Latest / The Personal Finance Club Show / The Trump Kids Account, Retiring on 24, and Coffee = House? | Ep 15

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The Trump Kids Account, Retiring on 24, and Coffee = House? | Ep 15 · The Personal Finance Club Show

0:14
Welcome back to the Personal Finance Club show.
0:17
Hey, Jen. What's up, Jer?
0:19
Well, I should say Merry Christmas, Jen, because today,
0:22
as you know, today is Christmas. Merry Christmas.
0:28
Happy No. Well, that's next.
0:29
Next week. Happy New Year.
0:31
Happy Kwanzaa. Happy Hanukkah.
0:34
What else? Oh.
0:35
Happy. Festivus.
0:36
Got them all. Yeah, we, we, we record these
0:40
ahead of time, of course. So it's not actually Christmas
0:42
as we're saying this, but Christmas is on a Thursday and
0:45
Christmas is always the same day as New Year's Day, which will be
0:47
on a Thursday and Thanksgiving is always on a Thursday.
0:50
And so on our first kind of year of podcasts here, all of our
0:56
episodes are dropping right on the day of these huge end of
0:59
your holidays. And so if you're listening to
1:01
this on Christmas morning, like you woke up excited for
1:06
Christmas morning, you ran downstairs and open up your
1:08
podcast app and listen to the personal finance club show.
1:11
Please send us Adm or an e-mail podcasts at
1:15
personalfinanceclub.com because you are a super fan and probably
1:20
frankly need to realign your your priorities a little bit,
1:24
you should. A couple of things about what
1:26
you just said #1 the fact that people are not absolutely
1:30
sleeping by their phones that they would have to run
1:33
downstairs you. Don't have to run downstairs and
1:35
turn on. Don't.
1:36
Don't you still have some of those big radios that's like the
1:38
size of a like a mini fridge and you have to tune in?
1:41
Isn't that, isn't that what we're doing right now?
1:43
Open up your podcast app. You made it seem like it was
1:46
like a GIF that they're unwrapping with a bow.
1:48
Yeah, maybe I misunderstand the technology here.
1:52
Yeah, you're. Really.
1:52
I thought you were a little more tech savvy than this, but.
1:55
Like punching the code and then the the big doors open.
1:58
It's like glowing inside and you like, you like access the
2:00
podcast. I don't know.
2:02
What? You lost me completely.
2:04
That's not how you listen to podcasts.
2:05
OK, I guess my my app is superior.
2:09
Anyway, Merry Christmas and all the other holidays to everyone
2:12
and thanks for listening and hopefully isn't this like maybe
2:14
on the 26th or something and you know, doing something more fun
2:18
on Christmas, who knows. Listen, you might need a
2:20
reprieve from that family, so go ahead and lock yourself in the
2:22
bathroom and listen to five agreements with me and Jeremy.
2:25
I spent many years trying to like, be out of the country on
2:28
Christmas Day just because I didn't want to like.
2:30
Wow, you sound like my brother who just confirmed that he's
2:33
coming home for Christmas and we were like, all right, see you
2:35
then. So I'm like, it's something
2:38
about I don't know what it is with boys.
2:40
They just don't want to be coming home, but you know when.
2:42
I was single. It was just too depressing.
2:44
It's just like, oh, like, here's another reminder that you're a
2:46
failure at life. One more, one more year.
2:49
Oh my God made it make me feel great about dating in LA.
2:52
Save that for another episode. It's a disaster, hey, but you
2:57
can just do what I do and get made.
2:58
When you're 44, you got plenty of time.
3:00
I do have plenty of time, yeah. Should we get into our first
3:05
segment? Let's do it.
3:10
Explain it like I'm five. OK, so today's explain it like
3:16
I'm 5 is a hybrid. Can I ask a dumb one?
3:19
We have a question from Murray in Utah.
3:21
So Murray asked and I picked this one because I knew we were
3:23
going to talk about it anyway. What are your thoughts on the
3:26
new kid investments plan Trump announced?
3:30
So this is like, well, yeah, I'll let you talk about.
3:33
I'll let you talk about because you're going to break it down
3:34
for us. OK, so in the last episode I
3:38
made a promise to you, our loyal Christmas morning listener who
3:42
said hey, the kids can wait to open their presents.
3:47
I got to hear the entire personal flash club show first.
3:49
So I made a promise to you. I'm going to stick to it.
3:51
The promise is I'm going to make an analogy.
3:53
And how do you make an analogy about a nuanced tax advantage
3:56
investment account? I don't know, but I'm going to
3:59
try. So here it is basically the US,
4:04
the government doesn't want a bunch of broke old people.
4:07
That's not good to see old poor people on the streets.
4:11
And it's not good for the people.
4:12
It's not good for society. And So what they decide to do
4:16
was to give each baby a little money seed.
4:20
And you plant the money seed into the dirt, and then it
4:23
grows. And there it's A and it grows a
4:25
magical money tree. But the rule is you can't cut
4:29
down the tree or eat its fruit until you baby I'm talking to
4:34
you. If you're a baby listening, you
4:36
baby are 60 years old or 59 1/2 years old.
4:39
Oh baby, you know that song now You don't.
4:42
You got what I need. See, I'm hip.
4:46
I know a song. Wow.
4:47
I was not expecting that. OK.
4:50
So yeah, mostly an oldies guy. I think my Spotify raps that I
4:53
was 78 or something like that, which I hilarious sound
4:56
offensive. But anyway, so that's that's
4:59
analogy. It's basically saying, Hey,
5:00
we're going to give you a little bit of money.
5:01
Now you plant it, you're not allowed to touch.
5:03
You have to wait till it grows until a mighty tree when you're
5:06
old. And then you can like eat the
5:08
fruit and cut it down and use the wood and live off of it,
5:10
right? Or I guess in the, if it's a
5:12
money tree, you're going to take the money off and go buy things
5:14
with it. So that's so that's the analogy.
5:16
And you know, but to be fair, that's kind of like the analogy
5:18
for all investing. And so what's the specifics of
5:21
this account? First of all, it was established
5:25
under the One big Beautiful Bill Act.
5:27
I'm rolling my eyes because I'm just so annoyed with the state
5:30
of the world these days. But which was signed into law
5:32
this year, 2025, and you can't even make your first
5:36
contribution to this account until July 4th of 2026, assuming
5:41
it comes to fruition with and with the state of the world
5:44
these days. You know, I'm not banking on
5:46
anything that the government really says.
5:48
OK, so that said. Why is that, Jeremy?
5:51
No, I'm just kidding. Don't get into it.
5:52
We're not going to get that, not on Christmas, Jen.
5:55
This is the. One day we bring family
5:57
together. We'll talk about, you know,
5:59
really divisive things on the New Year's episode.
6:02
You know, don't say, don't say whatever, whatever example
6:05
you're going to give. We're about to get 8 mail.
6:08
I'll just say whatever the other side hates.
6:10
That's what I hate anyway. OK, so you can't, you can't make
6:14
your first contribution until July 4th, 2026, which means we,
6:17
we don't even have one of these things yet.
6:18
So it's really hard to know exactly how it's going to look.
6:21
In fact, we don't even know where you open these accounts.
