PWL's Felix Rebuffs Stock Picking, Warns Long-Term Returns Trail 7%

PWL的Felix反驳选股策略，警告长期回报率低于7% 自动化全球指数投资胜过选股和备兑看涨期权策略，后者在结构上限制了上行空间，同时使散户投资者面临灾难性的行为错误和通胀损失。 投资组合经理Ben Felix与主持人Graham Stephan和Jack Selby一起破除普遍存在的个人理财迷思，他认为选股、小众备兑看涨期权ETF以及过度节俭往往会摧毁财富与幸福感。借助学术文献和实证数据，Felix提倡构建全球多元化、自动化的指数基金投资组合，并设定更切合实际的长期回报预期——即接近6%至7%，而非两位数的基准。此次对话还探讨了租房与买房计算中的细微差别、4%安全提款规则的现实情况，以及投资组合短视的心理陷阱。最后，Felix强调金钱仅仅是购买自主权和时间的工具，呼吁投资者将量化决策建立在明确的人生满足感目标之上。 PWL Capital预计全球多元化股票投资组合的长期名义预期回报率为6%至7%，并警告称近期美国市场12%至15%的涨幅属于实证异常现象，而非可靠的基准。 (53:10) 根据住房的5%规则，不可收回成本大约相当于1%的房产税、1%的维护费和3%的资本成本，这意味着从数学角度来看，全款付清的房产因错失复利而产生的成本，往往高于租房并持有指数基金。 (70:10) 传统的4%安全提款率在很大程度上依赖于美国市场历史上的特殊优异表现；缺乏灵活性的全球退休投资组合所面临的失败率，会将安全提款基准压低至2.7%至3.0%。 (93:08) 备兑看涨期权ETF和缓冲型ETF等专门投资产品在结构上表现不佳，因为它们保留了全部的下行尾部风险，同时又限制了反弹期间的上行空间。 (47:34)

Portfolio manager Ben Felix argues that long-term financial security and life satisfaction depend on behavioral discipline—primarily through low-cost global index funds, automated savings, and investing in human capital—rather than stock picking, extreme frugality, or inflated market return expectations. Low-Cost Indexing and Tempering Return Expectations (8:54) Felix contends that individual stock picking, complex options strategies like covered calls, and niche "ETF slop" manufactured by fund issuers are detrimental habits driven by influencers selling false hope. Despite managing roughly CAD $8 billion at PWL Capital, Felix allocates his personal portfolio entirely to a single Canadian-listed mutual fund offering globally diversified market exposure with modest tilts toward small-cap and value stocks. He warns investors against anticipating perpetual 10% to 15% annualized gains, noting that current elevated equity valuations mathematically compress expected future long-term nominal returns to approximately 6% to 7% for globally diversified portfolios. Felix characterizes past US market outperformance as an empirical anomaly rather than an eternal guarantee, while emphasizing that holding cash over decades poses a far greater certainty of real loss than enduring stock market volatility. Human Capital, Consumption Smoothing, and Reverse Budgeting (6:38) Challenging the traditional personal finance doctrine of extreme early-life austerity, Felix argues that sacrificing youth, social relationships, and health to maximize compound interest can result in emotional impoverishment. He identifies an individual's human capital—formal education, specialized credentials, and earning power—as their single highest-returning asset. Drawing on the economic life cycle model, Felix advocates for consumption smoothing: younger individuals should save less or utilize debt where sensible, ramping up accumulation during peak career earning years. Rather than micromanaging expenses through line-item budgeting, which he finds mentally draining, Felix advises reverse-engineering goals: calculating required savings, automating those deposits first, and spending the remainder without guilt. The 5% Rule and Psychological Realities of Housing (70:10) Felix challenges the assumption that primary residences are automatically superior financial investments, utilizing his "5% Rule" to evaluate the unrecoverable costs of homeownership against renting. The heuristic aggregates unrecoverable annual ownership expenses to roughly 5% of a property's total value: 1% for property taxes, 1% for ongoing maintenance, and approximately 3% for the cost of capital. When annual rent costs less than 5% of an equivalent home's price, renting is often financially advantageous. Beyond balance-sheet calculations, Felix questions whether homeownership inherently improves life satisfaction. He describes the desire for total control over living space as a psychological trap that frequently spurs excessive, unrecoverable spending on renovations. While acknowledging that debt freedom yields profound psychological peace that defies pure mathematical optimization, he cautions against viewing shelter primarily as an investment portfolio engine. Retirement Realities and Safe Withdrawal Rates (93:08) Addressing retirement modeling, Felix explains that the classic 4% safe withdrawal rate remains functional primarily because real retirees dynamically adjust discretionary spending during bear markets, rather than strictly withdrawing an inflation-adjusted dollar figure regardless of economic conditions. For individuals demanding an inflexible, guaranteed income stream, Felix considers 4% overly aggressive. Citing block-bootstrap simulations analyzing historical performance across 39 international markets, Felix highlights that relying strictly on single-country local market histories lowers the safe withdrawal rate to roughly 2.7%. Consequently, broad global diversification across international markets is essential to lower portfolio failure rates and preserve capital longevity over extended multi-decade retirements. Money as a Friction Reducer and Well-Being Limits (82:10) Felix frames money fundamentally as a tool to purchase autonomy, eliminate daily friction, and fund shared experiences like travel, which generates happiness through anticipation, active participation, and lasting memories. He references positive psychology's PERMA framework (positive emotion, engagement, relationships, meaning, accomplishment) as a deliberate model for aligning financial resources with overall flourishing. On the link between income and happiness, Felix notes that direct emotional gains diminish once basic security is achieved. However, he highlights a key distinction in recent research: while fundamentally unhappy individuals encounter a distinct emotional ceiling where higher income stops helping, individuals with a naturally high baseline for happiness experience emotional well-being that scales log-linearly with increased wealth. Felix concludes that quantitative financial optimization is functionally meaningless unless anchored to personal goals and realistic behavioral execution. While simple global indexing and skill accumulation provide financial durability, true outcomes depend on recognizing the psychological trade-offs inherent in spending, borrowing, and defining personal well-being.

[8:54] Ben Felix: I think picking stocks... there's a point in financial literacy where people believe that they should be picking stocks and that's how you invest. And I think that's probably on average detrimental to most people. [13:03] Ben Felix: I think the product that gets sold a lot by influencers and by people who are trying to create content is hope. And that's sold many different ways... It's like, if you invest in this thing, you're going to have a great financial outcome... The product that they're selling people is hope, but it's not real. [17:13] Ben Felix: when you do that research it typically suggests to do nothing. [20:09] Ben Felix: Almost never. I couldn't even tell you what it's worth right now. [22:19] Ben Felix: there is no universally perfect portfolio. [37:56] Ben Felix: You buy index funds. Very simple. But how many people actually do that and hold on to them for the long run? Not a ton. [53:10] Eugene Fama (quoted by Ben Felix): You’ve got to talk yourself out of the market portfolio. [72:41] Ben Felix: license to spend just ungodly amounts of money [75:34] Ben Felix: cost of peace of mind. [82:10] Ben Felix: Money is a tool that lets you buy time. [89:22] Ben Felix: All of these important financial decisions that I'm always talking about are... a means to an end to achieve the life that you want to live. And so for all of the quantitative finance research stuff to be useful, it has to be anchored in people knowing what they're trying to achieve. [93:08] Ben Felix: 4% is probably fine, [104:22] Ben Felix: My team at PWL, when I said, 'Hey, I think I need to go on this podcast,' there was a lot of like, 'Whoa, like wait, wait a second.' And a lot of it was the clickbaity stuff is a little bit of the issue. [104:22] Graham Stephan: I agree with you 100%. You think I like it? I hate it. I absolutely hate it. And I've been upfront about this. I do not like my titles and thumbnails at all. [108:44] Jack Selby: We pissed off everyone

[0:00] There is a lot more to a good life than [0:02] a higher income and more wealth. A good [0:04] life is subjective, [music] but there is [0:05] lots of research on what does and does [0:07] not tend to contribute to good lives for [0:09] most people. [0:10] >> You do manage around $8 billion worth of [0:13] assets. [music] What would you say is a [0:14] widely accepted belief that's actually [0:17] going to make you poor? [0:19] >> Picking stocks and I think that's [0:20] probably on [music] average detrimental [0:22] dude. God, [0:25] >> who should buy individual [music] [0:27] stocks? I honestly don't think anybody [0:31] >> Liupold make the same mistake investors [0:34] in South Korea make too much [music] [0:36] leverage. [0:36] >> I would probably stop checking my [0:39] portfolio five times a day. [0:41] >> I would stop dabbling in individual [0:43] stocks and covered calls. The costs of [0:45] trading options are [music] exorbitant. [0:47] >> Is it possible though that we can [0:49] continue to see these 10 to 15% returns [0:52] [music] every single year? We are very [0:54] close to a recession and I'm worried [0:57] about something worse than [music] a [0:59] recession. [1:00] >> So, what's the downside of saving too [1:02] much money? [1:03] >> Uh, well, [1:08] >> Ben Felix, thank you so much for coming [1:09] on the ice coffee hour. [1:10] >> Thanks so much for the invitation. [1:12] >> So, you're the chief investment officer [1:13] and portfolio manager at PWL Capital [1:16] with over $8 billion in assets. I have [1:19] to say, I've been watching you for the [1:21] last 9 years on YouTube. I think you're [1:24] probably one of the most sensible people [1:26] when it comes to investing, early [1:28] retirement, saving money. What's the [1:30] best investment you've ever made? [1:32] >> Two two things. One is myself. Uh, I I [1:38] went to university, got a degree in [1:40] mechanical engineering, did an MBA with [1:41] a finance concentration, did a whole [1:42] bunch of financial certifications, and [1:44] doing all that stuff allowed me to get [1:46] the job that I have and and progress [1:48] with PWL with the company that I'm that [1:50] I'm with and create content and all all [1:53] that stuff. So, that's I mean, in terms [1:54] of return on money, that has been by far [1:58] the best investment. If I had not done [2:00] all of that education and put in the [2:01] time doing content, all that kind of [2:03] stuff, I would have would have had a [2:04] very different outcome. I know there's [2:05] an outcome bias here, like I I have been [2:07] successful in a lot of ways. So, it's [2:09] easy for me to say, well, if you work [2:10] hard, you can do the same thing, which [2:11] is not necessarily true, but I do think [2:14] that I put myself in a situation where I [2:16] was able to get to an extent lucky. And [2:19] if I had not done those things, the luck [2:21] would have not played out the same way. [2:23] I'm very careful to say that, you know, [2:24] if you go make content, then you're [2:26] going to have the same outcome as I did [2:27] because that's not that's not true and I [2:29] don't think that's the right message for [2:30] people to hear. Anyway, the second best [2:32] investment that I've ever made is in [2:34] equity of my company of PWL Capital. Um, [2:38] I got options early on that I that I [2:40] pushed for and then I bought equity [2:42] later on and uh we were actually [2:45] acquired last year. Um, [2:46] >> congratulations. [2:47] >> Thanks. So, that was cool. And then I [2:49] also got equity in our acquirer, which [2:51] is an American company called One [2:52] Digital. Um, so I still have a big chunk [2:55] of my net worth. I know I say don't buy [2:56] individual stocks. They're a private [2:58] company. I think it's different, but I [2:59] do still have a big chunk of my net [3:00] worth in uh, One Digital Equity. [3:03] >> So what percentage of your net worth [3:04] then do you have in a private company? [3:06] >> It's a lot, man. Um, [3:09] >> 99%. [3:10] >> It's not that much, but it's uh, it's a [3:13] little under 50%. [3:15] >> I know. [3:16] >> Wow. I know it's a lot, but I'm you know [3:18] what? I I put so much of myself into the [3:21] work that I do. I I would not want to do [3:25] that if I didn't have meaningful equity [3:26] stake in the company that I'm helping to [3:28] build. [3:29] >> Yeah. [3:29] >> How does that feel? Does that make you [3:31] nervous at all? Do you think that you [3:32] could improve your peace of mind if you [3:34] just didn't have that? [3:36] >> One Digital is a big company. Um they're [3:38] they're a diversified business. They're [3:40] a large company. Like it's probably not [3:42] going to zero. I it could reduce in in [3:45] value, but but I'm not super worried [3:47] about a total loss. Even if that [3:49] happened though, I'd still be in a way [3:52] better financial position than I ever [3:53] thought that I would be, like when I was [3:55] growing up or whatever. So, I'm from [3:57] that perspective pretty comfortable. But [3:59] again, it's it's the risk is there and I [4:02] I'm I'm not blind to that at all. But [4:04] the amount of myself that I put into the [4:06] work that I do, I I just I wouldn't do [4:08] it if I didn't have a meaningful portion [4:10] of my net worth in in there. What's the [4:13] worst investment you've ever made? [4:15] >> Well, we were very careful with crypto. [4:17] >> Um, but when Bitcoin hit 60K for the [4:19] first time, we had an academic, like a [4:22] distinguished academic in traditional [4:24] finance, who had written a book on [4:26] crypto and DeFi. We had him on our [4:28] podcast and we spent an hour talking [4:30] about his normal finance research, which [4:32] is like, you know, he's one of the top [4:33] in his field. And then we spent an hour [4:35] talking about crypto and DeFi. And I was [4:38] like, man, I I had kind of ignored cryp, [4:41] not ignored, but I' I'd been very [4:43] skeptical of crypto. But then when this [4:45] this guy's like, man, he's super [4:47] credible. He he knows normal finance. I [4:51] was going to say real, but that might [4:52] piss people off. Oh well, I said [4:55] >> uh that he he knows that stuff better [4:57] than than anybody, including me. So I [4:59] was like, okay, if he's if he's taking [5:01] this stuff seriously, I've got to take [5:02] it seriously. And so this is the first [5:04] time Bitcoin's at 50K 60K and I bought [5:08] equal amounts of Bitcoin and Ethereum [5:11] and uh then it went back to whatever it [5:14] crashed to to 30 30K or something like [5:16] that after that and I'm pretty sure I [5:17] sold at the at the bottom. [5:19] >> But you ignored your own advice of just [5:22] buy and don't look at it. I bought it [5:23] for the way that I justified it to [5:25] myself at the time is after that podcast [5:28] episode where where this guy who I [5:30] respect was was talking about how much [5:32] crypto is going to change the future of [5:33] finance. I was like, "Okay, I need I [5:34] need to I need to take this more [5:36] seriously and treat it the same way that [5:38] I treat my research in other areas." And [5:40] so we actually did, I think it was 13 [5:42] episodes of a sort of sub sub series of [5:45] our podcast where we did an extra [5:47] release every week for 13 weeks or [5:48] whatever it was [5:49] >> purely on on crypto. So, we had a bunch [5:52] of experts with just different areas of [5:54] expertise that touched crypto. And the [5:56] way that I justified the purchase to [5:57] myself was that if I'm going to get my [6:00] head into this and research it, I feel [6:02] like I need to own own some and and get [6:04] experience with using a wallet and using [6:07] an exchange and all that kind of stuff. [6:09] So, that was my justification. But, [6:11] yeah, I bought at the worst time and [6:12] sold at the worst time. No, no regrets. [6:15] >> Paper hands. You could have just held. [6:18] >> I could have had the same amount today [6:20] as I did then. [6:21] >> Yeah, but you would have sold though at [6:23] the peak. You could easily have bought [6:25] at 60 and then sold at 122. [6:27] >> I held down held down to 30 and then [6:29] back up to 122. [6:30] >> Yeah. No, no, no. When it drops to 30, [6:31] you double down. You write it to 125. [6:34] You sell. It's not difficult. [6:35] >> I'll do I'll do that next. The next [6:37] cycle I I'll do that. [6:38] >> I'm curious. What is a widely acceptable [6:41] piece of financial advice that sounds [6:42] sensible but actually makes people [6:45] poorer? I'm going to take a little bit [6:46] of a different angle to the question. I [6:48] I just talked about some of the biggest [6:49] myths in personal finance in a in a [6:51] recent video. And one of the things that [6:52] I talked about is that you should save [6:54] as much as possible as early as possible [6:57] to live to live a good life. Uh so that [7:00] now we're not talking about financial [7:01] wealth because that certainly will [7:03] benefit your financial wealth. Mhm. [7:05] >> But I think that young people really [7:07] squeezing themselves to save as much as [7:09] they possibly can and making sacrifices [7:11] early on in life, uh, I don't know if [7:14] that's always the best thing to do for [7:15] their long-term outcome when you [7:16] consider the whole picture, not just the [7:18] size of their portfolio or the amount of [7:20] money in their bank account. [7:20] >> I think you might have just triggered [7:22] Graham. Yeah, I was about to say because [7:23] that was my entire philosophy was save [7:26] as much money as possible as