Latest / The Personal Finance Club Show / BlackRock Monopoly, IULs for Teachers, and 14 year old shoe flipping business | Ep 22

Transcript

BlackRock Monopoly, IULs for Teachers, and 14 year old shoe flipping business | Ep 22 · The Personal Finance Club Show

• 0:00
  Is BlackRock buying up all the homes, making it impossible to
• 0:02
  buy? What should Teacher Gracie do
• 0:04
  with her annuity and her IUL? And should your 4 year old start
• 0:08
  a shoe flipping business? Let's find out.
• 0:14
  Welcome back to the Personal Finance Club show.
• 0:17
  Hey, John. What's up, Jer?
• 0:19
  A lot. Tomorrow is Ty's first birthday.
• 0:23
  Woo baby party. Baby boy, I know we're going to
• 0:26
  have a baby party for him and he's crawling now and he can we
• 0:32
  call him a little Alex Honnold because he walks on the edge of
• 0:34
  the couch, then the table very carefully.
• 0:38
  No harness. Any sort of yeah, no, yeah, free
• 0:41
  soloing the coffee table at 0 feet altitude.
• 0:44
  But hey, it's a start. You kept him alive for a whole
• 0:48
  year, or well, almost this. Podcast doesn't air for a week
• 0:52
  so I don't want to jinx it yet. But we're.
• 0:55
  We're closing in on 12 months. Yeah, it is crazy.
• 0:59
  It's crazy how like, they're so small when they come out and
• 1:02
  then a year later they're like, that's like a big difference.
• 1:04
  But don't you feel like they're like more durable than you feel
• 1:07
  like they are? Like you feel you're going to
• 1:08
  break a baby, but then you're like, oh, you can actually do a
• 1:10
  lot. Yeah.
• 1:12
  I mean, yeah, I think you don't want to like throw them too much
• 1:15
  because they still have like sensitive necks and things like
• 1:17
  that. But yeah, they're pretty.
• 1:20
  Andrea is much more sensitive. Like, if he takes a tumble,
• 1:23
  she's kind of like losing it. I'm kind of like, yeah, babies
• 1:25
  are made of rubber. Like, you know, you get a bonk
• 1:28
  on her head every once in a while.
• 1:29
  They'll be fine. Dad Math.
• 1:31
  Yeah, I guess. And we have another birthday
• 1:34
  coming up. Another birthday today,
• 1:35
  actually. What's that it's?
• 1:37
  The birth. Jen's eyes got big.
• 1:39
  She has no idea who this is. Jen's the birth of a new a new
• 1:45
  segment. Oh God.
• 1:49
  Because, you know, I didn't and there's a death of an old
• 1:51
  segment because, you know, no one liked to explain like I'm 55
• 1:54
  year olds were constantly writing in with their like
• 1:57
  little jumbled text messages. They didn't even know all the
• 1:59
  words. And they said this did not make
• 2:01
  any sense to me. I don't know about interest
• 2:03
  rates and I don't know about, you know, collapsing currencies.
• 2:06
  Please make and and then adults were saying, why you doing?
• 2:10
  OK, So we're having a new segment.
• 2:11
  Jen, tell us about this new segment.
• 2:13
  The new segment is Hot Topics. Oh, that sounds so much more
• 2:21
  professional. OK, what is this segment, Jen?
• 2:24
  And not to be confused with Hot Topic, the, you know, Cool mall
• 2:29
  store, we went to his teens to look all edgy.
• 2:32
  Did you shop a Hot Topic? Oh my, I still do.
• 2:35
  You don't? Or do you think I get this?
• 2:37
  Like eyeshadow? I was like that.
• 2:39
  That mess is not from Hot Topic. Is eyeshadow even a thing?
• 2:42
  I don't know if that's like they.
• 2:43
  Probably have like a glitter moment there.
• 2:45
  I feel like something edgy but I don't know, I haven't been there
• 2:48
  in years. This session about of hot topics
• 2:51
  has been a lot more about hot topic than I had planned.
• 2:53
  But what is hot topics? OK, so we're going to talk about
• 2:55
  current events in the news, finance, investing, personal
• 2:59
  finance news. We're just trying to try and
• 3:01
  find stories to stay like somewhat topical, but maybe not
• 3:03
  too topical because we do batch episodes so.
• 3:06
  Hot Topical. Hot topical yeah we're I'm not
• 3:10
  going to touch that, but we're. Buy and hold investors.
• 3:12
  And so, you know, we don't need to be like doing day by day by
• 3:15
  today, sell tomorrow. This isn't like, you know, I
• 3:17
  think things are trending, are often trending for, you know,
• 3:20
  weeks or months. Like we could talk about
• 3:21
  tariffs, even though that's kind of been going on for a year.
• 3:24
  We it's still like a, it's still something that's top of mind, I
• 3:27
  think. Yeah.
• 3:28
  OK. So should we talk?
• 3:29
  Should we get into today's hot topic?
• 3:32
  Yes. OK, so there's an Instagram
• 3:35
  post, which is also probably a bajillion news articles, that
• 3:38
  says BlackRock just bought 50,000 homes at $300,000 each,
• 3:43
  then sold them three of themselves for wait three to
• 3:47
  themselves for 700,000. Your neighborhood's value just
• 3:50
  doubled overnight and you can't afford to live there anymore.
• 3:53
  Here's how they're legally stealing the American dream.
• 3:56
  Very dramatic. Dang, that is and it's just like
• 3:59
  such good click bait because like Black Rock sounds like
• 4:04
  black and mean. And they bought like this very
• 4:07
  specific numbers, 50,000 homes at $300,000 each where they, you
• 4:10
  know, every house is exactly 300,000 then sold three to
• 4:13
  themselves. And you know, it's this is
• 4:16
  something that I like to call finance fantasy porn because
• 4:22
  it's got these like dramatic sounding clever things.
• 4:26
  And in fact, like, if you can start swiping this thing, it
• 4:28
  says something like it explains that they sold the three to
• 4:33
  themselves to, you know, create a new market because now that's
• 4:38
  the market price. And then it, it, it increased
• 4:41
  taxes and then it's for it's pricing families out, forcing,
• 4:44
  you know, forcing them to rent back from BlackRock.
• 4:47
  And it said by 20-30, which sounds a long time from now, but
• 4:51
  it's 2026. It's only four years from now.
• 4:53
  It said by 20-30, corporations will own 60% of single family
• 4:57
  homes in America. Your kids will rent from Wall
• 5:00
  Street forever. And so I call this finance
• 5:02
  fantasy porn because it pieces together these clever sounding
• 5:05
  finance moves resulting in this totally fake outcome.
• 5:10
  And we actually saw this in last week's episode where the scroll
• 5:14
  patrol dude is like open a trust and then go to the, you know,
• 5:17
  then buy a like like life insurance policy and go to the
• 5:20
  bank and borrow $1,000,000 and buy a company.
• 5:23
  Now you're making 50,000. Like it all sounds like finance
• 5:26
  moves people could or should be making.
• 5:28
  And so when you're swiping through it like it erases you
• 5:31
  like, oh, I'm here working like a stiff and BlackRock selling
• 5:33
  homes themself and making us all rent from them.
• 5:36
  But here's a problem with this post.
• 5:39
  It is not true. It is just straight fantasy.
• 5:45
  It's fake. So let's start with this.
• 5:47
  BlackRock is like this investment banking company.
• 5:51
  They don't own any single family homes.
• 5:54
  That is patently false. You can go to Blackrock's own
• 5:58
  website and they have a page dedicated to this because this
• 6:00
  like conspiracy theory has gotten so far out of control
• 6:03
  that says BlackRock is not buying individual houses in the
• 6:06
  US. That is not what they do.
• 6:07
  They don't know. There's no evidence whatsoever
• 6:09
  that they own any house. Some people say, oh, but they,
• 6:13
  you know, owned funds and the funds owned publicly traded
• 6:16
  companies, and those companies are doing that.
• 6:17
  And that's not even really true either.
• 6:19
  They, like facilitate the purchase of those funds.
• 6:21
  But you know who owns those funds, Jen?
• 6:23
  Who you do so do I and we all do because like in our, you know,
• 6:29
  in our four O 1 KS, we own, you know, an S&P 500 index fund and
• 6:32
  that fund might own some Reit's, which is a real straight
• 6:35
  investment trust and that might own some homes, you know, and so
• 6:38
  like BlackRock, it's not some like boogeyman do this.