6:24
Will they allow Fidelity to have these accounts, or do you have
6:28
to go to, like, the US Treasury website?
6:30
It's not clear yet. OK, But here's the basic rules
6:32
as I understand them. First of all, the only people
6:35
who are eligible are children who are 17 or younger for the
6:39
whole calendar year. So the year you turn 18, you're
6:42
no longer eligible to contribute to one of these accounts.
6:46
Contributions like deposits in this account are limited to
6:49
$5000 per year. So basically it's like an
6:53
account. Think like Roth IRA or 4-O1K but
6:56
just for kids. You can put money in only $5000
6:59
a year. Also, the government has agreed
7:03
to give 1000 bucks to all U.S. citizens with a Social Security
7:08
number. Babies born between January 1st,
7:11
2025 that's backdated to the beginning of this year through
7:15
December 31st, 2028. So shout.
7:18
Out. Yeah, shout out to my own child
7:21
Ty, short for Tylenol, which was a much better name before.
7:25
We're going to start believing you.
7:27
Before all that Tylenol drama came.
7:31
Just kidding, it's not short for anything.
7:32
It's long for TA though. That's stupid.
7:35
We're going to make him just call him Tub.
7:37
But we're like, let's stretch it, all of it.
7:38
Let's make it a two letter name. OK, So anyway, if you're born
7:43
25262728, those four years you have a baby, you're going to get
7:47
$1000 grant. That's like the money seed I was
7:49
talking about. That's the seed.
7:50
That's the beginning amount of money.
7:52
The contributions that you put in, like let's say you put in
7:55
1000 bucks, you got 1000 bucks in there.
7:56
Any more money you put in is an after tax contribution.
8:00
And so you don't get a tax break for putting money in like you do
8:04
with a Traditional IRA or with a traditional 4-O1K.
8:08
So these are after tax contributions, and that's like a
8:11
Roth IRA. No withdrawals at all are
8:15
allowed before you're 18. And then at 18, it basically has
8:18
to be converted to an IRA to continue it.
8:21
And so you convert it to a Traditional IRA.
8:23
Now, does this sound like the White House website?
8:25
Where did you find this information?
8:26
Is this official? There's an there's an IRS
8:28
website and then there's a bunch of articles and I did my best to
8:32
summarize this for you, our Christmas morning listeners.
8:36
You're killing it. OK, continue.
8:38
Yeah. And so, so far, you might be
8:41
thinking, OK, this sounds like a Roth IRA.
8:43
You put money in after tax plus $1000 bonus, Great.
8:47
And it grows and you get to take out tax free.
8:48
But no, wait, that's not how this works on withdrawals.
8:52
Anything you put in after tax you can take out.
8:55
So like let's say you contributed to $5000 and it
8:58
grows to $8000, you can take out that $5000 tax free because
9:02
you've already been taxed on that like you always can, right?
9:05
That's how it works with the brokerage account.
9:06
That's how it works with the Roth IRA.
9:08
But then the growth, any of the growth you have to pay ordinary
9:12
income tax on, which is kind of crazy to me.
9:15
And the reason that's crazy is because when you contribute to a
9:18
regular brokerage account with no tax advantage, you don't pay
9:22
income tax on the gain, you pay capital gains tax on the gain.
9:26
And so this account is basically giving worse tax treatment to
9:31
the gains than a non tax advantage account.
9:35
And it, at least to me, muddies the water in as to like, is this
9:40
even a good idea at all? Like wouldn't you be better off
9:42
just putting into a custodial brokerage account?
9:45
I recently posted about that Instagram where you can
9:47
basically just put money into account in your child's name.
9:50
You manage it until you're 18. That's called an UGMA or an
9:53
UGMA. Anyway, Speaking of Thai, you
9:55
definitely pimped him out for that post.
9:57
That's right, I know my wife said that I could use photos of
10:01
the children until they're one year old and then no more kids
10:04
on social media, which I also agree with.
10:06
I'm not trying to say it. Yeah, we're getting there.
10:08
Wasn't he born in February? Yeah, he's going to turn.
10:11
He does already. He's already starting to look
10:13
like you, so it's probably time. Yeah, they people tell me he
10:17
looks like me all the time. And the next time a stranger
10:19
tells me that, I'm going to say, oh, he's not mine, just speaks.
10:23
I really like for some reason making strangers exactly because
10:28
I don't even spotted that. Like did you steal this baby?
10:30
It looks exactly like. So uncomfortable a man with a
10:33
baby. I would.
10:35
Just be like, oh, he's he's not mine.
10:37
Yeah, I'm gonna probably have some some phone calls made on
10:40
me. CPS coming to your door?
10:44
So anyway, that's what this account is.
10:45
You put money in after tax, it grows tax free.
10:48
They don't, they don't tax you along the way like on dividends
10:50
and stuff like they do in a brokerage account.
10:52
But then we withdraw any of the gains.
10:54
You pay ordinary income tax at the child's tax rate.
10:57
And so here's here's like the little hack that I think people
11:00
might be using on these, which is you do it until they're 18
11:03
and then at 18, you convert it to a Traditional IRA and then
11:07
you immediately convert it or I guess you would roll it over to
11:10
a Traditional IRA and then you immediately convert it to a Roth
11:14
IRA. And so basically you do pay the
11:18
the tax on those gains as income, but 18 year olds
11:22
generally have little to no income because they're like in
11:24
high school or freshman college or whatever.
11:27
And maybe there's only 10 grand or 15 grand of gains at all in
11:32
there. And if so, you would pay 0 tax
11:34
on that conversion. And so basically you could use
11:37
this as a way as kind of like a this, I promise you, if no one's
11:42
done this yet, they're going to, they're going to call it like
11:43
the, the Trump backdoor Roth IRA, because anything with the
11:47
word backdoor in it, people think they're like getting away
11:49
with something. And so you can basically fill it
11:51
up during their childhood and then immediately convert to a
11:54
Roth IRA when they're 18, thus having it all have tax free
11:57
withdrawals growing indefinitely, and then you only
11:59
pay the tax on the gains at the very low young adults income tax
12:05
rate. How many things could change
12:08
before that happened? All of it.
12:10
This is probably, yeah. It's like the student loan
12:12
forgiveness thing where it's like you should not be banking
12:15
on that because so many things could change, so many
12:17
administrations, so many laws, like come on, like even the fact
12:21
that you would be banking on this, which is what in theory is
12:24
like this amazing thing that that they're even putting 1000
12:27
like $1000 is not nothing. You know what I mean, especially
12:30
when it comes to investment. But like, I just feel like the
12:33
amount of things that could change between now and then for
12:35
future of the first batch of kids that would be able to
12:37
actually quote, UN quote cash out on this is crazy.
12:40
I I agree, I mean, you just don't know what's going to
12:43
happen in the future. And could future congresses
12:46
retract this? Usually, once you give, you
12:50
know, American citizens a benefit, it's much harder to
12:53
like, claw out of their hands because it just becomes insanely
12:57
politically unpopular, as does, you know, reducing Social
13:01
Security or taking away your 4-O1K or whatever it is, right?
13:05
But that said, it hasn't even been implemented yet, right?
