Latest / The Personal Finance Club Show / ChatGPT Stock Market Bubble, Billionaire 0% Tax Loophole, Retiring Early vs. Enjoying Youth | Ep 9

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ChatGPT Stock Market Bubble, Billionaire 0% Tax Loophole, Retiring Early vs. Enjoying Youth | Ep 9 · The Personal Finance Club Show

0:00
Are we in a ChatGPT stock market bubble?
0:02
Do billionaires really pay $0.00 in tax?
0:05
And should you be saving more to retire early or spending more in
0:08
your youth? We're going to find out right
0:10
now. Welcome back to the Personal
0:17
Finance clip show. Hey, Jen.
0:18
Hey, Jer. So this show as all shows, they
0:22
start with a Jingle or like kind of like a theme song and then
0:25
between segments was a Jingle and I, it gets stuck in my head
0:29
and I don't want to even like try to sing it because it's
0:31
really like my singing. Voice.
0:33
I'd actually love to hear you sing it.
0:35
Money, money. Oh, that's pretty.
0:39
Good. Oh my God I was like really
0:41
good. I like when I listen to shows
0:42
like man this sounds professional.
0:44
And there's been buzz on the Internet too.
0:48
Some people someone commented love the beginning Jingle.
0:50
Who comments on a Jingle? The fact that people are
0:52
mentioning it is crazy. And someone else said it sounds
0:55
like the Suits theme song, which I don't know anything about the
0:58
Suits theme song, but someone thought it sounded like that.
1:01
And so you're the producer of this podcast.
1:04
Maybe we both are. But you I, I think you're the
1:07
main producer. Where did the Jingle come from?
1:11
First of all, I love that you say buzz.
1:12
And by buzz you mean 2 comments? Hey for a for a podcast, it's
1:16
got like 1000 downloads an episode 2 comments is like we're
1:20
going viral. That's viral for us right now.
1:24
There's been more, there might have been like 3 or 4.
1:26
Yeah, maybe out of our 20 comments, I made the theme song
1:29
with my friend Jackson, also known as Homie HOMI.
1:34
And yeah, I mean, actually we had a stand in theme song 'cause
1:38
I have some songs about money and we decided we weren't going
1:42
to give you our our real money maker.
1:44
So we made a custom theme song for.
1:47
It's even better club. Show, Yeah.
1:49
And to. The and whose voice is that
1:51
singing on the theme song? That's me AKA Sabalu music baby.
1:57
That's crazy. Like and subscribe.
1:59
Yeah, yeah. To me, I don't know how you feel
2:02
about computer programming, but a lot of people who don't
2:04
understand it seem they say it just seems like nonsense magic
2:09
and that's how I feel about what you do.
2:11
I'm like the fact that I don't know like if I like picked up my
2:15
iPhone and clicked like voice note and it said money, money
2:19
and sound like just trash. And you make it sound like this
2:22
is like produced final. I don't even I don't even know
2:25
like is it a microphone? Is it a program?
2:28
Is it just talent? I have known of these things.
2:32
Shout out actually, your, your, your singing is very good.
2:35
But shout out Jackson, who produced the track.
2:37
He's fantastic. And you know, it is funny, my
2:40
best friend is a social worker in North Carolina and she's
2:43
like, how do you write songs? Like how do you do this 'cause
2:47
that's what I do. I write a lot of songs and I've
2:49
been writing songs since I was like 12.
2:51
And so, you know, it's, it's, it's definitely a muscle.
2:54
But to me it doesn't seem like that crazy.
2:56
And especially in a day and age when everybody seems to write
2:59
songs and have albums out, it doesn't seem like it's that
3:01
hard. But you know, I I take the
3:03
compliment in stride. I only listen to AI generated
3:06
music at this point. And you went to college for
3:12
this? What college did you go to?
3:14
I went to Berkeley College of Music, Berkeley BERKL, EE.
3:19
Not to be confused with University of California.
3:22
In. Berkeley, Berkeley, and where's
3:25
Berkeley? Yeah.
3:27
Where is it? It's in Boston, MA.
3:30
Right, other coast. And where do you rank in terms
3:33
of like music universities in the US?
3:38
Oh, that's a great question. I'd say in terms of contemporary
3:41
music, it's probably #1 a lot of people go to like jazz school or
3:46
conservatories. And I remember at the, when I
3:48
was at Berkeley 1000 years ago, our motto was nothing
3:51
Conservatory about it because a lot of places they don't focus,
3:55
they focus on classical music. They focus on like it's, it's
3:59
like a Conservatory, it's like intensive.
4:01
So whereas Berkeley, you can study background singing, you
4:04
can study audio engineering, you can study film scoring, There's
4:07
not a lot of schools that even offer those things, not in a
4:11
professional level. But I will say, like any school,
4:14
a lot of people can get in that have no business getting in.
4:16
So you really got to work for it.
4:17
You got to work while you're. There, that's probably true for
4:19
everything you know. What I mean, I mean, I'm sure
4:21
there's people at Harvard that's like you have no business being
4:23
here. So not everybody at Berkeley is
4:25
mega talented, but I think and if you want to do music
4:28
professionally, especially in a contemporary level, then it is a
4:31
very good school. That's it.
4:33
So if you're listening and if you didn't know, we're in the
4:35
company of a celebrity. Jen is actually the voice of the
4:38
theme song went to, you know, arguably the top contemporary
4:42
music university for music in the US And like does this for
4:47
professionally for a career in addition to her podcast hosting
4:51
skills. Yeah, it's giving, multifaceted.