• 6:41
  That's not what they do at all. They're just facilitate the
• 6:44
  purchase of stocks and bonds, not buying single family homes.
• 6:48
  So that's probably one that's strictly not true.
• 6:51
  Some people, I know this because I posted this on threads a
• 6:54
  couple days ago. Some people will say, OK, it's
• 6:56
  not BlackRock, but it's Blackstone.
• 6:59
  And you know, this, the post that we're talking about says
• 7:03
  Black Rock. It's like literally images of
• 7:05
  Black Rock's headquarters like over and over and the Black Rock
• 7:08
  CEO and like looking very evil. It's there's no, there's no that
• 7:12
  that was no mistake. They chose Black Rock on
• 7:14
  purpose. But but there some people say,
• 7:16
  OK, it's not Black Rock, it's Blackstone.
• 7:18
  That's the source of the whole confusion.
• 7:20
  Everything else is true. Everything else is true except
• 7:22
  for the name of the company they got, they got wrong.
• 7:24
  And obviously Black Rock and Blackstone Rockstone, kind of,
• 7:27
  you know, what's the difference between a rock and a stone
• 7:29
  anyway? Stones smaller.
• 7:33
  I say stones are smoother. Yeah.
• 7:36
  Cuz you like skipping. Stones, Yeah, yeah, yeah, I
• 7:38
  think you're. Right.
• 7:38
  Yeah, but I don't know. And so anyway, Blackstone does
• 7:42
  actually invest in rental housing, mostly apartments, but
• 7:48
  they do own some single family homes.
• 7:49
  And actually they just had an acquisition a couple years ago
• 7:51
  where they acquired another company that had a lot of single
• 7:54
  family homes. And so as of today, Blackstone
• 7:57
  has a third of institutional investors.
• 7:59
  These big companies that buy up single family homes, we're
• 8:01
  talking about has a third largest single family home
• 8:04
  portfolio with 62,000 single family homes.
• 8:07
  So I was like, OK, it's starting kind of starting to kind of
• 8:10
  sound like this might have some truth.
• 8:11
  It said BlackRock just bought 50,000 homes, but Blackstone
• 8:15
  actually has a total of 62,000 homes.
• 8:17
  That's behind companies called Progress Residential and
• 8:21
  Invitation Homes which have 83,081 thousand homes.
• 8:25
  If you add up all those top three biggest institutional
• 8:28
  investors, including Blackstone, that is up to 226,000 single
• 8:32
  family homes. That's a big number of course,
• 8:35
  but there's about 82,000,000 single family homes in the US.
• 8:40
  So those three massive institutional investors, scary
• 8:42
  guys that are, you know, buying up all the homes they own .27%
• 8:48
  of single family homes or one in 362.
• 8:53
  So you have to like walk, you know, assuming they're randomly
• 8:55
  distributed around the US, which they're not, but assuming they
• 8:57
  were, you have to, you know, you have to walk miles passing homes
• 9:00
  as you pass 362 homes before you get to 1 that's owned by one of
• 9:05
  these three big corporations. And then you start over, right?
• 9:08
  So, you know, it's not black, it's not BlackRock because I'm
• 9:12
  in Blackstone, even though Blackstone doesn't own a bunch,
• 9:14
  they don't own that much. And so you might say, OK, this
• 9:18
  is just some nonsense. Jeremy guy screaming into a
• 9:20
  microphone podcast should be made illegal.
• 9:23
  And that's, you know, maybe true, but so the Government
• 9:27
  Accountability Office actually did a study on this and
• 9:29
  basically looked at this trend as a potentially concerning
• 9:32
  trend they did back in 2024, so just over a year old now.
• 9:35
  And they said as of late 2011, there was no individual investor
• 9:40
  that owned more than 1000 single family homes.
• 9:43
  But what happened was in the wake of the financial crisis of
• 9:46
  of 2008, in the following years, like 2009 through 2013 or so,
• 9:50
  there started to be tons of foreclosures.
• 9:52
  And so it created this opportunity for companies to
• 9:55
  basically buy all these homes. In 2012, Warren Buffett said, if
• 9:59
  I had a way of buying a couple 100,000 single family homes and
• 10:03
  had a way of managing them, I would load up on them.
• 10:06
  I would take mortgages out at very, very low rates.
• 10:08
  And so basically what happened was there's this opportunity
• 10:11
  because a lot of people getting foreclosed on, getting kicked
• 10:14
  out of their homes, turning into renters.
• 10:16
  Then there's cheap rates, cheap homes, higher rent.
• 10:19
  And Warren Buffett was like, hey, that's a mismatch.
• 10:21
  I would be doing that if I could.
• 10:22
  It just turns out buying hundreds of thousands of single
• 10:24
  family homes is logistically difficult and he doesn't want to
• 10:27
  do that, but some companies did. So is that a troubling trend?
• 10:31
  This is a quote from that Government Accountability Office
• 10:34
  study. It said most market trends
• 10:38
  analysis we reviewed, and they reviewed like 75 different
• 10:41
  studies or something like that, defined institutional investors
• 10:44
  as those owning 1000 or more properties.
• 10:46
  By June 20, 2232, investors each owned more than 1000 single
• 10:52
  family properties in the US Collectively this totaled nearly
• 10:55
  450,000 homes. And so they're saying, hey, back
• 10:58
  in 2011, no one owned over 1000. In 20/22/32, investors had
• 11:04
  emerged owned over 1000. And collectively those big
• 11:07
  institutional investors owned, owned 450,000 homes.
• 11:11
  That as a proportion of the US stock of all single family homes
• 11:16
  is about half of a percent or one in 200.
• 11:20
  So it's 2026, is it true? And currently, you know, as of
• 11:24
  2024, I guess as of 2024, 1/2 of 1% of single family homes are
• 11:29
  owned by these, these large institutional investors.
• 11:32
  Is it true that by 20-30 they'll own 60%?
• 11:35
  Probably not. That's like, you know, unless
• 11:38
  something crazy happened in the future.
• 11:39
  But currently, you know, that's not the trend we're on.
• 11:41
  We went from, you know, around 0% to 0.5% over the course of 15
• 11:46
  years or whatever. Are we going to go from, in five
• 11:48
  years or we go from half a percent to 60%?
• 11:51
  No, it's like that's why this is like fantasy or finance fantasy
• 11:56
  porn because it's just not true. It's made-up.
• 11:58
  It's like fake lies that just go viral because it's such good
• 12:02
  rage bait. We you know that said houses are
• 12:06
  really expensive historically they're very expensive.
• 12:08
  They're more in dollars then more as a proportion of our
• 12:11
  income. And so we it's really attractive
• 12:15
  rage bait to blame a boogeyman with the name Black and her
• 12:18
  name, right? But that's not the truth.
• 12:22
  OK. So that said, there is a little
• 12:25
  bit of truth to this in some markets.
• 12:27
  First of all, I've been making a little bit of a straw man
• 12:31
  argument case, which is talking about the total number of single
• 12:33
  family homes. If you look at the just the
• 12:35
  single family homes for rent, it's not a half percent, it's
• 12:37
  about 3%. So it's more it's like, you
• 12:39
  know, that means 97% of rental homes are owned by small
• 12:44
  investors who, you know, have less than 1000 units, but you
• 12:48
  know, 3% of these big Wall Street companies, if you will.
• 12:51
  Okay, that's something. And then in some markets it's
• 12:54
  much worse. And so according to this
• 12:56
  Government Accountability Office study, the worst three markets
• 12:59
  were Atlanta were 25% of single family home rentals were owned
• 13:04
  by large investors, Jacksonville 21%, Charlotte 18%.
• 13:08
  So if you live in one of those cities or the suburbs of one of
• 13:10
  those cities, you might actually notice this.
• 13:12
  You know, one out of four homes that you go to check or rental
• 13:15
  from are now being owned by these these huge companies,
• 13:17
  which may be they're Dicks and bad landlords or whatever.
• 13:20
  And so that's, that's like the nugget of truth to this issue in
• 13:25
  some markets, but still even those markets, 75% of rentals
• 13:28
  aren't. And then again, that's just
• 13:30
  their rental homes. It's not even talking about the
• 13:32
  purchase homes, which is much, much smaller.