early as [7:28] possible because I did this compound [7:31] interest calculator and when I was 18 [7:33] years old, I'll never forget this. I put [7:35] a dollar in the Money Chimp calculator [7:37] and then I saw that by the age of 65 [7:39] that would be worth like $40 or $50. And [7:43] I thought, "Oh my gosh, every dollar I [7:45] spend is actually worth 50 bucks." And [7:48] so every single thing it was like a $10 [7:50] shirt times 50, a coffee time 50, shoes [7:54] times 50. And when I saw that, I thought [7:57] there's no way I'm spending any money. [7:58] And so I got my expenses as low as [8:00] possible. I remember even I wouldn't go [8:02] out to restaurants. I would eat at home [8:04] and then go to like show up and drink [8:05] the water and eat the bread because I [8:07] could save the $20 times 50. Everything [8:11] was times 50. And I look back at that [8:13] and I think I probably could have spent [8:16] more money, but I have zero regrets. [8:18] >> That's I mean, and that's and that's [8:19] fine. If you have zero regrets, that's [8:20] good. And it's not just about eating [8:21] eating out of restaurants. There's other [8:22] things like investing in education. [8:24] You've obviously had a great outcome [8:25] professionally. Investing in education, [8:27] investing in experiences. Like there are [8:29] lots of other things that you can spend [8:30] money on that are not saving or [8:32] investing in stocks. So you're not [8:34] wrong, and I don't disagree with you. [8:35] Young people should save. I just think [8:37] that there's often a perception that [8:38] leads people to do things like go to [8:40] restaurants and only drink water. That's [8:42] not always healthy. [8:43] >> So, what's the downside of saving too [8:45] much money? [8:46] >> Uh, well, giving up on life experiences, [8:49] giving up on things that you might have [8:50] enjoyed doing. You can look back and [8:52] say, "I didn't regret that." And that's [8:54] fine. But there are things that are nice [8:55] to spend money on. They can save time, [8:57] that can give you enjoyable experiences. [8:59] And I think that that perception that [9:01] spending anything is bad. I think that [9:03] can be unhealthy to to to a point. We'll [9:05] get more onto the psychology behind [9:07] spending and saving and investing all [9:09] the psychology of money later in the [9:10] episode, but I am curious because you do [9:13] manage around eight billion dollars [9:15] worth of assets. So, financially then in [9:18] terms of financial wealth, what would [9:19] you say is a widely accepted belief that [9:22] people think is responsible and it's [9:24] generally accepted by financially [9:26] literate people that's actually going to [9:28] make you poor? I I think picking stocks [9:31] and I know you guys dabble in that, but [9:33] I also know it's a tiny part of your [9:34] portfolio, so I don't think you'll [9:36] disagree with me on that. [9:37] >> I I think there's a there's a point in [9:38] financial literacy where people believe [9:40] that they can pick that they should be [9:42] picking stocks and that's how you [9:44] invest. And I think that's probably on [9:45] average detrimental to most people. [9:47] >> You know what's funny? It reminds me of [9:48] that like bell curve graph where it's [9:50] like the low IQ, the average [laughter] [9:51] IQ, and the high IQ. And on both ends of [9:54] the bell curve, it's like [9:56] >> index funds. In the middle, it's picking [9:58] stocks. It's like people that know [9:59] nothing like I know nothing so I'm just [10:00] going to buy index funds and the people [10:01] that like know everything like the sense [10:03] the masters are like I'm buying index [10:04] funds. [10:05] >> That is a perfect meme for the point. I [10:06] agree. [10:07] >> Do you think people can pick stocks [10:09] successfully long term and a good [10:11] example of this is Chris Camilo. I don't [10:13] know what it is. He seems to have his [10:16] finger on the pulse where his batting [10:18] average is just insane even in this [10:21] market. It's just how on earth did you [10:25] know that? So, there's a reason that you [10:27] guys talk about Chris Camilo a lot. Yes. [10:29] Because he's very unique. There are not [10:31] a lot of people that are doing that. [10:32] Now, I'm sure he's brilliant. Has he [10:34] been lucky? There's probably some luck [10:36] involved. Is he skilled? I I have no [10:38] doubt. Should other people try and [10:40] replicate what he is doing? Probably [10:42] not. [10:42] >> So, if investing is at the end of the [10:44] day really simple, just buying index [10:45] funds, why do so many people screw it [10:47] up? [10:48] >> H Yeah, that's a that's a very good [10:50] question. I think people want to believe [10:51] that there's something more. I think [10:53] that's part of it. I think a lot of [10:54] people don't even know about index funds [10:56] still. I think for a lot of people just [10:58] learning about that is a huge leap [10:59] forward in terms of their financial [11:00] literacy. I think people learn that in [11:03] the long run in many cases where they'll [11:05] they'll be picking stocks. They'll have [11:06] a portfolio with whatever five or 15 or [11:08] 20 stocks and then at some point they [11:11] evaluate how they would have done if [11:12] they had just bought the index and [11:14] realize that they did have positive [11:16] returns with their relatively [11:17] concentrated stock portfolio, but they [11:19] would have actually done better with [11:20] less of their own time invested if they [11:22] just bought the index. And so then then [11:23] they'll think, "Oh, you know what? I'm [11:24] just going to buy the index." Um, so I [11:27] think it's it's a learning process and [11:28] sometimes people need to learn through [11:30] experience, but sometimes people just [11:32] aren't aware that index funds are an [11:33] option. [11:33] >> That was exactly me because I started [11:36] off with index funds. I believe in 2013 [11:39] with a Roth IRA, Vanguard index fund, [11:42] super simple. In 2020, everything [11:45] crashed and I started buying individual [11:47] stocks and I diverted away from the [11:49] index funds. I still had my index funds, [11:52] but I plowed into individual stocks. And [11:54] 2020, they did insane. I think in one [11:57] year I was up like 30 something% on [11:59] these individual stocks, but I realized [12:02] I'm really bad at selling because I'm [12:04] the type when I buy something, I never [12:06] want to sell it. And so I held and they [12:09] kept going up. And then in 2022, [12:12] they went down. And when I looked at the [12:15] price when they went down from all the [12:17] ones I held, I had made more just in the [12:20] index fund that did nothing. And so I [12:22] sold all of them at the low. [12:25] >> Uh, no, I staggered. So I tax loss [12:27] harvested. Some of them actually did [12:30] insanely well. I think it was like Tesla [12:31] that did really well. Google did really [12:34] well. There were a few companies that [12:36] just exceeded my expectations and then [12:38] others I lost like Robin Hood [12:40] unfortunately. So overall, I still made [12:43] money, but I just sold all of them and [12:44] then index funds and I stuck with index [12:47] funds ever since. [12:48] >> And that's kind of what you'd sus what [12:49] you would expect statistically. Most [12:51] people are going to have that type of [12:52] experience. A very small number of [12:54] people are going to have the the Chris [12:55] Camilo type experience where they just [12:56] compound like crazy, but that's the [12:59] exception. That's like finding someone [13:00] that won the lottery twice and being [13:01] like, look, let's find replicate what he [13:03] did. I don't think it's realistic. How [13:05] common is it that you see really really [13:07] bad financial advice being spread online [13:09] on Tik Tok or Instagram or YouTube by [13:12] people of authority that people listen [13:14] to? Like is this a very common thing or [13:15] what are the biggest myths that people [13:16] spread that are actually very harmful? [13:19] >> I think it's extremely common. The idea [13:20] that you can pick individual stocks, the [13:22] idea that you can pick stocks based on [13:24] their dividend yield covered calls is [13:27] another one that comes up a lot. [13:29] >> We'll talk about that. That's in the [13:31] outline. Do not worry. We have that in [13:33] the outline. You guys got to keep [13:35] watching because that's in there and I [13:37] would love to get your take on this [13:38] because we've talked about a lot. [13:40] >> Yeah, I know you guys have. [13:41] >> Imagine on your 8 billion that you have [13:43] invested, you make 1% a week. [13:45] >> That's not how it works. [13:47] >> So, I've been thinking about how to [13:48] explain this to you. Should we go there [13:49] now or [13:49] >> No, no, no. We'll go save it. Yeah, [13:51] we'll save it. We'll save it. [13:52] >> Okay. Okay. I I think the product that [13:54] gets sold a lot by influencers and by [13:57] people who are trying to create content [13:58] is hope. And that's sold many different [14:01] ways. It's sold by saying, "Well, if you [14:03] pick this Man, the scam comments on my [14:05] YouTube channel about whatever insert [14:07] name of the the new token, like the ICO [14:09] scams, correct? [14:09] >> Those are all based on hope. It's like [14:11] if you invest in this thing, you're [14:13] going to have a great financial outcome. [14:15] >> And I think that gets sold a lot. You're [14:16] going to build passive income with [14:17] covered calls. You're going to build [14:18] passive income with dividend stocks. [14:20] You're going to pick the next big token [14:21] before it blows up. And the product that [14:24] that they're selling people is is hope, [14:26] but it's it's not it's not real. It's [14:28] it's usually uh designed for for clicks [14:30] or or the people selling it just don't [14:32] understand what they're talking about. [14:34] I'm not talking about you with covered [14:35] calls. Maybe a little bit. Um but yeah, [14:39] so I think there's lots of advice like [14:41] that out there that people listen to and [14:42] it sounds sensible when you hear it. You [14:44] hear, well, you can make 1% weekly with [14:45] covered calls. That sounds really good. [14:47] And people are like, well, yeah, I want [14:49] that. I want to I want to be financially [14:50] independent without having to save a [14:52] huge portion of my income. Uh, so yeah, [14:55] I stuff like that is is easy for people [14:57] to consume because it gives them hope. [14:59] >> Can you give bad advice if you recommend [15:01] index funds? Every single day that you [15:03] wait to bring AI into your business, [15:05] you're falling 2 days behind. But the [15:07] question is, how do you keep up? The [15:08] competition is only moving faster. [15:10] Fortunately, there's our sponsored [15:11] Netswuite. Next, you probably know [15:13] Netswuite, the AI powered business [15:15] management suite that securely connects [15:17] all of your data. It brings your [15:18] financials, inventory, commerce, HR, and [15:22] CRM into a single source of truth, and [15:24] it's trusted by over 43,000 customers. [15:27] On top of that, Netswuite Next is the [15:29] next huge leap in how business gets done [15:31] because AI is built into everything that [15:33] you do. It automatically surfaces custom [15:35] insights throughout your day. AI agents [15:37] work alongside you to solve problems and [15:39] handle the routine work. 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[16:16] >> I think if you tell people to build a [16:17] diversified portfolio of index funds and [16:20] that that's for the money that they're [16:21] not going to touch for a very long time, [16:23] I think it's very difficult for that to [16:25] end up being advice that you would later [16:26] say is bad. [16:28] >> Now, with the market though at all-time [16:29] highs and valuations are pretty [16:31] stretched, should people be more careful [16:33] about where they put their money? [16:35] >> Alltime highs are normal for first [16:37] things to understand. Very, very normal. [16:40] They happen all the time, which you [16:42] should expect in a stock market that is [16:43] increasing over time. Earnings are going [16:45] up. Recently, valuations have gone up. [16:47] All-time highs are are just part of the [16:49] the stock market. They're always going [16:51] to happen. They're not typically [16:52] followed by crashes. They're actually [16:53] typ more typically followed by more [16:55] all-time highs rather than declines. So, [16:58] that's all-time highs. Valuations are a [17:00] little bit different. I think US market [17:02] valuations are high. They're they're as [17:05] close to as high as they've been [17:06] throughout US market history. When you [17:09] sort future US stock returns by their [17:13] starting valuation, when valuations are [17:15] as high as they are now, future returns [17:17] are almost always low or negative [17:20] >> in the US market. [17:21] >> And I think people hear that statistic [17:23] or they see those data and they they get [17:25] scared. They they start wondering the [17:27] type of questions that you just asked [17:28] me. When you look outside of the US, [17:30] which is something that I have done for [17:32] 10 10 other developed markets, it's a [17:35] much wider range of outcomes. So if you [17:37] sort future returns by starting [17:39] valuations across all 10 developed [17:40] markets that that I looked at, uh you do [17:43] still see a relationship where lower [17:45] starting valuations have higher average [17:46] returns. But when you include other [17:48] countries, there's a much wider range of [17:50] outcomes. So you can have valuations [17:52] where they are now in the US market and [17:54] in Canada for example, there are 10-year [17:56] periods following starting valuations [17:58] this high where returns are very [17:59] positive. And the same is true in other [18:00] countries. So I think it's a there's [18:03] some information there's there's some [18:05] signal in valuations but there's a lot [18:07] of noise. So I I would not use it to [18:09] time the market. I wouldn't be worried [18:11] about it. What I would do and then I [18:14] heard you guys talked about this in a [18:15] recent podcast about uh [18:16] >> about Vanguard's expected returns always [18:18] being lower. [18:19] >> So but but I think that's the reasonable [18:21] interpretation. Valuations are high. We [18:23] should expect lower returns going [18:24] forward. But that does not mean the [18:25] market's going to crash. It doesn't mean [18:27] you should get out of stocks. I think if [18:28] anything it's a very good argument to be [18:30] diversified outside of the US market. [18:32] Not completely. I think global market [18:34] capitalization weights are a very good [18:35] starting point for any portfolio. [18:37] >> I think that's going to go over a lot of [18:39] the viewers heads. That's very academic [18:40] and I know obviously you have a [18:42] background in academia. But I I do [18:44] question [clears throat] should you base [18:47] your actual behavior and your investing [18:49] decisions on your knowledge? Because [18:51] people now hear this and they think oh I [18:53] need to acquire this knowledge in order [18:54] to know what to do. But even even still, [18:57] like you would probably say that you [18:59] should just dollar cost average into [19:00] index funds. And so how much does this [19:02] knowledge actually even help you? How [19:03] you talk about valuations, you talk [19:04] about all-time highs. Oh well, at [19:06] all-time highs, it typically actually [19:08] continues climbing at valuations as high [19:10] as they are, then this will happen. When [19:11] in actuality, all of this knowledge does [19:13] it act like it doesn't sound like it [19:14] translates into behavioral changes or [19:16] decisions. [19:17] >> I think that's the benefit of the [19:19] knowledge. I think when when you acquire [19:21] knowledge and when you understand things [19:22] about what is the relationship between [19:24] stock market valuations and future [19:25] returns it's very comforting to know [19:28] that when you do that research it [19:30] typically suggests to do nothing and I [19:33] sometimes people need to go down that [19:35] path of hear of learning that of seeing [19:36] the data uh hearing me or anybody else [19:40] talk about it for them to feel [19:41] comfortable investing when they see [19:42] people saying well markets are at [19:44] all-time highs that's a bad thing it's [19:47] not but you have to be comfortable with [19:48] the data to be comfortable with the fact [19:50] that it's not a bad thing. Maybe some [19:52] people can just say that they have so [19:53] much belief in financial markets and in [19:55] index investing and in stocks that [19:56] they're going to completely ignore the [19:58] news and they're going to completely [19:59] ignore people talking about valuations, [20:00] but I think a lot of people do need that [20:02] reassurance. So, I try and do that in a [20:04] lot of my videos where it's like a lot [20:05] of people are saying that this is a [20:06] problem that you should be worried about [20:07] that. Here's why you probably shouldn't. [20:09] It seems like the problem, if you [20:10] distill it down, is people taking too [20:12] much action, trying to do too much [20:14] research, trying to buy too many [20:16] individual stocks, trying to predict [20:17] things, when in actuality, what they [20:19] should be doing is