the roster for Manchester
00:15:05
United and on June 12th 2021 Christian
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Ericson at the age of 29 he had a
00:15:11
cardiac arrest during a national team
00:15:13
game when Denmark was playing Finland
00:15:16
Now 50 years ago he would be dead
00:15:19
straight up dead but because the
00:15:21
training staff is both CPR trained and
00:15:24
well equipped with that automated
00:15:26
external defibrillator AED Eric heart
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was shocked back to life it took one
00:15:31
shock on the field you can watch the
00:15:33
Youtube videos it's the kind of thing
00:15:35
where if it bothers you to watch someone
00:15:37
ostensibly die on camera it's a little
00:15:39
traumatic video but the fact that he
00:15:42
lived means at least for me it's very
00:15:44
interesting to see it's kind of like a
00:15:46
terrible but thankfully it ends well
00:15:48
silver lined you could say human story
00:15:50
to see people's reactions to see the
00:15:53
fans reactions to hear the stadium go
00:15:55
silent but to see this training staff
00:15:57
who had asked the write questions
00:15:59
beforehand and they were well prepared
00:16:01
and well trained and they react in
00:16:03
seconds they're sprinting on the field
00:16:05
they're checking him they're doing CPR
00:16:07
they use the AED and they save his life
00:16:10
now in a more American sense a similar
00:16:13
Cardiac Arrest happens to Demar Hamlin
00:16:15
in a Buffalo Bills football game in
00:16:17
January of 2023 and again in that case
00:16:20
an AED was used to shock his heart back
00:16:23
to life dear Hamlin is alive and well
00:16:26
and still playing football now those
00:16:28
might be one in 10,000 events right low
00:16:31
low probability and those are easy odds
00:16:34
to ignore but asking yourself well what
00:16:37
happens if that question can lead to
00:16:40
some life-saving answers a little
00:16:42
preparation goes a long way now the
00:16:44
personal finance World skewes less life
00:16:47
and death than Cardiac Arrest but some
00:16:49
of the financial Q&A will point you
00:16:51
towards things like a well-funded
00:16:53
emergency fund life insurance now term
00:16:56
life insurance only guys uh home and
00:16:58
auto insurance disability insurance
00:17:00
umbrella Insurance a lot of insurance is
00:17:03
here right protection is a lot about
00:17:05
margin of safety it's about insurance
00:17:07
but if you're unsure what kind of
00:17:08
insurance you do or don't need ask
00:17:11
yourself this fundamental question
00:17:14
question is if something bad happened on
00:17:17
some particular axis do I have the
00:17:20
assets needed to pay for it now here are
00:17:22
some examples if I died would my family
00:17:25
have the assets and cash flow to
00:17:27
continue our desire lifestyle if your
00:17:30
answer is no you probably need life
00:17:32
insurance if I got disabled and couldn't
00:17:34
work do I have the assets needed for my
00:17:37
family to continue our lifestyle if not
00:17:40
you need disability insurance if my
00:17:42
house burned to the ground or got swept
00:17:43
away in a hurricane something like that
00:17:46
well you can finish that question you
00:17:48
might need homeowners insurance if I got
00:17:50
sued when the mailman trips on my
00:17:52
sidewalk da da da da da you might need
00:17:55
umbrella Insurance you can ask yourself
00:17:56
those kind of questions if you don't
00:17:58
have the assets to cover your potential
00:18:01
liability you need insurance all right
00:18:04
now if everything in your finances feels
00:18:06
boring as we said that is a good thing
00:18:09
like Marv and home alone too you've
00:18:12
reached the top Harry I've reach the
00:18:20
top there are plenty of nuance topics in
00:18:23
personal finance to nose dive into or
00:18:25
you can just go live your life you can
00:18:27
go check out a musical or a museum and
00:18:31
as they say in Lay Miz another story
00:18:34
must
00:18:35
begin is nothing now another story must
00:18:42
[Music]
00:18:50
begin here's a quick ad and then we'll
00:18:52
get back to the show every week I send a
00:18:54
quick free email to thousands of readers
00:18:57
that shares three simple things one my
00:18:59
new articles and podcasts two the best
00:19:02
financial content of the week from all
00:19:04
over the Internet and three a financial
00:19:07
chart that explains some important
00:19:09
Concept in the news that week it's a
00:19:11
great primer to boost your financial
00:19:13
knowhow ah but Jesse I don't want
00:19:16
another email well this might not be for
00:19:18
you but I do hear you which is why I
00:19:21
make it very short sweet and full of
00:19:23
only the essentials a whopping 66% of
00:19:26
subscribers read my email at least once
00:19:28
once a month they're enjoying it and
00:19:30
maybe you will too you can subscribe for
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free on the homepage at bestter
00:19:35
interest. blog again that's a free no
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strings attached subscription at bestin
00:19:40
interest. blog but enough of these
00:19:42
boring topics let's get to some exciting
00:19:45
conversation with Jared dillian Jared is
00:19:47
a writer an author a DJ and a speaker
00:19:51
he's former Wall Street Trader at Leman
00:19:54
brothers and has been working in
00:19:56
financial adjacent fields ever since his
00:19:58
new newsletters include the daily dirt
00:20:00
naap a daily Market newsletter for
00:20:02
investment professionals and another
00:20:04
newsletter called we're going to get
00:20:06