• 13:34
  OK, So what about the theory? Can an investor just buy up all
• 13:37
  the homes and Jack up the rents and then kind of force everyone
• 13:40
  into like lifelong rental or renter status?
• 13:44
  And the answer is not really because the more homes they buy,
• 13:49
  the more expensive it gets, right?
• 13:50
  Because there are some, of course, Wall Street is a lot of
• 13:53
  money, but there's a bunch of individual people that have
• 13:55
  money like me. And if I want to buy a home and
• 13:59
  you know, black stones buy up homes, I'm going to be competing
• 14:02
  too. And I'm still going to want to
• 14:03
  buy a home for my family. And so that means now is it
• 14:05
  getting more expensive for me? But it's getting more expensive
• 14:07
  for them. And the more they have to pay
• 14:09
  for a home because they're like buying more and more and more
• 14:12
  trying to get this monopoly to the, the less financial sense it
• 14:16
  makes because they have to pay so much, right.
• 14:18
  And another reason that this won't work is because rent is
• 14:21
  really a separate market. While in theory, if this was
• 14:24
  like a perfect sealed vacuum in a test tube and you had to
• 14:28
  either, you know, you had to live somewhere, buy or rent.
• 14:30
  And if they all become rentals, then theoretically it'd be true.
• 14:33
  But that's not how the world actually works because rent is
• 14:36
  much squishier because those single family homes are
• 14:39
  competing with things like apartment buildings.
• 14:41
  And so if rent in a single family home gets too expensive,
• 14:44
  people can move to apartment, thus pushing rent prices down.
• 14:47
  They can downsize, they can buy a smaller home, they can get
• 14:50
  roommates, they can leave the area or drive slightly longer
• 14:53
  commute. And so, you know, the idea that
• 14:55
  you can just buy up all the homes and force people to rent
• 14:57
  there at high prices isn't true because there's all these
• 14:59
  squishy ways that the market can kind of account for that, thus
• 15:02
  driving rents back down, thus making the investment deal for
• 15:07
  the big institutional investors worse, right?
• 15:09
  And So what I'm kind of getting at is that the institutional
• 15:14
  investors aren't the cause of this.
• 15:16
  They're more of like a symptom. They see an opportunity, like
• 15:19
  Warren Buffett said, they saw an opportunity to get into this
• 15:21
  market, but they're not causing it.
• 15:24
  They're just, you know, taking management.
• 15:26
  And you might say that makes them Dicks.
• 15:27
  And, you know, maybe they are Dicks.
• 15:28
  I don't know. But they're not the cause of the
• 15:30
  problem. And then the solution to the
• 15:32
  problem likewise isn't like, you know, shutting them down, right?
• 15:36
  If all the institutional investors go away and the 3% of
• 15:39
  rental homes that are owned by institutional investors go to 0,
• 15:43
  then non institutional investors will own those rental homes,
• 15:46
  right? OK, so what's the real problem?
• 15:52
  5 things are the real problem and This is why homes are so
• 15:55
  expensive. And I think this is the solution
• 15:56
  to making them less expensive. Number one, we didn't build
• 15:59
  enough homes in the US for about 15 years.
• 16:02
  In 2008 there was the great financial crisis where we
• 16:04
  basically loaned too much money to people who couldn't afford
• 16:07
  it. The bond fell out, all these
• 16:09
  homes got foreclosed on and then lending tightened up really
• 16:13
  strictly because all these foreclosed homes flood the
• 16:16
  market and lending was much more difficult.
• 16:19
  Builders stopped building, they couldn't borrow money.
• 16:21
  They there's no need to because there's all these homes in the
• 16:23
  market. And so basically construction
• 16:26
  stopped and that's therefore a new home stopped getting made
• 16:30
  and therefore a less supply went on the market.
• 16:32
  And you kind of want to 1. I don't know who took it out
• 16:35
  there, but the less supply there is and the more demand there is,
• 16:38
  the higher prices goes. So for example, if 12 people
• 16:42
  want to live in 10 homes, there's going to be massive
• 16:45
  competition for those homes and the price is going to go really
• 16:47
  high. They're going to pay more and
• 16:48
  more and more until the people that can't afford it finally
• 16:51
  bail out. And then the price is going to
• 16:52
  be really high. If 12 people are competing for
• 16:55
  20 homes, suddenly the sellers are trying to compete for the
• 17:00
  buyers and they're putting the prices lower and lower and lower
• 17:02
  until the buyers decide to go with their home.
• 17:04
  And So what happened was we just have more people who want homes
• 17:08
  than than there are homes. I think we're, you know, the US
• 17:12
  is currently short millions of homes relative to these new
• 17:15
  household being formed rather through children growing up and
• 17:19
  becoming married or, you know, immigration or, you know,
• 17:25
  migration or whatever it is, more families are forming who
• 17:28
  want homes. And we're millions short now.
• 17:30
  So that's reason number one. We just didn't build enough
• 17:33
  homes. Reason #2 local politics.
• 17:36
  In many high demand areas, apartments are illegal.
• 17:39
  You know where I live? You know I live in a nice
• 17:41
  neighborhood in San Diego. You can't build an apartment
• 17:44
  back next to me. Like my neighbors would be
• 17:46
  outraged because we, you know, we're Nimbys.
• 17:48
  Do you know NIMBY is Jen not? In my backyard.
• 17:51
  Exactly. Not in my backyard.
• 17:54
  You know, we all, we're all super liberal.
• 17:56
  We're all for lower home home prices until the builder wants
• 18:00
  to build in my backyard. Like, no, not here.
• 18:02
  And so and that and, and every, you know, everywhere is
• 18:04
  someone's backyard. And so there's all this pressure
• 18:06
  from local politics to not make apartments legal.
• 18:09
  In fact, I was on a walk with my with my soon to be 1 year old
• 18:13
  baby and a stroller and this in California.
• 18:16
  Actually they're trying to address this problem by saying
• 18:18
  hey basically everyone can add units to their property called
• 18:22
  an Adu which is an additional dwelling unit.
• 18:25
  Is that what stands for? I think so.
• 18:27
  Yeah, something like that. So basically, you know, you can
• 18:30
  convert your garage to apartment or you can build a little tiny
• 18:33
  home in your backyard. And there's some rules around.
• 18:35
  And so someone in our, you know, in a neighbor, you know, few,
• 18:39
  you know, a few blocks away from me did this and built kind of
• 18:41
  like a big duplex in the backyard, adding 2 units.
• 18:44
  And then their neighbor who now has this like kind of big duplex
• 18:47
  that I'm like has all these crazy signs with arrows pointing
• 18:49
  to the neighbors saying this guy, like this guy's bringing
• 18:52
  apartments to the neighbor and like yelling at them.
• 18:53
  And so it's kind of funny because there's just like, very
• 18:56
  rough, like, you know, conflict right there in real life.
• 19:00
  But because they don't want more housing, it's because they think
• 19:03
  bringing apartments is going to bring in the riffraff.
• 19:05
  They like their quiet suburban neighborhood, Right?
• 19:07
  And, you know, there's also local limits on the height of
• 19:11
  buildings, on parking requirements.
• 19:13
  And we have really bad public transport in the US.
• 19:15
  And so you can't just necessarily build a bunch of
• 19:18
  high rises and neighborhoods and have it work because we are
• 19:21
  really car dependent and cars can't, you know, you can't have
• 19:25
  1000 cars driving where there used to be 10 cars driving
• 19:27
  because there'd be massive gridlock.
• 19:29
  And so, you know, those types of political decisions transport
• 19:34
  zoning is create, causing a lack of supply, which raises prices
• 19:39
  #3 interest lock, which is a lot of home buyers in the US have
• 19:44
  really low interest rates tonight right now.
• 19:45
  They bought back in the late teens, the early 2000s, and they
• 19:48
  have like a two or three or 4% rate.
• 19:50
  If you buy a new home today, you're looking at more like a 7%
• 19:53
  rate. Which means if someone sells
• 19:55
  their home and they have a low mortgage, their a monthly
• 19:59
  payment is going to skyrocket because they have to pay such
• 20:03
  higher interest and so they don't want to sell.
• 20:05
  And the only reason that they would sell is if someone really
• 20:08
  makes it worth their while and pays them way more money.