4:55
It's giving. What is it?
4:56
The dash or the slash generation?
4:59
Oh yeah, that's true. I like that.
5:01
That's what they say. You got to be good at two things
5:03
because then you can like. Two things.
5:04
Nowadays it's a million things. OK, you have a bunch of slashes.
5:07
Well, you know more than one's the important part.
5:09
Boom baby, that's me. Sweet.
5:11
Well thank you for the amazing theme song.
5:13
I feel like totally out of my sorts with it and I'm just
5:16
grateful that we have it. Yay.
5:18
Well thanks for letting me do it.
5:19
You tried to. He was trying to get stock music
5:21
y'all. I don't, I don't know.
5:24
Hell no, we won't go. That's why I hired you.
5:28
Look how well it's going. I was not going to that.
5:30
I'm not pushy on much, but that one I was going to be pushy on.
5:32
So yeah, I. Think it's awesome?
5:34
All right, let's go and do it. All right, let's do our first
5:36
segment. Explain it like I'm 5.
5:44
Now this one's a little bit different.
5:45
We got a message from Jay on Instagram that Jeremy forwarded
5:48
to me, and it's a graphic and it says the entire U.S. economy
5:52
right now is 7 companies sending $1 trillion back and forth to
5:57
each other. So tell us, is this true and
6:00
what does it mean? Can you explain it like I'm 5?
6:02
Is that even possible? So this is the most complicated
6:05
show I can think of and you're asking me to explain to a 5 year
6:09
old. You know, I'm talking, you're
6:12
always, you're always like you're the, the voice of the
6:14
audience here, Jen. And so you always feel like I'm
6:16
complaining to you. I'm complaining to people who
6:18
asked me to explain this stuff simply, I'm doing my best, I'll
6:21
do my best. And so in the AI world, I'm
6:26
going to make this much more simple than it really is because
6:28
I'm trying to explain it like you're fine.
6:29
But in the AOI world, there's a company called Open AI who makes
6:33
ChatGPT. And if you haven't heard of
6:35
ChatGPT, just you're. Living under a rock.
6:37
Right like this won't make any sense, but it's it's a very
6:42
popular, you know, AI tool, but open AI just kind of writes does
6:50
the AI part. They don't actually own
6:53
computers and warehouses and stuff like that.
6:56
So there's there's other companies like Oracle that
6:59
basically sells compute and so open AI.
7:03
If they want to make Chachi BT run, they rent a basically
7:09
computer time, server time from a company like Oracle.
7:13
There's other companies like that too, like Microsoft and
7:16
Amazon AWS and then Oracle. They basically they don't
7:23
actually make computers and computer chips.
7:27
They actually have to buy the computer chips to like build
7:29
these warehouses and they buy computer chips for a company
7:32
that designs and makes computer chips like NVIDIA.
7:35
And so there's like these three big types of companies, the AI
7:40
software companies like open AI slash jet GPT, the server
7:48
compute selling data warehousing companies like Oracle and
7:52
Microsoft, and then the chip designing companies like NVIDIA
7:57
and AMD. And what's going on right now is
8:01
there's basically these deals being struck.
8:03
So for example, NVIDIA invested $100 billion in Open AI and an
8:08
open AI turned around and agreed to buy $100 billion worth of
8:12
chips from NVIDIA. Open AI had this huge deal to
8:18
buy compute from Oracle. Oracle then went to buy chips
8:23
from Open or from NVIDIA. NVIDIA has this money now to
8:27
invest more in open AI. And so and this graphic is
8:31
basically like all these crazy arrows, all money going back and
8:34
forth. And at the core of it, the
8:38
question is like, is anyone making money right now or is it
8:40
just like passing money back and forth?
8:42
And so here's the here's the analogy.
8:44
This is where this is where the five year olds wake up.
8:46
Five year olds, this is where it's going to.
8:48
I'm up. This is 39 year olds.
8:50
Did you say 5 year olds? Yeah, either way.
8:53
So imagine there's a town that's never seen Donuts before and
8:57
this new donut shop comes to town and says, hey, guys, I'm
9:00
going to blow your mind. This donut, this new breakfast
9:04
we call donut is the best. It's sugar, it's flour, you're
9:07
going to love it. And so they're going to, they're
9:09
going to start selling Donuts, but they don't have the flour.
9:12
So then there's a flour company in town.
9:13
He's like, guess what? I'm going to buy flour.
9:16
And then it comes like, great, we're going to need a lot of
9:18
flour. And then this kitchen renting
9:21
companies in town says, hey, you're going to need kitchens
9:24
stocked with. And so then there's donut
9:27
companies like, alright, I'm going to rent some kitchens, I'm
9:29
going to buy some flour. And then like these three
9:31
companies are basically all saying this is, this is the next
9:34
hot thing. I was going to love these
9:36
Donuts. And so the, the flower company
9:38
gives them, you know, money to the donut company, the donut
9:41
company gives money to the kitchen company, the kitchen
9:42
company gives money to the flower company.
9:44
And it's all going back and forth, right?
9:46
And then the question that like no one's asking.
9:49
So then, so then you ask, how are these companies doing?
9:51
Donut company says we're doing great.
9:54
We're making tons of Donuts because we got this investment
9:57
from the flower company and we're making tons of Donuts.
10:00
Kitchen company says we're doing great.
