Latest / The Personal Finance Club Show / Buy a Tesla With Your Credit Card, the $2M Factory Worker, and Market Crash? | Ep 32

Transcript

Buy a Tesla With Your Credit Card, the $2M Factory Worker, and Market Crash? | Ep 32 · The Personal Finance Club Show

0:00
The economy just added 178,000 jobs.
0:02
Is that a lot? Is buying a Tesla with a credit
0:05
card an infinite free money glitch?
0:07
And how did a worker at a terrible factory job become a
0:09
multi millionaire? Let's find out.
0:16
Welcome back to the Personal Finance club show.
0:19
Hey, Jen. Jeremy.
0:21
So I just got back from Jersey Mike's and as I was buying my
0:26
sandwich, they gave me the little how much do you want to
0:28
tip on the sandwich? Where do you fall on the
0:31
spectrum? I feel like back in the 90s,
0:34
tipping was like 15%'s good, 10%'s bad, 20%'s exemplary, and
0:38
it's only for like a sit down full of course meal.
0:41
Now they're always turning the iPad around and saying I'm going
0:45
to ask you a question. What do you think?
0:48
And like, even then, even back in the days when it was just for
0:51
like a dinner sit down meal vibe, it was already
0:54
controversial. And now there's so many places
0:57
you're tipping at the bookstore, you're tipping like pretty soon
0:59
you're going to be able to tip your cash register cashier at
1:03
the grocery store. Like it's too much.
1:05
Like all all that's too much. I miss the 15 percent 20%
1:08
argument. Yeah, and it I even see on some
1:11
restaurants now they say, you know, at the bond it's like
1:15
there's another 5% added for like staff wages or something
1:19
like that. So I'm like, wait a minute,
1:20
you're charging. You're charging me up.
1:21
You haven't seen that. No.
1:23
Oh. That's like a new thing where
1:24
it's like it's not a tip, it's not the price, it's just like a
1:27
5% surcharge to like for staff cost of living I.
1:32
Haven't seen. That and it's like literally
1:34
like wait isn't that the price just isn't the price you're not
1:38
giving me like market rate prices are you like you're
1:42
you're at cost you're you're already inflating the price
1:44
because you've built your expenses into the price that's
1:47
what I thought I. Feel like DoorDash and stuff
1:50
does that too. Like they'll be like do you want
1:52
to tip your driver above and beyond?
1:54
And I'm just like what are y'all doing with the tip that I gave
1:57
them already? Yeah, it it does seem like it
1:59
just never, ever stops. I was in Australia a while back
2:02
and I sat down at a sedan restaurant and I ordered a
2:06
burger and it was like $14.00 and said on the menu 14.
2:09
And then when I went to pay, I was expecting in my mind for it
2:12
to be like 2362 because it's like tax plus tip plus
2:17
surcharge, blah, blah, blah. And then the bill came in, it
2:19
was $14.00. And and like people told me it's
2:22
like, yeah, just give them 14. Or if you happen to have like 15
2:25
on you, you can let them keep the dollar.
2:27
But it's very weird. Like just give us like
2:29
gargantuan extra amount of money.
2:31
It's like a very US centric problem that we've gone
2:34
ourselves into. Yeah, and I feel like Australia
2:37
is notoriously expensive, isn't it?
2:39
So like, that's amazing. Well, yeah, but I guess they at
2:41
least have figured out that the cost of living is built into,
2:45
you know, I think, I think that their, you know, their
2:47
bartenders and stuff make like 25 bucks an hour.
2:49
So it's like actually really solid, but just built into the
2:52
price like everything is, you know?
2:54
It's all built in. I like that we need to do that
2:56
because I'm not tipping at the bookstore.
2:58
Yeah, no, it did. It has gone out of control.
3:00
And you know that little iPad moment where it's like, I'm
3:04
going to ask you a question. I'm like, what are you going to
3:06
ask me? What's?
3:08
I hate it. Are you going to watch me while
3:10
I answer? This will be fun.
3:13
Sound off in the comments if you where's the craziest place
3:16
you've tipped because it's getting Wilder and Wilder every
3:18
day. So annoying.
3:21
Anyway, we we need some more money to tip.
3:23
So let's figure out how to make some more money.
3:25
Let's let's get into the show. Let's do it.
3:27
Let's get into hot topics. What is our hot topic today?
3:37
OK, today's hot topic is the job market.
3:41
So I have an Instagram post here that reads U.S. economy ads
3:44
higher than expected 178,000 jobs in March.
3:49
How should these job reports that we see every month affect
3:52
the average listeners day-to-day actions?
3:54
Oh my gosh, you fans already know the answer that question.
3:57
But before I answer that question, let's kind of break
4:00
down what this is. And, and often times I see these
4:04
headlines, oh, like 170 a 178,000 jobs.
4:08
That seems like a big number, I guess.
4:10
Is that good? I don't know.
4:11
And so I got a couple of charts here. 1 is the last 10 years of
4:14
job growth. And it shows, you know, the
4:16
monthly job growth over the last 10 years from 2016 to 2026.
4:21
And if you notice in this chart, there's a kind of dramatic thing
4:23
that happens kind of smack dab in the middle of it.
4:26
Job growth drops, you know, precipitously, like off the edge
4:31
of the Cliff. And I think that these numbers
4:32
might be in thousands. So it's, it's labeled there
4:35
-20,000. But what actually means is -20
4:37
million, because you have to multiply it by 1000.
4:40
And so right around March of 2020, I don't know if you
4:43
remember what happened around that time, but.
4:45
No, I was just chilling, Yeah. 2020.
4:49
Was on my end. I was on a sailboat for a whole
4:51
year with no Internet access and I landed in mid 2020.
4:55
I'm like what's up guys? They sprayed me down with a some
4:59
sort of anti virus hose. They're wearing hazmat suits and
5:04
they're like I. Was like, oh, what?
5:07
What did I miss? Just kidding.
5:09
But, yeah, obviously, that was COVID when, you know, in a day,
5:13
economies shut down and 20 million people lost their job.
5:17
But then like a month or two went back and everyone kind of
5:19
was like, well, we still need to, you know, eat and buy stuff
5:23
and yadda, yadda. It's like many of those people
5:25
got their jobs back. And so there's a huge drop in
5:27
this huge spike. And while that's really
5:29
interesting, it also makes every other month in history you can't
5:32
even see it. So the second chart shows just
5:35
the last four years since 2022 through 2026.
5:40
And still there's kind of some echo effect because while many
5:44
of the jobs came back like a month later, most of the jobs
5:47
kind of slowly trickled in over the following years.
5:49
So there's a lot of big job growth as those jobs came back
5:53
over the following months and even years.
5:55
And so even in 2022, I think we're still seeing a little bit
5:57
of those COVID jobs coming back. And this line kind of goes down.
6:01
The number of job growth if just listening, you're going to have
6:03
to trust me on this, but the number of job growth back in
6:07
early 22 was over 750,000. And now for the last nine months
6:11
or so, it's been bouncing right around 0.