• 20:10
  So maybe a home they paid 400,000 for, they could only
• 20:14
  sell for 800,000 in order to have like a similar monthly
• 20:17
  payment at the new place they buy and that pushes prices up
• 20:20
  because. Less of less sellers because
• 20:23
  they don't want to lose their rate, less supply, higher
• 20:26
  prices. It's all kind of the same trend,
• 20:28
  right? Another reason this is reason #4
• 20:30
  is that demand shifted back in COVID.
• 20:32
  There's kind of this mass exodus of working in offices.
• 20:36
  Everyone's work from home now. Not everyone, you know, but
• 20:38
  there's obviously a trend. And if you're working from home,
• 20:41
  suddenly your old place, which maybe wasn't, which maybe was
• 20:46
  fine if you were to sleep in there and going to work all day,
• 20:48
  now you need another room for an office.
• 20:50
  Or maybe you and your spouse are both there and you can't both be
• 20:53
  on calls at the same time. And so you need a third office
• 20:55
  or whatever it is. And so, you know, the, the
• 20:57
  demand for office buildings has kind of shifted to single family
• 21:00
  homes, thus more demand, less supply, higher prices.
• 21:06
  And then finally, the fifth reason is construction, which is
• 21:08
  construction is harder these days.
• 21:10
  Materials cost more. This kind of room has to do with
• 21:12
  tariffs, right? If you're if we're importing
• 21:14
  lumber and steel from Canada needs to pay more, that critical
• 21:18
  supply number we need is costing more because construction is
• 21:22
  harder. Labor is scarce.
• 21:24
  Why is labor scarce? Draw your own political
• 21:26
  conclusions. But it's harder to hire people
• 21:28
  now and permitting is so and that's more like a local zoning
• 21:31
  thing. And so all these things really
• 21:33
  point to basic economics. Less supply, less houses on the
• 21:38
  market, less houses available, more demand.
• 21:40
  People want their bigger COVID homes just have skyrocketed
• 21:43
  price. And so then we enter back to
• 21:47
  this silly BlackRock post that says BlackRock is buying up all
• 21:50
  their homes. Like it's really the, the
• 21:53
  essence of it is this, you know, first of all, BlackRock 100%
• 21:56
  false. Blackstone maybe, but the scale
• 21:59
  is dramatic with us. It's not 60% like they're
• 22:01
  implying. It's, you know, .5% and maybe
• 22:04
  you know more in, in certain markets, but that ain't the
• 22:07
  problem. You know, as soon as Atlanta has
• 22:09
  way more supply than they have demand, you know, these
• 22:12
  institutional investors will disappear because it's not worth
• 22:15
  it to them anymore. And so they're a symptom, not
• 22:18
  the 'cause that was my rant. What do you think, Jen?
• 22:23
  Wow, so you can't believe everything you hear on the
• 22:25
  Internet is what you're telling me?
• 22:27
  Shocking. I know.
• 22:28
  It's, you know, it's just so frustrating too, because you
• 22:29
  scroll through the comments and none of them point out the fact
• 22:33
  that this is blatantly false because even the comments are
• 22:36
  sorted by how many likes they get.
• 22:38
  And no one likes to hear that it's fake.
• 22:40
  Everyone likes to be in their echo Chamber of rage bait
• 22:44
  saying, yeah, get them Black Rock.
• 22:46
  And Black Rock's like, well, that's not what we do.
• 22:49
  So it is it is crazy that just, you know, it's the old, you
• 22:53
  know, study that shows misinformation travels like 100
• 22:56
  times faster than 100 times further than the reality.
• 22:59
  And the reality is this kind of sticky situation of we didn't
• 23:02
  build enough housing. It's hard to zone to build more
• 23:06
  people are locked in the cheap interest rates.
• 23:08
  People want bigger houses due to COVID and construction is more
• 23:10
  expensive. All that combined is really
• 23:13
  what's causing high prices. Not a boogeyman, you know, old
• 23:17
  white guy in a, in a suit, you know, with bad lighting that
• 23:20
  they put a picture of in front of a Black Rock headquarters.
• 23:24
  It's it's, you know, it's the market.
• 23:26
  But who are we supposed to blame if you don't have a picture of a
• 23:28
  guy looking angry in front of his building?
• 23:31
  I mean, it, it sounds, it sounds rough, but to some degree we
• 23:35
  have to blame ourselves. We have to blame the NIMBY's who
• 23:37
  are voting against high rises, right?
• 23:39
  Like if you want lower housing prices, you need more units.
• 23:42
  And you know, like I said, even in my very local level, the the
• 23:46
  house losing their shit because their neighbor was building two
• 23:48
  different units. Like that's the problem.
• 23:51
  That's why housing is more expensive because everyone wants
• 23:54
  a cheap home for their self. Like with, you know, very spaced
• 23:57
  out neighbors in a beautiful area, very walkable, but not
• 23:59
  doesn't want anyone else to be around.
• 24:01
  You know, there's a lot of people and while competing for
• 24:03
  the same stuff, that equals higher prices.
• 24:06
  Wow, that was a hot. I know Hot topic got off to a
• 24:11
  hot start. My my eyeshadow is is running
• 24:14
  because I'm just sweating with with I think.
• 24:16
  You need to go take a walk into a hot topic and maybe get some
• 24:19
  more references for what goes on there.
• 24:21
  They don't they don't sell eyeshadow.
• 24:22
  What about like like I feel like they have like a neck like a
• 24:25
  neck chain with. Like you're getting closer.
• 24:27
  Yep, spikes is definitely yeah, like maybe some jinkos.
• 24:30
  Did you ever remember Jinkos, those really wide leg jeans or
• 24:33
  is that like? Jenga that game.
• 24:36
  Where Jinko JNCO there were these huge jeans that were like
• 24:40
  each pant leg was like like super wide and like.
• 24:44
  I can picture them. Unisex like and they had
• 24:47
  definitely had some with spikes anyway.
• 24:49
  So take a walk into a hot top and get some more current
• 24:51
  references for this store from the 1990s.
• 24:55
  Hot topics and get so much Free Press from our our new our new
• 24:59
  segment here. Flooding the stories.
• 25:01
  OK. Should we move on to our next
• 25:03
  segment? Let's do it.
• 25:04
  What's the next segment? I don't know if you had any
• 25:06
  more. I'm hot topics out.
• 25:08
  OK. All right.
• 25:09
  Next segment is money. Money.
• 25:13
  Can I ask a dumb one? Yes, you can ask a dumb person
• 25:17
  what's our dumb, what's our smart question for a dumb person
• 25:19
  today, Jen? So Gracie asks.
• 25:23
  I'm a teacher, a retirement investor sold me an IUL and a
• 25:27
  four O 3 BI don't contribute to either anymore.
• 25:31
  The four O 3B has about 33,000 or 31,000 surrender value about
• 25:37
  six years before I can pull it out without losing surrender
• 25:39
  penalty. I don't contribute to it.
• 25:41
  I contribute to one through a California teachers association.
• 25:45
  It's an annuity and I don't know what that means.
• 25:47
  The October 2024 balance was $32,211.00 and the October 2025
• 25:52
  balance was $33,558. Should I pull out the money from
• 25:57
  this old plan and move it to my CTA plan?
• 26:00
  I have about 17 years before I retire.
• 26:02
  I'm hoping. I don't know if that makes a
• 26:04
  difference. What you think?
• 26:07
  Gracie Girl. Uh oh.
• 26:12
  I'm sorry. Last time you said girl, it was
• 26:14
  our friend Cilicia, and she got, oh, we got.
• 26:17
  Calicia, I I love you. Oh, she's the best.
• 26:19
  I like anything. I I hope you only feel love for
• 26:23
  me because I think you're doing amazing and I really want the
• 26:25
  best for you. That's that's only why I ever
• 26:27
  had any any. You know, excitement like.
• 26:31
  This, but it's all love. And Gracie, it's also all love
• 26:34
  because you like, this is just so common.
• 26:39
  What happened here? And so first of all, you know,
• 26:42
  you said a retirement investor sold you, you know, you might be
• 26:46
  conflating the word investor with advisor because often what
• 26:48
  they call themselves are advisors or financial advisors.