10:02
Donut company is renting all of our kitchens from us because
10:05
they're going to make all these Donuts and a flower company says
10:07
we're doing great. Flower sales are booming.
10:10
Look at all those doughnuts that are being made.
10:11
Flower sales are booming. Then here's like the question
10:13
that like the townspeople are asking me like, and here it is.
10:16
Is anyone buying doughnuts or enough doughnuts?
10:20
Because these three companies are just like off going to town,
10:24
like running their own doughnut empire.
10:26
But is is anyone buying actual doughnuts?
10:28
And so to put some bring it back to the analogy of opening eye.
10:34
Opening Eye just raised $40 billion on a $300 billion
10:39
valuation. So it says they're Cummings
10:41
worth $300 billion. And Sam Altman says they're on
10:45
track to do $20 billion in sales top line revenue this year and
10:51
they've agreed to purchase 1.4 trillion trillion.
10:57
This gets crazy. I'm going to bring.
10:58
It back. What does that mean I.
10:59
Don't even know what it is. It's even more zeros in
11:02
infrastructure deals like, OK, we're going to go buy, you know,
11:06
so basically like this is like back in donut world.
11:09
This is like the donut company saying, hey, we're going to
11:12
sell. We plan to sell yours.
11:14
Not even over yet, but we think when the year is over, we're
11:16
going to sell $20,000 worth of Donuts.
11:18
I like scaled this down to numbers, maybe we can wrap our
11:21
head around 20,000 bucks, like, you know, 20,000 bucks, not a
11:24
bad little donut business, like, you know, not a full time job.
11:27
And and that by the way, that's not even profit, right?
11:30
That's just like that's just how many, how much they sell.
11:32
So out of 20,000, what can you actually live on?
11:35
Very little if anything, right? So that we plan to sell $20,000
11:38
worth of don'ts this year and also we're going to spend $1.4
11:42
million on kitchen rentals and flower.
11:47
That's like a big scale difference, right?
11:50
They're selling $20,000 Donuts, but they've agreed to purchase
11:55
$1.4 million. Even when you scale it down, you
11:59
still got to 1.4 million. I know even the even the scale
12:02
down thing is like harder, like was enough like no, it's like
12:04
imagine you were making twenty $20,000 a year from your job.
12:08
Would you be buying $1.4 million worth of anything And that and
12:13
again, that's not even their profit.
12:14
That's like not their take home, that's their sales.
12:17
You know, if you know, their profit is like hugely in the
12:20
negative, right? So, So what does this all mean?
12:24
This is what people know. They're like, are we doomed?
12:26
Is this just a like massive Death Star that's going to crash
12:30
and all implode in its own way? There's two schools of thoughts
12:33
that the pessimists are like, this math isn't penciling out.
12:37
It's this, this like making $20,000 a year selling Donuts
12:41
and spending $1.4 million on, on kitchens and flour that's going
12:46
to, you know, once investors stop just fueling this and they
12:51
stop, you know, the loans and the investors stop funneling all
12:55
this money to like make this, you know, fiction continue to
12:59
not, you know, go broke. You know, one of these days the
13:03
checks are going to bounce. And then what's going to happen
13:06
to stock prices? And you know, a lot of people
13:08
say the whole S&P 500 has been basically not doing very well,
13:13
but for the seven companies who are doing artificially well.
13:16
And so when that, like when that fiction goes away, the whole
13:19
economy is going to like crumble.
13:21
That's the pessimist view. The optimist view is Donuts are
13:24
so darn good and nobody knows it yet.
13:27
And you just wait because people are going to be buying up Donuts
13:30
like crazy and well. Which camp are you in?
13:33
Well, the reality is, you know, I'm a Bogle ad I'm a index fund,
13:37
I'm AI guess I'm a pacifist in the in the finance world.
13:41
And my opinion is the truth is this balance between these two
13:46
camps, right? The people who don't believe it
13:49
are saying, I'm going to short sell NVIDIA, I'm going to short
13:51
sell. I'm not going to invest in open
13:52
AI. I'm going to short sell Oracle,
13:54
whatever it is. And the believers like, dude, I
13:57
want to buy, I'm going to be buying up AI stocks now.
13:59
So in 2040, when it's 100 times bigger than it is today, I get a
14:03
piece of that. And the current stock prices of
14:05
that stock and every stock in the market is the balance of
14:08
those two things. And so we don't know.
14:10
And what am I going to do about it is I know, I know exactly
14:13
what that is. Nothing, nothing.
14:17
It's the best answer as always, because it's going to shake its
14:19
way out. You know, this, this definitely
14:21
reminds me of the.com bubble back in the late 90s, which I
14:26
was alive for. I'm I'm 45 now.
14:28
And so I remember that where these companies are getting
14:31
these crazy valuations, crazy investments, crazy, crazy, crazy
14:35
because everyone knew that the Internet was a transformative
14:40
technology and it was going to change everything.
14:43
And so money has flowed in. But then like the bubble popped
14:47
in the year 2000 and then for 10 years, the stock market was
14:50
basically flat. You know, if you invested and at
14:53
the peak in the end of 1999, you basically 10 years later you
14:57
have about the same amount of money afterthe.com crash and the
15:01
financial crisis of O8, which is what they call the lost decade,
15:04
which is very bad to invest for 10 years and have the same
15:07
amount of money to go up, right? So that could happen again.
15:11
Or some people are saying, well, those companies didn't actually
15:14
have, they weren't selling $20,000 in Donuts.