those bastards which is about everything
00:20:09
that is depraved especially Finance
00:20:11
culture music and sex I haven't read
00:20:14
that one but sounds intriguing Jared's
00:20:16
books include Street freak which we will
00:20:18
mention today all the evil of this world
00:20:21
those bastards and recently released a
00:20:24
book called No Worries which again we
00:20:27
will dive into a little bit today so
00:20:29
without further Ado here is Jared
00:20:36
dillian Jared thanks for sitting down on
00:20:39
the best interest podcast maybe you know
00:20:42
I I think the average Wall Street
00:20:44
Professional might have heard of you
00:20:46
they they know about the daily dirt naap
00:20:48
but a lot of the diyers might not have
00:20:50
so so give us a real quick rundown of
00:20:52
your career kind of where you got to
00:20:54
where you are what the daily dirt naap
00:20:57
is what you find yourself filling your
00:20:58
days with as far as work goes now yeah I
00:21:01
went to the Coast Guard Academy for
00:21:02
college and served in the Coast Guard
00:21:05
for nine years while I was in the Coast
00:21:08
Guard I got super interested in trading
00:21:10
I wanted to be a Trader on Wall Street
00:21:12
uh on my second tour in San Francisco I
00:21:16
went to USF the University of San
00:21:18
Francisco got my MBA I also got a
00:21:21
part-time job on the floor the peos
00:21:23
options exchange so I was a local on the
00:21:27
floor for a little while and then I
00:21:29
turned that into a job at Liam Brothers
00:21:32
started working at Liam Brothers in
00:21:34
2001 uh I did index Arbitrage for three
00:21:37
years and then I ran the ETF desk for
00:21:40
four years ETF trading at the bankruptcy
00:21:44
I decided to leave you know Barclays
00:21:46
took over the leing broker dealer
00:21:49
operation but I decided to leave and
00:21:51
start my newsletter the daily dirt naap
00:21:53
so I've literally been doing that for
00:21:54
the last 16 years I've written a bunch
00:21:57
of books along the way Street freak was
00:21:59
published in 2011 all the evil of this
00:22:02
world was published in 2016 those
00:22:04
bastards was published last year and no
00:22:07
worries how to live a stressfree
00:22:08
financial life was published in January
00:22:11
I had a very long gig at Bloomberg
00:22:14
opinion I was an oped columnist for
00:22:17
Bloomberg for like five and a half years
00:22:19
also did that at Forbes also had a radio
00:22:21
show for a couple of years so yeah I've
00:22:24
done a lot of stuff cool very cool now
00:22:28
we're definitely going to talk about no
00:22:29
worries in a little bit and I think some
00:22:31
of the actual specific finance and
00:22:33
investing topics that I want to dig into
00:22:35
are very much in the vein of no worries
00:22:37
some cool stuff that you've talked about
00:22:38
recently on your podcast but going back
00:22:40
to Leman Brothers I mean you were there
00:22:42
at the bankruptcy right you were there
00:22:43
during the great financial crisis which
00:22:45
of your books maybe are just what can
00:22:47
you point people to if they're
00:22:49
interested in hearing some of your
00:22:50
stories from the inside of what it was
00:22:52
like to be there in the trading desk or
00:22:53
be there during the bankruptcy for sure
00:22:56
you would want to you would want to read
00:22:57
Street for you know you can still get it
00:22:59
off Amazon you can pick up Ed copies or
00:23:02
you can get it on Kindle but that's
00:23:05
that's the story of my time at Leeman
00:23:07
brothers from 2001 to 2008 and all kinds
00:23:11
of incredible stories which you wouldn't
00:23:14
believe that book is actually pretty old
00:23:16
now I mean that book is like 13 years
00:23:18
old yeah and it's held up pretty well
00:23:20
over time I mean it's a it's a classic
00:23:22
can can you give us any any spoilers or
00:23:24
just like does any one story stick out
00:23:27
from whether it's in the book or not
00:23:28
just any one story about how crazy that
00:23:31
time was I can tell you a story which
00:23:34
really I think speaks to leman's culture
00:23:38
there was an options Trader he traded
00:23:41
options ON Semiconductor companies and
00:23:44
he had a little bit of a temper I mean
00:23:45
we all did you know we all like broke
00:23:47
phones and stuff like that he gets mad
00:23:50
and he takes his phone and he slams it
00:23:52
on the desk and it bounces up and hits
00:23:55
his computer screen and breaks his
00:23:58
screen right so now not only is he
00:24:00
losing money his screen is broken he
00:24:03
can't do anything about it and he just
00:24:05
kind of he he just kind of hangs his
00:24:07
head and within 30 seconds these two it
00:24:12
guys come over you know wearing like
00:24:14
burgundy shirts and they have like
00:24:17
drills and they come up and they go and
00:24:19
they take out his screen and put in a
00:24:22
new one like a pit crew like it was like
00:24:25
NASCAR they put it and he was up and
00:24:27
running in a it and that's really what
00:24:30
was so different about Lan from other
00:24:33
firms like there was no bureaucracy like
00:24:36
at a big Bank like JP Morgan you'd have
00:24:38
to put fill out some form some requests
00:24:41
and it would have to get approved by
00:24:42
like six different people and maybe
00:24:44
three months later you would have a new
00:24:46
screen he had one in like 30 seconds
00:24:50
that was Liam Brothers and also it was
00:24:53
kind of an endorsement of his behavior
00:24:55
like look like you're a Trader you're
00:24:57
going to get mad you're going to have
00:24:59
emotions breaking something every once
00:25:01