6:13
In fact, five of the last nine months there's been negative job
6:16
growth, which means we've lost jobs.
6:18
And so there does just kind of be this seem to be this downward
6:20
trend. And what this article is talking
6:23
about is this very last little tiny data point there, which is
6:25
saying, hey, we've come in bouncing around the zero point
6:29
for nine months but now in March it's up it's above the zero
6:32
point. In fact, it's kind of the best
6:34
month we've had since December of 2024.
6:37
And so for about a year and a quarter or so, we haven't seen a
6:42
job number as good as this 178,000.
6:45
But still if you look at the second chart with the last four
6:48
years, it's not like that is a code style spike or anything
6:52
like that. Looks like it just could be
6:53
random noise. And so I'm not, you know, in
6:56
terms of the scale, even though it is the best month since
6:59
December of 2024, it still just looks like it might be bouncing
7:02
around the zero, you know? And in fact, I think we need to
7:04
see like a couple more months. Is this like a trend where it's
7:06
starting to go back up or is this just more of, you know,
7:10
randomness or noise around the 0?
7:14
So what does this mean? It basically means, you know,
7:16
the, the Bureau of Labor and Statistics, the BLS looks at how
7:21
many new jobs are added. And what's one of these signals
7:24
we used to try to figure out, is the economy in good shape if no
7:29
new jobs are coming out and we're losing jobs?
7:31
And, and that, and this number is a little bit different than
7:33
unemployment. Unemployment also includes how
7:36
many people there are and how many people are looking for jobs
7:39
and how many people have retired and things like that.
7:41
But if, you know, unemployment is going up and no new jobs are
7:44
coming in the market, that would be a bad sign for the economy,
7:47
right? And also, the Federal Reserve
7:50
uses this number to try to decide what they're doing with
7:53
interest rates. And so right now, the Federal
7:56
Reserve is kind of stuck between a rock and a hard place.
7:59
And that rock and that hard place are inflation and job
8:03
market. So on one side, inflation is
8:05
still kind of high, which means they would like to lower the
8:09
interest rate. So inflation again means when
8:12
stuff becomes more expensive over time and the Fed doesn't
8:16
like that. So they have this big lever, and
8:17
I imagine like a little guy with a lever and he's like pushing it
8:21
back and forth and that that this is what the Fed does.
8:23
Higher rates, lower rates, higher rates, lower rates.
8:25
And that's how they kind of control this massive ship that's
8:28
the US economy with their one lever.
8:30
And they say, OK, inflation's too high.
8:33
That means they lower rates. That means they slower, slow the
8:35
amount of money flooding into the economy to slow inflation,
8:39
make it harder to borrow money, harder to buy new homes, harder
8:42
to get business loans and things like that.
8:44
But that has an effect of slowing inflation.
8:47
But on the other hand, the job market is weak, meaning job
8:51
growth has been bouncing around 0 for the last nine months,
8:54
which means they want to push the lever the other way up, make
8:57
it easier to borrow money. So we want, we want to stimulate
9:00
job growth, which means that, hey, if, if a company can borrow
9:03
a lot of money, maybe they'll use some of that money to hire
9:05
people and that will create new jobs.
9:07
And so you can see they have this like this one lever, lower
9:10
rates, higher rates. And they say up job growth is
9:13
slow. We want to lower rates, they
9:15
say, but they say, oh, inflation's high, they want to
9:17
raise rates. And then everyone kind of points
9:19
to the Fed and says, Hey, fix all this with your one lever.
9:22
And obviously that's not very easy to do.
9:25
So that's kind of at a high level what it is.
9:27
And also interestingly, in this headline, it said higher than
9:32
expected. And so I guess, Jen, I have a
9:35
question for you. Have you noticed more hiring
9:39
than you expected in your area? Or have you seen a lot like is
9:42
there like jobs being closed everywhere and help wanted signs
9:46
with people on sandwich boards out front in LA sandwich?
9:49
Boards. I mean, I'm currently employed
9:51
so I haven't been paying attention except for when I read
9:54
Instagram posts that catastrophize the job market.
9:57
Yeah, I mean, that's, that's definitely a typical
10:00
individual's perspective, which is, you know, job growth is
10:03
slightly above or slightly below 0.
10:05
How do you even know if you weren't currently searching for
10:08
a job? And even Even so, would you even
10:11
notice that with the, you know, only the Bureau of Labor and
10:14
Statistics with their like massive study they do or their
10:16
survey can't even figure this out.
10:18
But it is interesting to basically stock market
10:21
predictors who are trying to say, hey, if the, if we're
10:25
expecting zero job growth and then it turns out we lost
10:29
100,000 or 100,000 jobs, they're going to say, oh, I better sell
10:34
my stocks once I hear that because I think that's going to
10:36
push stock prices down. That's bad for the economy where
10:39
as if you're expecting a million job growth and it comes in at
10:44
800,000, that's still bad because they're like, oh, it's
10:47
less than I expected. And so this expect, this
10:50
expectation was on the flip side, if you're expecting let's
10:53
say a half million job loss and it came in at 100,000 job
10:57
growth, that would be hugely positive.
11:01
And I think this, this idea that expectations are built into this
11:06
current price of the stock market is really important
11:08
because I think some people say, oh, there was job growth, I'm
11:12
going to go buy stocks now. And therefore those jobs are
11:15
going to create more growth in the future.
11:17
But you can't do that because it's too late.
11:20
We already expected there to be job growth.
11:22
And only when something exceeds or falls below expectations will
11:28
that actually potentially move the market and we'll move the
11:31
market in a way you expect. No one really knows.
11:32
The market is a little bit mysterious in that way.
11:34
So what I'm saying here is by the time you listen to this
11:38
podcast days ago, many days ago, you know, 345 or 7 or whatever
11:44
it was, this news dropped. Then a thousandth of a second
11:47
later, all the algorithmic traders, these are computer
11:49
programs that trade based on breaking news, already traded
11:53
based on how dismissed expectations.
11:55
And by the time your eyes had the time to process the words,
11:58
even if you were reading it the second the news article came
12:00
out, it's too late now. The new expectations are now
12:03
priced in the market. So to your question, what do you
12:07
do about this? The answer, as usual, is
12:11
nothing. This is like the most boring
12:13
podcast on earth. I go into detailed analysis on
12:18
complex financial topics only to eventually explain why this
12:22
means nothing to you and you know the answer.
12:25
You want to know why that's that's what you do.
12:27
You give us a why? You're 100% right, Jen, because
12:31
I think it's really tempting, you know, dear listener, who's
12:36
hearing the sound of my voice right now, I'm like so eternally
12:38
grateful for you because you have dedicated like a tiny
12:41
little fraction of your life to listening to the personal
12:43
finance club show both like the 99.9% of the rest of your life.
12:47
There's all this signal coming in.