15:17
They just had an idea that a donut could exist and they
15:20
didn't sell any Donuts. And so now like NVIDIA,
15:23
Microsoft, Oracle, like these companies actually have revenue.
15:26
It's not the same. And you know, and the answer is,
15:28
I don't know. And so I'm not, am I sure
15:30
there's going to be a dead, dead decade or a lost decade of 10
15:34
years in front of us? No, of course not.
15:36
If I was sure of that, I would do something of it.
15:37
But no one's sure of any of that.
15:38
So I'm just going to keep doing the normal thing, which is
15:40
acquiring more and more shares of my index fund that includes
15:43
these crazy big companies, includes the small companies,
15:45
includes the old Amazon, the next Amazon, doing all that.
15:49
And whether there's a crash or not in 10/15/20 years, it's all
15:53
going to shake out. I'm going to own a lot of shares
15:55
and still be doing great. Wow, okay, so when it comes to
15:59
seven companies, $1 trillion, you said my name is Bennett and
16:05
I ain't in it. That's what you said.
16:06
You said you're not doing nothing about it.
16:08
Yes, Bennett, is that what you said?
16:10
I don't know. You never heard that?
16:12
My name is Bennett and I ain't in it.
16:14
Yeah, that's what I say about everything.
16:15
I just sleep like a baby. Yeah.
16:19
And, and The thing is, people get so focused.
16:21
I mean, I'm kind of going off the rails here, but people get
16:22
so focused on these macroeconomic things.
16:26
Oh, what's the future of AI? Like me as like a little Jeremy
16:29
living in San Diego, I'm going to like make some moves and
16:31
like, you know, nimbly navigate these.
16:34
Like, it's like a it's like a freighter coming through and
16:37
you're like paddling in the Likai.
16:39
Like I'm just going to like nimbly like, like, no, dude,
16:41
that freighter's going to do what that freighter's going to
16:43
do. Like you, if you want to help
16:46
your own 'cause I'm just now making up metaphors on the fly
16:48
here, like focus on your paddling, you know, like focus
16:51
on where you're going. Pay down your debt, buy more
16:54
shares, buy and hold. You know, the things that you
16:56
can, you can control. Don't try to nimbly get in and
17:00
out of the market based on when you think this freighter is
17:02
going to get here and when it's going to move because it's not
17:04
going to work. It's just going to be much more
17:06
likely to hurt you than help you.
17:08
OK, five year old, stay the course.
17:10
You heard the man. OK, let's move on to our next
17:13
segment. Can I ask a dumb one?
17:18
Yes you can. You're probably asking a dumb
17:20
person, but ask away. You're not dumb either.
17:23
OK. All right, So this question
17:26
comes from Janelle. I love this question.
17:29
We were chatting, Janelle and I, and I think we've talked about a
17:33
lot about the psychology of money, and I feel like this goes
17:35
into it as well. So let's read Janelle's
17:38
question. She says I'm 50 years old and
17:40
have three children, one in his freshman year in college, a
17:43
senior in high school, and an eighth grader.
17:46
They all have 529 accounts. My husband died in December and
17:49
I have his life insurance money sitting in a Vanguard Cash Plus
17:52
money market account. I need to be able to have access
17:55
to this money IE not put it into a four O 1K but would like it to
17:59
grow over the next 5 to 10 years.
18:02
I would like to invest $250,000 and don't know where to start.
18:06
I'm a teacher and can retire in June, collect my pension and be
18:09
able to get another job if I need to.
18:11
What should Janelle do? Hey, Janelle.
18:14
So first of all, I'm so sorry for your loss.
18:18
Losing your husband with three kids when you're 50, I mean, I'm
18:23
45, we're almost the exact same age.
18:25
I can't imagine it just feels like you're at the beginning of
18:28
your life and you've been spending your whole life looking
18:30
forward to your whole life and you know, the next 30 or 40
18:33
years ahead of you. And to have that taken away is,
18:36
is heartbreaking. I'm very sorry.
18:38
So the first, the first piece of advice I'd give is it's OK to do
18:42
nothing for a while. I think the worst thing you
18:45
could do is have some sort of emotional or knee jerk or
18:51
panicked or you know, time pressure reaction in this moment
18:56
and it's OK to nothing. And your money is sitting in a
18:58
money market fund, which is the perfect place for it.
19:01
It's been, it's not even been a year yet.
19:03
You know, this is still November.
19:05
And so in the first year after your husband has passed, doing
19:08
nothing is a really good thing to do.
19:09
And it could be another year, one year, 2 years.
19:12
That's a small amount of time. You're not going to miss some
19:15
huge opportunity. The second piece of advice I
19:19
give is to Start learning. You know, when you're ready.
19:22
It couldn't wait again because see thing one do nothing.
19:25
But when you're ready, Start learning and you want you know,
19:29
you never want to invest in something you don't understand.
19:32
And so, you know, in actually the next episode, because we
19:36
record these out of order, I talked about a a chicken who has
19:40
plumped for the like, right for the a fox coming and going after
19:46
him. You know, you don't want there
19:49
are lots of foxes hunting in the financial services industry who
19:54
would love to take your money and put it into whatever they
19:58
will make them the most money. And actually, there's this that
20:00
recent article Rowdy Bush, you put he's a NASCAR driver.
20:04
I assume NASCAR is the part of the Von Dagen that you and I
20:07
both have. 0. Literally only learned this
20:10
man's name because he got involved in the insurance world.
20:14
But he put $10 million into an insurance policy under the
20:18
promise that it would it would start generating $800,000 a year
20:22
of tax free income, according to his insurance salesperson.