13:07
You can't, you know, the first contributions aren't even
13:09
allowed until July 4th, 2020. Sixth.
13:12
And so I. Interestingly.
13:14
Yeah, right. I mean, for the big beautiful
13:16
bill might as well be OK. But but I'm gonna end this with
13:21
saying you, you kind of said 1000 bucks is nothing to sneeze
13:23
us. So I'm gonna ask you a question.
13:25
I hate when you ask me questions.
13:27
I know. And I know you're going to hate
13:29
this. And I put it on there and it's
13:30
going to put you on the spot because they're impossible to
13:32
answer. So you can't feel bad because no
13:34
one knows the answer. Yeah, but I.
13:35
Feel like? Anyway, go ahead and let's try.
13:36
But put in your put your money seat in your $1000.
13:40
Money seat grows to a tree. And let's say it grows for 60
13:44
years so that the child waits until they're 60 years old and
13:47
let's say they get a 7% annualized return.
13:50
That's about the after inflation historical average growth of the
13:54
stock market. So the question is what will
13:57
$1000 be worth in 60 years? Invested 7% for 60 years
14:03
compounded. What's your guess?
14:05
I feel like I should be able to get close and I'm not going to
14:07
get close. What will $1000 be worth with 7%
14:12
interest on it? Basically over 60 years, yeah.
14:18
I don't know, Jeremy. Give me a guess even if you're
14:22
even if you're off by a few zeros.
14:23
It's just interesting to see what your guess.
14:25
Trust me, the six. Years.
14:27
OK, but what were you going to say?
14:28
What were you going to say? Well, guess I want you to guess,
14:30
then I'll explain it. All right.
14:32
I'll say 20,000. That's a really actually that's
14:36
really close. 5058 thousand. OK.
14:39
Yeah, hey, I mean, you have the right number of digits.
14:41
That's like on these types of questions.
14:43
That's like really good. Yeah.
14:43
So, you know, 58,000, so, you know, it's significant.
14:47
Like, you know, I don't think, I don't know anyone of my friends
14:49
who would take 58,000 bucks for granted.
14:52
But also this isn't like we're going to have a bunch of
14:55
automatic millionaires when they're 60.
14:57
It's just kind of like a seed for for what is.
15:00
Yeah, go ahead. My, my, my, my thought was like,
15:03
what? I what made me upset when
15:05
listening? You know, everybody's talking
15:06
about this, right? Which is why I brought it to the
15:07
pod. He's like, the idea of it is
15:10
actually really amazing because there's, there's so many
15:13
families specifically in America who would never have the
15:16
opportunity to let $1000 grow over 18 years.
15:19
And to make it like you said, if it, if it's true 58,000, that's
15:22
huge that somebody's college education, that's the car,
15:25
that's a down payment. Like it's so many things that
15:27
like a lot of families would never be able to afford.
15:30
So I want to love it and I want it to be something that's in
15:33
good faith, but I know that it's not.
15:35
And I I I and not though, no, not only do I know that it's
15:38
not, but I like I said, I don't feel like this is going to be
15:41
the case when this first batch of one year old 0 year olds make
15:45
it to 18 and are able to actually like use this.
15:48
Yeah, I'm with you actually. You know, Social Security is not
15:54
like this. Social Security is the young
15:56
people today who are working, their money is instantly getting
16:00
paid to the old people who need money.
16:02
And the reason that was is because back when I was
16:04
introduced, I think in like the 30s or whatever, they're like,
16:06
oh, oh, our old people are like starving on the streets today.
16:10
Hey, young people, you all pay and you all pay.
16:13
Give them your money. And then when you're old, the
16:15
young people will which like, you know, Kyle was like this
16:18
Band-Aid to solve the problem back then.
16:19
But then you have this like kick the can down the road situation
16:22
where it might, you know, the, the, the day young people stop
16:26
paying in and old people are like, wait a minute, I paid and
16:29
how come I'll get my money? And that's kind of like at risk
16:32
of happening now because the baby boomers, which are like
16:36
people like, you know, probably our parents age and how you're
16:38
how old your parents are. But like my.
16:39
Parents. My dad's 70, my mom's 65.
16:42
OK, so yeah, my parents are 75 and 72 or something.
16:47
I should know this. Yeah, 73, I think.
16:49
So a little bit older, but they're all kind of in that baby
16:52
boomer area. And, and so now there's like
16:56
potentially more old people than there are young people.
16:58
And now they, the system doesn't work because back then there was
17:01
like, oh great, three young people are paying into one old
17:04
person. Like how amazing.
17:06
Now it's like 1, you know, I'm exaggerating the numbers, but
17:08
like one young person paying into 3 old person doesn't,
17:11
doesn't work, right. So, you know, it is kind of
17:13
almost like a Ponzi scheme to some degree because you're just,
17:17
it's depending on this new influx of cash to pay out the
17:20
old investors. That's what a Ponzi scheme is.
17:23
This was not meant to be. This explained like I5 has
17:25
turned into a Social Security rant.
17:27
But, and for what it's worth, like.
17:30
I think older people are like they're scraping by in Social
17:32
Security. I mean, you talk about all the
17:34
time where it's like they still have to work at Walmart as
17:36
greeters. They still have to have a
17:38
supplemental income or somebody helping them.
17:40
They can't afford like exorbitant things like home
17:42
healthcare or like nursing. Like that's not even scratching
17:46
the surface. So it's like, what really is the
17:48
point if you can't actually take care of yourself when you're
17:51
elderly? Right, So exactly your $1200 a
17:54
month Social Security check, you know, if you're choosing between
17:57
paying for your medicine and eating cat food, like life ain't
18:00
that great, you know? So all that said, I actually
18:04
agree with you. I like something that looks like
18:07
this better. And the government has a really
18:09
good investment program called the TSP, which they give to, you
18:14
know, military and government workers.
18:17
And I think that's like actually been implemented extraordinarily
18:20
well. And I really like this.
18:21
I feel like it's kind of going towards that.
18:23
And, you know, I think you make a good point.
18:26
Hey, I'll believe it when I see it.
18:27
It feels maybe like it's not in good faith or not in fruition or
18:30
it's not going to come to fruition.
18:32
But I kind of like in concept too.
18:34
And I think that we should be doing more of this and less of
18:37
Social Security. And you know, we should have
18:39
started it in the 30s, but no time like, you know, best time
18:43
to plant a tree is 20 years ago. Second best time is today.
18:45
And so maybe it's going to work and I hope it does because I
18:48
think that and I don't even really like how it's
18:50
implemented. I think it should all be Roth.
18:51
I think, you know, the fact that they're charging you ordinary
18:54
income on the gains is kind of weird.
18:56
So maybe they can fix that too. But but like you said, giving
19:00
people like a start at an investment when they that
19:05
wouldn't have even been in their world otherwise, either through
19:08
their inability to access it or their inability to save or
19:13
whatever it is giving, you know, starting people know, I feel
19:16
like that could really be transformative for some
19:19
families. And so I I hope it works.
19:22
Amen. OK, go base your Christmas ham
19:26
as we get into our next segment. Money.
19:29
Money. Can I ask a dumb one?
19:34
OK. Nice pause, John.