12:49
There's all, there's all this noise coming in being like, oh,
12:51
job growth and recession and, and NVIDIA stock and, and, and
12:57
our job here is to say, Hey, Remember, Remember the rules,
13:02
the rules, not day trade based on job growth numbers.
13:04
That's not going to make you rich.
13:06
What's going to make you rich is to keep doing what you do, which
13:09
is earn more money, spend less, invest early and often, buy and
13:14
hold index funds, stay the course and you just ride through
13:17
all this noise. And so there, there's negative
13:19
job growth, there's positive job growth.
13:21
Best month since December. Who cares?
13:23
You don't worry about that. You worry about you, which is
13:26
you're trying to acquire more and more and more and more
13:28
shares so that when the eventual and the good news does
13:31
unexpectedly come out, you can benefit from it and you'll
13:33
collect the dividends and growth from all the profits and
13:36
innovation along the way. And so while it's interesting to
13:40
know what this means, why they're talking about it for,
13:44
you do nothing. Keep investing like a
13:47
sociopathic robot final. That's that's why I bring.
13:51
The table I I kind of think my personal mentality is kind of
13:54
like a sociopathic robot and I just I like.
13:58
It because I feel like it's kind of like when you start
14:00
investigating your health and you realize that everything's
14:03
connected and you're like, OK, like it's like if you stretch,
14:06
then you run faster and if you eat this, then you like sleep
14:09
better. And it's like, whoa, like it's
14:11
kind of interesting. And it's kind of you can kind of
14:12
gamify your health. And I feel like when you hear
14:15
it, like sometimes I pick the hot topics.
14:16
I'm like, does this have anything to do with what we
14:18
talked about? And it's, it is kind of all
14:19
connected the same way that a war is connected to stocks is
14:22
connected to job market is connected to politics.
14:24
It's like you're kind of give, you're tying all the pieces
14:27
together, which is what I think most people appreciate IA 100%.
14:30
Think that's true, but I think what makes investing so
14:33
interesting is that with fitness, for example, you're
14:37
100% right. You're like, if I do more,
14:40
better sleep, more stretching, more fitness, more physical
14:44
therapy, whatever it is, I get better results. 100%.
14:47
That's true with investing. That's not true because it's
14:51
such a fluid market or such a such an efficient market.
14:54
If you do more research, more trading, more stock picking
14:57
more, the more you do actually, the less you end up with.
15:01
And so it's it's it's important to understand how it's all
15:04
interconnected, but the take away should still be do less,
15:07
you know, stay the course. Put more money in stay.
15:09
The course and beyond that, you know, don't mess with it.
15:12
I love it. Crush it as per usual.
15:15
Thank you for the. Hot topic, yeah.
15:18
You're welcome. Let's get into money.
15:20
Money. Can I ask a dumb one?
15:25
I love this. Question, who's it from?
15:26
It's a. It's a good question.
15:29
Betty in Knoxville asks Knoxville, TN.
15:31
Is there another Knoxville? I don't know, there probably is.
15:34
It's the US, it's a long 1 so bear with me, but I think it the
15:38
context is really important and I really like this question.
15:40
So Betty says my mom retired at 59 after working 38 years in the
15:45
same terrible factory job. The upside was that they offered
15:49
a profit sharing plan which has given her a solid retirement.
15:52
I don't know her exact numbers but probably about 2 million.
15:55
The downside is because they took care of all the investing
15:58
for her, she never learned anything about investing and she
16:01
is also not tech savvy. She asked me questions about
16:04
what she should do but has already transferred the money to
16:06
an Edward Jones account. I have offered to open a
16:09
Fidelity account for her and invest in index funds so she can
16:11
avoid paying her financial advisor and have better returns.
16:14
For context, it's her money and I don't care what she wants to
16:17
do, but she also worked most of her life for it and I want her
16:20
to get the most of it. How harmful is it for her to
16:23
stay with the financial advisor versus having her own brokerage?
16:27
What a good. Question and what a great, you
16:29
know, example scenario for so many of us who are kind of
16:33
struggling with this problem. And so you know, first Betty,
16:37
thank you for asking such a thoughtful question.
16:39
Congrats to your mom. It sounds like she put in her
16:42
time 30 what was it 38 years in the same turbo factory job That
16:47
is very rough. I mean, sometimes I once heard
16:50
this book called it's called like Whitefinger.
16:53
Something is about the sky on this boat.
16:56
And he said he started working as like a deckhand on a boat.
17:00
And this line that always stuck with me, stuck with me was I, I
17:04
realized what it felt like to work for a day for the first
17:07
time in my life because he was like, actually working, you
17:10
know, like with his hands and his back and, you know, like
17:13
exhausting work. And you know, as I sit here in
17:17
this, you know, fake, you know, studio I made talking to a
17:22
microphone like this is not a real work.
17:25
And so I see people like in a factory, like doing real work.
17:27
And for 38 years I'm like, Dang, that is like respect your mom
17:31
for, you know, for just working for her whole life.
17:35
And you know, while the factory job, I don't doubt how terrible
17:38
it was, I have to give the company a little bit of respect
17:41
for setting up a program that resulted in a factory worker
17:47
ending up with maybe $2,000,000. That's incredible.
17:49
And it shows the power. It shows the power to Betty's
17:53
mom's credit of doing nothing right.
17:55
You know, she wasn't reading job headlines.
17:59
To throw it back to our hot topic from 2 minutes ago.
18:03
She wasn't reading job headlines and trying to get in and out of
18:05
the market. She was just letting it ride for
18:07
38 years. Now she has 2,000,000 bucks for,
18:10
for a factory worker, you know, that puts you probably in the
18:13
top 5% of wealth or so in the US and she's maybe in the bottom
18:17
20% of income earners. And so that shows them the
18:19
incredible power of investing and, and staying the course.
18:22
And so, you know, to your question, what does she do?
18:26
Now she's got, let's assume, assume 22 million, assume she's
18:30
59. And I think we can assume that's
18:33
safely because you probably know your mom's age and you know, how
18:38
harmful is it for her to stay with Edward Jones versus having
18:42
her own kind of do it yourself Fidelity account.
18:46
And let's run some numbers. First of all, Edward Jones is, I
18:51
would say, not notorious for having low fees.
18:54
In fact, probably the opposite. You know, just, and they don't
18:57
publish anything very publicly. And I think every person kind of
19:00
gets a different deal. But I think typically at
19:03
$2,000,000, you might be paying a 1.1% AUM fee.
19:07
That's an annual assets under management fee.
19:10
They all. They also have this portfolio
19:11
program fee thing that tax on another .1%.
19:14
Then they also usually recommend high fee mutual funds to invest
19:19
in because they get kickbacks from them that add another .5 to
19:22
1%. You add you Add all that up on
19:25
the low side. She's probably paying out 1.7%
19:28
of her portfolio every year in management fees, in advisory
19:33
fees. And if she asks her financial
19:36
advisor at Edward Jones, how do you get paid?