20:26
You know, after after he put his $10 million in the next bill
20:30
came to keep this policy active and he's like, what do you mean
20:33
next bill? I thought this is when you start
20:35
paying me $800,000 a year. The insurance salesman hemmed
20:38
and hard. The guy looked at his policy
20:40
that 10 million had grown to the, the stately sum of 2
20:43
million or something like that, or I figure if it's 1.5 or 2
20:46
million, but he lost like $8 million on this thing.
20:49
And now he's like going public and, you know, and, and the sick
20:53
thing about that is, is like the numbers are so big.
20:56
You're like, oh, it's, but it happens to widows for $100,000
21:01
all the time through 100,000 becomes 20.
21:03
They're like, well, you know what happened?
21:04
That happens like I got taken because that's the that's the
21:07
industry, that's the finance industry.
21:09
And it's not, it doesn't need to be.
21:11
And so advice too is Start learning, you know, learn about
21:15
investing. Never invest in something you
21:17
don't understand. And we have an investing course.
21:19
It's 99 bucks. I'm going to give it to you for
21:22
free, Janelle. So Jen's going to send it to you
21:24
and I want you to take it. And it's like, there's no secret
21:26
to the investing course. It talks about, we talked about
21:28
this podcast on Instagram, on the YouTube, the basics, what's
21:32
the stock, What's a bond? What's the mutual fund?
21:34
What's in the next fund? How do you buy and hold these
21:36
things? What buttons do you click on
21:38
which websites? Once you do it a little bit, it
21:41
starts to make sense. And so in this learning process,
21:45
which is still advice #2 I want you to take 100 bucks and go
21:49
open up, you know, the 100 bucks you didn't spend on this in this
21:51
course. Go open up an investment account
21:53
now with us with Vanguard, Fidelity, or Schwab.
21:56
These are, you know, big online low fee brokerage brokerages and
22:03
you can put into a regular old brokerage account.
22:04
So you said not a four one KA regular brokerage account and
22:07
you can put money in and out whenever you want.
22:09
There's no age restrictions or anything like that.
22:11
And just watch it for a while. Don't make your first toe
22:16
dipping into the investment world, the $250,000 one.
22:21
Make it the $100 one because I think once you see like, oh, I
22:24
heard on the news this NVIDIA bubble is going to crash and
22:28
like the sky is falling. My 100, which became 105 is now
22:33
103. It's actually not that big of a
22:35
deal. I get it Now.
22:36
It's starting to the level of volatility I'm becoming more
22:39
comfortable with. And then you can start say, OK,
22:41
let me start doing maybe $10,000 a month for 25 months, you know,
22:46
two years later, then you can get to the market.
22:48
I think the more slow approach is better.
22:51
And then three, I would say, hey, you know, you kind of have
22:54
a lot going on here. You've got a pension, you've got
22:56
a lot of money, you've got some kids.
22:58
You got 529 accounts. This is, you know, this is
23:01
beyond the scope of a podcast answer frankly.
23:05
And so I would talk to a pro. And when you go and talk to a
23:09
pro, you need to watch out because a lot of those pros,
23:12
they're commissioned sales people, They're just pushing
23:14
products where makes the most, most money, IEC insurance
23:17
salesman or financial services salesman.
23:20
And many of them, the many of the rest of them only make money
23:24
by taking your assets under management.
23:26
And they make money by charging you an annual fee.
23:29
And that's less bad, but still, there's usually this conflict of
23:33
interest where they're not really interested in giving you
23:35
advice. They're interested in just
23:36
keeping all your money under their custody so they can charge
23:39
you for it every year. My preferred method is find a
23:42
flat fee advisor. This someone you can pay by the
23:46
hour or by the project. Maybe just two or three hours
23:49
with a financial advisor could solve all these problems for
23:52
you. And you know, now this is the
23:55
the plug. When I used to give that pitch,
23:58
people would ask, great, how do I find a financial advisor that
24:01
charges a flat fee? And my answer was, I have no
24:03
idea. That's why we started Nectarine,
24:05
which is a marketplace of flat fee financial advisors.
24:08
And here's the deal with Janelle.
24:09
If you finish the investing course, because I don't want you
24:12
to even talk to a financial advisor until you know the
24:15
basics because you won't be able to, you won't have a nose to the
24:18
difference between an insurance scam and then like an
24:21
altruistic, you know, index fund advisor if you don't know the
24:25
basics. So if you finish the index fund
24:27
course, which takes about 8 hours, take it for an hour night
24:30
for over the course of two months or an hour a week, sorry,
24:33
or the course of two months, or you can binge it in three days
24:36
if you want, whatever you want. But if you finish it, then we're
24:38
going to give you a session with a nectarine advisor too.
24:41
And because I, you know, I want the best for you.
24:45
I want the best for everyone. I wish I could give it for free
24:46
to everyone, but you know, we're trying to make a living too.
24:50
And so once you, you know, those are the three pieces of advice.
24:52
Do nothing for a while. Another year would be fine.
24:55
Start by learning and investing 100 bucks in a regular brokerage
24:58
account. Go buy yourself 100 bucks worth
25:01
of Vt, the Vanguard total world stock market ETF.
25:05
See how it does. Then three, talk to a pro flat
25:08
fee advisor. You can find them on
25:10
hellonectarine.com and we'll give you the investing course
25:14
and we'll give you the Nectarine session.