in a while is not that big of a deal
00:25:04
it's it's such an interesting comparison
00:25:06
or ju position between those kind of
00:25:08
stories or that kind of atmosphere that
00:25:11
you were living in and it is very real
00:25:13
in Wall Street versus the kind of topics
00:25:16
or the importance or the stress that
00:25:18
people should feel in their everyday
00:25:20
finances so let's dive into some of
00:25:22
those topics I mean I really liked one
00:25:23
of your your most recent podcast
00:25:25
episodes the three biggest financial
00:25:27
decisions you will ever make what are
00:25:30
those decisions Jared and and why do you
00:25:31
place so much importance on them first
00:25:34
of all I I would just preface this that
00:25:36
I would say these are the three most
00:25:39
important financial decisions that an
00:25:42
average person will make someone of
00:25:43
average means okay if you have more
00:25:45
money then you're going to have more
00:25:47
complex financial decisions but for the
00:25:48
average person it's buying a house
00:25:51
buying a car and going to college those
00:25:54
three things are really if you get them
00:25:57
right
00:25:59
will set you on a good path and if you
00:26:00
get them wrong you will be paying for it
00:26:02
for the rest of your life and honestly
00:26:04
the biggest one is the house and this is
00:26:06
this is one that this is a mistake that
00:26:08
people make all the time buying a house
00:26:10
for a lot of people is an emotional
00:26:12
decision you know typically what happens
00:26:14
is they get pre-approved for this giant
00:26:17
loan which is based on 42% of their
00:26:21
income and they look for houses on that
00:26:24
basis and they find a house that is too
00:26:26
big for them and they fall in love with
00:26:28
it
00:26:28
and they're like yeah we know the dog
00:26:30
can play in the yard and the kids room
00:26:32
is here and the TV goes over here and
00:26:34
they just fall in love with this house
00:26:36
then they end up overpaying for it and
00:26:39
they have just like all of their free
00:26:42
cash flow going out the window to pay
00:26:45
for this house which crowds out their
00:26:48
ability to number one save for
00:26:51
retirement but number two even really to
00:26:54
just spend disposable income and enjoy
00:26:56
themselves you know everything goes to
00:26:58
the house so what I talk about in the
00:27:01
book is that decision of whether to buy
00:27:04
a house that's one decision if you get
00:27:07
that decision right then you don't have
00:27:10
to worry about small decisions and the
00:27:12
small decisions are like whether you
00:27:14
should buy coffee in the morning if you
00:27:16
get the big decisions right you don't
00:27:18
have to worry about the small decisions
00:27:20
yeah too many people in this Arena place
00:27:22
too much emphasis on the small decisions
00:27:25
whether it's the small decisions just in
00:27:26
terms of dollars and cents you know the
00:27:27
morning coffee or the small decisions in
00:27:29
terms of just time spent I think it was
00:27:32
you but even if it wasn't I I'm sure you
00:27:33
would agree with this statement on some
00:27:35
level the idea that you're sitting in
00:27:37
the grocery aisle and you're wondering
00:27:39
you know do I buy the the store brand
00:27:40
peanut butter or do I splurge for the
00:27:42
GIF like it doesn't matter and why
00:27:44
you're spending more than one second on
00:27:46
it and you know it's it's a $1 decision
00:27:48
and meanwhile you've got a mortgage that
00:27:50
is is 50% too large and you're stressing
00:27:52
about what peanut butter to
00:27:54
buy people just get jammed up on stuff
00:27:58
that does not matter at all like
00:28:02
actually it's funny because I sent out a
00:28:04
newsletter yesterday which talked about
00:28:07
the whole coffee decision and I had a
00:28:10
guy who I know from Wall Street and he's
00:28:12
been amazingly successful I mean we're
00:28:15
talking like nine figures here he's done
00:28:17
really really well and he's like I
00:28:20
disagree with you man like he says when
00:28:22
I lived in New York like I always took
00:28:24
the subway and I brought coffee to work
00:28:27
and and like I what else did he say I
00:28:31
never bought a bottled water and he's
00:28:33
like and that's why I have money and I'm
00:28:35
like you dummy like that's not why you
00:28:37
have money you have money because like
00:28:41
you did all these amazing trades and you
00:28:43
created funds and it was because your
00:28:45
work it's not because you took the
00:28:47
subway it's not because you saved like $
00:28:50
five like it's in it's insane totally
00:28:53
totally and and the other ones on your
00:28:55
list of the car in college a quick
00:28:56
little anecdote literally yesterday as
00:28:59
we record recording on March 1st
00:29:01
yesterday on February 29th my wife and I
00:29:03
bought a new car and you know the new
00:29:05
versus used debate there's some stuff
00:29:06
that I've put out there before that I
00:29:08
think some listeners have heard to that
00:29:09
actually the the the used car market is
00:29:12
pretty efficiently priced and buying a
00:29:14
used car isn't really that much of a of
00:29:16
a deal compared to a new car but we
00:29:18
bought a Hyundai which is very much kind
00:29:20
of an economy car and we did buy new but
00:29:23
my wife's car was 18 years old she was
00:29:25
still driving a 2006 Chevy right so we
00:29:29
squeezed every mile we could out of that
00:29:31
thing she named the car it was Sheila it
00:29:34
was really bad sad to say goodbye to
00:29:36
Sheila but then yeah but then we bought