19:38
Thank you. We we talked before the show
19:41
how, but you have to pause between our next segment music,
19:45
then the segment name and our editor Sahil Charlotte.
19:48
Sahil has been trying to squeeze it in, and so he's like, you
19:51
gotta pause. Because I'm talking 1,000,000
19:54
miles a minute. OK, I want to say one thing
19:56
before we get in this episode that Jeremy doesn't know yet is
19:59
that we had a high school class. That had their assignment was to
20:06
ask a question into the podcast and if they ask a question
20:10
they'll get 100% on their next test.
20:13
Now I know I know it's really crazy so shout out on Mr. I'm
20:16
going to want to get this right Mr. Coucher and is at Shalmont
20:20
High school now the only thing I want to say we're not asking a
20:23
question from one of these kids today.
20:25
The reason why is because they don't probably realize that we
20:28
batch our episodes and by the time they get to this, like the
20:31
class, I probably won't even take in class next semester.
20:33
I don't know, I guess high school you take the whole year.
20:35
But basically they're not going to get their question answered.
20:38
They said on the next episode then they'd get 100%, which I
20:41
like. I thank you, Mr. Coucher, for
20:43
listening and for implementing this assignment.
20:45
However, I I feel you're going to have to use it for like next
20:48
semester because we're not going to hear this until Christmas
20:51
Day, as you know. Wait, do they only get the 100%
20:54
if their question is answered on the year?
20:56
Yeah, and and we have to ask it and answer it on the air.
20:59
Oh my. Well, he's putting.
21:00
So now we have to be the decider of who gets the 100%.
21:03
That's not. That's like a lot of questions.
21:04
If we were doing this like weekly within like 3 days I
21:07
would absolutely try and squeeze a question from that class and
21:09
then get like one kid 100. No I think we should like just
21:13
rapid fire every single kid who submitted 1 so they all get 100.
21:17
You're gonna be mad, but they're not gonna hear it until
21:19
Christmas in the class, I'm sure.
21:21
This I I agree. It's too late.
21:22
Like we're already on the Christmas episode.
21:24
Mr. What was it? Coucher.
21:27
Mr. Coucher, we're already on Christmas, man.
21:29
That's that's that's the podcast, but hopefully you could
21:32
play some. Fun Hi and thank you for
21:34
listening These kids they had like some good questions, some
21:37
better than others not going to call names, but they did they
21:40
had some good but I love that what I loved about all the
21:42
questions is they like 90% of the the students said I can get
21:47
100 if I ask a question. So here's my question.
21:49
I like something experiencing like nobody tried to lie and be
21:52
like I have a genuine question about personal finance.
21:54
They were just like, and they probably probably did, there's
21:56
like a mix of, but like they were just all were just like, I
21:58
can get 100 If you answer my question on the air, I'm like,
22:01
wish I could help you. But let's try and like in the
22:04
next few episodes, like after Christmas, maybe 2 episodes from
22:07
now, we'll try and get to one of those and maybe Mr. Coucher can
22:10
move the 100 to next semester. If that is even A2 semester
22:14
class, but I hope so. All right, High school, I feel
22:16
like generally is a, is a a. Year you take.
22:19
It for the year, right? Mine was.
22:22
Mine was and mine was like after the semester it's like you're
22:24
switching teachers I think. No, that's crazy.
22:27
You went to regular high school? Yeah.
22:30
Public. School baby public, Southeast
22:32
Michigan. I mean mine was magnet but we
22:34
took the class for the year. You were magnet.
22:37
Okay, okay, let's get back to it.
22:38
We gotta get back to the show. Okay, anyway, so back to the
22:40
show. We actually do have a question
22:43
from Chris and it's an audio message.
22:45
So why don't you click on that and we'll listen together.
22:47
Hi, Jeremy. Hi Jen, Chris here, Big fan of
22:51
yours. Been following for a really long
22:53
time on Instagram and now on this podcast.
22:55
Great job guys. I'm interested in your.
22:57
Thoughts on the relationship between antitrust and market
23:01
concentration and its impacts on everyday consumer prices and
23:05
household financial health in the US.
23:07
One of the podcasts I also follow besides yours is 1 called
23:10
Organized Money by Matt Stoller. Something to follow.
23:13
And I just think there's been a greater concentration and it's
23:17
curious if you see that or is it normal what we're in now or not.
23:21
And then it's my second question is, let's say perchance I saw
23:25
you at the airport. It was like, hey, I'm a really
23:29
big fan. Would it be inappropriate for me
23:32
to like pat your arm to get your attention?
23:35
Anyways, that's rhetorical. I apologize for doing that and I
23:39
appreciate everything you guys do.
23:40
Thank you. I'll take the second question.
23:42
I know he's talking about me, so let me answer that.
23:47
I, I was just going to say, actually, I don't remember
23:49
anyone ever like patting my arm, but hey, Chris, I, I am at that
23:54
very weird level of fame where I get recognized probably once a
23:59
week on average. Sometimes it's like a month that
24:01
goes by that. Week.
24:03
Yeah, I think once a week is pretty fair.
24:06
I mean, in the like, least possible way.
24:11
But what I'll say is when people meet me, sometimes they're like,
24:15
I don't know, I get questions like that, like, is it OK if I
24:17
say hi or something like that? And I promise you, it's way more
24:22
of a big deal for me than it is for you.
24:24
Like when I get recognized, I have to like ask myself that
24:27
question. I'm like, am I famous?
24:29
Is this like, is, is everyone looking at me right now?
24:32
Like, do they want a picture? What an autograph.
24:34
What do I have anybody nearby that's like, who is this guy?
24:37
Right, exactly. Like, is there a buzz start
24:39
like, oh, that. He's here, he's at the airport.
24:42
He's sitting in a middle seat in the row 38 right by the
24:46
bathroom. He must be a big deal.
24:48
No, he was a billionaire, Yeah. And so, yeah, I always say hi to
24:54
me. I promise you it's a bigger
24:55
deal. Yeah.
24:56
For me, it's like, that's what's going through my head.
24:58
For everyone else, it's like, Oh yeah, I think I saw that guy
25:00
when I was like, scrolling through Instagram while I was
25:03
pooping. And so that's not a word.
25:06
Back to poop, all right? Now that I know like high school
25:10
kids watch us for class, like credit, I'm going to have to
25:14
bring the I don't know, there's need to be more they're.
25:16
Doing a lot worse than what you're doing.
25:18
You don't have to worry about those kids.
25:20
That's probably true All right so that's that addresses the
25:24
airport thing. You're welcome to touch me
25:26
anywhere between like neck and hips.
25:29
We'll say we'll just a little sake.
25:32
We'll take face and. Going off the table.
25:35
I don't know. Let me just.
25:36
That rubs your belly. Yeah, a little belly rub that.
25:39
That's polite. OK, so now for the much more
25:43
difficult question to answer, antitrust market concentration.
25:46
That was like a very, if you by the time all the listeners have
25:50
totally forgotten that question by now with all this airport
25:52
talk and belly rub talk. But what he asked is he used a
25:58
couple of phrases that are kind of complex.
25:59
So antitrust, what does that mean?