• 26:51
  But here's the problem. You weren't talking to a
• 26:54
  retirement financial advisor. You unfortunately were talking
• 26:57
  to an insurance salesman. Their entire purpose of existing
• 27:01
  is to sell you insurance. And they, they, they go into
• 27:05
  schools and they go into teachers because T, because a
• 27:09
  lot of school districts have like, because they're public
• 27:12
  entities are forced to not show favoritism to 1 vendor or
• 27:17
  another. And since they can't show
• 27:19
  favoritism, the snake oil cells would come in and they said you
• 27:22
  can't show, you know, you can't show favoritism.
• 27:25
  And they're like little snakes. And then they find these 25 year
• 27:27
  old teachers, which you probably worry maybe you're 23 because
• 27:31
  based on the math I'm looking at, you're probably very young
• 27:33
  when he bought this. And they say, who you gotta
• 27:34
  have, you gotta invest for retirement.
• 27:36
  And I'm a retirement investor and this is what you buy an
• 27:39
  annuity. And So what is an annuity?
• 27:41
  An annuity is it's a pretty simple concept.
• 27:44
  It's a financial contract where you give an insurance company
• 27:48
  either a lump sum of money or regular series of payments and
• 27:52
  they agree to pay you some amount of money later, usually
• 27:55
  in payments over time. And you know, in concept it kind
• 27:59
  of makes sense because you give them a bunch of payments, you're
• 28:03
  saving, they're doing this fancy financial institution thing for
• 28:07
  you, putting your money to work, blah, blah, blah.
• 28:09
  No downside risk all. And it has a very slick sales
• 28:12
  pitch. And then at retirement age, you
• 28:14
  get some money out with some gains, right?
• 28:16
  Sounds good. Here's the problem.
• 28:20
  Once the insurance company has your money, they don't have any
• 28:25
  more amazing ways to grow that money than you have access to.
• 28:30
  We as investors now in, you know, 2026, you're our Lord
• 28:33
  with, you know, apps at our fingertips.
• 28:35
  We have ways to invest in the stock market, the bond market
• 28:40
  options, anything that insurance something to do essentially we
• 28:43
  can do too. But when you give the money to
• 28:45
  insurance company, they have to pay for their buildings, for
• 28:49
  their rent, for their salaries, for their profit, for their
• 28:53
  shareholders and for the big, old, fat, juicy Commission that
• 28:59
  your insurance salesman made when he sold you this annuity.
• 29:03
  And so I'm going to Gracie. This is why I said girl, because
• 29:07
  you know, buckle up, sit down because it's about to get it's
• 29:09
  about to get ugly. I don't have every single exact
• 29:14
  payment you made in this thing but what I do see from the
• 29:16
  screenshot you send is you the last contribution you made was
• 29:20
  200 bucks and. 20 Yeah, I didn't mention she did send a
• 29:22
  screenshot for the listing. Yeah, yeah.
• 29:24
  Yeah. It's kind of like just an
• 29:25
  overview of the policy, but it's like, so the last contribution
• 29:28
  was 200 bucks in 2023 and you said you have 17 years left
• 29:33
  until retirement. I'm going to surmise you kind of
• 29:35
  like a 30 year teaching until retirement plan means you've
• 29:38
  been working for 13 years and the math kind of works out 13
• 29:41
  years times 200 bucks a month equals about what you put into
• 29:45
  this plan, which is 30,500 and that's what it says your total
• 29:48
  contributions made 30,568. So if I all those assumptions
• 29:54
  are roughly correct, you've been making $200 a month
• 29:56
  contributions for, you know 11 years ending in 2023 and now
• 30:01
  it's 2026. That's 152 total contributions
• 30:04
  if you went back instead of paid into this annuity contract I.
• 30:08
  Don't. Do that which, which has a
• 30:10
  current genis genis, like it's not for Gracie, it is for
• 30:15
  Gracie, but it's for everyone else who's listening.
• 30:17
  So you know your current, your current surrender value is what
• 30:20
  you can get out of it, which is 31,000.
• 30:22
  If you don't surrender and you just take them at their word for
• 30:25
  the balance, it's 33,000. If you had put that into an
• 30:28
  index fund, just a normal S&P 500 index fund from 2011 to 2023
• 30:35
  when you're making these payments, and then stop making
• 30:37
  payments into your index fund and just held it today, instead
• 30:39
  of 31,000, it would be worth 111,000.
• 30:44
  So why would you do that to Gracie you don't have?
• 30:45
  To $80,000 more. And like as a teacher you're
• 30:49
  probably not making $80,000 a year.
• 30:51
  This is probably like multiple years of salary over a year of
• 30:54
  salary. Maybe you're making 80.
• 30:55
  Depends where you are. And so you know, and $80,000
• 30:59
  like I'm a multi millionaire and $80,000 is a ton of money.
• 31:03
  Like we're we're talking about planning.
• 31:05
  I'm already married with my wife, but we got married very
• 31:07
  simply and we're thinking about having kind of like a wedding
• 31:10
  party coming up and we're. Oh, where's my invitation?
• 31:13
  What the hell? There's been no invitations yet.
• 31:16
  We're just talking about it. But but we're like, should we
• 31:20
  spend 30 grand? Should we spend 40 grand?
• 31:22
  If we could spend 80 grand, it'd be like, you know, this
• 31:24
  fantastic, you know, fantastic wedding even by a millionaire
• 31:27
  standard. And, you know, you are out that
• 31:31
  much, which sucks. OK, So I'm very sorry about
• 31:34
  that. I had to do that, Matthew.
• 31:35
  But it's important to know like, why this things suck And by, you
• 31:37
  know, and and you were on this too, you're like, hey, in 2024
• 31:42
  it was at 32,200. In 2025 was at 33,500.
• 31:46
  It went up only $1000 or about 3% in an entire year when the
• 31:51
  market during that year went up, you know, whatever it was 20%.
• 31:54
  And the answer is, yeah, that's how the insurance company makes
• 31:57
  their money. They keep the money, not you.
• 31:58
  Right, OK. So that's what annuity is.
• 32:02
  You're also in IULA. Quick little story about
• 32:05
  IULS&IUL is relatively similar in concept.
• 32:09
  It's a contract with an insurance company.
• 32:11
  You give them payments, but instead of just an agreement to
• 32:14
  pay you back a certain amount of time, you know certain amount in
• 32:17
  a certain period, they have made a Frankenstein of life insurance
• 32:22
  and cash value. So it's like a life insurance
• 32:26
  and investment Frankenstein thing that they used to confuse
• 32:30
  people in my opinion. And I actually bought one of
• 32:33
  these IU LS just like that fake Blackstone Black Rock story saw
• 32:38
  I see these fake IUL ads. And so I clicked on it and I
• 32:41
  bought 1 and I got a 91 page contract in the mail and I read
• 32:44
  every, every every single page on 91 pages.
• 32:47
  And I did all the math. I found that if I were to invest
• 32:50
  200 bucks a month into this IUL that was sold to me, like I all
• 32:56
  I said was yes, yes, yes, this is what they sold to me.
• 33:00
  In 40 years, my IUL would be worth $320,000.
• 33:04
  That said, that's very optimistic because riddled in
• 33:08
  this contract were all sorts of things like we can change these
• 33:12
  terms, whatever we want. We can make the rates lower, we
• 33:14
  can make the payouts lower, we can make the terms worse, we can
• 33:16
  make the cap source, we can make the fees more expensive.
• 33:18
  Like, you know, every single pages, 91 page contract is to
• 33:23
  help the insurance company make money, make sure they stay
• 33:25
  profitable because that's what they do, right?
• 33:26
  So optimistically, based on the day that I bought it, it's going
• 33:30
  for $320,000. Realistically, it's probably a
• 33:33
  lot less than a lot of these things go to 0 because people
• 33:36
  stop making payments for one reason or the other and then
• 33:38
  the, the policy lapses and their money all disappears.
• 33:42
  So that said, optimistically, $320,000, if I invested in an
• 33:46
  index fund over that same period, it'd be $1.8 million.
• 33:50
  So the value of the IUL eroded 82% of the potential value.
• 33:55
  And this is an IUL that purports to track the S&P 500.
• 33:58
  And that's what these insurance sales would do.
• 34:00
  They conflate the indexed universal life insurance with an
• 34:04
  index fund because they both have the word index, but one has
• 34:08
  82% less return. And that's the optimistic
• 34:11
  return. All right, here's the the not so
• 34:14
  funny part of the story. As if this wasn't not funny
• 34:16
  enough, there's a book called Power of 0 and the Author and
• 34:20
  then this is not to be confused with Dial with Zero.