00:29:38
a new car we did a lot of research we
00:29:40
bought Consumer Reports gives Hyundai's
00:29:42
really good grades we put a lot of time
00:29:44
and effort into it because we know we're
00:29:45
buying this depreciating asset yeah and
00:29:48
we wanted to make it a smart decision or
00:29:50
as smart as we could yeah that's the
00:29:51
right way to do it now kind of Switching
00:29:53
gears because those are some tips that
00:29:55
we said apply to we'll call it you know
00:29:57
the broad center of the bell curve apply
00:30:01
to average people but some people are
00:30:03
richer than average and and you put out
00:30:05
a podcast recently and the title of it
00:30:07
was does it bother you that some people
00:30:09
are richer than others such an
00:30:11
interesting topic it's something I kind
00:30:13
of think about it work because we have
00:30:15
some very wealthy clients we also have
00:30:17
some clients who are just starting out
00:30:18
and and building their long-term wealth
00:30:21
and so I see this so what was the
00:30:22
impetus behind this topic and and what
00:30:24
is your opinion on it Jared I don't
00:30:26
remember the I don't remember why I
00:30:29
talked about this but I don't experience
00:30:32
fomo like if other people are getting
00:30:34
rich on something I'm like good for them
00:30:36
it's their path I'm on my path like it's
00:30:39
like all the Bitcoin stuff from a couple
00:30:41
years ago when people were getting rich
00:30:43
off crypto I'm like great like I'm on my
00:30:46
path I'm going to do my thing and I
00:30:49
don't really care what other people are
00:30:50
doing but a lot of people do a lot of
00:30:52
people are super interested in how much
00:30:54
money somebody else is making and I mean
00:30:57
really like the word we haven't said yet
00:30:59
is Envy like there's a lot of Envy out
00:31:01
there and even Charlie Monger talked
00:31:03
about this like somebody said to Charlie
00:31:05
Monger like do you think the world is
00:31:07
driven by greed and he said no it's
00:31:09
driven by Envy and like it took me a
00:31:12
long time to understand that because I
00:31:14
fortunately was born without that reflex
00:31:17
like I don't experience Envy I mean
00:31:20
don't get me wrong there's some people
00:31:22
who are richer than me who I think are
00:31:24
dumber than me and you know I kind of
00:31:27
wish like had as much money as they had
00:31:29
but like I said like I'm on my path Envy
00:31:31
is the worst out of the seven deadly
00:31:34
sins because you don't get to have any
00:31:37
fun at it you get to have fun at lust
00:31:40
you get to have fun at sloth right but
00:31:42
you don't get to have fun at Envy like
00:31:44
Envy is just miserable you know not to
00:31:46
get political but Envy is what drives
00:31:48
really terrible social movements and
00:31:51
people get hurt you know in some
00:31:53
countries very high tax rates and
00:31:56
communism and all that stuff so you know
00:31:58
I just encourage people to just focus on
00:32:00
what they're doing and ignore what
00:32:03
everybody else is doing I I was hoping
00:32:04
you would bring up I I I think I've
00:32:06
heard Charlie Monger say that same exact
00:32:07
thing about Envy right it's the only one
00:32:09
of the seven deadly sits you don't get
00:32:10
to have any fun with and it is true
00:32:13
right all it does is drain you I was
00:32:15
having a conversation with a client the
00:32:17
other day it was a terrific conversation
00:32:19
just on that topic of yes there will
00:32:23
always be people in the world and this
00:32:24
might even be a buffet quote but there
00:32:26
will always be people in the world who
00:32:27
are richer than you and also dumber than
00:32:30
you and and it's right it's another
00:32:32
version of like you know the Jones is
00:32:34
down the street maybe or like it's
00:32:36
frustrating maybe some of it's luck
00:32:38
maybe it's that some people are born on
00:32:40
third base and others aren't the world
00:32:42
throws you situations that you have no
00:32:44
control over and that brings me back one
00:32:46
of my favorite quotes is the Annie Duke
00:32:48
quote I don't know if you know Annie
00:32:49
Duke Jared poker player right Annie says
00:32:51
there are two things in your life that
00:32:53
control the the outcome of your life
00:32:56
it's the quality of the decisions that
00:32:58
you make and luck all you can control is
00:33:01
the quality of your decisions luck is
00:33:02
out of your hands going back to the
00:33:04
original question does it bother you
00:33:05
that some people are richer than others
00:33:07
maybe at one point in my life when I
00:33:09
didn't have as much perspective on the
00:33:10
world but at this point when you talk
00:33:12
about the path that you're on Jared and
00:33:14
you're on your path and they're on their
00:33:16
path and I'm on my path and all I can
00:33:18
control is the quality of my own
00:33:20
decisions yep you've been asked about
00:33:21
this next topic a lot it is such an
00:33:23
interesting topic though I know for a
00:33:25
fact that a good number of my listeners
00:33:28
are on the fire path they are they are
00:33:32
diyers wow they are seeking Financial
00:33:35
Independence you know Mr Money Mustache
00:33:37
was an inspiration to them at some point
00:33:38
in life and and maybe we do need to
00:33:40
separate Financial independence from
00:33:43
retiring early right the FI versus the
00:33:47
re but let's dive into a little bit on
00:33:49
your position on the fire movement at
00:33:51
least the way that that it's been
00:33:52
presented to you and if you've thought
00:33:54