simplifying. What do [20:21] you think about a one fund portfolio? Do [20:24] you think that that is a viable method [20:25] for people to do? It is the most [20:27] simplest, hands-off approach to [20:28] investing. [20:29] >> Yeah, as you guys mentioned, my firm [20:31] manages around $8 billion. A huge [20:33] portion of those assets, believe it or [20:35] not, are in single fund portfolios. The [20:38] rebalancing is done inside of the fund. [20:40] Uh in Canada at least, it's very tax [20:42] efficient. Uh it's very operationally [20:45] efficient. Uh behaviorally, it's [20:47] fantastic because you don't see all the [20:48] individual components. Oh, you know, [20:50] international stocks went down and you [20:51] and you start to worry about that. So, [20:52] I'm a big fan. My my personal portfolio [20:54] is 100% in a single fund portfolio. [20:57] >> Your personal portfolio is in 100% one. [21:00] >> Yeah, it's a Canadian listed mutual [21:02] fund, so that the ticker doesn't really [21:03] matter to most of your audience. Um but [21:05] yeah, it's all in a single fund. How [21:06] often do you check your portfolio? [21:08] >> Almost never. I couldn't even tell you [21:09] what it's worth right now. [21:11] >> And do you have then someone that's [21:13] managing your portfolio? [21:15] >> Yeah. Yeah. So I I have an adviser [21:17] through my firm. [21:19] >> Now it's in one fund. So most of their [21:21] advising is on, you know, how much [21:23] should I be contributing to my [21:24] registered accounts this year or right [21:27] now or whatever or should I do this for [21:28] tax purposes or whatever. And so in [21:32] practice then what you do is you get [21:33] paid out from YouTube from your job and [21:35] then your adviser will just take that [21:36] money and throw it in this account and [21:38] you don't even check it. [21:39] >> Yeah. [21:40] >> What's the strongest argument against a [21:43] one fund portfolio? [21:44] >> You you could make some tax arguments [21:46] that maybe there are fewer tax loss [21:48] harvesting opportunities with a with a [21:50] single fund. I don't love that argument. [21:52] ETFs are so tax efficient like you [21:54] mentioned VT. The funds that I'm talking [21:56] about in Canada are extremely tax [21:57] efficient. So the idea that maybe you're [21:59] missing some tax loss harvesting [22:00] opportunities, I think you're probably [22:02] making up for that by how tax efficient [22:04] the single fund is in the first place. [22:05] People love complexity, as you said, [22:08] people have a bias for wanting to do [22:10] stuff, having components in their [22:11] portfolio, maybe that makes some people [22:13] feel more engaged, [22:14] >> but I don't know, man. Not having to [22:16] rebalance, not having to worry about [22:17] anything. It's it's really nice. [22:19] >> What would you consider to be the [22:21] perfect portfolio? [22:22] >> No. Does that include real estate, cash, [22:25] treasuries, gold? [22:28] >> There is no universally perfect [22:30] portfolio. So let let's start there. [22:32] There's a really interesting book [22:33] actually where a whole bunch of Nobel [22:35] laureates were interviewed by uh by [22:37] another professor at MIT about what [22:40] their definition of the perfect [22:41] portfolio is. I think this would make a [22:42] great video. I just haven't made it yet. [22:44] And everybody has a different [22:46] definition. And I think that's really [22:48] telling just about uh investing and and [22:51] portfolio management in general that you [22:52] can take all these brilliant people who [22:53] have literally shaped the field of [22:55] finance and they don't agree on what the [22:57] perfect portfolio looks like. And so how [22:59] should you know what does my opinion [23:00] matter on what the perfect portfolio? So [23:02] I I don't have a universal answer. My [23:04] portfolio is [23:06] uh global equities with a Canadian home [23:09] country bias. So that's relevant for [23:11] Canadians. For Americans it's a little [23:13] bit different. You could still argue for [23:14] a bit of a home country bias, but US is [23:17] such a big part of the market anyway. [23:18] Anyway, so Canadian home country bias. [23:21] The rest global market capitalization [23:23] weighted. It's my portfolio is very [23:25] similar to an index fund, but it does [23:27] tilt a little bit more towards small cap [23:29] and value stocks, which is like [23:31] >> I don't know. It's a small optimization [23:33] that I that I like, but for all intents [23:35] and purposes, it's very similar to an [23:37] index fund. I own a house. I don't own [23:41] gold. I don't own any other real estate [23:43] assets. I have I have some cash. [23:46] Probably more cash than I would tell [23:48] most people to have, but it it's kind of [23:51] nice having cash. [23:52] >> What percent do you have in cash? [23:53] >> In percentage terms, it's not a huge [23:54] amount. In dollar terms, it feels kind [23:56] of big, but it's [23:58] >> Is it like 5% cash? [23:59] >> Below below 5%. [24:00] >> Oh, that's not like 2% 1%. [24:04] >> Uh, it's probably close to four. [24:09] You know what? probably if I can include [24:11] everything it's below below 3%. [24:13] >> Why is that? [laughter] [24:14] >> It feels like a big dollar amount. I [24:15] don't know. I look at it I'm like I [24:16] should [24:16] >> So we got money McGee over here. Okay. [24:18] Mr. Deep. [24:19] >> I mean 3% has got millions of dollars [24:22] Jeff. [24:22] >> I mean he is managing a$8 billion. [24:24] >> It's not that's not my $8 billion. [24:26] [laughter] [24:27] >> Are you not a billionaire yet? Okay. Got [24:29] it. [24:29] >> To me that sounds really reasonable. [24:31] >> Yeah. Like why do you feel like [24:32] >> it's basically like global index fund [24:34] portfolio house some cash? Why do I feel [24:37] like the cash is too much? I don't know, [24:39] man. Because I I know that cash has a [24:41] low expected return. I know that in real [24:42] terms, it's probably losing money over [24:44] the long term, and I don't have any [24:47] concrete reason to have it right now. [24:49] Um, but it's like, I don't know, we have [24:51] to do something in the house. It's just [24:52] nice to have [24:53] >> cash there. Um, [24:55] >> so speaking of savings, do you think the [24:57] S&P 500 is a reasonable savings account? [25:01] >> It depends how big your spending [25:03] liabilities are relative to your [25:04] portfolio. If you might need $1,000 next [25:08] year or sometime in the next six months [25:09] and you have $10 million invested in [25:11] stocks, I'm not worried about it. But if [25:14] you need a million dollars next year and [25:15] you have $2 million invested in the [25:18] market, I' I'd maybe think about taking [25:20] some of that out of the market. So, it [25:22] really depends on the proportion that [25:24] you need liquidity on. [25:25] >> So, how much should people be saving? [25:27] >> It's another tough one. It really [25:29] depends on each individual situation and [25:31] the person's goals and all that kind of [25:32] stuff, but I there's been some research [25:34] on this. somewhere between 10% at the [25:37] low end and maybe a little bit higher [25:39] than that if you want to be more [25:40] aggressive is reasonable if you start [25:42] saving at a at a normal point in your [25:44] life. Uh it can be higher than that if [25:46] you want to have a really aggressive [25:48] retirement goal. But I I I don't like [25:50] any like everyone's got to save 10%, [25:52] everyone's got to save 20% of their [25:53] income. I don't like that. I think [25:55] everybody needs to sit down, look at [25:56] what their specific goals are and map up [25:58] how much map out how much they should be [26:00] saving. It sounds like you put a strong [26:02] emphasis on making goals, coming up with [26:04] a plan, knowing what you want, and then [26:06] making sure all of your decisions, [26:08] beliefs, behaviors all serve that one [26:11] goal. Where do people go wrong when they [26:13] set goals? Cuz if everything hinges on [26:16] your ability to set good goals for [26:18] yourself, how does someone know if [26:19] they're setting good goals? And what [26:20] would be a failure of setting goals? [26:22] Failure setting goals would be looking [26:23] back and realizing that you set the [26:25] wrong goals after you've spent 20 years [26:27] trying to achieve whatever the thing you [26:28] set out to achieve was. There is pretty [26:31] interesting research suggesting that [26:32] people are quite bad at identifying the [26:35] goals that are actually important to [26:36] them. Uh but there's also some pretty [26:38] interesting research showing how you can [26:39] overcome that to an extent. A big one is [26:43] using what's called categorical prompts. [26:45] So it's really just giving people the [26:47] categories that important goals might [26:48] fall into and that helps them ideulate [26:51] goals that are actually meaningful to [26:53] them. So that's a big one. And then [26:54] another one and we did we have this [26:56] research up on our website is presenting [26:59] people with a master list of goals which [27:01] is a pretty cool idea. It's basically [27:03] take a whole bunch of goals that other [27:04] people have generated and put them all [27:06] into one big list. That's like it's not [27:09] actually all goals you could possibly [27:10] have but it's an approximation of all [27:13] goals you could possibly have. And then [27:14] people can go through that list and pick [27:15] off goals that might be important to [27:16] them. So those two exercises produce [27:19] goals that people will later reflect on [27:21] as being more meaningful to them. [27:22] >> Let's say we're providing the average [27:24] viewer for direction for advice on [27:26] setting correct goals. What would if you [27:28] were to distill it down to like one [27:30] decision or thing that they should do [27:32] actionable thing what would you what [27:33] would you say that is? [27:34] >> Yeah. So the the process that we use and [27:36] we have an app on our website that [27:38] people can use if they want to do this. [27:40] We ask people to write down their goals. [27:42] We then ask them to double the list of [27:43] goals. Just gets you to think a little [27:45] bit harder. Then we present them with [27:48] the categories. So we for categories, we [27:51] use the items in the perma model, which [27:53] is a model of of well-being that comes [27:55] from positive psychology. But it [27:57] basically suggests that the the [27:59] ingredients to a good life are positive [28:01] emotion, which is feeling good right [28:03] now. Like we're having a good time [28:04] talking. That's positive emotion. I'm [28:05] enjoying a coffee later, whatever. [28:07] That's a posit positive emotion. [28:09] >> Uh engagement. So being engaged in tasks [28:12] uh that are that meet your skill level. [28:15] I I would say like this now recording a [28:17] podcast is is engaging. Relationships is [28:20] having meaningful relationships. Meaning [28:22] is doing things that are larger than [28:24] yourself. And accomplishment which is [28:25] accomplishing hard things like getting [28:28] to a million subscribers on a YouTube [28:29] channel for for example. [28:31] >> So you give people those prompts. These [28:33] are the categories that important goals [28:34] might fall into. And then they fill out [28:36] a few more goals. And then the final [28:37] step is they they review the master list [28:39] of goals that other people have [28:40] prevented. And you get in the end you [28:42] get a list of goals that have gone [28:43] through this iterative process. And [28:45] people tend to find the exercise really [28:47] helpful. [28:47] >> What are the best goals that people [28:49] should be writing down that you've [28:50] noticed lead to the highest amount of [28:52] happiness? Now, I got to say, I don't [28:54] care how much money you have because [28:55] everyone loves finding a deal. There's [28:57] just something about paying less than [28:59] you should that just never gets old. 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Once again, [30:23] that is whatnot.com/invite/iced [30:26] coffee hour or you can just click the [30:27] link down below in the description. I [30:29] absolutely love running the podcast like [30:31] filming with guests, YouTube strategy, [30:33] traveling. It's all so fun. But there is [30:36] one thing that I genuinely despise and [30:38] that is back-end paperwork. No joke. If [30:40] I have to do anything with payroll, [30:42] taxes, or benefits, [30:45] it be the [30:48] And that's exactly why we've partnered [30:49] with today's sponsor, Gusto. For those [30:51] unaware, Gusto is an online payments and [30:53] benefits software built for small [30:55] businesses. It's all-in-one, remote [30:57] friendly, and incredibly easy to use. [30:59] So, you could pay, hire, on board, and [31:01] support your team from anywhere. Gusto [31:04] handles payroll, tax filing, direct [31:05] deposits, health benefits, 401k, workers [31:08] comp, all of it. 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That is three [31:53] months of free payroll at gusto.com. [31:56] Once again, that is guest o.com/iced [32:01] with the link down below in the [32:02] description. What are the best goals [32:04] that people should be writing down that [32:07] you've noticed lead to the highest [32:08] amount of happiness? [32:09] >> Yeah, it's a it's an interesting [32:10] question. The most common goal when we [32:12] did our goals survey, which is what we [32:14] used to generate our our master list, [32:16] was financial independence. It wasn't [32:18] early financial independence. It was [32:20] just financial independence at some [32:21] point. So that is definitely a goal and [32:23] I mean it's a goal that everybody should [32:24] have because at some point we're as [32:26] humans who age not going to be able to [32:28] earn income. So I think that is a very [32:31] good goal. I think you have to be [32:32] careful with how aggressively you pursue [32:33] it. We can talk more about that if you [32:35] guys want. And then there are lots of [32:37] other interesting ones about [32:38] relationships and time with family. Uh [32:40] time comes up a lot just freedom of time [32:42] which is related to financial [32:43] independence but not necessarily the [32:45] same thing. Uh but if you just think [32:46] through the perma model positive motion [32:48] engage uh engagement relationships [32:49] meaning and accomplishment there are [32:51] tons of good goals that stem from that [32:52] that will contribute to people living [32:54] lives that that they enjoy more. Now, in [32:57] terms of maximizing returns, going back [32:59] to investing, what are your thoughts on [33:01] margin for people who are young? Because [33:04] I have a note here that your argument is [33:06] that young people should potentially [33:08] borrow to invest. And I would love for [33:10] you to explain the rationale behind [33:12] this. [33:13] >> The economic models on lifetime saving [33:15] and asset allocation suggest is that you [33:19] want to reach your lifetime exposure to [33:21] stocks as early as possible. Now, if you [33:24] have $10,000 in your investment account, [33:26] but you have $3 million of future [33:29] earnings that you will eventually save, [33:30] but don't don't yet have access to and [33:33] your lifetime allocation to stock should [33:35] be whatever uh 70% or something, [33:38] >> then the amount you should have in [33:40] stocks today based on economic models is [33:43] much higher than your available savings. [33:45] >> And therefore, you should borrow to [33:47] invest to get closer to your optimal [33:50] lifetime exposure to stocks. Now, should [33:52] people use margin? [33:54] The the downside of margin is that you [33:56] can lose everything. You can you can [33:58] have a total blowup. I think that's very [34:00] unpleasant and can deter people from [34:03] investing afterwards. Uh so I I don't [34:06] tell people to use margin. I think [34:07] conceptually leverage for young people [34:09] does make sense. There are lots of other [34:10] ways that people can get get leverage. [34:12] People use leverage to an extent when [34:14] they when they take out a mortgage to [34:15] buy a house. Uh some people use [34:17] leveraged ETFs. I don't have a super [34:19] strong opinion on those. Yeah. So, it's [34:21] a good idea in theory, but should people [34:23] actually go out and borrow on margin to [34:24] invest when they're 22 years old? I'd be [34:27] pretty hesitant to. [34:28] >> It was interesting. Chris Camille was [34:29] making the argument that people who are [34:31] young should be buying a 2 to 3x [34:34] leveraged S&P 500 index and said that [34:38] even at 2x leverage, if you're just [34:40] going to be dollar cost averaging, you [34:43] might see an 80% decline if the market [34:46] collapses like 2008. But if you keep [34:48] buying in long-term, it should [34:50] outperform. [34:51] >> Yeah. [34:52] >> What are your thoughts on something like [34:54] that, which is really aggressive, but as [34:56] long as you could stay the path, [34:57] assuming you're not going to panic sell [34:59] or go to zero. [35:00] >> Honestly, I don't hate it. I I'm a [35:02] little hesitant to say yes, S&P 500 only [35:04] because that's not really a diversified [35:06] portfolio. The US market has gone [35:08] through very long periods where it [35:09] delivered no returns. Mhm. [35:11] >> The the the general idea of using [35:13] leverage for young people and using [35:15] leveraged ETFs to get