19:39
Usually what these types of advisors say is oh, the advice
19:42
is free or we make money when you make money, or my company
19:46
pays me, or there is no fee and all those things are
19:49
horrifically not true. Or, you know, what's the word
19:56
where like Miss. Exaggeration or no, it's not an.
20:00
Exaggeration. Like misdirecting.
20:01
There's like a word for it, but not a word.
20:03
Can't help. You OK?
20:04
Well, they're. Not true.
20:07
They're wrong having. A toddler or having a baby and a
20:10
toddler, not going to have to sleep.
20:11
They're wrong. They're horribly wrong.
20:13
Not helpful at all. There's a word like they're.
20:15
Like Miss, they're deceptive or whatever.
20:18
Yeah. OK, so anyway, so like, let's do
20:22
the math 1.7% of $2,000,000. That means every single year
20:26
your mom out of her investments, her actual money that she could
20:29
withdraw from the bank and put into a savings account, she's
20:32
paying $34,000 in fees. And you know, let's assume she's
20:39
spending five, you know, live in Tennessee, you're a factory
20:41
worker. I assume you're not spending
20:43
half $1,000,000 a year in spending.
20:45
Like let's say she spends $5000 a month on her living, that's
20:49
$60,000 a year. You know, to me it feels a
20:52
little bit roadie that your advisor is taking, you know,
20:55
your total spending is $60,000 and then you're spending another
20:59
$34,000 on this financial advisor who, you know, I'm
21:04
getting a little bit personal here, like probably is not going
21:07
to beat the market, you know, almost certainly not going to
21:09
beat the market. So I mean, I don't know, Jen,
21:13
like would would you spend half of your income on your nuts, not
21:17
half of your income. Would you spend half of your
21:18
total spending on a financial advisor?
21:22
Doesn't. Seem like a good idea?
21:24
It seems, and you know, it's, it's rough because, you know,
21:29
Betty's mom did this and then the fees are invisible to her.
21:32
She doesn't know what they are. And so it's real like the number
21:35
of dollars in her account is absolutely getting debited that
21:38
ever. But it's happening on like a
21:39
daily basis, like fractions of a dollar, whatever it is.
21:42
And so she doesn't see it. And so she's probably going into
21:44
the grocery store clipping coupons, trying to save $0.50
21:47
here and there. Meanwhile, she's running a
21:49
$34,000 check to her advisor every year to underperform the
21:52
market. You know, none of those fees.
21:54
So that doesn't it kind of sounds.
21:56
Like also sounds like the her strategy this whole time has
22:00
been what you said to leave it alone, set it and forget it.
22:02
And that's done well for her so far.
22:04
And she might be paying for a little bit of Peace of Mind with
22:06
like this person is an advisor. They know what they're doing.
22:08
I don't have to worry about it. But if you were actually to do
22:11
the math and realize how much you were losing, you'd probably
22:14
think twice knowing how easy it is to invest on your own without
22:17
an advisor you make. It a great point though and the
22:21
world is nothing if not Shades of Grey and so Edward Jones has
22:24
some things going for it for sure.
22:26
Which is 1. They're not criminals, like
22:28
that's like a massive financial advice company or investment
22:33
management company. They have, you know, pretty much
22:36
branches in every city so you can go to your local strip mall
22:39
and go into an Edward Jones office.
22:41
It's 100% better than losing money to a Ponzi scheme or a
22:46
romance scam. You know, 59, still young, but
22:49
you know, 6979 eventually, you know, aging adults are at risk
22:54
of getting scammed, right? If you are just fully self
22:59
managing in your own account and then some hot dude on this.
23:03
I saw some Instagram video where some woman thought she was
23:07
dating Matt Reif. Do you know who Matt Reif is?
23:10
Yeah. Why would she want to do that?
23:12
Well. I mean, she was like this like
23:14
woman probably pushing 70. Matt Reif, is this like comic?
23:18
He's a very good looking dude. I think he's probably around 30
23:20
or something, maybe even younger.
23:22
And some, you know, to my eye, I instantly clocked it's like a
23:26
fake Matt Rife profile. It's like, it's like Matt Rife
23:30
with two eyes. 234 is like messenger and like he's already
23:34
taken her to the tune of like $30,000 or something like that
23:37
because he's like, oh, babe, like I'm going to go, you know,
23:39
book my hotel for the blank. Like, can you just forward me
23:42
the money? Right.
23:44
And so, you know, if there's an Edward Jones advisor between
23:48
scammer and this woman, like that could have been potentially
23:52
avoided because you're going to have a person be like, hey, of
23:54
course you can do whatever you want with your money.
23:56
But can I, you know, dig in a little bit more and ask you
23:59
where, you know where this is going?
24:02
Can I ask a? Question yeah, about Edward
24:04
Jones. Is it somebody who's just
24:05
managing your investments or are they, I mean, I guess you
24:08
wouldn't know, like Betty's mom's whole situation.
24:10
Or is it somebody who looks at your total finances and it's
24:12
like up in there in your account?
24:14
It's like, how does that work? Do you give them access to all
24:16
Oh? Jen, my sweet summer child.
24:20
I mean, it's just so, it's just so funny because it's like such
24:23
a simple question and like the reality of the financial advice
24:26
world is so messed up because the reality is, is most of these
24:32
financial advisors make money from charging a percent of the
24:36
assets doing investment or asset management.
24:40
And asset management is basically putting in an index
24:43
fund and leaving it there, or in Edward Jones case, putting in
24:46
like 30 different mutual funds to create the illusion of
24:49
complexity and then leaving it there.
24:51
And you know, then they take a percent every year.
24:55
But then you asked like a really good question, which is like,
24:57
what about her debt and borrowing money for a car and
25:01
planning for her kids college and 529 and charitable giving
25:04
and tax preparation, yada, yada, yada, yada.
25:07
And the reality is, is most financial advisors will, you
25:10
know, claim they do all that stuff, but really they don't get
25:13
paid for it. And so the value which they
25:16
bring to the all that planning stuff, which is separate from
25:18
the investment management varies.
25:21
You know, some are some are excellent at it and they take it
25:23
very seriously and some don't. And, you know, again, like, I'm
25:28
not trying to like drag Edward Jones from the mud here.
25:30
It depends on the advisor and all that.
25:33
But I I assume Edward Jones's answer would be like, yeah, of
25:35
course we do that. Of course we do that.
25:37
It's all included in our one, you know, sweep fee.
25:40
But we just don't have to get paid for it.
25:42
And so like I said, your mileage kind of varies.
25:44
Interesting. Really Gray.
25:47
Yeah, super. Gray and and also Edward Jones,
25:51
you know, I'm kind of making the case for Edward Jones, which is
25:53
they're not criminals. You know, they have, they have a
25:55
human, they have local offices. They, they do the investment
25:59
management for her. I think listeners of the show
26:01
probably know by now. It's not that hard to go to
26:03
Fidelity, Vanguard or Vanguard or Schwab, click open an account
26:08
or even a robo advisor like Wealthfront or Betterment, click
26:12
open an account, put your money in and just leave it there and,
26:14
you know, take it out when you need it.