about it before Jared I mean do you
00:33:56
think about financial Independence
00:33:58
differently than the retiring early
00:34:01
aspect of it first of all I I wrote a
00:34:03
substack about this I don't know if you
00:34:05
saw it did you see it yeah I I did and
00:34:07
we will link it in the show notes for
00:34:08
everybody to read it's a good one and
00:34:10
some people got upset about that number
00:34:12
one I don't want to retire early and
00:34:14
number two I don't want Financial
00:34:16
Independence what Financial Independence
00:34:18
means is getting to a number that you
00:34:23
have in your head about what makes you
00:34:26
independent and then stopping that's
00:34:28
sort of implicit in that like you get to
00:34:30
a number and then you stop right I
00:34:32
disagree with that like I'm going to go
00:34:34
beyond that number and I'm going to keep
00:34:35
going and I'm never going to stop and
00:34:38
with regard to retire early you I I
00:34:41
spoke at Coastal Carolina University a
00:34:43
couple days ago spoke to a class of
00:34:46
business students and I said I don't
00:34:47
want to retire my goal is not to do
00:34:51
nothing and there a lot of people say
00:34:53
like well you get to retire and pursue
00:34:55
your dreams and all that stuff I'm like
00:34:56
great well my dream is to be a DJ right
00:35:00
like I already like I'm a DJ already
00:35:02
like I play parties but wouldn't it be
00:35:04
cool if I just had like 16 hours a day
00:35:07
and I could just do music and nothing
00:35:09
else that would actually be hell like
00:35:12
that would be hell for my hobby to
00:35:15
become my job and like take up my whole
00:35:18
life like that would actually suck I
00:35:20
don't want to retire I don't want a lot
00:35:23
of unstructured free time like I like
00:35:26
working and I think the fire movement is
00:35:28
for people who really dislike their jobs
00:35:31
they don't like working they want to
00:35:33
stop and then what happens is you stop
00:35:36
and then you have $2 million saved up or
00:35:39
something like that and then every time
00:35:41
the stock market goes down 3% you freak
00:35:43
out because you think you're going to
00:35:44
run out of money and you're going to
00:35:46
have to go back to work and you're going
00:35:47
to have like a 10year gap in your resume
00:35:49
and you're not going to be able to get a
00:35:50
job that sounds like hell to me like it
00:35:53
sounds it's it really sounds terrible so
00:35:56
I don't care if the math works out like
00:35:58
I mean the fire people say the math
00:36:00
works out and I think their return
00:36:03
assumptions on the stock market are a
00:36:05
little high I think if you use six or
00:36:08
eight% return assumptions I think it's a
00:36:11
different it's a different calculus than
00:36:13
if you're using 10 or 12% return
00:36:15
assumptions but nonetheless like I don't
00:36:18
want to retire and I'm just going to
00:36:20
keep working because I like working I
00:36:23
like that answer and and we're a big fan
00:36:25
here of different points of view so even
00:36:27
though I mean I know enough of my
00:36:29
listeners well enough that they're going
00:36:30
to respect everything you just said
00:36:31
Jared and I can speak for myself
00:36:33
certainly where my introduction to the
00:36:36
fire of movement call it 2015 or so I'm
00:36:39
a 25-year-old engineer right mechanical
00:36:42
engineer working in Aerospace I'd give
00:36:44
my job a B minus or a C+ it simply
00:36:46
didn't Light My Fire it was paying fine
00:36:49
I didn't mind going into work but I
00:36:50
didn't love it and yeah the idea of
00:36:53
escaping that particular work style was
00:36:57
appealing to me and I didn't know it per
00:36:59
se at the time I didn't realize it but I
00:37:02
just said oh this fire movement seems
00:37:03
interesting the idea of saving money
00:37:05
investing for the long run that I I can
00:37:07
get on board with that and so I started
00:37:09
learning a lot more it wasn't until
00:37:11
actually I started the best interest
00:37:14
where I found this passion project and
00:37:16
then that led me to switching careers to
00:37:18
where now I'm kind of working one-onone
00:37:19
with clients I love what I'm doing now I
00:37:22
love my work dayss so the idea of the
00:37:25
financial side of the financial
00:37:27
Independence Movement meaning diversify
00:37:30
lowcost index funds live a Frugal
00:37:32
lifestyle I'm on boarded with all that
00:37:35
once you find something that you love to
00:37:36
do work-wise I have no need or no desire
00:37:39
to retire early I have no need or desire
00:37:42
to hit my fi number and stop so I I
00:37:44
totally see both sides of the coin you
00:37:47
talked about Mr Money Mustache and I've
00:37:50
never met him the fire movement seems to
00:37:53
me to be an anti-consumption movement
00:37:56
really more than anything else
00:37:58
the idea that you would spend money on
00:38:00
something that brings you enjoyment is
00:38:03
immoral in their framework you know what
00:38:06
I mean Mr Money Mustache wrote this
00:38:08
whole essay about how he made a pizza at
00:38:11
home he's like you know we made the
00:38:13
dough and we had the pepperoni and we
00:38:16
made this tomato sauce and we made the
00:38:18
pizza and it took a couple hours and
00:38:20
he's like hey all the ingredients for
00:38:21
the pizza cost $5 so I saved $15 instead
00:38:26
of buying a pizza for 20 bucks and I'm
00:38:29
like dummy like you spend 3 hours making
00:38:33
the pizza and if you value your time at
00:38:35
$25 an hour then it's an $80 Pizza you
00:38:39
know what I mean and there's a lot of
00:38:40