• 34:22
  Dial with Zero, I Love That is a book about making sure you spend
• 34:25
  your money on things that you love and so you don't die with
• 34:26
  too much money. Power of 0 is basically an
• 34:29
  insurance pitch trying to sell you life insurance.
• 34:32
  And the author of Power of 0 did a hit piece on me on YouTube.
• 34:37
  Did you know this? Jeff wait, what?
• 34:39
  Like. An actual hit piece.
• 34:41
  Like there's like a. There's like a 7 minute video
• 34:44
  where the guy is like ripping on me.
• 34:46
  You got to say that to me. Jen's like, oh, great.
• 34:50
  I was like, she's like, I was about my new best friend.
• 34:54
  She's like, like, oh, I'm checking Instagram.
• 34:56
  She follows him, though. But you know, he, he made the
• 35:01
  argument that every insurance salesman makes, which is your
• 35:07
  policy wasn't properly structured.
• 35:09
  You bought a bad insurance policy.
• 35:11
  I saw the good insurance policies and he said, hey, by
• 35:15
  your math, you underperformed the index by $1.47 million.
• 35:20
  By my math, you should have underperformed the index by 1.33
• 35:24
  million. Like that's literally, you know,
• 35:25
  he didn't say it that way. He's like, it should have made
• 35:27
  320,000. I should have made 450,000.
• 35:30
  He was kind of saying it should have been better.
• 35:31
  I was like, that still underperforms index by over
• 35:34
  $1,000,000. And that's by your made-up
• 35:37
  YouTube fake optimistic math, not by the actual piece of paper
• 35:41
  that I got when I bought this thing, right?
• 35:43
  And you know, don't if you don't know who to believe me, you know
• 35:46
  me or the the author of this book, like believe Gracie,
• 35:50
  right? She's a teacher who got sold
• 35:52
  this bullshit and she's looking at her numbers and she has she
• 35:55
  put in actually didn't say this yet, but her total
• 35:58
  contributions, she's been contributing to this thing for
• 36:01
  13 years. All these like incredibly
• 36:04
  valuable years in your 20s. She's scrimping and saving on a
• 36:08
  teacher's salary to put away the 200 bucks a month.
• 36:11
  She made $30,568 of contributions.
• 36:15
  So she saved $30,000 today, the surrender value 31,013 years
• 36:20
  later. It's criminal right?
• 36:22
  She barely broke even 13 years later.
• 36:25
  So if you don't know, you know you don't have me or the power
• 36:28
  of 0 guys lying. Look at Gracie.
• 36:30
  What is her actual thing doing 13 years later?
• 36:32
  Right. OK, so I'm obviously very worked
• 36:36
  up today. I need to, I just need to go to
• 36:38
  a hot topic and grab myself a smoothie.
• 36:41
  Do they sell smoothies there? John has given up.
• 36:45
  I'm trying to tell me what a hot topic is.
• 36:48
  And so to answer your question, Gracie, what should you do?
• 36:52
  Well, first I think you started with doing something right,
• 36:54
  which is you stopped paying into them.
• 36:56
  And there's a saying, don't throw good money against bad.
• 36:59
  Sometimes people get into one of these contracts and they say,
• 37:01
  Oh, well, now I have this surrender fee and if I don't
• 37:04
  like get out of it and if I don't keep making payments, I
• 37:07
  could lose the money. But there's a sunk cost fallacy.
• 37:10
  What's done is done. That's behind you.
• 37:12
  What counts for your life now is going forward making the best
• 37:16
  decision. Sounds like you're making a
• 37:17
  better decision with where your future 4 O 3B money is going.
• 37:20
  And then with regards to spreading these, these insurance
• 37:23
  contracts, I don't want to say, you know, I'm this, I can't be
• 37:26
  prescriptive without seeing all the details on, you know, in
• 37:29
  front of me. I just kind of had an overview.
• 37:31
  But you know, what I'm saying is if your, you know, annuity or
• 37:36
  your IUL is making 3% a year right now, like, why wouldn't
• 37:40
  you just cash it out, Go do a lump sum roll over into, you
• 37:43
  know, an index fund, whatever you can do and put that mind to
• 37:47
  better use going forward. And, you know, some words of
• 37:52
  kindness or comfort are we all have these stories.
• 37:56
  We all have stories where, man, if I had done XI would have Y or
• 37:59
  if if I hadn't made this mistake, I would be here.
• 38:01
  Everyone's got that, you know, no one's batting 1000 on perfect
• 38:05
  financial moves along the way. And so, you know, I gave you the
• 38:09
  math and what where you could have been just so you kind of
• 38:12
  know what's out there and that this isn't the the right way to
• 38:15
  be investing. But we've all done that.
• 38:17
  I've done that. John's on that.
• 38:18
  Every person on earth has made financial mistakes.
• 38:20
  No one's doing it perfectly. You're not doing it perfectly.
• 38:22
  That's OK. And you're doing great.
• 38:24
  Now you've you've you've been saving a living below your
• 38:26
  means. You're on the right track.
• 38:28
  And so I would say probably good move to stop paying into this.
• 38:31
  I would look seriously at starting them.
• 38:34
  It's probably worth a couple 100 bucks for a meeting with a
• 38:38
  Nectarine advisor. You can go get a flat fee.
• 38:40
  Our advisor, you can upload your two contracts ahead of time.
• 38:43
  They can review them with you during the hour and then make,
• 38:46
  you know, make some really detailed steps about OK, cancel
• 38:50
  these, roll over to these two accounts invested this way, get
• 38:53
  you on the right track. I can think you could probably
• 38:54
  do that in an hour with a Nectarine advisor.
• 38:57
  It's at hellonectarine.com, by the way.
• 39:00
  So yeah, that's, that's what I say to you, Gracie.
• 39:03
  And sorry this happened to you. And you know, this is so
• 39:06
  emblematic, like every single teacher I know has the story.
• 39:10
  The insurance salesman come in, sell them these.
• 39:12
  It's like exactly this. It's like not even approximately
• 39:14
  the story. It's exactly the story.
• 39:16
  They get sold annuities, they get sold Iuls.
• 39:18
  They're crappy. 15 years later, they realize, wait, I've been
• 39:20
  paying this thing for 15 years. That's not even worth the amount
• 39:23
  of money I paid into it. This guy said I was going to be
• 39:26
  like dancing in riches. It's just not true.
• 39:29
  It wasn't true. He lied to you to make a
• 39:30
  Commission. That's what happened.
• 39:31
  It sucks, but that's that's real life.
• 39:34
  Sorry, Gracie. Yeah, but you can move forward
• 39:38
  with the right information now. Yeah, and you found your way to
• 39:41
  our podcast, so you're in exactly right place now.
• 39:44
  Way to go, Gracie. Yay, Gracie, the future is
• 39:47
  bright. OK.
• 39:48
  Shall we get into our next segment?
• 39:51
  Oh my gosh, I'm so excited. What is it?
• 39:56
  Scroll Patrol. Scroll Patrol.
• 40:01
  Awesome. OK, I found the video on the
• 40:02
  Internet. I didn't tell Jeremy anything
• 40:04
  about it for real this time. He's going to watch it for the
• 40:07
  first time and react and tell us what he thinks.
• 40:11
  So Jeremy, click on that link. Let's watch this video together
• 40:13
  and Give your opinion. My son is 14 and he's constantly
• 40:17
  asking me, how can I make some money?
• 40:19
  Dad? I sit down with him and I say,
• 40:20
  all right, let's go to ChatGPT and let's say, all right, I'm a
• 40:23
  14 year old. I have a little bit of money.
• 40:25
  I'm good with technology. I'm super into football, soccer.
• 40:28
  How can I make extra money? The AI suggested that we buy
• 40:31
  sneakers during sneaker jobs at Nike and then try and resell
• 40:35
  them. And you have to have some money.
• 40:36
  There's some of the times the sneaker chops are 150 or 200
• 40:38
  bucks. But he learns about it.
• 40:40
  He learns about taking risks. He learns about trying to
• 40:42
  examine the market, look at data, customer service.
• 40:44
  You got to ship those shoes once you get them to a buyer.