26:16
But Betty said her mom knows nothing about this, has never
26:21
done it, is not tech savvy. And so just the concept of doing
26:24
that yourself might be so terrifying that she doesn't want
26:27
to do it. And it might.
26:28
It's kind of one of those things that you, you can't quit smoking
26:30
for someone else like Betty, you could say to your mom, mom, it's
26:34
$34,000 a year. Let's go over here and just do
26:37
this other thing that's going to be like if you get, if you put
26:40
that $2,000,000 into an index fund with Fidelity, for example,
26:43
it'll be at the, on the high end point, 1% per year instead of
26:46
1.7% per year. That'll take your $34,000 annual
26:50
fee and bring it down to 2000. That's a whatever that is a 17
26:55
times decrease. That's pretty serious, right?
26:59
But you can't quit smoking for someone else, right?
27:01
If you say, mom, the smoking is going to cause cancer and has
27:06
during your lungs and you're going to get emphysema and blah,
27:08
blah, blah, she's going to be like, I don't care.
27:10
I'm doing this for my reasons. I'm going to die anyway.
27:12
I don't care, you know, and, and she might say, Hey, I want to be
27:15
able to walk in an office and look at someone in the eye and
27:17
say, give me my money. And this whole online thing
27:20
scares me. And like, that's Betty's mom's
27:22
truth, right? So Edward Jones, to their
27:25
credit, they've got local people and local offices you can go and
27:28
talk to and, and walk in their office.
27:30
So that's kind of like the pros and cons, which is very
27:34
expensive. You're very unlikely to
27:35
outperform. And by the way, I did some math.
27:38
Let's say she spends $5000 a month and let's say instead of
27:41
getting a 10% return, if she's all in stocks, she's going to
27:43
get an 8% return minus around 3% inflation.
27:46
So I modeled this with a 5% real return.
27:51
That means after inflation return, if she spends $60,000 a
27:54
year, gets a 5% real return at the age of 80, she'll get she'll
27:58
have $4.3 million. So she actually will be in great
28:01
shape. She'll likely have more than she
28:03
has now. If she's paying that 1.7% fee,
28:08
instead of 4.3 million, she'll end up with 2.8 million.
28:12
And so that's a one, It's a million and a half dollars.
28:16
It's not all in fees. Some of it's opportunity cost
28:19
because that money is not invested.
28:20
That's being paid in fees. But she'll end up with a million
28:23
and a half dollars less money at age 80.
28:25
You know, that said, they're both well above 0 and she's been
28:29
spending along the way. And you know, that's more of a
28:31
Betty problem than Betty's mom problem if she's planning to
28:34
leave money to her her kids. But you know, so, you know, I
28:39
guess that Shades of Grey, like obviously I'd rather have a
28:41
million and a half dollars, but if she just feels more
28:43
comfortable with this. And by the way, 2.8 million with
28:46
that fee is much better than 0 if it's like the romance scam
28:49
Ponzi scheme option, right? And so there's, it's not totally
28:53
fair to look at that in a vacuum and say, hey, if you reduce fees
28:56
every single penny you can, you're going to, you're going to
28:59
be guaranteed to get that money. You're not because you can, you
29:02
know, make mistakes yourself. Or maybe if Betty's mom is doing
29:05
it herself, the next time Trump tweets something and she gets
29:09
freaked out, she goes and sells everything and then misses a day
29:12
like today in the market. Actually, I'm looking at my
29:13
phone right now. The market's up 2.5% today
29:16
alone. If someone sold yesterday
29:18
because they're afraid of, you know, the, you know, upcoming
29:23
Iran war situation, they would have missed one of the best days
29:27
in years. And even at Edward Jones, I
29:30
think they're talking out of that sort of panic selling,
29:32
which a lot of people do when they have the hand on the
29:35
trigger themselves right there. So that's kind of the whole
29:39
thing. Here's some options.
29:40
First of all, I would be remiss if I didn't mention the RIA,
29:45
which is a registered investment advisor, of which I'm a Co
29:47
founder called Nectarine. And we do flat fee financial
29:51
device. And so unlike the AUM model
29:55
where they charge you a percent of your assets every year,
29:57
Nectarine most the price directly on the website, you can
30:00
see what it costs per hour or per plan.
30:03
So if you want have a financial plan or there's also an ongoing
30:06
option if you want someone to call on the phone or e-mail
30:08
whenever you want, you can have an ongoing option.
30:11
It's all listed in U.S. dollars, not a percent of assets or
30:13
anything like that. There's no hidden fees.
30:16
That said, like to be perfectly frank, I don't think Nectarine
30:20
is probably the best option for Betty's mom for a couple of
30:22
reasons. 1 Betty, Betty's mom doesn't want, you know, doesn't
30:28
want to do it herself. She doesn't want the ability to
30:31
go and make a trade herself, it sounds like.
30:33
And two, it sounds like she really wants to be able to walk
30:35
into the local strip mall and talk to a human.
30:37
You know, nectarine is all online.
30:39
You know, it's one of the ways that we have dramatically
30:41
cheaper prices than Edward Jones.
30:42
We're not paying for strip mall office place around around the
30:45
country, right? And so for Betty's mom,
30:47
realistically, I don't think that's really the best option,
30:51
or at least it's not the only option.
30:52
I think, you know, Betty and her mom together could go definitely
30:55
book an hour or plan and sit down and, and see how it
30:58
compares with Edward Jones and make a plan.
31:01
And you could also potentially do that with some of her money.
31:04
So for example, Betty, if your mom has 2,000,000 bucks or so,
31:08
you could say, hey, mom, give me X dollars, 1010 thousand,
31:12
50,000, whatever it is, we're going to open up an account
31:15
together in your name. I'm going to help you and you're
31:17
going to just watch it and you're going to say, OK, how how
31:20
is my own Fidelity account doing versus how is Edward Jones
31:22
doing? And that could be a way to
31:24
basically dip your toe in without, you know, losing the
31:27
whole benefit of having a, you know, human brick and mortar
31:31
financial advisor. But really see the difference.
31:34
So that's option 1 is like just do it yourself, use Nectarine.
31:38
If you want a flat fee financial advisor, go open up a Fidelity
31:41
or Vanguard or Schwab account and maybe start small.
31:44
And option number 2 is to stick with Edward Jones.
31:47
It's really not the end of the world.
31:48
And you know, as passionate as we are at the personal finance
31:52
club show about reducing fees and the like dramatic compound
31:56
if impact it has, you know, at 59, the impact is honestly a lot
32:01
less than it would be at, you know, 19 or something.
32:04
You know, if a 19 year old is going to say, hey, I'm Edward
32:06
Jones and my horse, I'm going to do it my whole career.