it is not [35:17] terrible. I' I'd be very careful about [35:19] who should actually go and implement [35:21] that. Uh I think it behaviorally could [35:23] be very very difficult for a lot of [35:25] people, but I don't hate it. I don't I [35:26] don't hate his comment. [35:27] >> So, who should I'm curious because I [35:30] think about it logically and it does [35:32] sort of make sense. Obviously, there's [35:33] going to be a little bit of decay [35:35] because you are paying that margin fee [35:38] or you're paying the expense ratio on a [35:40] leveraged ETF that's usually going to be [35:42] a little bit higher than the base form [35:44] of the ETF. [35:45] >> But you know what? So, we we had a [35:47] professor on from uh from from Arizona [35:49] who who's done a study on his was [35:51] looking at single stock leverage [35:52] products. [35:53] >> He's actually less concerned about this [35:55] stuff. Uh we we had another Yale [35:57] professor too that talked about the same [35:58] thing. I brought up the leverage decay. [36:00] uh it's the volatility decay that people [36:02] worry about. And both those guys said [36:03] that's not really the right way to think [36:05] about it. Like that's just part of the [36:06] cost of leverage. But you look at going [36:08] go and take out a margin loan or go and [36:09] take out a whatever a bank loan and [36:12] leverage ETFs overall with the total [36:14] cost of implementing leverage through [36:15] that that medium is going to be pretty [36:17] competitive. I don't worry about that [36:19] stuff. I think the behavioral issues are [36:21] are much larger. So, if you are to do [36:24] leveraged ETFs, then what would make the [36:26] most sense is something similar to what [36:27] you practice, which is you kind of just [36:29] buy it and then let it sit and you don't [36:31] even check your portfolio probably. [36:33] >> Oh, yeah. I wouldn't be trying to go in [36:35] and out of the market using leverage [36:36] ETFs to to trade. [36:38] >> But it is if you're holding 10, 15, 20 [36:40] years there, you don't really see a [36:41] problem in buying, you know, VT [36:43] leveraged. [36:44] >> So, again, I would be like recommending [36:46] recommending leverage uh in my [36:48] profession is like super super [36:50] dangerous. Uh, so I'm not saying [36:53] everybody should use leverage. Uh, I I [36:55] don't want listeners to think that [36:56] that's what I'm what I'm saying. I think [36:58] for people who can psychologically [37:00] handle it, who really understand the [37:01] implications of what they're doing, the [37:02] ups and downs that can come, the costs [37:05] of doing it, all that kind of stuff. [37:06] >> Here's where I'm getting at this. You [37:08] are talking about this from a very [37:09] academic standpoint of research and [37:12] history. And then I think there's also a [37:14] behavior component to this that [37:16] >> for sure [37:17] >> probably I'd say behavior is more [37:18] important than what's academically [37:22] correct. Would you agree with this? [37:24] >> Yeah. In the paper that I mentioned uh [37:26] that argues for this approach they they [37:28] do kind of acknowledge that the behavior [37:30] is a big issue. Uh the argument that [37:32] they make in the paper is that if people [37:33] understood the long-term benefits they [37:35] would the the behavior the behavioral [37:37] aspects would be a lot more palatable. [37:39] like people don't realize how big the [37:40] potential benefits are and that's why [37:42] it's so behaviorally difficult. So they [37:44] do talk about that but I you know [37:45] talking to actual investors uh as as I [37:48] do I would be really worried about most [37:51] people successfully in implementing this [37:53] type of strategy over a long period of [37:55] time. [37:56] >> How important is behavior when it comes [37:58] to investing like this? [38:00] >> Not just like this. I would say [38:01] investing period behavior is is kind of [38:04] everything. Investing is is simple but [38:07] not easy. I didn't come up with that. [38:09] Lots of people said that before, but [38:10] it's, you know, you buy index funds. [38:12] Very simple. But how many people [38:15] actually do that and hold on them for [38:16] the for the long run? Not a ton. [38:20] >> So, should people be more afraid about [38:21] losing money in the markets or more [38:23] afraid about losing purchasing power of [38:25] cash? [38:27] >> Without question, cash [38:30] without question. Over a 30-year [38:32] horizon, cash is much riskier than the [38:36] stock market. And from your perspective, [38:37] if someone wants to save more money to [38:39] invest, is it better for them to cut [38:41] back or try to make more money? [38:43] >> Make more money is is my opinion. People [38:46] get pretty upset when I say that. Like [38:48] when I when I make the point that I made [38:50] earlier that maybe not everybody should [38:51] be trying to save as much as they [38:52] possibly can as early as possible. [38:55] People get really upset when I say that. [38:56] When I say people should maybe just earn [38:58] more money, uh they get really upset [38:59] about that, too. But I I think there are [39:01] lots of ways people can earn more money. [39:04] I I don't think you guys would disagree. [39:05] Like you guys are both doing stuff. [39:07] You're using your time in ways that [39:08] allow you to earn more money than you [39:11] could at I don't know working at a I'm [39:13] not going to call anything out, but a [39:14] job that makes less money. [39:16] >> Like there's there are things that you [39:17] can do there. Not not everything is in [39:19] your control. And I and I completely [39:20] acknowledge that. But there are things [39:22] that can people can do to improve their [39:24] situation. [39:25] But that being said, it still does make [39:27] sense for a lot of people to probably [39:29] save more than they're spending because [39:30] I do think that the US and probably just [39:33] North America in general has a spending [39:34] issue. [39:35] >> I agree. [39:36] >> And so if someone is dissatisfied with [39:37] where they're at financially, [39:39] >> for 99% of the people within that co [39:42] within that population, it's probably [39:43] they're spending too much. What sort of [39:45] spending strategies or expenses do you [39:47] think people waste their money on or [39:49] strategies they should implement in [39:50] order to improve their financial [39:53] performance? I'm not a fan of budgeting [39:55] personally. Never never clicked with me. [39:58] But I think that what you can do is [40:00] define the amount that you need to save [40:02] in order to reach whatever your goal is [40:04] and work backwards from there. And [40:06] sometimes you might realize that the [40:08] amount of saving you have to do to [40:09] achieve the goal is way too aggressive. [40:11] You want to retire at 35, so you have to [40:12] save 60% of your income, which means [40:14] you're living on whatever $1,200 a month [40:16] or something. That probably doesn't [40:18] sound palatable to a lot of people. So [40:20] you adjust your goals. But I much [40:21] prefer, and now this is what I do [40:23] personally. I know how much I need to [40:24] save each year. I save that and I don't [40:27] really worry too much about the rest of [40:28] the spending. Um, but I I'm also, you [40:32] know, I'm not going to restaurants and [40:33] just ordering water. [40:35] >> But I think I'm naturally pretty [40:37] >> pretty frugal. So, I think if someone [40:39] has a spending problem, that probably [40:42] requires deeper deeper reflection. [40:45] >> I'm curious for you, Graham, because [40:47] like you said, back in the day, you [40:49] would do a lot of these like frugal life [40:50] hacks and stuff like that. [40:52] Realistically, those actual decisions [40:57] did not probably amount to a very large [40:59] change in your overall net worth. Now, [41:02] if we fully remove that from the [41:04] behavioral stacking that you probably [41:06] did, like the habits that you formed, [41:08] the habits are valuable, but [41:09] >> the decisions themselves were probably [41:12] not very productive to your current [41:14] >> financial portfolio. [41:16] >> Maybe. Maybe they were. And the reason I [41:18] say that is because back then I was [41:19] dumping everything into real estate. And [41:21] I would basically be at zero dollars in [41:24] my bank account at the end of the year [41:26] because my goal was to have 100% [41:28] invested. And so by December 31st, I'd [41:31] be spending money on renovations. It [41:33] would go to a down payment. I would be [41:34] zero. And then I'd have commissions [41:37] coming in like January to bit basically [41:39] bump me back up. And so I invested [41:41] everything. So I don't know. I think in [41:43] the big picture, no. But if that [41:46] prevented me from buying one property [41:48] back in 2012, let's just say, then that [41:51] would be pretty significant today. [41:53] >> I think you're in a unique situation [41:55] because if you weren't that guy, it [41:57] would have changed your content and the [41:59] appeal of your content. [42:00] >> But also, I want to push back because I [42:02] got the same experience. Like, we're [42:04] talking about going to a restaurant and [42:05] ordering water. [42:07] >> My experience at the restaurant was not [42:09] the food that I got and ate. My [42:11] experience was going to the restaurant [42:13] with friends. I got the same experience [42:16] as everyone else minus a $30 entree cuz [42:19] I ate at home. [42:21] >> Same with going to the bar. Like I would [42:23] go to the bar with friends. Would never [42:24] get a drink. But we can go to a liquor [42:27] store down the street [42:29] >> and all one bottle. Yeah. One bottle. [42:32] Pour it in a in a thing like this. [42:35] >> Drink it outside of the bar. Have fun. [42:38] And then we walk in the bar. Now you [42:40] already got your drinks but for a [42:41] fraction of the price. And then we just [42:43] get waters. No one knows. You get like, [42:45] you know, just a water and a glass. And [42:47] oh, you know what? I used it. [42:48] >> Bad day to be a restaurant owner. You [42:49] know what's crazy? Bad day. [42:51] >> This unlocked memory. This unlocked a [42:53] memory. By the way, I'd ask for water [42:55] with ice in it and they say, "Oh, by the [42:57] way, could I get a lime?" [42:59] >> Throw the lime in there. No one has any [43:01] idea. It's just water. I just remembered [43:04] that. I don't know how small businesses [43:06] would survive [laughter] [43:08] if people if everyone did that. I am [43:10] curious if you could go back and give [43:13] yourself now. Let's just say you gave [43:15] yourself $10,000 from what you own right [43:17] now and you had to spend it and you [43:20] couldn't invest it to your 18-year-old [43:21] self and so you had $10,000 to spend [43:24] over the next, you know, 10 years, an [43:25] extra thousand a year just on dinners or [43:27] whatever it is, would you do that? [43:31] Yes, you would do that. [43:33] >> Yeah. Yeah. Even though you could not [43:35] invest the 10,000 you had. [43:37] >> Yeah. $10,000 today. If I could give it [43:39] to myself back then, I [43:40] >> probably not $10,000 today, though. It's [43:42] $10,000 if you're giving it back to [43:44] [clears throat] him. Back then, it would [43:45] be like, you know, losing 10 grand [43:47] today, but $2,000 back. [43:49] >> Let's just say, let's just say that [43:50] $10,000 back then it's just now through [43:53] real estate and this and that worth [43:54] 60,000. Would I take $60,000 today to [43:57] get Probably not. But if it's 10K, I [44:00] would. [44:01] >> What's the number? [44:02] >> I mean, I have no idea. I would have I [44:04] would have no clue how to how to [44:05] compound what went to which property and [44:08] then to what index fund. [44:10] >> Wait, what number would you do it? [44:12] >> Not 60, but you would do it at 10. [44:14] >> Uh, maybe like 30. 30 to 10. [44:17] >> 30 to 10. Yeah. [44:19] >> And giggles, but at the same time I got [44:21] 3x over I mean it's 18 to 35. So 17 [44:24] years. So 3x over 17 years. [44:27] >> Yeah, that sounds about on track with [44:29] the S&P. [44:30] >> It's it's it's probably [44:31] >> enough. Close enough. Like I said, I [44:33] didn't miss out on experiences at all. I [44:36] got the same experience. I just found a [44:37] way to do it cheaper. [44:39] >> I think a lot of people could put into [44:41] practice the things that you did when [44:42] you were younger for sure because I 100% [44:44] admit for most people it is a a spending [44:47] issue. [44:48] >> Yeah, I I agree with that. I think sp [44:49] spending is a huge problem. Uh a lot of [44:52] people don't know what they spend. They [44:53] don't they don't realize the impulses [44:55] that they have to spend and then all of [44:56] a sudden they have no no money. And the [44:58] the problem with the problem with this [45:01] whole issue is that because of [45:03] compounding [45:04] 20 30 years down the road when you [45:06] realize you had a spending problem, [45:08] there's not a whole lot you can do about [45:09] it. You can't undo the saving that you [45:12] didn't do because you can't catch up [45:14] with the compounding that you missed. So [45:16] those that do end up saving money, you [45:18] argue of course ETFs all the way, but I [45:20] am curious within ETFs. I know that it [45:23] is the objective of these ETFs to get as [45:26] much money into the ETF as possible so [45:29] then they can collect their expense [45:30] ratio fee. It's easier to sell a [45:33] product, the product being the ETF, [45:36] if it's not as volatile if it appeals to [45:39] the investor's emotion because it's [45:42] easier to digest as an investor less [45:44] volatility. But because of that, do you [45:47] think that they could be compromising [45:50] returns over time, riskadjusted returns, [45:52] because they're trying to sell something [45:53] a little bit more conservative? [45:55] >> I don't know about the conservative [45:56] angle, but I think that this this issue [45:58] of ETFs being created to be marketable [46:01] is a massive issue. I I did a video [46:03] earlier this year that I called the rise [46:05] of ETF slop where I basically said that [46:08] we're in this age now where there are [46:09] hundreds of ETFs, maybe maybe even more [46:11] now, being created every year for all [46:14] kinds of wacky investment strategies [46:16] that appeal to the biases that investors [46:18] have. [46:18] >> So, I talk in that video, I think it was [46:20] about uh covered call ETFs. Uh I talked [46:23] about thematic ETFs, [46:25] >> like you got your semiconductors, you [46:26] got your whatever AI ETFs, all that kind [46:28] of stuff. Uh there were a couple of [46:30] other ones too, a single stock ETFs. You [46:32] can buy a covered call leveraged single [46:34] stock ETF, which is like it's wild, but [46:36] they're attracting a ton of assets. And [46:38] the crazy thing about them is they they [46:40] have they have high fees. And so an [46:42] issuer can come out and create whatever [46:44] 15 new ETFs that cover individual [46:46] stocks. If one of them attracts a bunch [46:48] of assets because it does well over the [46:49] short term or because that stock gets a [46:51] bunch of media coverage or whatever, it [46:53] makes it worthwhile for them to have [46:54] issued all of those all of those ETFs. [46:56] And so we're in an environment now where [46:58] there are all of these financial [46:59] products that are behaviorally very [47:01] appealing because whatever they pay a [47:02] 10% yield or a buffer ETFs that was the [47:05] other one that I had in that video. So [47:06] they're capped on the upside and the [47:08] downside. And again like to your to your [47:10] point that's very behaviorally [47:11] attractive if you listen to the story. [47:13] Oh, I don't have to lose money and I can [47:14] invest in stocks. That sounds amazing. [47:16] People don't realize how much upside [47:17] they're giving up in the long run. And [47:19] all those products tend to have higher [47:20] fees. And so you get in this situation [47:22] where the ETF issuers want to be [47:24] profitable as they should be and so they [47:26] create products that are appealing to [47:27] people that are very marketable that [47:29] have higher fees and those are the ones [47:30] that get advertised to investors and [47:33] people buy them. [47:34] >> What do you think about covered call [47:35] ETFs? [47:36] >> I mean I've done I did I think three [47:39] videos on this topic last year and I I I [47:41] don't know who should actually invest [47:44] them. I think a lot of people do because [47:46] they pay high income yields and that [47:47] feels really good. But who should [47:50] actually invest in that strategy? I I'm [47:52] at a loss. Like I really don't I agree. [47:54] >> I would Well, I would argue that the [47:56] people who should invest in that are the [47:58] people who mentally want to see that [47:59] income coming in and they they like to [48:02] see that I think it's like 8% a year. [48:05] That's a consistent dividend without a [48:09] ton of volatility and just [48:11] psychologically just makes them feel [48:12] better to know, hey, if the market goes [48:14] up or down, I'm making my 8%. [48:16] >> But you you're not right because you're [48:17] making if if the portfolio crashes 30%, [48:21] you don't get 8% on your initial [48:22] investment. Like that's there's [48:23] volatility in that too. Uh but I think [48:26] that people don't understand the thing [48:27] people don't understand with covered [48:28] call funds, covered calls in general [48:30] just as a strategy is that it introduces [48:32] asymmetry into the distribution of [48:34] outcomes. It's basically like it reduces [48:36] volatility. So if you look at a covered [48:38] call ETF or or whatever you look at it [48:40] sharp ratio, it's that looks that looks [48:42] really good. It's a good sharp ratio. [48:43] It's got less volatility than the [48:44] market, but all of that most of that [48:46] volatility reduction is coming on the [48:48] upside. You're keeping most of the [48:50] downside. You get a little bit of [48:51] premium buffer, but you're keeping most [48:52] of the downside risk and you're [48:54] completely capped in your upside. [48:56] >> What does that mean for Jack's option [48:58] strategy? [49:00] >> Okay. So, I want to just think through [49:03] like you talk about getting whatever 3% [49:06] a week or 1% a week, whatever that is. [49:08] >> Well, a lot of that every I I hope every [49:10] time I've said that it's more of like [49:12] tongue and cheek. It's kind of like, [49:13] yeah, you know, I get 3% a week. [49:14] Obviously, you do not average 3% a week. [49:17] That makes zero sense as an investor. [49:19] you can't do that. Uh that being said, [49:21] >> I'm glad to hear you say that. [49:22] >> Yeah, that being said, but uh I I do [49:26] think that it's not a bad strategy to [49:29] play around with with a little bit of [49:30] money on the side and I've been doing it [49:32] and so far it's it's tended to work [49:34] pretty well. [49:35] >> Have you benchmarked your covered call [49:37] returns relative to the underlying [49:38] stock? [49:39] >> Well, as of late, yes. And relative to [49:43] the underlying stock, I have [49:44] underperformed, [49:45] >> which is kind of what you'd expect. I [49:46] mean, listen, I've heard you guys talk [49:48] about this stuff. I know it's a small [49:50] part of your portfolio, and I know you [49:51] enjoy doing it, and it's like that's [49:53] that's fine, but as a strategy, what [49:55] people have to understand about covered [49:57] calls is that the expectation is that [49:59] you're going to underperform the [50:00] underlying [50:01] >> structurally, like that is what is going [50:02] to happen. And if you want that, and if [50:04] you understand that you're giving up [50:06] upside volatility, but not downside [50:08] volatility, which basically means if it [50:10] goes down, you still capture most of [50:11] that, but if it bounces back, you don't [50:13] capture that. That's just that's [50:15] mechanically the way a covered call [50:16] works. If people get that and they have [50:19] fun doing it, like who am I to say they [50:21] shouldn't do it? I just think people [50:22] have to understand what the expectation [50:24] is when they go into that type of [50:25] strategy. [50:26] >> What do you think about the opposite [50:27] strategy of buying call options or [50:28] buying put options then? [50:30] >> Well, two very different strategies. [50:32] Obviously, buying call options is a way [50:33] to get leverage. So, I I don't think [50:37] people should all I'm not going to say [50:39] everybody should be buying calls, but we [50:40] talked earlier about there there can be [50:42] some benefits to leverage in a long-term [50:44] portfolio. When we had Robert Merin on [50:47] our podcast, who's a Nobel laureate, and [50:48] he's done a ton of the the original [50:50] research on life cycle asset allocation, [50:53] how should people invest over their [50:54] lifetimes? He's an advocate for using a [50:56] bit of leverage as well. uh and he [50:58] talked about on our podcast that he [50:59] would actually rather people use call [51:01] options than margin [51:03] >> because you can't completely blow [51:05] yourself up with a call option whereas [51:06] with margin you can. Um but the other [51:09] comment that he made that was really [51:10] interesting is that he he would not [51:12] advocate for people buying call options [51:14] themselves. He would like to see it [51:16] embedded in a financial product. So you [51:17] buy an ETF that gives you exposure to [51:19] the S&P 500 plus plus calls to give you [51:22] some leverage. [51:23] >> Uh and then you just buy the ETF and [51:24] it's very simple. But Merin's point was [51:26] people shouldn't be trying to buy calls [51:28] themselves because people are errorprone [51:31] and there's a lot of risk that you screw [51:33] something up. [51:33] >> So given all these strategies, who [51:36] should buy individual stocks and when is [51:38] that the right move to make? [51:40] >> I think you guys are great examples [51:41] where I I think you have a lot of fun [51:43] doing it. Uh it gives you something to [51:46] talk about. It's entertaining to listen [51:47] to you talk about it. But those are all [51:49] reasons that people do buy individual [51:51] stocks. It's pretty boring to show up to [51:52] a a dinner party. uh especially if [51:55] you're not ordering food and and say [51:57] that you know you just buy index funds [51:59] but you guys you guys have great stories [52:01] to tell uh so you can not order food and [52:04] talk about I can't remember the name of [52:05] the stock that you guys were talking [52:06] about recently but the you have stocks [52:08] to talk about you have stories to tell [52:10] and that's [52:10] >> that's true because my Robin Hood loss [52:13] ended up becoming one of our most viewed [52:15] clips it's been reposted so many times I [52:17] think cumulatively we probably got 50 [52:20] million views in that Robin just me [52:21] losing money on Robin Hood so I made [52:23] some some of the money I'd lost so much [52:25] more than that clip generated, but it [52:27] helps helps offset some of the losses on [52:29] that. [52:30] >> There are other niche scenarios, too, [52:32] like some people who are directors of [52:34] companies are required to hold stock. [52:35] Um, some people who are insiders at [52:38] companies that have gone public and hold [52:39] a huge amount of stock with a low cost [52:41] basis. In many cases, they want to [52:43] continue holding the stock not just for [52:44] tax reasons, but because there's a huge [52:46] sentimental value. And it's like if that [52:48] person has diversified enough for them [52:50] to be set for the rest of their life and [52:51] they want to continue holding the stock [52:52] of the company they help to start, I'm [52:54] not going to tell them that's that's a [52:55] bad thing to do. So there there are [52:56] reasons like that. But who should like [52:59] commit to picking individual stock as [53:00] part of their long-term investment [53:01] strategy for reasons like for [53:03] objectively uh objective reasons like [53:06] it's going to improve their long-term [53:07] outcome? I honestly don't think anybody. [53:10] >> Is it possible though that we can [53:12] continue to see these 10 to 15% returns [53:15] every single year? Because my concern is [53:16] that we've all gotten very spoiled that [53:18] for the last 15 plus years we're seeing [53:21] 12% annualized returns. What do you [53:23] think are the returns that we're [53:25] probably going to see over the next 10 [53:26] years? [53:27] >> We as a firm produce capital market [53:29] expectations similar to what Vanguard [53:31] does. I guess I think ours are a bit [53:32] higher though. Uh but I think we're just [53:34] below 7% a year as our long-term [53:36] expected return for that's a globally [53:39] diversified portfolio with a Canadian [53:41] home country bias. [53:42] >> Whatever. It's probably roughly similar [53:44] for just a global market portfolio. [53:46] Maybe a little bit lower because the US [53:47] is a bigger weight, but whatever. Call [53:49] it between 6 and 7% I think is a [53:51] reasonable long-term expectation. That's [53:53] a nominal return. So before before [53:55] inflation. I don't think the returns [53:57] we've seen in the US market in recent [53:59] history are are normal. I did a video on [54:02] that. Uh, I felt like it was a bit of a [54:04] throwaway video maybe a couple years ago [54:05] where I just talked about like what have [54:07] the actual returns been of global stock [54:08] markets throughout history of the US [54:10] market throughout periods other than [54:12] this one that we're in right now. [54:14] >> And it's it's pretty clear that this [54:16] current period is an anomaly. It's not a [54:18] period that we should expect to repeat [54:20] forever. And I think there is a there's [54:21] a danger there where people look at 10% [54:24] as such a common number. I think that [54:26] was the title of my video. Do do stocks [54:27] return 10% a year? And the thumbnail [54:29] says no, they do not. But uh I think [54:32] that 10% number is dangerous because it [54:33] it leads people to think uh through [54:35] long-term financial decisions on the [54:37] assumption of 10% returns and that can [54:39] lead to it can lead to mistakes. [54:41] >> How much international equity should [54:43] people own? [54:44] >> The easiest starting point I love [54:46] there's there's a quote from Eugene FMA [54:47] who's a Nobel Prize winning economist. [54:49] He's the guy that kind of created the [54:51] idea of market efficiency which is the [54:53] idea that that market prices contain all [54:56] available information. Uh in an [54:58] efficient market you shouldn't try and [54:59] pig stock. So like this whole concept of [55:02] index investing really sits on top of [55:03] FMA's research his comment about about [55:08] answering your question is uh you've got [55:10] to talk yourself out of the market [55:11] portfolio. So you look at market [55:13] capitalization weights the market has [55:15] priced in the optimal asset alloc [55:17] allocation approximately. Yeah. [55:19] >> So look at that as a starting point and [55:20] you've got to talk yourself out of it. [55:22] Now you can talk yourself out of it to [55:24] an extent. If you're an American maybe [55:26] you do have a bit of a home country [55:27] bias. if you're Canadian as I am and and [55:30] as we reflect on our portfolios again, [55:31] maybe you have a bit of a home country [55:33] bias, but market capitalization weight [55:35] should be the starting point. So that's [55:36] whatever 60 to 65% US and the rest [55:40] international. [55:41] >> How do you know when you're being too [55:43] conservative with your investments? [55:45] Every business owner hits a point where [55:46] they need a real specialist, a [55:48] developer, a designer, or someone who [55:50] actually knows AI, but a full-time hire [55:51] with a salary and benefits is a huge [55:54] commitment for a 3-month project. That's [55:56] exactly why we've partnered with Upwork. 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So, if [56:35] you're not looking at Upwork, what are [56:37] you doing? I've personally used Upwork, [56:38] and it genuinely makes the entire [56:40] process easier and more affordable with [56:42] industry low fees. Posting a job takes [56:44] minutes, and signing up is free. Over [56:46] 170,000 freelancers on the platform hold [56:48] five-star ratings, so you're hiring [56:50] someone with a verified track record. [56:51] Visit upwork.com/coff [56:53] right now and post your job for free. [56:55] That is upwork.com/coff [56:57] or just click the link down below in the [56:59] description to connect with top talent [57:00] ready to help your business grow. How do [57:02] you know when you're being too [57:03] conservative with your investments? [57:06] >> I don't know if you can know that. We we [57:07] we have a a tool on our website that in [57:11] in my opinion is the best. Uh it's [57:14] called a psychometric risk uh tolerance [57:16] assessment tool. So it's basically like [57:18] a it's a bunch of survey questions that [57:20] you go through and it spits out a range [57:22] of asset allocations that make sense for [57:25] you. [57:26] >> I think doing something like that so you [57:28] have an idea of what you're comfortable [57:29] with makes a lot of sense and if you're [57:31] more conservative than that then that [57:32] that'll help to to tell you. I think a [57:34] lot of people probably are more [57:36] conservative than they should be. I [57:38] think tools like target date funds there [57:41] there is research on this out of Boston [57:43] College I believe showing that target [57:45] date funds do help people increase their [57:46] equity exposure when they're younger [57:48] relative to what they would do if they [57:50] were on their own. I think financial [57:51] adviserss can have the same effect but [57:53] people people have the reason in that [57:56] research is that people tend to have [57:59] p pessimistic expectations more [58:01] pessimistic than they probably should be [58:03] which leads them to have more [58:04] conservative portfolios. So, it's it's [58:05] it's a tough question to answer, but [58:07] it's definitely something worth [58:08] interrogating for each person. [58:09] >> When does it make sense to have a [58:10] financial adviser? If what your firm [58:12] mostly invests in is just a single ETF, [58:17] one fund portfolio, then why would it [58:19] make sense for your clients to be [58:22] putting their money with you paying fees [58:24] when they could basically be doing the [58:25] same thing? [58:26] >> We're huge advocates of DIY investing. I [58:28] mean, my my YouTube channel and our [58:30] content in general is like, at least in [58:32] Canada, one of the top resources for [58:33] do-it-yourself investors to figure out [58:35] how to do it themselves. So, I'm a big [58:37] advocate for doing that for people who [58:38] can. There are a couple reasons I think [58:40] that that people do hand it off. One is [58:43] implementation. So, we can say you just [58:46] buy a fund, but you still have to figure [58:47] out which accounts you're buying it in. [58:49] You still have to figure out when you [58:50] should sell it, um, if you should, how [58:52] to fund your spending, where to put new [58:54] savings, which fund it should be, what [58:56] what asset allocation it should be. [58:57] There's lots of decisions leading up to [58:58] that final step of just buying a fund. [59:01] Just buying the fund is the easy part [59:03] and there's a lot of complexity. So [59:05] people could spend hours and hours doing [59:06] research and listening to podcasts like [59:08] this to arrive at those decisions or if [59:11] they want to hand it off, they can [59:12] contact a financial adviser and be told [59:15] basically based on your situation, this [59:16] is what we would recommend. So reducing [59:18] complexity is uh is one and [59:21] implementation. And the the other one is [59:23] comfort. We have a ton of people who [59:25] find us through our podcasts. They'll be [59:26] like dedicated listeners for years and [59:29] then they'll become clients at some [59:30] point and they'll tell us that they [59:33] stopped listening to the podcast because [59:34] they didn't have to worry about this [59:35] stuff anymore and it's a huge weight off [59:36] their shoulders. It's a really [59:38] interesting phenomenon but I think it [59:39] speaks to one of the reasons that people [59:40] outsource this stuff uh which is mental [59:43] overhead. It just it just goes away. [59:45] It's one less thing to think about. [59:46] >> So you're at $8 billion in assets under [59:49] management right now. [59:50] >> Canadian dollars. Yeah. [59:50] >> Canadian dollars. [59:51] >> Oh, that's like 2 million America. [59:53] >> It's not that low. [59:55] >> Okay. [laughter] [59:56] Did you notice a stark increase in the [59:59] amount of clients that you had before [60:00] and after you went on dire of a CEO? [60:02] >> No, not a stark increase. Like there was [60:04] definitely a period of of heightened [60:06] interest where we we fielded a whole [60:08] bunch of calls. Uh but it no, not a huge [60:11] difference. [60:11] >> Would you say would you be able to [60:13] distill it down to a number like going [60:15] on a podcast that gets 2 million views [60:16] like Diary of a CEO? How much money in [60:18] deposits did you get? [60:20] >> Honestly, it would be a rounding error. [60:22] like it's [60:23] >> really [60:23] >> it was not a huge deal. A lot of [60:26] interest, a lot of phone calls, uh a lot [60:28] of new subscribers to my channel and our [60:30] podcast and stuff like that, but I mean, [60:33] we're already a big enough firm that I [60:34] don't think something like that is going [60:35] to move the needle that much. [60:36] >> I have a feeling for something like [60:38] that, it's going to take repeated [60:40] >> Yeah. exposure. They subscribe, they [60:42] become a [60:43] >> It's going to start with that and then [60:44] they're going to go down the rabbit hole [60:45] and then like 3 years later, [60:48] >> then it'll be like sees some dude on a [60:49] podcast gives him their life savings. [60:52] Yo, I saw you in diary of CEO. Here's [60:54] all my money. [60:55] >> Yeah. [60:56] >> Now, if you're fielding a lot of these [60:58] calls, I'm curious, what's the worst [60:59] call and financial situation that you've [61:02] seen? [61:02] >> I don't take the calls. So, it's tough [61:04] for me to say, but I I think probably [61:06] the most common situation where I look [61:08] at it and it's like, yeah, like this [61:09] this person really needed our help is [61:12] people who are just sitting in cash. [61:14] They've got a successful business or [61:15] they've got a high income job or [61:16] whatever and they've just been shoveling [61:18] money into a savings account and it's [61:20] literally sitting in cash because they [61:21] don't know what to do. [61:22] >> What's the most amount of cash you've [61:23] seen? [61:24] >> I don't millions of dollars. I don't [61:25] know. [61:25] >> Millions. So, it was a small business [61:27] owner or something that just saved up [61:29] everything, throw millions of dollars of [61:30] cash [61:31] >> or or someone who sold a business and [61:33] they stuck in a savings account because [61:34] they didn't know what to do and it's [61:35] just it's sits there. So, that that's [61:37] one of those it's a situation where you [61:38] look at it, it's like, yeah, okay. So [61:39] that the our fee uh relative to the [61:42] opportunity cost of sitting in cash is [61:44] negligible for that person. [61:46] >> And what about the strangest story? [61:48] >> Weird ones would probably be people who [61:49] have started businesses in legal gray [61:51] areas um and and come to us. We've had [61:54] to be like uh we we can't touch this. Uh [61:57] there been some interesting ones there. [61:59] other ones with uh with crypto where [62:01] people just made a huge on some random [62:04] token and it's like it becomes real [62:05] money and it's life-changing and it's [62:07] just you look at it and it's like wow [62:08] that's [62:09] >> what's the biggest amount you've seen [62:11] >> from that type of scenario [62:12] >> tens of millions [62:13] >> tens of millions of dollars [62:15] >> wait we're talking after tax [62:18] >> they they sold it went to cash and they [62:20] were like hey I need help yeah so I mean [62:23] those those are crazy stories but it's [62:24] like that's we can say wow and it's like [62:26] wow it's a crazy outcome but we [62:27] >> wait guys you're saying if you [62:29] $10,000 into crypto, you could turn it [62:31] into tens of millions. [62:32] >> Yeah. Which coin to invest in. I saw on [62:34] your channel there were some comments [62:35] about an ICO that we should be buying. [62:37] >> Those comments are the worst. But [62:39] seriously though, we we also get people [62:41] who have actually literally won the [62:43] lottery by buying lottery tickets. And [62:44] so it's like people get windfalls from [62:46] all sorts of different weird lottery is [62:48] not as weird. I think crypto ones are [62:50] are stranger. But yeah, people end up [62:52] with piles of money for all kinds of [62:55] weird reasons. The one thing I found [62:56] very interesting is that you recently [62:58] said that the more you look at your [62:59] portfolio, the worse you're likely to [63:01] do. And then I thought of myself where I [63:04] look at my portfolio probably [63:07] five times a day. [laughter] [63:09] It's It's actually strange for me not to [63:11] have checked it before we filmed. I I I [63:13] check it. [63:13] >> Are you Are you okay after not checking [63:15] it? Do you feel okay? [63:17] >> I'm curious what it's doing because [63:18] there's 10 minutes left to the market [63:19] and I like to throw in some buys at the [63:21] end of the day if it's down. [gasps] [63:24] >> Yeah, that's a real sign. What does it [63:25] what does it say about me that I check [63:27] so often? [63:28] >> Uh it's honestly it's probably leading [63:30] you to take less risk than you otherwise [63:33] would if you were like me and just [63:34] didn't look at it. That's what that [63:36] research suggests. It suggests that [63:38] people who check their portfolios more [63:39] frequently are more worried about risk [63:42] because they see the volatility daytoday [63:44] or or minute to minute throughout the [63:45] trading day [63:46] >> and it makes them more averse to risk. [63:49] So, what we're going to do for the [63:50] channel members is that at the very end, [63:53] I'm going to show you my portfolio and [63:55] you'll be able to rate it and you'll be [63:57] able to be brutally honest with what you [63:59] think of my allocation because I have a [64:02] feeling I know what you're going to call [64:03] out. And there's there's something in my [64:05] portfolio that the channel members will [64:06] see that uh you're probably not going to [64:09] like. [64:09] >> Okay. But moving beyond that, in terms [64:12] of the general economy, do you think [64:13] it's easier or more difficult for people [64:16] to get wealthy in 2026, 2027? [64:19] >> I'm not an economist. I don't study the [64:20] the macro economy. I can tell you what [64:23] what we see with our very biased sample [64:27] of people who are becoming wealthy. [64:29] There are still a lot of people starting [64:30] businesses. There's still a lot of [64:31] people raising capital. there are still [64:33] a lot of people participating in the [64:34] equity of companies uh like like some of [64:37] these AI companies that are still [64:39] private or or uh maybe going public [64:41] soon. Like there's still a lot of wealth [64:43] being created. Now again, I'm not a an [64:46] economist. I don't study the the lives [64:49] of everyday Canadians or Americans. Is [64:51] it easier or harder for them to to get [64:52] wealthy? I don't know. But I can tell [64:54] you from our our again acknowledged as a [64:56] very biased perspective as a firm that [64:58] deals with people who are getting [64:59] wealthy or or who are wealthy uh it does [65:02] not seem like that has that has [65:04] decreased. [65:05] >> Do you see any risks to our economy that [65:07] you think people are overlooking? [65:09] >> Tons of risks. I I think it's very easy [65:12] to get bogged down worrying about [65:14] questions like that and I think a lot of [65:16] people do. Like when I when I posted my [65:17] video recently on the biggest myths in [65:20] personal finance and I mentioned that [65:21] savings myth that you should save as [65:22] much as possible, a ton of the replies [65:24] were that well in this economy it's [65:26] different. You need to save as much as [65:27] you can because the future's going to be [65:28] awful. It's like maybe maybe it is. I [65:32] think being an investor inherently [65:34] requires optimism. I think if you're not [65:36] optimistic, you're not going to be a [65:37] good investor. It ties back to the [65:38] checking your portfolio too much. Like [65:39] if you if you just invest in stocks, [65:43] don't look at your portfolio, save what [65:45] you need to save, and don't worry about [65:46] it, you're going to be a better [65:47] long-term investor than if you worry [65:49] about whatever thing. I mean, the funny [65:52] thing is, right, you could have you [65:54] could probably you could have 10 [65:55] brilliant economists on your podcast who [65:58] would all give you some crazy niche [66:00] reason about why everything's about to [66:01] collapse. And maybe they're maybe [66:03] they're right to an extent. Maybe [66:04] they're not. Maybe it's already priced [66:06] in. I don't know. Um, and those things [66:08] are interesting to to hear about, but [66:10] are they actionable or useful for [66:11] investors? I don't I don't really think [66:13] so. So, I don't worry about I don't [66:15] worry about that stuff too much. [66:16] >> What do you think about Pokemon cards as [66:18] an investment? [66:19] >> I saw that episode, but I have not [66:21] listened to it. I don't know, man. Lego. [66:23] Lego is another one that apparently has [66:24] had great returns. I did listen to your [66:27] episode with uh Ben. That was cool. That [66:29] was a cool one. Uh, but yeah, there's [66:31] all kinds of weird stuff that you can [66:33] show like look how well this person did [66:35] investing in this weird thing. I think [66:37] collectibles as a general uh as a [66:39] general asset class. Wine is another one [66:41] that comes up. Uh cars is another one. [66:44] There's all kinds of weird stuff. It's [66:45] whatever. I think a lot of those asset [66:47] classes are are pretty thinly traded. I [66:50] I really like advice that works in [66:52] equilibrium. Like you can kind of tell [66:54] everyone to invest in index funds and [66:57] that that works. They're participating [66:59] in the market portfolio. You can't tell [67:01] everyone that they should have a 10% [67:02] allocation to Pokemon cards. market will [67:05] explode. [67:06] >> Now, speaking of being well diversified, [67:08] I think a lot of people also look at [67:10] their house as an investment. What are [67:12] your thoughts on the current conditions [67:13] of the housing market? [67:15] >> I I I do know the Canadian market better [67:17] than the US market. Uh I know housing [67:19] costs are high everywhere and they've [67:21] been going up and that's that's a [67:23] challenge that's true for both renters [67:24] and owners. But beyond that, I mean, I I [67:27] think that the the housing decision, how [67:29] much housing you should buy and whether [67:30] you should rent or or own it, I think [67:33] the assessment of that is still the same [67:35] as it would be under any market [67:37] conditions. [67:38] >> Even though now the monthly payments are [67:40] so much higher, the prices are so much [67:42] higher. What's surprising to me is that [67:44] when you look at the income ratio needed [67:46] to buy a house, it's the highest it's [67:47] ever been in history. And so I tend to [67:50] argue that maybe conditions today are [67:52] not as they were 5 years ago, 10 years [67:55] ago [67:56] >> because housing costs have gone up or [67:57] because the rent versus own trade-off [67:58] has changed [67:59] >> purely because prices and the carrying [68:01] costs are so high relative to what the [68:03] average income is. [68:05] >> Yeah. I mean I I agree that is a [68:07] challenge, but I mean people still have [68:09] to pay for housing. So I I don't know [68:11] how I don't know how it changes the [68:12] decision other than maybe you have to [68:14] live in a smaller a smaller place than [68:16] you would have 10 years ago. Do you [68:17] consider a house to be an investment? [68:19] >> Uh, not an investment. An investment. I [68:22] would say it's a consumption good. It's [68:25] a mix, I guess. When when you buy a [68:26] house, you're buying uh you're consuming [68:30] part of it, but you're also investing [68:31] some of your money in a real estate [68:33] asset. So, it's a it's a it's a [68:35] combination. I I I [68:37] think the big benefit of buying a home [68:41] is that it provides a hedge to the cost [68:44] of living in that specific home. Say you [68:46] to live in a very specific area that you [68:48] want to stay in. If the cost of living [68:50] in that area go up, rents are going to [68:52] go up a whole bunch. But the other thing [68:53] that's going to happen is that real [68:54] estate prices are probably going to go [68:56] up. And so if you own a house, you're [68:58] you're hedged. Housing costs went up in [69:00] that area, but so did the price of your [69:01] asset. So you're protected. Whereas a [69:03] renter might get priced out of their [69:05] home. That that to me is the best [69:06] argument for owning. [69:08] >> It's like insurance almost. [69:10] >> Yeah. It's kind of like insurance. It's [69:12] it's like there's a a really cool paper [69:14] that asks that question. why do people [69:16] invest so much of their net worth in [69:18] their home? And they come to the answer [69:20] that it's because it behaves like a [69:22] long-term bond that's perfectly indexed [69:25] to the costs of living in that specific [69:27] home, [69:27] >> which is a pretty cool way to frame it. [69:29] Now, I think that the other side of that [69:32] argument is that just like a long-term [69:34] bond, while it might produce coupon [69:36] payments that that meet your cash flow [69:38] needs or whatever, in the interm, in the [69:39] short term, it's going to be very [69:40] volatile in price. Long-term bonds are [69:43] super volatile. Individual home prices [69:45] are also super volatile and I think that [69:46] leads into uh how long you want to stay [69:49] in a place. If you want to stay in a [69:51] place hypothetically forever and you [69:52] want to make sure that you're not going [69:54] to get priced out of that house, the [69:56] only option is to buy. But if you might [69:58] leave in 3 years between transaction [70:00] cost and price risk, I think renting [70:02] starts to become pretty appealing. [70:04] >> You have a very interesting equation. [70:06] I've never heard this before that [70:07] determines if you should rent or buy. [70:10] Explain what this is and who should be [70:11] using it. [70:12] >> I called it the 5% rule. That's what [70:13] you're talking about. And it's not [70:15] always 5%. Some people got mad about me [70:17] about that. It's like, well, it should [70:19] have been 6% or 4% or whatever. But I [70:22] I'll explain the the premise and people [70:24] can figure out what number makes sense [70:25] for them. It's bas basically the idea [70:27] that there are unreoverable costs of [70:30] owning a home. Just like rent is an [70:32] unreoverable cost. You you rent a place [70:33] for $3,000 a month, you pay the rent, [70:35] you get a place to live, you have [70:37] nothing left over. There's no residual [70:38] value. when you own a home, people [70:41] imagine that you buy this asset, it goes [70:43] up in price and they don't they don't [70:44] account for all the costs that you that [70:46] you incur to live there. And so I think [70:48] you have to account for those to make [70:49] the rent versus own comparison. Uh and [70:51] so I just thought about okay, if we take [70:53] the property taxes, which are an [70:54] unreoverable cost, you pay taxes to the [70:56] municipality or whatever. Um and you get [71:00] whatever a nice city or whatever, but [71:02] there's nothing there's no residual [71:03] value. You pay maintenance costs, which [71:05] are just the cost of keeping the place [71:06] running. your video on your real real [71:08] estate returns and your your kind of [71:10] misadventures if we can call them that [71:11] in real estate maintenance cost was a [71:13] huge part of that it was [71:14] >> where people just they don't account for [71:16] it and it's all the little things I [71:17] thought you did such a good job in that [71:18] video because all those little things [71:20] that add up to like holy crap I paid x [71:23] number of dollars and spent x number of [71:24] hours maintaining my house so [71:26] maintenance costs and then the other big [71:27] one that I think really gets ignored and [71:30] you talked about this implicitly in your [71:31] video Graham is is the opportunity cost [71:33] of of capital if you have $100,000 of [71:36] equity in a home, that's $100,000 that [71:38] you could have had invested in the stock [71:39] market. And that difference in expected [71:41] returns between home equity and stock [71:44] market appreciation is an opportunity [71:46] cost. And then if you're using leverage, [71:47] you also have the the cost of of [71:49] interest. So you end up with a a [71:51] weighted average cost of capital, but [71:53] whatever. And so you add all that up and [71:55] based on the numbers that I used in that [71:57] video back then, I came up with 5% as a [72:00] number. And all you do is you take that [72:02] and you look at the amount of rent that [72:03] you would be paying and you compare that [72:05] 5% of the value of a home that you would [72:07] otherwise buy uh to the amount of rent. [72:11] And if they're equal, you're financially [72:14] indifferent roughly approximately. Uh if [72:17] but it it also shows you if owning is [72:19] much more expensive. Maybe 5% of the [72:21] property is whatever five grand a month, [72:23] but you could rent a similar place for [72:25] $4,000 a month. And it's okay. renting [72:28] is actually pretty cheap relative to [72:29] buying this house. And it can tell you [72:31] the other thing, too, that may maybe [72:32] renting is more expensive. So, it's it's [72:34] rough. It's not perfect, but I mean, in [72:37] analysis that I've done since then, it's [72:39] it's actually pretty good. [72:41] >> So, again, I think we're going back to [72:43] the math versus behavior. Yeah. And I [72:46] think there are also intangible benefits [72:49] of owning a house that even for myself I [72:52] try to account for because I put myself [72:55] in the position where mathematically I [72:57] think it's better to rent right now. But [72:59] then I think realistically could I be [73:03] happy renting a house? And I think for a [73:06] home that you intend on keeping or [73:08] staying in 10 15 years, I don't know if [73:10] you would be happy or at least for [73:12] myself renting a home for that long and [73:14] not being in control of that house and [73:18] like what you do with it and the fixes [73:19] and the you know moving a you know [73:21] changing a bathroom. So where do you [73:23] build in the intangible benefits? [73:25] >> I think a lot of what you just described [73:27] is actually a trap that people don't [73:28] account for. The perception that you [73:31] have control and can do whatever you [73:32] want. It seems really compelling. [73:34] Listen, I've lived like I'm I'm in the [73:36] middle of living this right now where we [73:38] bought a house 6 years ago [73:40] >> and ever since we moved in, we've been [73:42] doing stuff like a bathroom, like a I [73:45] mean, we we had one wall in the house [73:47] that was never finished when the house [73:48] was built. It's in a room with a really [73:49] really high ceiling. [73:51] >> And so we finished the wall and on that [73:53] wall I put a full glass backboard [73:55] basketball hoop cuz I was like that'd be [73:57] super cool. Like we're doing this [73:58] anyway. It's an extra whatever few [74:00] thousand to put that. I'm going to do it [74:01] and stuff like that's very fun. I would [74:03] never be able to do that in a rental. [74:05] And I love I can I can literally make [74:07] myself breakfast and then go shoot hoops [74:08] like right beside the kitchen, which is [74:10] which is awesome. But every one of those [74:13] little things is thousands of dollars of [74:15] costs that I would not have incurred as [74:17] a renter. [74:18] >> So that's you can view that as awesome. [74:21] Or you can think about are renters are [74:24] people who rent their homes any less [74:26] happy than owners when you look at the [74:27] broad data. Like I again I've I rented [74:29] with my family with a wife and kids for [74:31] six years. We've now owned a home for 6 [74:33] years. I don't think we're any happier [74:35] as homeowners. Honestly, I think the [74:38] added stress of home maintenance and [74:39] managing all the renovation stuff we've [74:41] been doing is probably a net negative [74:44] relative to when we were renting and [74:46] landscaping, man. Like, you know, I [74:48] mean, you know, real estate better than [74:49] I do. It's it's brutal. [74:51] >> Uh, and then when you look at the data [74:52] on this, and there have been studies in [74:54] uh Canada uh and a few other countries [74:56] that ask whether homeowners are happier [75:00] than renters. There there is one [75:01] American study too that it was a sample [75:02] of 600 women I believe specifically. But [75:06] asking that question are homeowners [75:08] happier than renters? And the answer is [75:10] generally no when you look at a broad [75:12] sample of data and I mean that that [75:13] lines up with with my experience. So I I [75:15] believe it. It's good good confirmation [75:17] bias for me. So it's like I that should [75:20] be an intangible. It seems like that's a [75:22] great argument. You can do whatever you [75:23] want whatever you want with your house. [75:24] But I really think it's a license to [75:26] spend just ungodly amounts of money [75:28] doing stuff that's not actually going to [75:30] improve your life. And I say that as [75:31] someone who's doing it right now. [75:34] >> Another thing that I'm curious about is [75:35] I posted on Twitter and it got a lot of [75:38] attention. It got 4 million views. I [75:40] said for those that have paid off their [75:42] mortgage and own a home free and clear, [75:45] do you have any regrets? Almost no one [75:48] posted that they had regrets. There's a [75:50] few people who had regrets that were [75:51] very specific to paying off a mortgage [75:54] that was sub 3%. But every single other [75:58] person said that the freedom and the [75:59] feeling they got by owning a home free [76:01] and clear superseded anything else. And [76:04] they said it was the best feeling in the [76:06] world. What What are your thoughts on [76:08] that? [76:09] >> I've got a couple great anecdotes that [76:10] speak to this. So in in Canada, we have [76:12] to get Canadian for a second here for me [76:14] to explain this. [76:15] In Canada, when you take out a mortgage [76:17] to buy a home, the interest is not [76:19] taxdeductible. But when you borrow money [76:22] to invest in an asset that's expected to [76:24] produce income, like stocks that that [76:25] pay dividends, the interest becomes [76:28] deductible. And so sometimes we'll see a [76:30] client who comes to us and they have [76:31] whatever a million dollars in their [76:32] portfolio and they have a whatever a [76:35] $500,000 mortgage that's just borrowed [76:38] to purchase the house non- tax [76:39] deductible. and we'll we'll say, "Hey, [76:41] you know, we could use some of your [76:43] portfolio to pay off your mortgage." And [76:45] then if you want to keep the mortgage, [76:46] you can reborrow, reinvest back in the [76:49] portfolio. You end up in the exact same [76:50] place, but your interest is now [76:51] taxdeductible. It's just smart financial [76:54] planning if someone's in that situation. [76:56] And I would say 95% of the time, there's [77:00] one case where the where the person [77:01] really did go through with it, but 95% [77:03] of the time, they do step one, we we [77:05] sell some of the portfolio, we pay off [77:06] the mortgage, and then we're like, okay, [77:08] now now we're going to go back to [77:09] lender. We're going to we're going to [77:10] reborrow and invest back in the stock [77:12] market. And 95% of the time, the person [77:16] is like, "No, you know what? I actually [77:18] feel really good having the house paid [77:20] off. We're just not gonna we're not [77:22] going to reinvest in the market." Which [77:23] is fine. That's great. that was the [77:25] right decision for them, but it going [77:27] through the actual process. At first, [77:29] it's oh, this is a great idea. We're [77:31] going to do it. And then they have a [77:32] paidoff house and they have to make the [77:35] decision to reborrow to invest and they [77:37] don't do it. So, I I think that speaks [77:38] volumes to your to your question. [77:40] >> I wrestle with the exact same thing [77:42] because I know at some point I want a [77:45] house with more space. We have family to [77:47] visit, uh, you know, with a bigger yard, [77:50] things like this. And then I I wonder [77:53] for that exact same purpose is that the [77:56] the primary uh home deduction really is [77:59] capped at 750 grand. Everything else [78:01] after that, there are ways of borrowing, [78:03] but it seems like the best thing to do [78:04] is if you have something relatively [78:06] liquid, use that to buy the house and [78:08] then pull a margin and then buy back the [78:12] position that you had sold to buy the [78:14] house. And I wrestled with the exact [78:15] same thing is would I would I do that [78:18] regardless? It's like why am I not doing [78:19] that now? Why didn't I do that 5 years [78:22] ago? I think that lends itself to uh [78:25] just the peace of mind that I I've never [78:28] really controlled for peace of mind [78:29] until recently that it just something [78:31] clicked after dealing with all those [78:32] rental properties where now I place a [78:34] premium for just easy. [78:37] >> Yeah. I I think there's a there's a lot [78:39] of psychological benefit to having a [78:41] having a paid off house. I also don't [78:43] think people on the other side of the [78:45] argument. I don't think people fully [78:46] understand the costs of having a paid [78:48] for house. Almost every video that I [78:50] make on renting versus owning, people [78:52] will say, "Well, the math changes [78:54] dramatically in favor of owning once [78:55] your house is paid for." As if it's [78:57] better to have a paidoff house. It's [78:59] actually way worse. [79:01] >> Yes. When you look at the total cost of [79:02] owning, including the opportunity cost [79:04] of equity with a house that's been [79:05] bought on cash or or is fully owned [79:07] otherwise, uh, and you compare that to a [79:10] renter, the fully paid for home is [79:12] almost always going to look worse than [79:13] renting and investing in the stock [79:15] market. Mortgages bring owners onto the [79:18] same level as renters. Um, but if you [79:20] have a paid for house, it's it's costing [79:22] you far more, which is the cost of of [79:25] peace of mind, and there's nothing wrong [79:27] with that. At what point does [79:28] optimization just become not worth it? [79:32] And I'll give you an example, a personal [79:34] example. I was looking at doing a box [79:35] spread, but I had some taxfree MUN bonds [79:38] too. And so I was thinking if I do the [79:40] box spread, I can get a capital loss. [79:42] And then I look at my after tax return [79:44] compared to what I'm earning from [79:45] tax-free munis. And I'm doing all these [79:48] like mental calculations. And then I [79:50] determined through Claude analyzing [79:52] every single aspect that I would be [79:55] saving [79:57] 0.02%. [80:01] By doing all of these like things and I [80:05] think like the net amount was like it [80:07] was a negligible amount. I mean it's the [80:09] difference of uh you know a few hours in [80:12] the market up or that's really what it [80:14] was. When could people take it too far? [80:17] >> So I think it's subjective. I think in [80:19] that case, you've got to look at the [80:20] amount of time that you spent doing it, [80:22] but you've also got to look at how much [80:23] you enjoyed spending that time. I think [80:24] it's an interesting example because you [80:26] might have really loved saying that you [80:28] did a box spread [80:30] >> and maybe that's something you could [80:30] talk about in content or whatever and [80:32] maybe that's a reason that it doesn't [80:33] matter so much. [80:34] >> Um, but if you account for the cost of [80:36] your time in in that scenario, you're [80:38] maybe a ne negative even. So, I think [80:39] people have to account for time, but [80:41] it's also highly subjective just based [80:42] on an individual's preferences. We we've [80:45] brought uh really good tax planning to [80:48] to some folks that that work with us uh [80:52] and shown, you know, you could save over [80:54] your lifetime, whatever, hundreds of [80:55] thousands of dollars in net present [80:57] value of tax by doing this thing. And [81:00] some people say that's great. I want to [81:02] I want to implement it. And some people [81:03] say, you know what, for a few [81:05] hundred,000 is just not worth the [81:06] complexity in my life. [81:08] >> So, I think it's highly subjective. But [81:10] I think in general people do get bogged [81:12] down in the details and try to optimize [81:14] things when they should just be, as we [81:16] talked about earlier, buying index funds [81:18] and not worrying too much about it. I [81:20] have to say though, for the few people [81:22] who this applies to, this will save five [81:25] people, could be hundreds of thousands [81:27] of dollars. If you're buying a primary [81:29] residence and you have a few million [81:32] dollars minimum in a brokerage uh that [81:36] supports options, [81:38] you buy a house, primary residence with [81:40] a box spread and take a capital loss on [81:42] it. It's not financial advice, but look [81:44] into it. The few people this applies to. [81:46] It is mindblowing. No one knows about [81:49] it. It's very complicated to explain. It [81:52] took me days to wrap my mind around how [81:54] this thing works. It is incredible. It's [81:56] like uh it's it's a superpower to be [81:59] able to do that. You get borrowing right [82:01] now net after tax high 3%. It's [snorts] [82:05] crazy. Fixed interest only. It's [82:09] incredible. But it applies to like five [82:11] people watching. So I'll end it there. [82:12] What does money mean to you? Uh money is [82:15] a tool that lets you buy time. I think [82:19] is really its fundamental [82:22] purpose in our lives. [82:25] That's that's really it. It's a It's a [82:27] tool. You you you work or or or start a [82:29] business or or create an asset or [82:30] whatever to to create money, but what's [82:33] the money actually for? Is to give you [82:35] ownership of your time. [82:36] >> And so, how do you use money to produce [82:39] more time in your life? Like, what are [82:41] the main things that you spend money on [82:43] that you've noticed improve your [82:44] happiness the most? [82:45] >> There's a whole bunch of things really. [82:48] I mean, we we uh we had one vehicle for [82:51] years. We have I have four kids. M [82:53] >> um we had one vehicle up until 2 years [82:55] ago. We finally got a second vehicle [82:58] because there would be cases where [82:59] whatever you had to wait for the other [83:01] person to be done with the car. So that [83:03] was that's a big expense, but it's been [83:05] it's been really useful uh just for time [83:08] use and not having to wait for wait for [83:10] the vehicle. Another big one is meal [83:14] prep, meal delivery. We we get uh [83:17] prepared meals delivered to our house [83:19] every week so that we don't have to [83:20] worry about cooking. And that's [83:22] something that we did that years ago and [83:23] then we moved to a more rural area. We [83:25] couldn't get it delivered out there [83:27] anymore. And just a few weeks ago, I [83:28] found a service that does deliver to our [83:31] our address and so we've been doing that [83:32] again. [83:33] >> Personally, I don't know if you guys do [83:34] that, but I find that to be [83:35] >> cook unity. I love it. Okay. [83:37] >> I just got it. I actually brought it to [83:38] the warehouse today. [83:39] >> I find it so it just takes such a mental [83:41] load off not having to plan your grocery [83:44] shop, not having to actually cook and [83:45] clean up and all that stuff. So that [83:46] that for me is a is a big one. Uh and [83:49] but then also so there's time saving and [83:51] then there's also how you use your time. [83:53] Uh and money is a tool for that as well. [83:55] Uh we went on a a family trip to the [83:58] west coast of Canada this summer. It was [84:00] the first big trip we've taken with all [84:02] four of our kids on an on an airplane [84:04] and all that stuff and that was [84:05] incredible. Trips are cool because the [84:08] anticipation leading up to them brings a [84:10] lot of joy. The actual trip hopefully it [84:12] goes well. Ours did. Brings a lot of joy [84:14] and then the memories give you lasting [84:17] joy. So, I think stuff like that is is [84:19] great. And then I spend money on uh on [84:22] equipment like I've got a kayak and a [84:24] mountain bike and all that kind of [84:25] stuff. So, those are the really the big [84:27] ones. You have a really interesting [84:29] video that I've probably watched at this [84:30] point three or four times, which is how [84:33] money relates to happiness. What were [84:35] the the the findings of this? Cuz a lot [84:38] of it was backed in science. And so, [84:40] it's nearly, you know, undisputable. I [84:43] mean, there's evidence and data that [84:44] suggests that certain things actually do [84:46] produce happiness and certain things [84:48] negatively affect your happiness. What [84:50] did you find out in the making of that [84:52] video? [84:52] >> Yeah, I think a big one that [84:56] people often don't know until they see [84:58] the research is that the relationship [85:00] between money and happiness, if you just [85:02] look at income levels and happiness, [85:05] there's a very weak relationship. Some [85:07] older research suggests that there was a [85:08] plateau where above certain levels of [85:10] income, you don't get any happier. more [85:11] recent research has found that it it [85:13] does continue to increase but the [85:15] relationship is very weak. Uh I think [85:18] that's the part that gets missed even in [85:20] with more more updated research that the [85:22] research the new research shows okay if [85:24] your income goes up whatever from [85:26] 100,000 to 500,000 there is there is a [85:28] bit of a happiness increase but it's not [85:30] meaningful for a big jump in income it [85:32] was like five points on 100 point scale [85:34] of happiness like we're talking about [85:36] nothing crazy there was there's another [85:38] stat from one of those papers that [85:39] talked about how a big income increase [85:41] was about equivalent to a headache in [85:44] terms of effect on happiness so I think [85:46] that that really messy relationship with [85:49] between happiness and money is is really [85:52] important. The other stuff I talked [85:53] about in that video that I think is [85:55] meaningful is time versus money [85:57] preference. People who prefer money over [86:01] time tend to be less happy. So if if [86:03] you're given the choice between having a [86:05] little bit more money or a little bit [86:06] more time, people who choose time will [86:08] tend to be happier people. They also [86:10] tend to have better relationships with [86:11] their spouses. And there's a few other [86:13] data points in there like that. Uh the [86:16] data on social comparison I think is so [86:18] important. If you have people around you [86:21] who are wealthier, who have a nicer [86:23] house or a nicer car, that tends to [86:26] really decrease your happiness. So [86:28] interesting implications of that [86:29] [clears throat] like who you spend time [86:30] with. I think this happens as people get [86:32] wealthier, they start hanging out with [86:33] other wealthy people and there's always [86:35] someone wealthier and so you end up [86:37] feeling bad about your level of wealth [86:40] and your position in life. I think [86:42] that's really important. It has [86:43] implications for where you live, too. [86:44] Like buying a a not so nice house in a [86:47] really nice neighborhood might not be [86:48] the best idea. [86:50] I think those are the those are some of [86:52] the biggest takeaways. I'm I'm curious [86:53] what you've watched three times now. [86:55] What are your biggest takeaways? [86:56] >> I mean, I always heard about the [86:57] commute, you know, and that was kind of [86:58] interesting to hear about. And then I [87:00] thought the time and the money thing was [87:01] the most interesting out of everything [87:03] that you covered in the video. What in [87:05] the research of finding the happiness [87:08] and money relationship, what have you [87:13] practiced in your own life that has made [87:15] the most meaningful impact? [87:16] >> Definitely having a preference for time [87:18] over money is [87:20] >> so what does that mean in application? I [87:22] >> if there was something that that I was [87:24] offered