• 40:47
  How much money did he make? Well, it ends up with shipping
• 40:49
  and everything in taxes. We lost a little bit of money,
• 40:51
  but that's a life lesson too. So I think the way you learn
• 40:54
  about money to a certain extent if you're talking about money is
• 40:56
  you start a little bit of a small business.
• 41:00
  What's that guy's name? Scott Something.
• 41:02
  Galloway. Cluster.
• 41:03
  Galloway. Is that right?
• 41:04
  Yep. Yeah, I see him all over my
• 41:06
  feeds. It seems like a really
• 41:10
  reasonable guy who has really reasonable takes from what I've
• 41:12
  seen of him. And you know, I, I kind of like
• 41:16
  that lesson, you know, is, is very, a lot of times people talk
• 41:20
  about starting a business or passive income or yadda, yadda,
• 41:23
  yadda. In these like very abstract
• 41:25
  terms. It's just like, just like the
• 41:28
  finance fantasy porn of a single Instagram post Like, oh.
• 41:33
  Just 18 plus this episode if you say the P word one more time.
• 41:36
  I like using the word porn in the non actual porn context
• 41:39
  because it's just so like jarring because it is such a
• 41:42
  jarring thing to see. Like oh I should just leverage
• 41:44
  my insurance policy in a trust and make $50,000 a month.
• 41:47
  Like that's just nonsense. But what he's saying is like,
• 41:49
  OK, this is actually potentially pretty intangible.
• 41:53
  He said, go to ChatGPT, ask him get this idea, Go try to do it.
• 41:57
  Like see how it works. Like you need some actual money.
• 41:59
  You can't just like make money out of thin air.
• 42:01
  And then like, we actually lost money because there's shipping
• 42:03
  and and like, you know, and, you know, I think his fortune
• 42:08
  probably learned a really important business or really
• 42:10
  important lesson there, which is, you know, that didn't quite
• 42:14
  work the way I thought it would. I learned about these hidden
• 42:18
  expenses and these, you know, the time it took and all these
• 42:21
  other things. I really like that, you know,
• 42:23
  I'm, I'm a huge fan of starting small businesses.
• 42:25
  And, you know, that's kind of the, the, the fiber of American
• 42:33
  excellence is our entrepreneurial spirit.
• 42:36
  And I think that, you know, for all of Americans failings or all
• 42:40
  America's failings, which are, you know, boundless, I think
• 42:44
  Americans are really hard workers.
• 42:46
  We're really ambitious and, and I, you know, even from traveling
• 42:49
  to other countries, I, I find it to be true.
• 42:51
  We all kind of have this like hunger to grow businesses in US,
• 42:54
  which I think is great. I think it's cool, you know,
• 42:56
  maybe it's not the purpose of life.
• 42:58
  Maybe that's beyond like my pay grade, but I think that's a cool
• 43:02
  kind of like American cultural thing, which is we all are very
• 43:04
  entrepreneurial and want to kind of hit it big and work hard
• 43:07
  towards those goals. And it doesn't just happen
• 43:10
  automatically. You kind of have to fail a few
• 43:12
  times. And so while, you know, that
• 43:13
  little, that little anecdote he told wasn't like, oh, look how
• 43:16
  easy it is. I just made $1,000,000.
• 43:18
  I think when his 14 year old is 18 or 22 or 26, those lessons
• 43:24
  will seep in and he'll say, OK, this new idea I have, that's not
• 43:29
  going to work. I remember when I was 14, I
• 43:30
  tried that and the shipping was, you know, broke the bank on us.
• 43:33
  What if we do it? You know, what if we go in bulk
• 43:35
  or what if we do, you know, figures it out, whatever it is,
• 43:38
  and then makes it work. And then the small business and
• 43:42
  entrepreneurial spirit of the US is what makes the world go.
• 43:45
  And so, you know, I, I like that.
• 43:47
  I think it's a cool idea whether you're 14 or 44 or 64, just go
• 43:52
  do it, you know, and I think so many people are fixated on being
• 43:59
  perfect or not failing. I can't start unless I'm already
• 44:02
  good at it. But you have to suck first.
• 44:05
  You know, that's the only way to do it.
• 44:07
  You have to fail and you just have to try and you just have to
• 44:09
  get even. When we were starting this first
• 44:11
  in this podcast, and I was like, we were doing that a little bit
• 44:14
  like, oh, we got to make it perfect.
• 44:16
  I'm like, does anyone remember the first episode at this point?
• 44:18
  Like, no one cares, you know? And we're only, what are we 22
• 44:21
  episodes in right now? You know, we're going to be
• 44:23
  judged by our 200th episode, not by our first episode.
• 44:26
  And our first episode was primarily there to get us going,
• 44:30
  to get us practice, to get us better.
• 44:33
  Are we getting better? I don't know.
• 44:34
  Of our 22 episodes, three of them I think, were solid.
• 44:38
  And yeah, 17 of them have been flagged by the FCC for hate
• 44:44
  speech. Jesus.
• 44:48
  You just used the Lord's name in vain.
• 44:50
  There we go, Episode 22 flagged. We're going down.
• 44:54
  Yeah, no, not the 60 times you said porn when I said Jesus,
• 44:59
  that's what that was. Now the love between two people
• 45:02
  is is not to be shared. OK, got it.
• 45:06
  Nice, have you looked up? Yourself on the Epstein files
• 45:08
  yet Do you think there's any chance you're in there?
• 45:10
  No, I don't think I'll make it. I don't think I'll make the cut
• 45:13
  unfortunately. I don't think there's any chance
• 45:15
  I'm in there. I mean, obviously I've never
• 45:18
  like been in it. I've never talked to him, never
• 45:20
  been a sphere. But like, some people are like,
• 45:22
  totally just are what's like collateral damage where like, I
• 45:26
  heard Jon Stewart, someone mentioned Jon Stewart's name to
• 45:29
  Jeff Epstein. Be like, Oh, yeah, we could get
• 45:31
  someone like Jon Stewart Johnson's like, whoa, why are
• 45:34
  you bringing me into this? In scenery.
• 45:37
  All right. So are you going to give, are
• 45:38
  you going to give Scott a grade? Yeah, Professor Galloway here.
• 45:42
  I, you know, I'd give it an AI don't know it's fine.
• 45:45
  I think like, I think it's he kind of makes the, you know, in
• 45:50
  the 42 seconds of that clip or whatever it is, he makes the
• 45:52
  very complex topic of entrepreneurship a little bit
• 45:56
  more concrete and, you know, takes away a little bit of the
• 46:02
  fantasy finance porn of, oh, just leverage assets and become
• 46:07
  rich. You got to actually try and do
• 46:09
  the work and it doesn't always work out.
• 46:10
  And I think that's probably a good lesson for 14 year olds or
• 46:13
  adults Swim. Nice.
• 46:14
  Yeah I like it. I agree.
• 46:16
  Last week we had AI think it was last week we had a four year old
• 46:19
  learning money habits. Now we're on to 14.
• 46:22
  So good, Dad's doing the thing. Yeah, yeah, it's true.
• 46:27
  We got two. We got 2 dads in a row.
• 46:29
  It's it's Dad. Teaching money habits.
• 46:31
  Month here, Dad teaching money month.
• 46:34
  I love it. OK, let's go to our final
• 46:37
  segment of the episode. Money, money.
• 46:41
  Jeremy had time today. I had time today.
• 46:44
  I'm in those comments. People always say I like you
• 46:47
  because you're always in the comments and I say I need to
• 46:50
  find better ways to use my time, but thank you.
• 46:52
  OK, you are in the comments, actually.
• 46:56
  Yeah, it's, it's when I'm scrolling, looking through, I'm
• 46:58
  like, oh, Jeremy, he had time. He had time that day, too.
• 47:02
  You gotta do something when you're pooping, John.
• 47:03
  You guys gotta be a remind. Me to never handle your phone.
• 47:09
  OK, so we've got an Instagram post here called How to get
• 47:12
  rich. Do you want to explain what
• 47:14
  we're seeing and I'll read this comment.
• 47:16
  So yeah, it's a pie chart in the left half of the pie, which is a
• 47:21
  dark green, probably 49%, not quite half, but like almost
• 47:25
  half. It says, oh, it's, and then it's
• 47:28
  labeled relative impact these activities have on building
• 47:30
  wealth. So it's a pie chart.