people out there who like don't
00:38:42
understand this relationship between
00:38:43
time and money and for him it's really
00:38:46
more of you know it was he was like I
00:38:49
don't want this like dangerous car
00:38:51
rumbling down the street to my house and
00:38:53
all this stuff I'm like come on man like
00:38:55
it's Insanity The Reason re dominoes
00:38:58
exists is because of a division of labor
00:39:01
we have this thing called a division of
00:39:02
labor like dominoes is better at making
00:39:06
pizzas than you and they're faster so
00:39:09
you should buy a pizza from dominoes and
00:39:12
that will take you a minute and then
00:39:16
with the three hours that you would have
00:39:17
spent making the pizza do something else
00:39:20
like work like write short stories watch
00:39:22
baseball clean the house like it's a
00:39:25
better use of your time than a pizza I
00:39:28
don't know if you ever heard this before
00:39:30
but it's really more of a philosophical
00:39:32
issue about capitalism but it's called
00:39:34
the allegory of the sandwich right no no
00:39:38
us so the allegory of the sandwich is
00:39:41
okay I don't want to go to the store and
00:39:44
I don't want to trade with anyone else
00:39:46
so I'm going to make a sandwich myself
00:39:48
so how long would it take me to make a
00:39:50
sandwich well I would have to grow wheat
00:39:53
in my backyard and Mill the wheat and
00:39:56
make flour
00:39:57
and I'd have to raise a pig for the ham
00:40:00
and butcher the pig and I would have to
00:40:02
grow lettuce and grow tomatoes and you
00:40:05
know have chickens for eggs for
00:40:07
mayonnaise and all this stuff it would
00:40:09
take me a thousand hours to make a
00:40:11
sandwich and that's really the beauty of
00:40:14
trade right so we have a division of
00:40:17
labor I do what I'm good at which is
00:40:19
like writing newsletters and I earn
00:40:21
money by writing newsletters which I can
00:40:23
use to buy a sandwich you know so I
00:40:25
don't have to spend a, hours making a
00:40:28
sandwich so the the whole thing is just
00:40:31
it's almost anti- capitalist it really
00:40:33
is and I just I totally disagree with it
00:40:37
oh well I I definitely think there are
00:40:38
quarters like I have seen the extremes
00:40:40
there's one website I know of Jared
00:40:42
where they have a spreadsheet that
00:40:44
probably has two or three hundred line
00:40:46
items in it and every line item is a
00:40:48
food and since you were talking about
00:40:50
food there it breaks the foods down into
00:40:53
costs per calorie if you want to really
00:40:55
be frugal here it's rice and beans and
00:40:58
actually some kinds of some brands of
00:41:00
chicken but it's almost missing a bit of
00:41:02
the forest for the trees in in my
00:41:04
opinion and and stepping over dollars to
00:41:06
pick up pennies there's definitely an
00:41:08
aspect of that in the fire movement too
00:41:10
that I don't think is healthy and some
00:41:12
leaders in the fire movement I've seen
00:41:14
are definitely starting to separate
00:41:15
themselves from that line of thinking a
00:41:17
little bit I love the allegory of the
00:41:19
sandwich I love bringing it back to kind
00:41:21
of basic economics and trade is a
00:41:23
wonderful thing currency to promote
00:41:25
trade that's a fantastic thing thank God
00:41:28
we have dollars and nickels and quarters
00:41:29
so that we can trade our bread and ham
00:41:32
with one another I just think it speaks
00:41:34
Jared to some people worry about the
00:41:37
wrong things when it comes to their
00:41:38
financial life here's a quick ad and
00:41:41
then we'll get back to the show serious
00:41:43
question why do podcasters constantly
00:41:46
ask for ratings and reviews yes they do
00:41:49
help highlight our shows to new
00:41:50
listeners they help strangers find us on
00:41:52
Apple podcast and Spotify it's totally
00:41:55
true and a good reason to ask for
00:41:56
ratings and reviews use but I have
00:41:58
something more important at least more
00:42:00
important to me I want to know if you
00:42:02
like this stuff I want to know if you
00:42:04
like my podcast episodes my monologues
00:42:06
my guests the information I share with
00:42:08
you and the stories I tell I want to
00:42:10
improve and make your listening more
00:42:12
enjoyable in the process so yeah I would
00:42:14
love to read your reviews and sure if
00:42:17
you throw a rating in there too that's
00:42:18
great if you like what I'm doing please
00:42:21
share it with me it's such a great
00:42:22
feeling to read your feedback I'd love
00:42:25
to read your review or see rating on
00:42:28
Apple podcast or Spotify thank you let's
00:42:31
talk a little bit about your most recent
00:42:33
book no worries what can readers expect
00:42:35
from the book I mean it's the best damn
00:42:37
personal finance book ever written it's
00:42:39
really really good humbly speaking so
00:42:42
the reviews on Amazon today went from
00:42:45
4.9 to 4.8 they dropped to 4.8 so that
00:42:50
sucks but it's gotten great reviews a
00:42:53
lot of people have said it's really
00:42:54
changed the way they think about money I
00:42:57
I mean it's about living a stressfree
00:42:59
financial life right most of the
00:43:01
personal finance books if you go to
00:43:02
Barnes & Noble and you go to the
00:43:04
Bookshelf it's a lot of schlocky stuff
00:43:07
like 12 ways to become a millionaire and
00:43:09
stuff like that I don't think the goal
00:43:11
should be should be to be a millionaire
00:43:13
like that's the goal shouldn't be to get
00:43:15
to some number I mean the goal should be
00:43:18
to be happy with your financial