26:02
That means antitrust are rules that stop companies from
26:05
becoming too powerful so they can't form monopolies,
26:08
overcharge consumers, cheat or block competition.
26:12
Imagine the, you know, early days of capitalism, the one, you
26:16
know, steel company basically put all the other steel
26:20
companies out of business and then they could inflate the
26:22
prices. And then you couldn't build
26:24
cars, you couldn't build homes, you couldn't build railroads.
26:27
And they could mistreat their employees and, and Jack up the
26:30
price and everything. And the government's like, hey,
26:32
actually that's really bad for our economy, for our citizens.
26:38
We shouldn't let companies just become these massive, massive
26:42
companies and take over and bully out competition, yada
26:44
yada, yada, and so into the antitrust laws.
26:46
And you hear this every once in a while with like, is Google too
26:49
big? Like, do they, are they they
26:50
just? Get out of lawsuit.
26:52
I think they did. And, you know, depending on the
26:54
the political wins and who's in office, like these things get
26:57
harder, like tighter or less tight.
27:00
And, you know, I think generally conservatives, Republicans are
27:05
more for limited regulation and they say, hey, let companies do
27:09
whatever they want, be as big as they want.
27:11
And so the question was kind of like, and then and the other
27:14
term you use, which is a little bit confusing is market
27:16
concentration. What that means is instead of
27:18
lots and lots of little companies, few big companies,
27:22
right? Market is the companies and
27:23
concentration means few big companies.
27:25
And So what he's saying is, you know, instead of there being 15
27:29
different companies that sell you a cell phone and they all
27:33
have to just try to make a better phone, there's just one.
27:35
And it's Apple and it's massive and they can stomp on all their
27:38
competitors and turn the text bubbles green and be all down
27:42
Dicks to everyone who doesn't have an iPhone.
27:45
And so it's kind of crazy. Anyway, I'll get into that
27:48
another. Time.
27:48
I agree, I'll go on a green bubble rant all day long.
27:51
So wild. I didn't realize.
27:52
I was like, there's an option for it to not be green.
27:55
Like I'm like, oh, that was like a choice.
27:56
Oh yeah, Apple could fix that in five seconds if they want to.
27:59
And they're like. Like a month ago I was like.
28:01
Oh my God. Crazy the elitism of like.
28:03
But as a former high school girls volleyball coach, I had,
28:07
you know, 28 girls on my team. 2828 had an iPhone.
28:10
Because if you were the green bubble, you were like.
28:13
For everybody. You ruined it for everybody and
28:15
you're ostracized. You're like a outcast from high
28:17
school. How could?
28:18
How could use WhatsApp like get out of here?
28:21
Yeah, yeah, rainy pictures and Apple could fix they could make
28:24
everyone blue bubble if they wanted with high quality
28:27
everything I know. So anyway, OK, so he's so
28:31
basically what Chris is asking is like, is this like limited
28:35
government oversight on breaking up huge companies causing a huge
28:40
market concentration, thus hurting individuals through
28:44
higher prices and, you know, wrecked personal finances,
28:47
whatever it is. And so let me tell you a quick
28:49
story about maybe I blew it, but here's the lead in there's one
28:55
company, a giant tech company that alone makes up 8.44% of the
29:03
S&P 500. That's massive, right?
29:05
So there's 500 companies. So you'd expect every company on
29:07
average to have like a 10th or sorry, 1/5 of 1% right to to fit
29:11
all 500 companies into into this pie.
29:13
But one company has almost 9% and it's this giant tech company
29:17
and it's like it's a monolith and it's too big to fail and
29:20
yadda, yadda, yadda. That company's name is IBM and
29:25
the year is 1973 And so. Like I'm watching like a history
29:31
movie right now the year. The year get Ken Burns in here
29:37
with a picture of people on a giant mainframe.
29:41
So, so part part of my answer is like, there have been giant tech
29:47
companies before and you know, and the rest of the S&P 500 back
29:50
then, you know, the top 10 was like oil companies and AT&T and
29:54
you know, like have all the companies that aren't in the top
29:57
10 now. And had you invested in the S&P
30:00
500 index fund in 1973, would you have been ruined because of
30:04
these like massive oil companies and massive tech companies that
30:07
have gone too big to fail? No, you would have had an
30:10
incredible returns over the, you know, following whatever that is
30:14
52 years since then, right. Today, the biggest company in
30:20
the S&P 500 is. Do you have a guess of this?
30:23
Job. Is it the alphabet company?
30:25
Oh, actually, that's not a bad guess.
30:27
It's not, but no it's not. OK.
30:31
Give me three more guesses. OK.
30:33
Is it? Is it?
30:34
Is it Tesla? No, that's a good guess.
30:37
I think those are all top five. OK, is it, is it meta?
30:41
Nope. Good guess though.
30:43
I got two more. Two more.
30:46
I feel like there's two more big ones you haven't said, so we'll
30:48
see if you. Really.
30:48
Wait wait, wait. People are screaming at their
30:51
phones right now like you idiot. This is kind of hard.
30:54
This is kind of a hard one. As far as the biggest one, it's
30:56
not. Google, it's not Facebook Meta,
30:59
it's not, is it? Is it?
31:02
Do one of these people that I named own the other one of these
31:05
other ones? No.
31:06
So Meta's 8 Google is technically 5th and 7th because
31:09
they have two share classes, but if you add them up there they
31:11
would they would be third. Somebody's freaking out right
31:14
now, like threw their phone out their car window and it's like,
31:18
and it's something when you say it, I'm going to be like, what
31:19
the helly? You'll know.
31:21
We've said this word a lot on the podcast.
31:23
Today. Mostly last episode that just
31:26
aired the. AI.
31:28
It's an AI thing, yeah. It's an AI thing.
31:31
Who owns AI? It's open AI.
31:34
No, they're not even public. That was a bad guess.
31:36
They're not even OK. There are dumb questions.
31:40
OK, I don't know, just. Tell me NVIDIA.
31:42
Nvidia's the biggest, Duh. Yeah, I know.
31:46
OK. And Apple's second and
31:47
Microsoft's third, for the record.
31:49
So. And NVIDIA, here's the next guy.
31:53
So if, if IBM in 1973 was 8.44% NVIDIA, this, you know, AI is
31:59
taking over the world too big. Like bubble, bubble, bubble.
32:02
What percent of the S&P 500 do you think NVIDIA makes up?
32:06
OK. So you said IBM was 8%?
32:08
Yeah, 8.4. 8.4 OK and NVIDIA has been crazy, like they had like
32:13
600% crazy game whatever. So I'm going to say something
32:17
bananas and say of the S&P, they make up 40%. 40 I guess that 'd
32:25
be crazy because then, like Apple, everyone else has to get
32:28
in the rest. But the correct answer is seven
32:30
7%. Damn, it went down OK.
32:36
But so, so partially. My point is, you know, the, the
32:41
crazy big companies are going to do what the crazy big companies
32:44
are going to do. And we've seen things like this
32:45
before. We haven't seen exactly this
32:47
before. No, for sure.
32:48
And when you, when you add up like all like, you know,
32:50
Nvidia's only a little bit bigger than the second biggest
32:52
because Apple's 6.6%, the two Googles combined are about 6%,
32:57
Amazon's 4%. So there's a lot of big
32:59
companies. And that like is pretty similar
33:01
to how it looked like in the early 70s.