• 47:31
  The left half says increase income, the right half says
• 47:35
  decrease expenses. So earn more, spend less.
• 47:38
  That's how you build wealth. And then the little slice in
• 47:41
  between, like the little 2%, the little orange slice that's left
• 47:44
  says high yield savings, Roth versus traditional expense
• 47:48
  ratios, ETF or mutual fund, 4-O1K versus IRA tax off tax
• 47:51
  loss harvesting, buy versus rent, credit card training,
• 47:53
  rebalancing, small cap versus large cap stock picking back
• 47:56
  door, Roth IRA I bonds versus bond fund asset allocation,
• 47:59
  which brokers tax efficiently lump sum like a long list.
• 48:03
  And you know, the stuff that like we all nerd out about.
• 48:06
  And the point here is that you can all that fine-tuned stuff,
• 48:11
  that little tiny slice, you can, you know, sharpen it to the
• 48:16
  finest point you can imagine. You can work on it all day.
• 48:19
  You can make yourself an expert, all that.
• 48:22
  But if you're not doing the big things, make more money, spend
• 48:25
  less money, invest the difference the big things, then
• 48:27
  the little things you know just don't have the big of an impact.
• 48:30
  OK, so this commenter says, but I will say if that little orange
• 48:36
  sliver makes a bigger chunk of the pie, you don't have to worry
• 48:38
  about the income and expenses after praise hands emoji.
• 48:43
  I don't know what this person means.
• 48:45
  I can read in two different ways.
• 48:46
  In one way they might be saying once your investments are big
• 48:50
  enough, then your investments really are your income.
• 48:56
  And then you don't need to worry as much about like working
• 48:59
  harder or being more frugal. And to that, to that reading of
• 49:03
  it, I would agree with that, because that's really the, the
• 49:08
  core of financial independence, which is, hey, get yourself to a
• 49:12
  place of investing where your investments have grown so large,
• 49:15
  you can live off the growth indefinitely without really
• 49:18
  eating into the core. And then you like they're
• 49:21
  saying, OK, now suddenly the, the job has gone away and now
• 49:25
  you can help your investments. And I largely agree with that.
• 49:28
  But I will say that doesn't, you know, I mean, you can spend
• 49:31
  indefinitely, right? You know, you still have to live
• 49:33
  below your means or else you'll, you can, you can spend even
• 49:37
  millions of dollars down to 0 pretty quickly if you're being
• 49:39
  reckless. The other reading of it I have
• 49:41
  is saying, hey, if you're good enough at investing, then that
• 49:47
  part will become bigger. And that's to me is giving day
• 49:51
  trader. It's giving options trading,
• 49:53
  it's giving Robin Hood. Come on, it's giving, you know.
• 49:57
  I love that. I love that.
• 50:00
  I used to coach speech volleyball.
• 50:01
  Shout out my other my Coco. Jeremy said it's giving day
• 50:05
  trader. Please make a post with you.
• 50:07
  Just like it's giving day trader, it's giving predicting
• 50:10
  by press performance. It's giving you need to do.
• 50:13
  Exactly. Alright, yeah.
• 50:15
  But yeah, freeze is like my little, you know, Gen.
• 50:18
  Z, She was translate everything for me and she'd always like she
• 50:22
  has like a little so calyx. It's like Jeremy, it is giving
• 50:25
  late for practice there, Breeze. I apologize for that impression
• 50:31
  of you, but it's probably kind of close.
• 50:33
  But she would teach me these things.
• 50:34
  And so anyway, this this comment is giving, you know, it's giving
• 50:38
  this person maybe things that they can outperform them.
• 50:40
  It's giving outperformance. It's giving chase past
• 50:43
  performance, like everything Jen just said.
• 50:45
  And to that, my answer is like, whoa, buddy there.
• 50:49
  That's probably not true. You know, if you think you're
• 50:53
  just going to invest better and take away the core message of
• 50:56
  this post, which is you need to earn more and spend less, you're
• 51:00
  going to be broke for a long time.
• 51:02
  That's kind of the, that's kind of the mentality of the forever
• 51:07
  broke, which is, oh, no, no, I'm going to invest.
• 51:09
  I'm going to invest better. And you know, I see it all the
• 51:11
  time. People, you know, have their
• 51:13
  first 100 bucks or 500 bucks invested and they're like, how
• 51:16
  do I get a better rate of return?
• 51:17
  I'm like, rate of return ain't your problem.
• 51:19
  You know, you need to put more money in whether you get 11% or
• 51:22
  12% or 14% or 9%. You know, 500 bucks in a year
• 51:26
  from now is going to be about 500 bucks.
• 51:28
  You know, that ain't enough. You need to be putting in a lot
• 51:30
  more 500 bucks, you know, And then over the course of decades,
• 51:35
  yeah, we want to minimize fees and do all these little things
• 51:38
  in the right to, you know, get our rate of return as high as
• 51:40
  possible. But you're not going to.
• 51:42
  You know, I just read the story the other day about this dude
• 51:45
  who he made some, he bet against Bitcoin in one of the downturns
• 51:52
  and made $200 million, you know, using some options trading
• 51:55
  strategy. So, you know, he basically doing
• 51:58
  options trading, you can take a little bit of money and
• 52:00
  potentially make huge amounts of money if you're crazy long shot
• 52:03
  that hits. But in most cases you lose all
• 52:06
  your money. So options trading in most cases
• 52:08
  basically converts investing as I call it, you know, growing
• 52:12
  your wealth over time to gambling.
• 52:14
  We're just guessing, hoping you would.
• 52:15
  So made $200 million. And so that kind of story often
• 52:18
  goes viral in these. And then, you know, young
• 52:20
  investors like, oh, that's the orange slice.
• 52:22
  I can make the $2,000,000 in there by doing the right options
• 52:24
  trade. But then this guy then bet it
• 52:28
  all on Etherium and lost $250 million.
• 52:31
  And I think his total winnings, you know, over his options
• 52:34
  gambling career, based on this brief article I read, was like
• 52:38
  negative $128 million and he had 50 bucks left in his account.
• 52:41
  And so, you know, I think that's a more true story 'cause I think
• 52:45
  the kind of people who make these huge gambling bets and win
• 52:49
  often also make huge gambling bets and lose.
• 52:52
  And that's the mentality of the forever broke if you're just
• 52:55
  going to keep trying to make the bats.
• 52:56
  Whereas the mentality of the wealthy is, hey, I'm going to
• 52:59
  just keep putting more away and keep trying to get a slightly
• 53:01
  better rate of return over time, that compound growth do it.
• 53:03
  And so I don't know what this commentary meant.
• 53:06
  Anyone who's commenting on my post is someone I love because
• 53:10
  they're feeding the algorithm and getting us slightly more
• 53:14
  slightly more views or whatever it is.
• 53:16
  But if you're saying, hey, if you get your wealth big enough,
• 53:19
  you don't need to worry as much about working, that's true.
• 53:21
  If you're saying if you're an expert day trader you don't need
• 53:24
  to work, that's not true. It's not giving OK.
• 53:28
  It's not giving. Got it.
• 53:30
  All right, Well, we have made it to the end of another episode of
• 53:35
  the Personal Finance Club show. We did it, Jen.
• 53:40
  Happy. Birthday Tai tomorrow.
• 53:42
  Happy birthday, Tai. We'll see you guys back next
• 53:45
  week. Jeremy, give us the rules.
• 53:48
  And don't forget the 2 Rules of Personal Finance Club.
• 53:50
  Rule #1 live below your means and rule #2 invest early and
• 53:54
  often. See you next week.
• 53:56
  The personal finance club show is produced by Jeremy Schneider
• 53:59
  and Jen Wendia, music by Essa Balu and Homie.
• 54:02
  Send your questions to podcast at personalfinanceclub.com.
• 54:06
  The Personal Finance Club show is Co hosted by Jeremy Schneider
• 54:08
  who is a co-owner of Nectarine and SEC Registered Investment
• 54:12
  Advisor. The views expressed on this show
• 54:14
  are those of the hosts and guests and do not necessarily
• 54:17
  reflect the views of Nectarine. Please refer to
• 54:20
  hellonectarine.com for all relevant disclosures.
• 54:23
  This podcast is for informational and educational
• 54:25
  purposes only and should not be construed as personalized
• 54:28
  investment advice or a solicitation to buy or sell any
• 54:31
  security.