00:43:20
situation so it's really a book about
00:43:22
happiness and the first part of the book
00:43:24
talks about your attitudes towards money
00:43:26
and the first chapter is probably the
00:43:28
most important chapter of the book and
00:43:29
it's called you have to want it and a
00:43:33
lot of people they want to want money
00:43:36
but they don't want money if you know
00:43:38
what I mean dive into that a little bit
00:43:40
more they want to want it but they don't
00:43:43
want it I'm not I I I might need five
00:43:45
seconds to to follow that logic what
00:43:47
what is that what is that I would say
00:43:48
the vast majority of people don't really
00:43:50
have a concept of what it takes to make
00:43:54
money for example you have a job you
00:43:57
work at a university you get paid
00:43:58
$70,000 a year great so you think you
00:44:02
make what you make unless you get like a
00:44:05
cost of living bump or a raise or an
00:44:07
award or something like that but you
00:44:08
pretty much make what you make every
00:44:10
year well there's a lot of other things
00:44:11
you can do to make money first of all
00:44:14
you could totally change careers right
00:44:16
you could say I could make more money
00:44:18
selling real estate so you could leave
00:44:21
your career and blow up your identity
00:44:24
and become somebody totally different
00:44:25
and get a different job and start making
00:44:27
more money it's very hard to do you know
00:44:30
but some people do that you could start
00:44:33
doing passive income you could start
00:44:35
buying out houses and renting them out a
00:44:37
lot of people do that people become
00:44:39
millionaires doing that you could start
00:44:41
a business like even a small business
00:44:44
even like selling chachkies on Etsy or
00:44:47
something like that's that's a business
00:44:49
you can make 10 or 20,000 more a year
00:44:52
doing that there's lots of things that
00:44:54
you can do to make more money but you
00:44:56
have to to want it you have to want it
00:44:59
and it takes work and it takes effort I
00:45:02
I mean look like I'm guilty of it too
00:45:05
there's things I could be doing to make
00:45:08
more money and I choose not to do them
00:45:12
because I'm happy with my present
00:45:14
situation I'm complacent and a lot of
00:45:16
people get complacent but if you're not
00:45:19
complacent and you're hungry there's a
00:45:22
lot of things you can do to make more
00:45:23
money got it you have to want to do that
00:45:26
thing that's going to lead to income
00:45:27
yeah I I can understand that and I can
00:45:29
also understand again having seen both
00:45:31
sides of the coin a little bit in my old
00:45:34
career it was here's your salary and
00:45:37
here's your two to three% cost of living
00:45:38
raise I'm not sure I started this side
00:45:41
project in the pursuit of money per se
00:45:43
but it definitely opened my eyes to
00:45:45
other avenues out there what are some
00:45:47
other ways Jared just some other
00:45:48
stresses some other worries that you see
00:45:50
out there in the whether it's in like
00:45:53
the personal finance content space that
00:45:55
you think aren't merited or just from
00:45:57
average people who you've interacted
00:45:58
with where they're worrying about
00:46:00
something that you just think isn't
00:46:01
worthwhile well the two sources and
00:46:03
there's only two sources of financial
00:46:05
stress the two sources of financial
00:46:06
stress are debt and risk and that's it
00:46:10
so if you have a lot of debt it's going
00:46:12
to cause you stress if you have a lot of
00:46:14
risk in the financial markets it's going
00:46:15
to cause you stress pretty much nothing
00:46:18
else I addressed this in the book but
00:46:19
some people say well if you don't have
00:46:21
enough money then you're experiencing
00:46:23
stress and I actually disagree with that
00:46:25
as long as your basic needs are met
00:46:27
okay if your basic needs are met if you
00:46:30
don't have debt and you don't have risk
00:46:32
you're perfectly happy I know lots of
00:46:34
people who don't have much money they're
00:46:37
debt-free they're not investing and they
00:46:39
have nothing to worry about financially
00:46:41
they're perfectly happy then you have
00:46:43
the richest guy in the world Elon Musk
00:46:46
who almost went bankrupt when he took
00:46:48
out a loan to buy Twitter and pledged
00:46:50
his Tesla stock is collateral and the
00:46:52
stock went down 75% the richest guy in
00:46:56
the world almost went bankrupt he has
00:46:59
Financial stress so it's all about how
00:47:01
you structure your life it's not it's
00:47:04
not a function of how much money you
00:47:05
make at all so the two sources of stress
00:47:08
are debt and risk and if you minimize
00:47:11
your debt and risk you're going to be
00:47:12
okay so I I definitely get on board with
00:47:15
minimizing the debt I mean a lot of
00:47:17
people in the personal finance base have
00:47:18
heard that idea before minimizing risk
00:47:21
though I mean how does one invest for
00:47:23
the future save for retirement those
00:47:25
kind of things I mean minimizing risk
00:47:27
are you saying like take risk all the
00:47:28
way to zero or is there some in between
00:47:31
number if you will that makes more sense
00:47:34
yeah so in the book I talk about
00:47:35
something called the awesome portfolio
00:47:37
Okay and you mentioned lowcost index
00:47:40
funds before and sort of the
00:47:42
conventional wisdom these days is that
00:47:45
how you should invest for retirement is
00:47:48
you should put all your money in the S&P
00:47:50
500 and dollar cost average it and write