25:17
Wow, that's amazing. I did not know you were going to
25:21
do that. Surprise.
25:22
It's a surprise for Jen too. She's like, great, more work.
25:24
I have to go. No, not at all.
25:27
No, I the reason I mentioned the psychology of money before is
25:30
because Janelle and I were chatting a little bit behind the
25:32
scenes as I was just asking her about the question a little bit
25:36
more. And she just mentioned, she
25:37
actually mentioned the dead box and she said that's something
25:39
that she wished she had done before her husband passed.
25:42
Because when you're in the fog of grief, then it's really hard
25:46
to sort all these things out. So I think that we answer these
25:50
money questions and talk about all these terms that we just try
25:53
to unpack them. But there's all this psychology
25:56
underneath, just the actual factual act of like, you know,
26:00
an opening investment accounts and like you, there's always
26:02
context that makes you make really huge decisions that can
26:06
change your life. So I really wanted to get this
26:09
question answered and I really appreciate your answer and your
26:11
generosity. And I'm sure that Janelle was
26:13
well. So thank you for that and thank
26:14
you for answering the question. Of course yeah, wish you the
26:17
best It's it's crazy to lose your spouse that young and and
26:21
dead box too. It's I mean, we all think we're
26:23
going to die when we're 100 wherever.
26:24
But that's why you got like I update my dead box every year.
26:28
I have been for the last 10 years.
26:29
And if you don't know the dead boxes, well, we should talk
26:33
about the dead box and then we'll do it.
26:35
Yeah, we'll do it in another episode.
26:37
Awesome. OK, let's move on to our next
26:39
segment, Scroll Patrol. Scroll Patrol.
26:47
OK, so this is a video that Jeremy hasn't seen that I have
26:50
sourced from the Internet, and he's going to click on it, he's
26:54
going to react to it, and he's going to tell us what he thinks.
26:57
So Jeremy, go ahead and click on that link, watch this video, and
27:01
then let's talk about it. Here we go.
27:02
I have not seen this before. Clicking Play.
27:05
How do billionaires not pay taxes?
27:07
Well it's because they don't make money, at least not the
27:10
kind the IRS taxes. Take Mark Zuckerberg for
27:12
example. He's the CEO of Meta a multi
27:15
billion dollar company. But as an employee he only gets
27:18
paid a $1.00 a year salary because his main form of payment
27:21
is getting shares of Meta, the company he owns.
27:24
And as long as he doesn't sell his shares he doesn't have to
27:26
pay taxes on them because the government only taxes you when
27:29
you sell something and make a profit.
27:31
Now here's the crazier part. Instead of selling the stock and
27:34
paying taxes he borrows money using that stock as collateral.
27:38
So he basically goes to the bank and tells them hey I have
27:40
billions of dollars in meta stocks so can you loan me
27:43
$1,000,000 And the bank obviously says sure take a
27:46
billion we know you're gonna pay it back.
27:48
And that borrowed money isn't taxed because it's a loan, which
27:51
is not income. Puts simply, billionaires live
27:53
off of borrowed money. That is, that's a very well
27:57
edited video. I don't know this creator.
28:00
She seems like she did a good job.
28:03
You know the the essence of what she's saying is mostly true.
28:09
I do believe that's correct. And Mark Zuckerberg has a $1.00
28:12
salary. If you asked him why he wouldn't
28:15
say it's because it's some anti tax paying scheme, he would say
28:18
because I have enough cash and I want to like strictly tie my
28:24
financial outcome to the shareholders financial outcome,
28:26
which is what business people say when they are looking out
28:29
for shareholder value. And what she said about loans is
28:33
maybe partially true, but I think she kind of left out the
28:35
last step, which is, you know, in her fictitious view of the
28:39
world there, her example view of the world, you know, he gets
28:43
paid a dollar and has all the stock and then borrows money
28:45
from the stock and then never pays any tax whatsoever.
28:49
But then the thing about banks giving out $1,000,000 loans, so
28:53
they want to get paid back. And she had mentioned, like, how
28:56
does he make those payments? If you borrow $1,000,000?
28:58
Does anyone knows who's bought a home in Southern California?
29:00
You got to start paying, you know, $10,000 a month or
29:04
whatever it is or $20,000 a month.
29:07
And his $1.00 salary wouldn't cover that.
29:10
And so at some point, he has to pay back that loan.
29:15
I do think that this strategy she's describing, you know, I
29:19
think it varies. We talked about this with Elon
29:21
Musk in every recent episode where, you know, people might
29:25
say Elon Musk never pays any tax.
29:27
But when Elon Musk bought Twitter, he didn't just borrow
29:31
$20 billion from a bank and say, I'm good for it.
29:34
He sold $20 billion worth of his Tesla stock, and he paid tax on
29:41
that. You know, the government that
29:43
fully publicly disclosed paid probably billions in taxes and
29:48
so. He can afford it.
29:49
Right. And I do think Zuckerberg has
29:52
used loans to, you know, leverage the stock.
29:54
But I think if you asked them, they'd probably say it's not
29:57
because I'm really trying to avoid capital gains tax.
29:59
It's because I actually want to keep invested.
30:03
I think I can actually make more money by keeping my money
30:06
invested and just, you know, use this loan as a collateral for a
30:09
while until I eventually sell the shares.
30:11
You know, I'm reacting in real time.
30:13
So I, you know, don't have time to go look up.
30:15
But if you go look up Mark Zuckerberg's public
30:19
transactions, I can almost guarantee he sells stock.