32:08
I want to like go grab them by the lapels and shake them and
32:10
say, tell your millions and millions of dollars and years
32:14
and years of your life. You know, Betty already is
32:16
retired and you know, doesn't have a 50 year working, you
32:21
know, time for that ever. It doesn't make as big of a
32:23
difference when you're later in life.
32:26
That's option 2. And an option 3 would be to go
32:28
seek out a different investment asset manager that's a fee only
32:33
fiduciary that and that what that means is fee only doesn't
32:36
mean flat fee. It means they still charge an
32:38
AUM fee. They still charge a percent of
32:40
your assets, but that's all they charge.
32:42
There's no other suite for there's no other, you know,
32:44
there's no other commissions or anything like that.
32:46
And Edward Jones is not that. They also earn commissions.
32:50
And so if you find a true fee only fiduciary who only charged
32:53
that percent, suddenly the incentive to go into these high
32:57
fee funds goes away and they're almost certainly going to
32:59
recommend index funds. And so if you find someone that
33:02
has a long track record and you trust that is local, you can
33:06
probably cut those fees in half or so with $2,000,000.
33:08
That's a significant chunk of change.
33:10
Many advisors would be happy to give you a rate under 1%,
33:13
probably .9 point 8.75, something like that.
33:16
And that's about half of the cumulative fees she's likely
33:21
paying at Edward Jones. Just guessing.
33:23
I don't know, but that's another option.
33:25
So, you know, to Betty, you know, I, I totally respect your
33:33
question and really, you know, honor that you are taking it to
33:37
heart. And you said, how harmful is it
33:39
for her to stay with the financial advisor?
33:41
You know, it's kind of a shrug. Like, yeah, it's going to cost
33:44
her a lot of her time, but in terms of her life, it's not
33:47
going to necessarily cost her much.
33:48
She's already retired. She's probably going to spend
33:49
the way she wants to spend. If it brings her comfort, maybe
33:52
that's a good option for her. Maybe you could look for a
33:54
different flat or a different feel in the advisor.
33:57
Or maybe you could DIY it yourself with a fidelity count
34:00
with just a small amount of money and see if she takes to
34:03
it. But like I said, you can't.
34:05
Can't quit smoking for someone else coming.
34:07
Through with the tea real solutions here at the Personal
34:11
Finance club show I'd love to see it pains me not.
34:14
To recommend my own service. What are we even doing here,
34:16
Jen? Isn't this, Isn't this my
34:18
opportunity just to shill my my my own advisory firm?
34:23
It's not. You're keeping it.
34:24
Real. It's not even a firm I.
34:25
Don't even like like talking about it like that because like
34:27
did you just say? Firm.
34:28
Firm. Is that what you called it like?
34:29
Mattress Firm. Yeah, I.
34:31
Got you. I just.
34:32
I've never called. I've never heard you call it
34:33
that before. Yeah, I don't because.
34:34
I don't really think of it that way.
34:35
It's not like we're trying to like increase our Bank of
34:37
business. We're, we're creating a
34:39
marketplace where you can go and see the different advisors and,
34:41
and, and book whichever 1 you want, see their reviews and all
34:45
that. So yeah.
34:47
You're keeping it honest. We appreciate it.
34:49
Betty. Betty's mom.
34:50
Good luck. I hope that you heard what you
34:52
needed today. Let's move on 2 scroll patrol,
34:59
scroll patrol. Whoop, whoop.
35:02
You already know I'm on the Internet.
35:04
I am finding videos for Jeremy and I to watch together.
35:08
He's not seen this. I'm on YouTube.
35:10
I'm in the YouTube street. So Jeremy, go ahead and click on
35:13
that video. Let's watch it together and see
35:18
what you think. All right, I've.
35:19
Not seen this video, can you actually?
35:21
Buy a Tesla with a credit card and get paid to do it.
35:24
Well, in 2018 this guy did, and he got paid about $5000.
35:28
The thing is, most credit cards earn you rewards when you use
35:31
them, and this guy knew exactly how to exploit it.
35:33
He was able to use the Chase Inc Business Preferred, which is a
35:36
card that gave him three points per dollar on advertising
35:38
expenses. But Tesla doesn't allow you to
35:40
put the entire car on a credit card, so he used a payment
35:43
service called Plastic to charge the card and send the money to
35:46
Tesla. And here's the genius this part,
35:48
because the transaction went through plastic instead of
35:50
Tesla, it was coded as an advertising expense, meaning he
35:54
was able to get 3 points per dollar for the entire purchase.
35:57
So even after plastics fee, he still earned around 180,000
36:00
points worth up to $5000 in free trial.
36:03
But plastic quickly caught down, they closed the loophole and
36:06
unfortunately, it no longer works.
36:08
Yeah. I was until that last line, I
36:10
was like, OK, this sounds like impossible because, you know,
36:14
I've never heard of plastic, but clearly plastics paying the fee
36:18
and they can't just lose money on that transaction.
36:20
But yeah, everything he said there is exactly right, which is
36:23
a lot of people when they go to a car dealership, they want to
36:26
say, oh, can I just buy this with my credit card?
36:28
And dealerships just, well, I've never, ever heard of a
36:30
dealership letting him get away with that.
36:32
They'll let you put down like 1000 bucks or 500 bucks or some
36:35
sort of down payment to make sure you know they're serious
36:37
and make sure they know you're serious.
36:39
But then after that they want a check, a wire, an ACH cold.
36:45
Hard cash, Yeah. A.
36:46
A bag of non sequential unmarked 20s and 50s if you're buying it
36:51
for your cartel or something. But yeah, you, you can't put a
36:56
credit card down. And every once in a while I hear
36:58
of one of these loopholes where someone can like get free points
37:03
and it just doesn't last. There's, did you hear about the
37:05
guy with the, there's, I think there's an American Express card
37:10
and he was buying, what are they called money, money orders with
37:15
an American Express card. So this was, I think this was
37:18
probably back in like 90s or early 2000s, but this guy
37:21
figured out he could use his Amex and buy like a $500 money
37:26
order from like the grocery store or something like that.
37:28
And then he could pay off his Amex with the money order.
37:32
Yeah. And then Amex would give him
37:33
points for that. And so it just created this like
37:35
infinite. And so he, he was, he was like
37:37
putting million, he's buying millions of dollars worth of
37:39
money orders and then paying off millions of dollars in his, his,
37:42
his and. It was legal and and.
37:44
Then and then he was just acquiring, you know, hundreds of
37:47
thousands of dollars and beyond of, of credit card points or
37:51
cash back or whatever. And, you know, eventually Amex
37:54
caught on to this and I, I, I don't know, it was the Amex of
37:57
the grocery store, whoever. And they sued him and he was
38:00
kind of like, what what rule did I break?
38:03
I'm just using your car, like you said.
38:05
And, you know, kind of like this plastic thing, like once someone
38:09
finds a loop like that, it gets shut down immediately.
38:11
And I think, you know, I don't know, this is all from memory.
38:14
I would have to look up this exact story.
38:16
But I think that he basically got to keep the money and, and
38:19
was kind of like left with their tail between their legs.