33:04
And so to, to 1°. This has happened before.
33:06
And I think that just continuing to invest index funds is the
33:10
way, you know, when you're voting, I think you should
33:14
consider this stuff and say, hey, do I want there to be, you
33:17
know, better regulated markets or less what regulated markets?
33:21
And I think that impacts is generally speaking, this market
33:24
concentration and these limited antitrust laws potentially hurt
33:29
consumers, right? You know, for the girls on the
33:32
volleyball team, reason now parents can't buy a $300 phone.
33:35
They have to buy a $1200 phone or their kid is going to be
33:38
like, you know, made a like ostracized from their volleyball
33:43
team, right? And so that that's, that's
33:45
actively hurting consumers, right?
33:47
And so and, and if the government and like the European
33:50
Union, for example, like squashes stuff much more
33:53
quickly. In fact I think we have the EU
33:55
to thank for USBC on our iPhones.
33:58
USB or sorry Apple refused to have like normal connections on
34:02
their phones until the European Union said stop that you can't
34:06
just like you. Know push out.
34:07
Competition. So they did it for the EU and
34:10
then they're like, all right, we'll just do it for America
34:13
too, so we don't have to make two different phones or
34:15
whatever. And and so I do think that that
34:18
type of regulation can actually benefit consumers.
34:21
So that said, I do think these things can hurt.
34:24
But here is the real take away. When I get questions, there are
34:29
so often people worrying about things like this list.
34:32
This list is the things that people worry about when they're
34:36
asking me questions. Things like market
34:38
concentration, antitrust enforcement, quantitative
34:42
easing, Federal Reserve rates, yield curve, inversion, foreign
34:46
exchange rates, shadow banking, M2 money supply growth.
34:51
All these things that you hear these like super scary news
34:54
headlines and doom and gloom about.
34:56
But here's what people should be worrying about.
34:59
Making more money, spending less than you make, investing the
35:04
difference. And so I just think that, Oh
35:08
yeah, I know it's not the breaking.
35:10
Your own rule, I'm like, I've never seen that third finger.
35:14
Well, the first two are like the making more and spending less
35:16
are the the first rule. Live below your means and invest
35:19
early and often. But.
35:20
It's just it hits different. Yeah, OK, 3 rules.
35:24
I've already the brand is destroyed.
35:26
But but the point is you can like worry about this like Mac
35:30
Rock. And I kind of feel like it's
35:32
like you're going for a run through the desert and you're
35:35
like, are the tectonic plates shifting?
35:37
And should I be concerned about that?
35:38
And the answer's like, dude, like worry about running.
35:41
You know, like the, the plates may shift or they may not shift.
35:45
And yeah, there might be an earthquake, but it's probably
35:49
not going to, you know, open up and swallow you whole and you're
35:51
going to be in a, you know, sometimes I make up analogies
35:56
totally on the fly and. You could be in quicksand.
35:59
That's. Actually the reference, no.
36:00
What's it called? Like a crevice or something when
36:02
you fall and you like just like. A sinkhole.
36:05
No, it's like when the when like the earth splits and then you
36:08
just fall down. I'm just knows that it's cold.
36:11
It's kind of like a, it's like a crevasse or something, right?
36:14
Like you see it in ice, icy areas.
36:17
OK, we need to not start an outdoorsy podcast because this
36:21
is not going. Well, it was never going to be
36:22
that. Right, but the point is, you
36:25
know, you very rarely have the earth split open and fall into
36:28
crevasse, but you every single day should be worried about
36:31
running faster and running further if, if that's your goal,
36:33
right? And so don't worry about the
36:34
tectonic plates shifting so much.
36:36
You know, vote accordingly with, with what you, you know, where
36:39
your, where your loyalties lie or whatever, but worry about,
36:44
you know, your own race. And that's what I would, what
36:46
advice I would give you, Chris. And thank you for touching me.
36:48
Not in my bathing suit area at the airport.
36:52
Thanks for calling in, Chris with your audio message.
36:57
Appreciate you. Let's go into our next segment,
37:04
Scroll Patrol. Scroll Patrol.
37:08
OK, once, as you all know, Scroll Patrol is a video that
37:13
Jeremy has never seen from the Internet that I picked.
37:16
He's going to watch it live. He's going to respond to it.
37:20
So, Jeremy, go ahead and give that a good old look.
37:22
If you stopped buying coffee out, you would be able to afford
37:25
a home. And I'll prove it to you.
37:27
If you spend $5 a day on coffee times 365 days in a year, you'd
37:32
get $2000 per year roughly. The average home price in the
37:36
United States is $360,000. A 20% down payment to avoid
37:40
mortgage insurance is $72,000. So the time to save $72,000 is
37:46
72,000 / 2000 a year. And you get in the sense that I
37:53
was wondering if that was going to be a joke, and it was.
37:56
I appreciate that. And so you know.
37:58
I know we've answered the coffee question before, but I've never
38:01
seen anybody do the math. And it was like clever.
38:03
I thought it was funny. Yeah, and, and the the worst
38:08
news is in 36 years, someone's going to cost a lot more.
38:10
So, you know, you know, you're probably not going to get there.
38:13
The first book I ever read on personal finance was a book by
38:15
Susie Orman, which was. Shout out Susie Orman, my mom
38:19
loves her. Oh really?
38:20
Yeah. I feel like she was kind of like
38:22
an OG financial influencer. Yeah, she remember what you're
38:25
the you're the new Susie, actually.
38:28
Yeah, I'm the new Susie. That's how I describe myself.
38:31
I'm like a a young lesbian. Is Susie Orman a lesbian?
38:36
I, I, I think so. Maybe I should have said that.
38:38
I thought that was like common, common knowledge.
38:41
Maybe she had thought no, maybe not.
38:43
Maybe the haircut threw me off. I don't know how we're going to
38:45
get you're cancelled. Today.
38:47
I know fully cancelled she can do whatever she wants.
38:50
That's great. So anyway, the first book I read
38:54
was a Susie Orman book and I feel like she kind of had this
38:56
like don't buy the coffee out mentality and and the I think
39:02
they had like a lot, a lot of people really like that message.
39:04
Like, Oh yeah, that's how I'm going to say.
39:06
And then I feel like the the winds of personal finance
39:10
feelings flew the other way. And they're like, no, wait,
39:12
Dad's like spend shaming. And it's a little tiny few bucks
39:17
for a little bit of joy. And it doesn't really make that
39:19
big of a difference. And, you know, I, I think both
39:22
are kind of true. You know, 2000 bucks a year is
39:23
nothing to sneeze that his math wasn't totally fair because you
39:26
wouldn't be saving that under rock.
39:28
You'd probably be investing it. And if you invested, you
39:30
actually could cut down that 36 years.
39:32
But yeah, that alone, your coffee ain't going to buy a
39:34
house, right? Like that ain't your problem.
39:38
And I think when looking at how to buy a house, first of all,
39:43
it's very expensive. I'm sorry about that.
39:44
We don't have the same low cost that, you know, our boomer
39:48
parents did. But you can still buy a house
39:50
today, but move the big needles first.