30:23
That's where he gets his money. So, and he paid and he pays tax
30:26
on it. So, you know, I think that this
30:29
is kind of one of these like partially true click baity
30:33
videos where, yeah, for sure, a lot of CEOs have small
30:38
paychecks. Yeah, for sure.
30:40
They might take loans against their against their assets, but
30:44
I think they're also probably paying a lot of tax.
30:46
Are they paying enough in tax? No, I mean, don't get me started
30:49
because also, by the way, if you know, when Elon Musk paid tax on
30:54
his shares, he sold $20 billion. Those are long term capital
30:57
gains. So he's capped at 20% federal
31:00
tax. Whereas if.
31:02
Yeah. Whereas if you're a Doctor Who
31:04
goes doing surgery everyday to, you know, make a living and save
31:08
people lives, your income is not capped at 20%.
31:12
It's capped at I think 39.3% or something right now.
31:15
And so you literally doctors who like work for a living pay more
31:19
in taxes, double the rate that billionaires pay.
31:22
And so, you know, Warren Buffett always talks about this where
31:26
his his tax rate's actually lower than his secretary's
31:31
because he's making money or his money makes money and the
31:33
secretary is making earned income.
31:35
Sounds like. Yeah, that's.
31:36
I did not know that. I didn't know there was a 20%
31:39
cap. Yeah, and it and it's it's 15%.
31:41
It's only 20% in like a really high income.
31:43
Actually it used to be 15%. They for really high income,
31:46
they did 20%. And I think it's like this dirty
31:50
little secret of rich people, which is you pay lower tax rates
31:53
on money making money than you do on earned income.
31:55
And you know, for it's always, it's like a left versus right
31:58
thing. And everyone's like, oh, the
31:59
left wants higher taxes. I'm like, well, I think, you
32:02
know, as a, as a baseline, why are people who work for a living
32:06
paying more taxes than people who make money for living?
32:08
By the way, I'm in the, I'm in the ladder camp now.
32:11
Most of my money is money making money.
32:14
Like my salary is pretty low. Just as bad as Elon.
32:18
Yeah, exactly. Mine is about 9 zeros at the end
32:21
of that. But but you know, it would it
32:24
would not, it would hurt me to pay more on capital gains tax
32:28
because that's how I get a lot of my income by selling things
32:31
at A at a gain now. But still, like, I'm like living
32:34
this like fantasy life of like running podcasts and doing, you
32:37
know, doing whatever I want. If I went back and worked for a
32:40
living at a tech company, like running software like I've been
32:43
trained to do, it would suck to go pay a higher tax rate for
32:46
that, right? So I feel like those could be
32:48
the same. So yeah, for her.
32:50
Like, I think all these things are like mostly true in a in a
32:53
vacuum. I don't think it's like
32:55
completely true in terms of what billionaires are actually doing
32:57
completely. But the essence of billionaires
33:01
should be taxed more is probably true.
33:03
I'd give this one AB minus. Yeah, B minus.
33:08
Oh, and I love that you said you're living this fantasy life
33:09
of making podcasts. That's just so sweet.
33:11
That's just so endearing. Isn't that what we all want to
33:14
do is just go make a podcast and not have like any sort of real
33:17
job? That is lovely.
33:19
OK, let's get into our last segment, Money Money.
33:24
Jeremy had time today. Okay, you have time and we're
33:29
going to get into it. I pulled a graphic from our
33:32
Instagram. It's called would you rather and
33:34
it says spend 95% of your paycheck and invest 5% or spend
33:39
70% of your paycheck and invest 30%.
33:41
And on the left side, you have an old man by a computer working
33:44
for 52 years. On the right side, this person
33:47
is rock climbing and snowboarding.
33:49
So fun. Part 24.
33:50
So fun, those emojis. Those are really great emojis
33:53
actually. Honestly when you zoom in and
33:55
then it says you currently have this choice so I'll read the
33:58
comment and then you can respond to it.
34:00
This person says no guarantee you will live that long.
34:03
As someone who was a Hospice therapist and had many young
34:06
patients, I say mix both. Live and enjoy the fruits of
34:10
your labor while you were healthy and be able to invest
34:12
within means while also saving for the future.
34:15
But the future isn't promised for anyone on Earth.
34:20
Yeah, I mean, in short, IA 100% agree.
34:23
You know that that post they were responding to was basically
34:28
just math saying, Hey, if you invest 5% of your paycheck, your
34:33
career will span 52 years. If you invest 30% of your
34:36
paycheck, you're, you will be able to retire with the same
34:39
amount, amount of money for 24 years.
34:42
And I think a lot of people, they just default to, well, I'm
34:45
going to spend down all the money in my checking account and
34:48
then wait till next paycheck and repeat.
34:50
And then 52 years later be like, oh gosh, I hope I can retire.
34:53
And so if you're a little bit more purposeful about that, you
34:56
can maybe retire earlier. I think that kind of a subtext
34:59
was if you only spend 70% of your paycheck instead of
35:03
spending 95% of your paycheck, then you won't be having any fun
35:07
for 24 years. And you know, to that I'd say, I
35:10
hope not. You know, I think so many people
35:13
just automatically equate spending and happiness.
35:17
And if you spend 10% more, you're 10% happier.
35:19
But it's just totally not true. And you know, look at someone
35:23
who makes 100,000 versus someone who makes 80,000 is 100,000 or
35:27
20% happier? If they spent 80,000 instead of
35:29
100, would they become sadder? Like, no, of course not.