00:47:54
out the volatility and you'll have a big
00:47:56
number at the end or maybe a more
00:47:58
conservative version of that is you have
00:48:00
60% in a total stock market index fund
00:48:03
and 40% in the total bond market index
00:48:05
fund and you dollar cost average that
00:48:08
and you have a big number at the end
00:48:09
right so the problem with that is that
00:48:13
when you invest in an index you get the
00:48:15
returns of the index which are good but
00:48:19
you also get the volatility of the index
00:48:22
which is undesirable and the S&P 500 you
00:48:25
know it moves around 155 20% a year
00:48:28
which is a huge amount of volatility so
00:48:30
over the course of a 40 or 50y year
00:48:32
investing career you're going to have 20
00:48:35
or 25 10% Corrections you're going to
00:48:38
have 5 to8 20% bare markets in one time
00:48:43
or more you're going to have a 50% draw
00:48:46
down and Vanguard has marketing around
00:48:49
this they you know in their ads they say
00:48:52
just ride it out just hold on they're
00:48:55
like the Bitcoin guys they're telling
00:48:56
you a hle right like they just hold on
00:48:59
all right let's say you had the ability
00:49:01
to hold on and let's say you don't panic
00:49:04
and sell at the bottom which is what a
00:49:05
lot of people do but let's say you had
00:49:08
the ability to hold on you're going to
00:49:10
be miserable you're going to be
00:49:12
absolutely miserable like writing out
00:49:14
all this volatility in the stock market
00:49:17
and the solution to that is something
00:49:19
called the awesome portfolio which is
00:49:21
20% stocks 20% bonds 20% gold 20% cash
00:49:25
and 20% real estate okay this port this
00:49:29
portfolio returns about 1% less than the
00:49:33
S&P 500 with half the volatility of an
00:49:37
8020 portfolio you're trading away 1% in
00:49:41
terms of gains but you're cutting your
00:49:44
volatility in half and also draw Downs
00:49:47
matter right the Max draw down you
00:49:49
experience in any given year so in 2008
00:49:52
the stock market was down like 38% the
00:49:55
worst draw down for the awesome
00:49:57
portfolio in any year was 12% which was
00:50:01
actually in
00:50:02
2022 that's the worst year you could
00:50:04
possibly have as you're down 12% out of
00:50:07
curiosity if someone wanted to dig into
00:50:09
that I'm sure you share some of the
00:50:10
details in the book but when it comes to
00:50:12
specifically the gold and the real
00:50:14
estate portions of that portfolio some
00:50:16
sort of Diversified index or gold what's
00:50:19
it the GLD ETF maybe and then for the
00:50:21
real estate specifically I could say oh
00:50:23
my house but is that too concentrated or
00:50:26
is there some more Diversified way to
00:50:28
invest estate so the way I leave it up
00:50:31
to people I'm like you can use the
00:50:33
equity in your house as the real estate
00:50:35
portion and you should do that but you
00:50:37
can also buy a reindex right so vnq
00:50:42
which is the Vanguard reindex that
00:50:45
accomplishes the exact same thing and by
00:50:47
the way a lot of people don't know this
00:50:49
but since the year 200000 out of those
00:50:52
asset classes gold has been the number
00:50:54
one performer since the year 20 2000 in
00:50:57
real estate has been number two stocks
00:51:00
have actually been number three since
00:51:02
2000 a lot of people say only 20% stocks
00:51:05
you're only have 20% of your money in
00:51:07
stocks we have a cult of stocks in this
00:51:12
country like and we are the only country
00:51:14
that does this there's no other country
00:51:16
in the world that invests in their stock
00:51:19
market for retirement right nobody else
00:51:22
does this we're the only people that and
00:51:23
it's it's Insanity you know we are a
00:51:26
country of crazy gamblers we love our
00:51:29
businesses Jared we love our businesses
00:51:32
well this this has been awesome this has
00:51:33
been fun and funny and enlightening and
00:51:36
and really cool some cool unique topics
00:51:39
I think we've covered today Jared so
00:51:41
let's go over some of the important
00:51:42
stuff now if folks want to okay they
00:51:45
want to check out the book maybe they
00:51:47
want to check out the daily dirt na they
00:51:49
want to listen to you on the B smart
00:51:50
podcast where can you point our
00:51:52
listeners to to find you and check out
00:51:54
your stuff the book you can get
00:51:57
there's we have a link it's called
00:51:58
buynow worries. so if you go to buy
00:52:01
worries. comom there's a whole bunch of
00:52:02
retailers there you can find me and the
00:52:05
podcast at Jared dillian money.com
00:52:08
that's Jared dillian money.com fantastic
00:52:11
all of that will be in the show notes
00:52:13
and Jared dillian thanks for stopping by
00:52:15
the best interest podcast thank
00:52:18
you thanks for tuning in to this episode
00:52:21
of the best interest podcast if you have
00:52:23
a question for Jesse to answer on a
00:52:24
future episode send him an email email
00:52:26
at Jesse bestter interest. blog again
00:52:30
that's Jesse bestter interest. blog did
00:52:33
you enjoy the show subscribe rate and
00:52:36
review the podcast wherever you listen
00:52:38
this helps others find the show and
00:52:40
invest in knowledge themselves and we
00:52:42
really appreciate it we'll catch you on
00:52:44
the next episode of the best interest
00:52:49
podcast the best interest podcast is a
00:52:52
personal podcast met for education and
00:52:54
entertainment it should not be taken as
00:52:57
Financial advice and is not prescriptive
00:52:59
of your financial situation