39:53
So things like, what are you renting?
39:55
Are you spending $3000 a month on rent or $2000 a month?
39:58
If he redoes, if he redoes that math with $1000 of savings by
40:02
living a place that's a little bit cheaper, suddenly, you know,
40:05
it's it's a realistic time frame.
40:07
What Car are you driving? I'm looking at a new car.
40:10
Rivian, I really want it. And I looked at the lease price
40:13
and it's like something outrageous like $1700 a month
40:16
and I'm like, my God, Oh my God, do people pay $1700 a month to
40:21
drive a car, a lease and then you give it away and your
40:24
money's gone? Bananas.
40:27
Yeah. And so you know the and the
40:28
average new car payment these days is like $750 a month.
40:32
And so, but you can totally drive a used car where your
40:34
total cost of ownership including maintenance and
40:36
depreciation is like around 2 to $300 a month.
40:39
And so if you can live somewhere cheaper $500, you can rent or
40:43
drive something cheaper $500 right there.
40:45
That's your 1000 bucks you can buy a house.
40:47
And so, you know, I think I really like that video.
40:50
It's funny, it's well executed. I agree that a you know, you
40:53
can't just trade in your coffee for a house that doesn't That's
40:56
not houses are much more expensive than coffees That
40:59
doesn't that's not how it works. But but I think both things a
41:03
little bit true, like the little things can add up to in my own
41:06
expenses. I was looking at my credit card
41:07
bill, which is like an eye watering amount of money and we
41:10
didn't really buy much that expensive, like things over 100
41:13
bucks. There weren't that many things,
41:15
but it was just like the 40 bucks.
41:17
It's like the door dashes and the eating out and the, and the,
41:20
you know, Amazons and like all these little things totally add
41:23
up. Like those are bigger than
41:24
coffees for sure. But then you do a couple of
41:27
those a day times 30 days and you've got looking at like a
41:29
$10,000 credit card bill, which is I like these days.
41:34
I sound excited about it. Really guts you down that credit
41:38
card bill. So yeah, I like that video.
41:41
I give it an A because it's funny, but it is a little bit
41:44
dismissive of the value of actually, I alter my score.
41:48
I give it an A minus because it it's a little bit dismissive of
41:52
the value of frugality. And I think that just to say,
41:56
oh, coffee alone isn't going to buy you a house, therefore don't
41:59
try at all. And, you know, he's making a
42:01
joke. I'm not trying to like pick on
42:02
him. It's like a funny video.
42:03
I like the video. But I don't think for you,
42:06
listener, I don't think you should say, OK, since coffee
42:09
can't buy me a house, therefore don't even try.
42:11
I don't think that should be the message.
42:12
Like, yeah, the coffee's let up. It's as will the Amazons, as
42:15
will the eating's out. But I'll definitely focus on the
42:17
big things first. Housing, transportation, job.
42:20
If you can go switch jobs, get 20% pay raise, you know, drive a
42:25
cheaper car, rent or own a cheaper house, those three
42:28
things will easily make you a multi millionaire even if you do
42:31
it on a clever little yellow notepad on a on a TikTok without
42:35
having to be like dismissive about savings.
42:37
And the little stuff adds up too.
42:38
I like the video. All right, cool.
42:40
A minus. Not bad.
42:42
Yeah. Let's move on to our last
42:45
segment of the episode. Money, Money.
42:49
Jeremy had time today. OK, so we're jumping out of the
42:54
Jeremy Schneider multiverse. We I'm going into a post that
42:58
was submitted. People are starting to submit to
43:00
us for more than just can ask a dumb one, which I love.
43:02
They're like in my inbox asking doing can ask a dumb one.
43:05
They're doing explain Lego 5. And now Jeremy had time today.
43:09
So this is a post from Alex Hormozi.
43:11
Had you heard of him before this?
43:13
Yes, I know. I know of Alex Hormozi well.
43:17
Oh, OK, so big in the finance world.
43:19
Do you know him? I don't know him.
43:21
You know, we don't have, we don't have a crossover.
43:22
What was our crossover? It was like, it was an NPR
43:24
podcast. It was wait, wait, don't tell
43:26
me. That's her only crossover so
43:27
far. So I don't know Alex, but this,
43:30
this is a little bit of a lengthy post.
43:31
So sit with me. I'm gonna talk for a minute.
43:34
Go grab some eggnog, Alex wrote. I debated posting this because
43:40
it can make you feel hopeless already very dramatic.
43:43
But I think the truth is always best found out early.
43:47
Many financial gurus talk about investing $100 a month etcetera
43:50
to get to a point with 1,000,000 when you retire.
43:55
The reality of the math is if inflation is 3% per year, that
43:58
1,000,000 is not worth $1 million today because
44:01
compounding inflation is. Inflation is just as powerful as
44:05
compounding returns. Said differently, $1 million and
44:08
60 years only worth 167,000 of today's buying power with 3%
44:14
inflation. And typically with late stage
44:16
capitalism, rate of inflation increases not decreases.
44:19
So what does this mean in reality?
44:21
You have to 6X your goal. Example, if you wanted to retire
44:25
with 1,040,000 per year passive, you actually want 6,000,000 and
44:29
240,000 per year passive. If you want 4 million and
44:33
$200,000 in passive income, you really need your goal to be
44:36
24,000,000 and wait. Is that right 24?
44:41
That's what it says. I mean he has all sorts of typos
44:43
here, like either like 4 numbers between commas or two numbers
44:46
between commas. But I think he means 24,000,000
44:49
which is 6 * 4 and 1.2 million. OK, in passive income right now,
44:54
let's say inflation is 2.3% rather than 3%, the historical
44:58
average. OK, you'll have overshot your
45:00
goal by 50%. Money will only be 1/4 as
45:02
valuable rather than 1/6. Great, retire early, but the
45:06
alternative is certainly worse. Undershoot and be a burden to
45:09
the people who you care about. Hoping for social Nets which may
45:11
or may not exist then who knows. Regardless, I've never seen
45:15
anyone talk. Love this.
45:17
I've never seen anyone talk about this and maybe it's
45:19
because it makes people feel hopeless, but I figure math is
45:22
math and you shouldn't be afraid to do it for yourself.
45:24
Always better to overshoot and get there early than never
45:27
arrive. This is so dramatic.
45:30
Yeah, I'm surprised. Young, like, I feel like he's
45:32
one of these guys that some people just think is like the
45:35
biggest guy and then some people.
45:37
Never heard of I don't want to call you up but Carl who
45:39
submitted this, he said. I normally appreciate Alex's
45:41
advice but this felt off and that's why he submitted it and
45:44
wanted you to respond. Yeah, I mean, yeah, so Alex
45:48
Harmozy I think is like one of these hustle culture guys who
45:51
just, you know, talks about growing businesses and, and a
45:54
lot of it, like he kind of bragged about his own wealth and
45:57
yadda, yadda, yadda. I was giving Jim bro when I
46:01
scanned his page I was like why are you so buff?
46:03
I think that's how he got rich from magic, a bunch of gyms or
46:06
something. But then he says he has no
46:07
members in his gym. So I was like, I don't
46:09
understand. I could only stomach it for so
46:11
long. Yeah, let's not get into him.