35:32
And so I think you just going to be need to be more purposeful
35:34
about how you live your life and go, you know, I, I've been
35:40
talking to my wife about this. We've been having a little bit
35:41
of a fight about money because I've been spending too much and
35:44
I spent, I spent $59. We went, we just had our year.
35:49
On coffee. Not that bad.
35:52
We went, we went to a local hotel to have like a little
35:55
staycation for our one year anniversary.
35:58
And just, I don't know because I've been spending a lot lately
36:01
and I just, I've like lost some of my frugal routes when I was
36:05
booking this hotel, it's like, do you want to add parking for
36:07
$59? And I was like, yeah, probably
36:11
it's probably hard to park on there, whatever.
36:12
And then like I got there and there's like so many St. spots
36:15
like, you know, maybe closer to our room than where the parking
36:18
lot was like located on the hotel premises.
36:21
And I just like, I just waste that money.
36:23
It's like, I feel like such a waste.
36:26
And like, was that, was I happier because I parked?
36:28
No, it's probably less happy. I think I've kind of like
36:30
parking in the street and I like walking outside.
36:32
So like going down to like a parking garage, you know,
36:35
whatever it is. But you know, but to this
36:39
person's point, I agree. And you want to make sure you're
36:42
taking advantage of this, of those real opportunities to
36:45
convert money to happiness, which I think are much less
36:49
often than you realize. I think sometimes people think,
36:51
oh, if I get the valet parking, I'm going to be happier.
36:53
But no, you're not like valet parking doesn't make anyone
36:55
happier. So don't waste your mind stuff
36:58
that doesn't make you happy. But if you actually get a real
36:59
opportunity in your 20s and your 30s and your 40s, make sure you
37:02
do as Chanel, our previous question asker learned like life
37:06
in promise. If you're 50 and you know, I
37:08
know how old your husband was, but if you're 50 and you kick
37:11
the bucket, you know those savings will have done you
37:14
anything. So you will really do want to do
37:15
both. But I think you can with that
37:17
mindset, being purposeful, spend purposefully, live your like
37:22
fullest life you can in your younger years.
37:25
And then you're not going to be an age-old man still working on
37:28
a laptop. You might be like a 50 year old
37:30
man. If you're not Janelle's husband,
37:32
then you're going to hopefully have a lot more years.
37:34
I know. I feel like I've used Janelle's
37:36
name too much. Sorry, Janelle.
37:39
It's OK, All right, So we don't rate the comments.
37:43
I keep thinking that we rate the comments, but we don't.
37:44
OK, So thank you anonymous commenter on our Instagram.
37:51
And I think we're before we go, we're going to read a, I guess I
37:56
comment on our Spotify. It's not a review.
37:58
Yeah, comment reviews. We love it all.
38:01
Uh huh. Press is good press.
38:03
Send your hate comments this way.
38:05
I hate comments. This is on our episode about
38:07
compound growth, Grace, she said.
38:10
I love the episode. I could listen to you too, all
38:12
day. And then some weird guy named
38:14
Jeremy Schneider commented. Aw, thank you, Grace.
38:17
But she said she loves the long episode, right?
38:19
All the long. Oh, I missed that part.
38:21
I mean, honestly, it's funny because when we were, we were
38:24
recording and I was thinking, this episode's flying by.
38:26
We're at 35 minutes. I'm like, OK, I'm glad.
38:29
To me, it feels like they're not that long, but apparently we
38:31
just be talking. But Grace loves the long
38:33
episodes. Grace, they're going to keep
38:36
coming, so. Buckle up.
38:38
That's really nice to hear because when I originally
38:41
envisioned this podcast, I was like, I really want to be about
38:43
20 minutes and like really punchy and I still want to be
38:45
punchier. But they've definitely been
38:47
drawing out. So if if you like listening to
38:50
long episodes, when I listen to myself, it does seem like, you
38:52
know, one commute home and back and there's no more personal
38:55
finance club for a week. And so, you know, maybe we do
38:58
need to make them longer. I mean, I'm having a good time,
39:01
so let's keep it going. Grace loves it, you know.
39:03
Thanks, Grace. That's really nice.
39:06
Leave comments, subscribe, leave comments on our iTunes, like on
39:10
podcast app because that's going to push us to the top.
39:12
Then maybe we'll make the list like top ten podcasts in the
39:15
world. Exactly.
39:17
Get us. Awesome.
39:18
Well, that's all the time we have today for you on the
39:20
Personal Finance Club show. Thank you for listening and we
39:22
will see you next week. And don't forget to the 2 Rules
39:25
of Personal Finance Club rule #1 live below your means and rule
39:29
#2 invest early and often. The personal finance club show
39:32
is produced by Jeremy Schneider and Jen Mundia, music by Essa
39:35
Balu and Homie. Send your questions to
39:37
podcast@personalfinanceclub.com. The Personal Finance Club show
39:42
is Co hosted by Jeremy Schneider who is a co-owner of Nectarine,
39:45
an SEC registered investment advisor.
39:48
The views expressed on this show are those of the hosts and
39:50
guests and do not necessarily reflect the views of Nectarine.
39:54
Please refer to hellonectarine.com for all
39:56
relevant disclosures. This podcast is for
39:59
informational and educational purposes only and should not be
40:02
construed as personalized investment advice or a
40:04
solicitation to buy or sell any security.
40:07
Listeners should consult their own financial, legal or tax
40:10
professionals for advice specific to their situation.