38:22
But yeah, you know, it, it seems like another one of those
38:25
stories which you hear and they go like, cool.
38:28
And you know, to his kind of like paying for, I mean, he kind
38:32
of mentioned that it was coded as advertising, which implies
38:36
he's doing some sort of like tax fraud.
38:37
He's saying that instead of buying, it doesn't matter how
38:39
it's coded when you you know, whether you get the points back
38:44
or anything. Or maybe plastic made a mistake
38:46
and said, OK, we will give you points for advertising, but not
38:49
for a new car or something. I don't know how how plastic
38:52
works. I've never heard of that
38:53
service, but clearly they closed the loop and you know, now we
38:57
can't do it. But even you know, even this
38:59
guy, it's like makes for a good little click baity short video
39:03
be like what did he make like 1000 bucks there or less?
39:05
Because because Graham said that was Graham Stefan, by the way,
39:08
he was like a big YouTube and oh, you know him.
39:11
Yeah, yeah, I know he's. Like, he's probably like, you
39:12
know, one of the top personal finance personality guys for
39:17
sure on YouTube, Yeah. I'm still waiting for the day we
39:20
were like, Jen, this is clearly AI.
39:22
I'm not. Yeah.
39:23
I don't think Alan is AI, but he said, well, if you know.
39:26
Him then he's not, yeah, he said after.
39:28
The fee, he still made money, whatever.
39:30
So clearly it wasn't, you know, let's say a Tesla cost a high
39:32
end one cost $100,000. Three percent of that's $3000.
39:36
Maybe he paid $2000 to a plastic fee and maybe he made $1000 or
39:40
whatever it was. Did he did it say that exact
39:42
dollar amount? I forget, I don't know.
39:44
Actually, I'd have to run it back.
39:45
Well, whatever. But the point is, you know, what
39:47
do you clear a grand like, OK, you know, like good for him
39:50
finding that loophole. But I just I never get excited
39:53
about the credit card thing because it's like people, people
39:58
think it's like this like infinite free money thing or
40:01
it's like you're you're magical key to fly flat international
40:05
flights and like Tesla free money.
40:07
But like what did he make 1000 bucks?
40:09
Whereas what's his paycheck? If he's buying $100,000 car,
40:11
he's probably making $10,000 a paycheck.
40:14
And if he got $1000 bonus at work and made it 11,000, no
40:17
one's making some like outrageous, maybe this guy but
40:19
got $1000 bonus at work. What about like what a great
40:21
job, but it's way easier to make more money by working and like
40:24
getting raises and getting bonuses and doing side hustles
40:27
and starting business. That's way easier to make money
40:30
than to like, you know, fight over a few pennies of like
40:33
getting, you know, being the one guy who found out like a
40:35
temporary loophole with some new fintech company in this credit
40:38
card points face. Like, who cares, man?
40:41
Like, you know, OK, you can have that thousand.
40:43
I'm going to work on my like, you know, 10 million by growing
40:46
my business or whatever. So yeah.
40:48
I love the dramatic music behind it too.
40:50
Make it seem like, Oh my God, Can you believe it?
40:52
Yeah. It's like a documentary.
40:53
Yeah. Exactly.
40:56
And you know. For what, 1000 bucks?
40:58
Like OK, so nothing he said there was incorrect.
41:00
Like, you know, normally you can't buy cars with credit
41:03
cards. He found this loophole, they
41:04
shut the loophole down. He made a few bucks, OK, yeah,
41:08
but I didn't find it to be misleading or anything like
41:10
that. And he's a good creator, so it
41:12
doesn't surprise me. But yeah, I'll give it a I don't
41:15
know what do I even give it? Like a can I go off the letter
41:19
scale and give it a an IDC for I don't care gives me or what's
41:26
like what do you get? If you like, I'll give it a
41:28
pass. Give it.
41:29
Incomplete. Yeah, pass.
41:30
Fail. You know how if you in college
41:32
if you don't want the letter grade?
41:33
I give it a pass because it's technically correct but I don't
41:36
find it to be either good or bad idea just like whatever.
41:39
So pass I love. It I love it.
41:43
All right, nice last segment. Money, money.
41:50
Jeremy had time today. I had time.
41:52
Today I'm in the comments. You're in the comments.
41:55
Good old fashioned. Flame wars with me.
41:57
Flame wars. OK, this is a I'm on Instagram.
42:02
It's the post titled Stock market crash question mark.
42:06
So want to show explain to the audio listener what we're seeing
42:10
here in our chart? Yeah, this is Charts Spring.
42:13
Of 2026 and the Iran war tensions and war is escalating
42:19
and it says the one month there's four charts it says the
42:22
one month return of the SP500 is -7%.
42:26
It's like a very scary looking down red slope, but then the one
42:30
year return is plus 14% and the 10 year return is plus 289% and
42:37
a 40 year return is plus 6149%. And so it's making this point
42:43
which is like, yeah, it feels bad this month.
42:46
But this year, you know, if you're hoping for a 10% return,
42:50
you still got that you're at 14% the previous year.
42:52
If you're hoping for, you know, happening over the long term, we
42:55
have 289%. So clearly the long term thing
42:58
is still working really, really well, even though this month
43:00
feels bad. And this commenter said.
43:04
I don't get why you're answering the question with a chart
43:06
showing long term returns. Like are you implying we've
43:10
never had a crash in 40 years? And I don't know how to explain
43:13
this emoji. It's the one raised eyebrow.
43:16
Yeah. Curious.
43:17
Suspicious maybe? I love that.
43:19
Emoji. Yeah, I don't really know what
43:22
this commenter is talking about. You know, clearly there are
43:25
crashes. They're all in the chart.
43:27
That's a very bumpy line. If you look at the 10 year
43:29
return, there's a 2022 like inflation crash.
43:33
There's a 2020 sharp COVID crash.
43:35
Zooming out even further, there's the the great financial
43:39
crisisandthe.com crash. Like there's lots of crashes.
43:42
But the point is those crashes are priced for admission into
43:47
these amazing returns. If you want a 0 or 1% return net
43:53
of inflation, you might be able to get that in a high end
43:56
savings account with no crashes. There's no essentially no risk
44:00
there as much as there isn't risk anywhere in the financial
44:03
world. But if you want 10% returns or
44:05
7% after inflation, so that's zero, then you have to sign up
44:09
for this uncertainty that follows this along the way.
44:14
But that uncertainty is short lived because while it feels bad
44:18
this month, you know, today again, I'm looking at my phone,
44:21
we have a + 2.5% return. So that's 7%.
44:23
Look at your. Phone during the podcast.
44:25
Well, it just is. On this little I'm on do not
44:27
disturb mode and it it just has a little screensaver on it.
44:30
Are you day? Trading during the podcast.
44:32
Yeah, I know. I'm doing some quick options
44:35
trades in case of news. I have one ear with your with
44:37
your audio and the other ear just has like Wall Street
44:41
Journal's voice to text. I know.