46:13
I'm just going to, I'm going to keep the rest of my commentary
46:16
on this. And my answer to this is like,
46:18
yeah, like no shit. Like inflation exists is the is
46:22
the net of this. And, you know, to say that like,
46:28
and, and his whole take away is do exactly what all the
46:32
influencers are saying, just don't do $100 a month.
46:35
You know, if you want 6 times more, do $600 a month.
46:38
And you know, every single time that we I teach investing in
46:42
personal finance, like one of the first lessons is inflation
46:45
for this exact reason. You know, if you're counting on,
46:49
you know, one getting to $1 million and having it be 7
46:52
figures in 60 years and having that, like, be your savior,
46:55
like, yeah, that's probably not going to be true.
46:57
So yeah, my answer to this is generally like, no shit, of
47:00
course everything here is true. Of course you want to like, you
47:03
know, end up with too much money rather than too little.
47:06
Of course, you need to account for inflation.
47:09
You know, if you look historically at stock market
47:12
gains, it's about 10% per year. Inflation historically is around
47:15
3% per year. So a inflation adjusted
47:19
projection, which is allows you to think about in terms of
47:23
today's dollars would be 7% and if you want to be more
47:25
conservative, 6%. And so you can go use a for a,
47:31
an investment growth calculator. There's a brand new one, by the
47:34
way, at hellonectarine.com. Which?
47:37
Allows you to put in your 41K and all the other sorts of cool
47:40
stuff. And then it has inflation built
47:42
right into that calculator. So it's kind of he's like, I've
47:44
never seen him talk about this. Like, yeah, we talked about this
47:46
constantly of. Course, all the time.
47:48
That's what I thought was so funny.
47:49
Like I've never heard anyone talk about it like this.
47:51
Like that inflation like impacts future growth like yeah,
47:54
literally that's like literally video 3 in the personal finance
47:59
club Course it is like not even exaggerating.
48:01
It's the first chapter video 3. But anyway, you know, I'm I'm
48:06
fine with this. Like I I really nothing other
48:08
than him just being so dramatic and self important about the
48:11
whole thing. I I agree.
48:13
And when you're projecting growth account for inflation.
48:17
That said, I think a lot of times him and everyone make this
48:21
mistake of, okay, today on, you know, Thursday, December 11th,
48:26
today recording this, I'm going to go in and like do a little
48:28
Excel calculation or online investment growth calculation
48:33
and whatever, whatever number it says in 40 years, that's the
48:36
number, that's my number. I'm going to hang my hand in
48:38
that. I'm going to close my eyes and
48:40
just run full steam ahead without thinking about it ever
48:42
again. And if that number is wrong,
48:43
then I'm going to die. And the reality is, is like
48:46
you're constantly readjusting. And so the, the goal here isn't
48:50
to like have that number be right and be doing everything
48:52
right in this exact moment. The goal is to make steps in the
48:56
right direction. And so if you are swimming in
48:59
debt and have never invested a penny, let's make a plan.
49:02
Let's start and see, let's let's make a, you know, 30 month plan
49:05
to get out of debt and have your debt be 0.
49:07
And then in 30 months, then we can start investing that 100
49:10
bucks a month. Then you're from then you can
49:12
switch it to 200 bucks a month. And then, you know, now we're
49:15
four years in the future or whatever it is and you have no
49:19
debt. You've got a pretty good
49:20
investment start and you're investing more and more each
49:22
year like you're on a great path.
49:24
Even though you that original projection didn't have you being
49:26
a multi millionaire, the steps in the right direction are what
49:29
really made the difference. And so I think a lot of times
49:32
feeling momentum, feeling movement, getting that
49:35
encouragement is what actually matters, Not today having that
49:41
40 year projection be 100% right based on what you're doing
49:44
today. It's just about kind of
49:46
encouraging yourself and feeling the momentum in the right
49:49
direction so you keep making good steps along the way.
49:52
Why you're so gracious? Because I was like this guy
49:54
seems wack. I don't know, I mean, like,
49:57
maybe I'm just reading it from a very left brain perspective, but
50:00
like everything he said there was technically correct.
50:02
It's like, yes, you know, don't count 10%, you know, account for
50:04
inflation. You know, I mean, there's some
50:06
very dramatic numbers in there. You need to make $24,000,000 to
50:10
have 1.2 million with a type owner because it's got too many
50:12
zeros of in passive income. It's like, OK, like, but you
50:16
know, it's a little bit of a scare tactic just because, yeah,
50:19
in 40 years all the numbers are going to be bigger.
50:22
But people are reading that 24,000,000 and they're thinking
50:24
$24 million in today's and you know, you don't need $24,000,000
50:28
to be happy today, $24 million is outrageously rich.
50:31
Like you can, if you had, you know, $2,000,000 that you'd be
50:34
in very, very good shape, right? And so in 24 years, jobs are
50:38
going to pay more. Everything's going to be more
50:40
expensive. Like that's, it's not going to
50:42
look as crazy of an, sorry, not in 24 years, but in the 40 years
50:45
or whatever his projection was that 24,000,000 isn't going to
50:49
be such a crazy number. It just looks crazy today
50:51
because of Kafka growth. All right.
50:56
I like, I like kind of looking at other people's little
50:58
comments and and threads for you to comment on.
51:01
I might put some more in. Oh to the Jeremy verse, who knew
51:04
there are there other social media accounts?
51:07
I had no idea. You're the only one.
51:10
I've just been writing in a Word document and saving it.
51:13
My God, Merry Christmas y'all. I'm going to plug myself.
51:18
If you are listening to this on Christmas, go to Hallmark.
51:22
Plus we've got a song in a movie, a sweet holiday romance
51:27
SUITEII don't know it. It hasn't come out yet, so it'll
51:31
be like way in the background. But anyway, go listen to it.
51:34
It's called Christmas All Around Boo.
51:36
Yeah. That's awesome.
51:38
I'm always sorry. So impressed with your Hollywood
51:40
success. Hollywood Hallmark that are all
51:43
filmed in Canada to save on budget.
51:44
Hilarious. Anyway, that's all that we have
51:48
for you today on the Personal Finance Club show.
51:50
Thank you for listening and we'll see you again next week.
51:53
And don't forget the 2 rules of Personal Finance Club.
51:55
Rule #1 live below your means and rule #2 invest early and
52:00
often. The personal finance club show
52:03
is produced by Jeremy Schneider and Jed Mundia, music by Essa
52:06
Balu and Homie. Send your questions to podcast
52:09
at personalfinanceclub.com. The Personal Finance Club show
52:12
is Co hosted by Jeremy Schneider who is a co-owner of Nectarine
52:16
and SEC Registered Investment Advisor.
52:19
The views expressed on this show are those of the hosts and
52:21
guests and do not necessarily reflect the views of Nectarine.
52:24
Please refer to hellonectarine.com for all
52:27
relevant disclosures. This podcast is for
52:29
informational and educational purposes only and should not be
52:32
construed as personalized investment advice or a
52:35
solicitation to buy or sell any security.
52:38
Listeners should consult their own financial, legal or tax
52:41
professionals for advice specific to their situation.