44:45
I'm mashing by and sell. I'm literally doing everything I
44:47
say not to do constantly during this podcast.
44:49
I'm like the worst hypocrite in history.
44:53
You know, I literally actually, I just I just did my taxes and
44:56
you get a, you get a 1099 B showing all the trades you made.
45:00
We just talked about. We talked on the previous.
45:02
Episode and I and I couldn't even show my 1099-B on that
45:07
previous episode because it had no trades.
45:09
I literally didn't do anything and guess what I'm living by.
45:12
Your words exactly. I don't my the.
45:14
Tax form is is showing up with receipts.
45:17
I made no trades. I just sit, sit on my index
45:19
funds collecting money. How wonderful.
45:22
So yeah, no, I'm not implying there's never been a crash.
45:25
I'm showing the crashes there, but they're short lived.
45:27
It's short term volatility and it's just the crashes are people
45:31
are guessing what's going to happen over the next short term.
45:34
Long term, you're like I guess Warren Buffett said in the short
45:39
term, the stock market is a voting system.
45:41
You're everyone's voting. It's like a popularity system.
45:43
Good day, bad day. In the long term, it's a Wayne
45:46
system. How much is all these companies
45:49
worth? Companies now are worth a lot
45:50
more than they're worth 40 years ago because Amazon came around,
45:54
NVIDIA came around, Tesla came around, General Motors, you
46:00
know, Google, Facebook, like, and then the, the new wave of
46:05
bigger companies that are going to get, the bigger companies are
46:07
going to get even bigger. Just like, you know, if you look
46:09
at IBM, the biggest company in 1982, today it's gone massively
46:14
bigger. I mean, it's a nothing, it's
46:16
like a nothing burger today. It's still a massive, massive
46:19
company, but you don't even hear about compared to the really big
46:21
tech giants, right? And then the really big tech
46:24
giants of today are maybe going to be nothing burgers compared
46:26
to the really, really big tech giants, really, really big
46:28
energy giants or the transportation giants or the
46:31
space giants or whatever, you know, whatever the future holds.
46:33
And so in the short term, we're trying to guess how is it going
46:35
to be good or bad this like this tariff, this war, blah, blah.
46:38
Not to mitigate war tariffs, of course, like like war is
46:42
horrific. And I don't mean to like, make
46:43
light of it, but sadly, the world we live in, there's been
46:48
wars like dotted consistently throughout our history.
46:51
And hopefully we'll be a lot less of in the future, but maybe
46:54
there will be. But still, when you weigh the
46:57
stock market over decades, it gets heavier and bigger and
47:00
bigger and bigger. And collecting all those profits
47:02
over time makes you wealthier. And so, yeah, the message isn't
47:04
there will never be a craft messages.
47:07
Do what Jeremy does. Just don't sell anything and
47:09
ride them out. You know, I learn here and it's
47:13
just like sometimes I'm listening and I'm thinking all
47:17
this speculation is really messing with the natural order
47:20
of things. Like it feels like 99% of stock
47:23
market is people just messing with it and thinking too much.
47:25
And the things that they're doing is making the stock market
47:28
do the things that they think it's going to do or not going to
47:31
do. And it's just like if we just
47:32
let companies grow and let innovation happen, everybody
47:35
could just make money. But maybe I'm being too
47:37
idealistic. Yeah, I mean.
47:39
You're, you're right, but I'll, I'll give you the case for all
47:42
that vault utility, which is price discovery.
47:46
What price discovery means is all these active traders who are
47:50
doing options and shorting and buying and selling and picking
47:53
stocks, they are trying to get at the true value of the price.
47:58
JL Collins made another good analogy.
48:02
He said the price of a stock or the price of the stock market.
48:05
It's kind of like a beer. Some of it's actual beer and
48:08
some of it's foam and you're looking at it from the top down.
48:11
So you never really know how much is foam and how much is
48:13
beer. And you're buying it for the
48:15
beer. And you know, Jen, your, you
48:17
know, your position in that analogy would be like, why can't
48:20
we just all have the beer? That would be great.
48:23
But we but we don't know how much beer is really there.
48:25
And so the like the the rising and, you know, falling of the
48:29
foam is trying to get to that true value of the beer.
48:33
And, you know, frankly, index fund investors benefit from it
48:37
because we can go buy an index fund and blindly to say, yes,
48:40
give me all the stocks. I don't care which ones.
48:42
And because all those active traders are killing themselves
48:46
trying to get an edge on each other, even though net, net
48:49
they're all making zero relative to the market.
48:51
There's 0A available in the market relative to everyone
48:54
else. So if one trader wins, one
48:55
trader loses and then Exxon investor says I don't care.
48:58
You guys are all cumulatively making zero.
49:00
I'll just take their turn to the market.
49:02
But thanks for doing all that price discovery.
49:04
Thanks for making sure the best companies and the biggest
49:07
companies I'm getting the most of and second biggest and second
49:10
best, second most of. And so, yeah, I, I agree.
49:12
That's kind of like all these traders and everything is, is
49:16
like I really, but that's kind of again, price for admission
49:18
into getting into an efficient market where you're getting a
49:22
fair shake at all the companies, right?
49:25
OK I love it. Great episode.
49:28
We made it. I learned a lot.
49:31
I really, I'm just out here. I'm benefiting a lot from just
49:35
being able to sit here and listen.
49:37
And it does. It does.
49:38
Really feel like this is a big explain a bunch of stuff podcast
49:41
and the takeaways always do nothing.
49:43
But maybe it's entertaining and maybe it's encouraging you to
49:46
keep doing nothing that's going to keep making you wealthy.
49:48
Kind of like Betty's mom who did nothing for her 39 year career
49:51
and has $2,000,000 as someone working at a what did she call
49:55
it same Terrible factory Horrible.
49:57
Factor I know. Like Dang and like 59 still
50:00
going. Oh, Betty's mom has like decades
50:02
of like exciting life out of her, but it just shows the power
50:06
of compound growth over time. And so you can do it too.
50:09
Keep doing nothing except for these two things to build
50:11
wealth. Rule #1 live below your means
50:15
and rule #2 invest early and often.
50:18
The personal. Finance Club Show is produced by
50:20
Jeremy Schneider and Jen Mundia, music by Essa Balu and Homie.
50:24
Send your questions to podcast at personalfinanceclub.com.
50:27
The personal Finance Club show is Co hosted by Jeremy Schneider
50:30
who is a co-owner of Nectarine and SEC Registered Investment
50:34
Advisor. The views expressed on this show
50:36
are those of the hosts and guests and do not necessarily
50:39
reflect the views of Nectarine. Please refer to
50:41
hellonectarine.com for all relevant disclosures.
50:45
This podcast is for informational and educational
50:47
purposes only and should not be construed as personalized
50:50
investment advice or a solicitation to buy or sell any
50:53
security. Listeners should consult their
50:55
own financial, legal or tax professionals for advice
50:58
specific to their situation.