that would give me money or or [87:27] or save me money or I could choose to [87:29] have more time with my kids and and my [87:32] wife as a rule. Usually I'll take more [87:36] time with my kids. Being here with you [87:38] guys is a bit of an exception. [87:40] >> Not that we appreciate it. [87:41] >> Not that I'm getting paid to be here, [87:43] but it's, you know, it's a business [87:45] trip. So, but that's a case where you [87:48] look look at the the perma model that I [87:49] mentioned earlier. Positive emotion, um, [87:51] uh, engagement, relationships, meaning, [87:53] and accomplishment. Relationships in my [87:55] family are super important, but so is so [87:58] is accomplishment. So is engagement. and [88:00] trying to continue to build my my my [88:03] YouTube channel and and uh my ability to [88:05] create content is important to me. So [88:07] anyway, I had to make that trade-off. Am [88:08] I going to take a few days away from my [88:09] family to come out here, which I did, [88:11] but generally speaking, uh if an [88:14] opportunity comes up or like, hey, you [88:15] do you want to come do this? Do you want [88:16] to come do this speaking engagement? Um [88:18] do you want to come to this conference? [88:20] Usually, I'm going to turn that down. [88:21] >> One of your top comments on that video I [88:23] thought was really interesting. It's [88:25] always remember that money is just a [88:27] means to an end. It's not an end in and [88:30] of itself. So, what does this mean to [88:31] you? [88:32] >> It's like I said earlier, money is a [88:34] tool. It's a tool that lets you do [88:36] stuff, but I think you have to [88:37] understand what it can do. And and [88:40] you've got to understand what the [88:41] research says about the best ways to use [88:43] money for it to be a useful tool. I [88:46] think a lot of people end up amassing [88:47] huge amounts of wealth, but are unhappy. [88:50] I think it's a very common a very common [88:52] story for for lots of different reasons. [88:54] Uh but yeah, there's a there's an old [88:56] paper that I based portions of that [88:58] video on uh called if money doesn't make [89:00] you happier, you're not spending it, [89:01] right? And the premise is just that, you [89:03] know, you can have a ton of money and [89:05] engage in activities that don't make you [89:07] happier. But that's not because money [89:09] doesn't improve happiness. It's because [89:10] you just don't know how to use money to [89:11] make yourself happier. So I think being [89:13] in tune with what you want out of life, [89:15] what your priorities are, and what the [89:17] evidence says about the type of spending [89:19] that is is most beneficial is really [89:22] important. At what point does increased [89:24] wealth start to see diminishing returns? [89:27] >> I I've I've heard you guys talk about [89:28] this this question with other guests. [89:30] I've thought about it a lot. I've seen a [89:32] lot I I you know I I've worked with and [89:34] know a lot of very wealthy people and I [89:38] really think it depends on the person. [89:40] >> Like there there are people who have and [89:42] I'm not just talking about the people [89:43] that I know, but there are people who [89:44] have tremendous amounts of wealth [89:47] >> and are still wondering if they can [89:49] spend a little bit more and still be [89:51] okay. And then there are people who have [89:52] whatever 5 million, 10 million who are [89:54] just perfectly content. So I I really [89:57] think it does depend on on the person [89:59] and and what their objectives are and [90:00] what their perspectives are. But I I [90:03] don't know if there's a single a single [90:05] rule on that. [90:05] >> Was there a moment for you? [90:07] >> I don't think I'm there yet really. Like [90:10] I don't think if I stopped working right [90:12] now, I'd probably have to make some [90:14] changes to my lifestyle that I wouldn't [90:15] want to make to to be okay for the rest [90:18] of my life. And I Yeah. So, I'm I'm not [90:21] there yet. [90:21] >> What's interesting to me in in doing the [90:23] research on you for this podcast is that [90:25] while finance may be the thing that [90:27] you're a professional in, it seems like [90:29] the thing that you're really passionate [90:30] about is philosophy and like the [90:32] psychology of money, at least based off [90:34] the content that I've watched of you. [90:38] What has been like your single greatest [90:40] finding in that whole adventure you've [90:43] gone on researching that? [90:45] >> Oh man, I don't know if there is a [90:47] single greatest finding. Maybe the [90:48] single greatest finding is how important [90:50] that side of finance is to people's [90:53] actual decisions. We can do find all the [90:56] research on why index funds are good and [90:58] covered calls are bad or whatever. Um [91:00] but none of that matters if it isn't uh [91:04] if it isn't connected to the psychology [91:05] of the person making a making a [91:07] decision. So that that's I mean it's a [91:10] good question and I think really when I [91:11] think about it the answer is that those [91:13] two things are are connected. They're [91:16] they're intimately connected. I I set up [91:18] my video, the the the using your money [91:21] to be happier video by saying like, [91:22] "Hey, this might be this might seem like [91:24] a weird topic for a chief investment [91:25] officer and like a a quantitative [91:28] finance person to be talking about, but [91:31] all of these important financial [91:32] decisions that I'm always talking about [91:34] are they're like you said earlier, [91:36] they're means a means to an end to [91:38] achieve the life that you want to live." [91:40] And so for all of the quantity finance [91:42] research stuff to be useful, it has to [91:44] be anchored in uh in people knowing what [91:47] they're trying to achieve. [91:49] >> It is a means to an end to achieve the [91:50] life that you want to live. But then you [91:52] also talk about the life cycle model [91:53] which is trying to even the curve of [91:56] happiness and then using money to kind [91:58] of flatten that. Can you explain a [91:59] little bit more on that? [92:00] >> Yeah. So the life cycle the life cycle [92:03] model is just the idea that people want [92:05] to smooth their consumption through [92:07] their lifetimes. And if you think about [92:09] your lifetime earnings, typically people [92:11] are going to have lower incomes when [92:12] they're younger and their incomes are [92:14] going to increase as they get older and [92:15] get into the peak of their careers and [92:16] then it's going to decrease a little bit [92:18] as they stop working and then it's going [92:19] to stop. And so the idea of the life [92:21] cycle model is that uh people want to [92:24] smooth their consumption throughout [92:25] their lives, which means saving less and [92:28] maybe even borrowing early on in life, [92:30] which is super common. Like people take [92:31] mortgages, they take student loans and [92:33] all that kind of stuff. Like I think it [92:34] it describes reality fairly well. And [92:36] then as you start earning more [92:38] throughout your career, that's when you [92:39] start saving. And then as you get into [92:41] retirement, that's when you start [92:42] disaving or spending your your savings. [92:45] The real world implications are one of [92:47] the things that we talked about earlier, [92:48] which is that maybe young people [92:49] shouldn't save that much and should be [92:50] comfortable borrowing, which I think [92:52] like again like I think people do that. [92:54] They take student loans, they take [92:55] business loans. I think that's a that's [92:57] a pretty I don't I don't think it's [92:59] controversial to say. Uh, but then the [93:01] tricky part is you do have to start [93:03] saving eventually throughout your peak [93:04] earning years and you've got to save [93:05] enough to be able to retire. But that's [93:07] that's the concept. [93:08] >> What do you think is an appropriate safe [93:09] withdrawal rate given today's [93:11] valuations? [93:12] >> I' I've made so many videos videos [93:14] bashing the 4% rule, so people are [93:16] probably going to be like pulling their [93:18] hair when I say this. 4% is probably [93:19] fine, [93:20] >> but it really depends how you're using [93:22] it. However, I I don't think it's safe [93:26] to actually literally spend 4% of your [93:29] starting portfolio value adjusted for [93:31] inflation for whatever 40 or 50 years. [93:34] >> But I also don't think that's what [93:35] people will actually do. I think people [93:37] who who are actually retired and living [93:39] off of their portfolios, and I see this, [93:40] we see this with our clients. [93:42] >> If the financial markets are not doing [93:44] well, people will scale back. They'll go [93:46] on a less nice cruise. Maybe they'll [93:48] skip the cruise altogether that year. [93:50] they'll they'll give their kids a [93:52] smaller down payment for whatever. [93:54] >> People will make sacrifices, they'll cut [93:55] back. The whole premise of the 4% rule [93:57] and the way that Bill Ben did that [93:58] analysis and the way that all of the [94:00] analysis replicating it since then has [94:02] done is is spending the exact same [94:05] amounts adjusted for inflation every [94:06] year. And there's all kinds of other [94:07] stuff in there, too. Like even if people [94:09] don't cut back spending when markets are [94:10] bad, I don't know if it's true that [94:12] people are always going to perfectly [94:13] index their spending to inflation. So, [94:15] yeah. Anyway, but I think as a [94:18] guideline, if you're trying to figure [94:19] out how much can I actually spend for my [94:21] portfolio, uh, or how how much roughly [94:24] can I uh do I need to have saved to fund [94:26] my retirement safely, 4% is probably [94:28] fine. But I only say that on the on the [94:31] basis that people are not actually going [94:32] to follow the 4% rule that they're going [94:34] to follow some more flexible spending uh [94:36] spending path. If it has to be fixed, if [94:39] someone says I want I want a number that [94:42] I can spend that dollar amount adjusted [94:43] for inflation for the rest of my life, [94:45] I'm probably closer to 3%. [94:47] >> That's how I've modeled the two. It [94:49] seems like the 4% rule, he actually came [94:51] out and said it was actually more like 5 [94:53] a 12%. [94:54] >> Well, he he's he changed stuff, right? [94:56] He he went at it in small cap stocks. He [94:58] he's done he's modeled different [94:59] scenarios like in this in this inflation [95:02] environment, in this valuation [95:03] environment. He's done tons of tons of [95:05] stuff since then. I think that the most [95:07] useful research that followed Benginans [95:10] was the research that looked at [95:11] international stocks. The US market like [95:13] we know looking backward that it is the [95:16] best performing stock market in in [95:18] history. And so to look at the history [95:20] of the US market even yes they had the [95:22] great depression which interestingly [95:24] that's not the year that breaks the 4% [95:26] rule. Do you guys know that [95:27] >> it was the 1970s? Correct. [95:29] >> 1968. [95:30] >> Yeah. [95:30] >> That's the worst period to retire [95:31] anyway. That's because inflation was [95:32] super high not because returns were low. [95:34] I love that that point. [95:37] >> Uh anyway, even with the Great [95:38] Depression, you look around the world, [95:40] returns have just been lower than they [95:42] have in the US. And when you run the [95:44] exact same analysis that Bill Dangan did [95:47] on other markets, you get a lower number [95:49] universally. I think Canada is the [95:51] closest. Maybe New Zealand was up there, [95:52] too. I don't I don't remember. But most [95:55] countries and the world index, which [95:56] includes the US market at its market [95:59] capitalization weight, do not support [96:01] the 4% rule. So that to me is like yes, [96:04] Bill Bang Bill Bangan did research that [96:06] is practically so useful because it [96:08] gives people quick napkin math to figure [96:10] out how much they need to save for [96:11] retirement but it was based on US [96:14] history which we know after the fact to [96:16] be exceptional. [96:18] >> So I was modeling it 70% US equities 30% [96:22] international for someone retiring [96:26] in their 30s. And it seems like, by the [96:28] way, what's interesting is that after [96:29] about 40 years, there's no downside of [96:35] modeling longer. Like if you live to [96:37] 150, after about 40 something years, it [96:40] doesn't matter if you live to 80, 100, [96:43] 200 years because your expected return [96:46] over time is going to be so positive [96:47] that it that it doesn't matter beyond [96:49] that. But when I was modeling that [96:51] scenario through also world markets, it [96:55] came out to 2.75% [96:58] would have a 99.9% [97:00] success rate uh success ratio. Success [97:03] ratio I can't say that. [97:04] >> Yeah, that sounds reasonable. There's a [97:07] paper that came out recently that uses [97:09] uh a simulation technique called block [97:11] bootstrap. But basically they they take [97:13] actual historical returns for a whole [97:15] bunch of stock markets around the world. [97:16] They have 39 stock markets in there and [97:18] and bond markets and they use that to [97:21] create a million simulated possible [97:23] outcomes. So anyway, it's a it's a good [97:26] without getting into the details, it's a [97:27] good simulation technique that gives you [97:29] a realistic distribution of outcomes [97:31] based on actual history. And they found [97:34] that the 4% rule, I believe for for a [97:37] normal American retiree, the 4% rule had [97:39] a failure rate around 7%. Hm. [97:41] >> So it's I mean it's probably similarish [97:43] to your numbers if you if you did the [97:45] same type of analysis. [97:46] >> But you think broad-based average person [97:49] spend fixed amount 3% for a long [97:52] retirement for someone who wants to [97:54] retire early. [97:55] >> I think that's I think that's [97:56] reasonable. I did one video where where [97:58] a paper by those same authors but a [98:00] different paper. [98:01] >> They looked at just uh domestic stocks. [98:03] They didn't include international [98:04] stocks. Now domestic stocks in their [98:06] setup is not American stocks. It's the [98:10] stocks of any domestic country from the [98:13] from the perspective of any investor in [98:15] one of the countries in their sample. So [98:17] the way they do their sampling method is [98:18] they'll pull on average a 10-year block [98:20] from maybe it's the US and then they [98:23] pull another block from another country. [98:24] So maybe it's 10 years of the US and [98:26] then maybe 12 years of Canada and then [98:28] maybe four years of Italy. And they keep [98:30] running this until they have a run of [98:33] returns and using only domestic data. So [98:36] that means returns of the stocks of a [98:38] country measured in their own currency. [98:41] Uh they found a 2.7% I believe saved [98:44] with draw rate. But when you introduce [98:45] international stocks, at least in their [98:47] historical data, it's had a big a big [98:49] benefit. [98:50] >> I feel like a lot of what's discussed in [98:53] this podcast is still not necessarily [98:55] actionable and applies to so few people. [98:57] So, if someone's made it this far and [98:59] they still haven't walked away with one [99:01] single decision or habit or behavior [99:04] that they should have, a decision they [99:06] need to make about their own finances, [99:07] what would you say is the safest overall [99:10] advice or thing that you would do if you [99:12] were them? [99:13] >> If I'm a random person listening to this [99:15] podcast, I would probably stop checking [99:18] my portfolio five times a day. [99:23] I would probably invest in a globally [99:26] diversified portfolio of of index funds [99:28] and not worry about it. So I would stop [99:30] dabbling in individual stocks and [99:32] covered calls and use that time to [99:34] invest in my human capital. [99:36] >> Man, Jack, [99:37] >> there you go. [99:37] >> But honestly, those are probably the big [99:39] ones that for for most people, that's [99:40] such a huge portion of it. Pay off high [99:42] interest debt. We haven't talked about [99:43] that at all, but if people are o [99:45] overspending and ending up in credit [99:46] card debt or or unsecured consumer [99:49] financing that's costing them whatever [99:50] six or seven% a year, paying stuff like [99:52] that off is an easy win. Uh but for what [99:56] we've talked about, I think not checking [99:58] your portfolio too often. Being [100:00] optimistic, maybe that's the easiest [100:02] takeaway, being optimistic and not [100:03] worrying about a lot of the stuff [100:05] because, and I know we can't predict the [100:07] future and maybe it's possible that the [100:09] apocalypse is coming. I don't know. But [100:11] I think investing is predicated on [100:14] optimism. [100:16] >> Which is more true? That happy people [100:17] make more money or that money makes [100:19] people happy? [100:20] >> Oh yeah, that's a great question. [100:21] >> I don't know. I don't know if we have [100:23] research that that uh untangles that [100:27] that question. I don't know. I think [100:29] there's probably a relationship. I think [100:30] happier people probably do make more [100:31] money. that that that later paper that I [100:35] mentioned that found that there is no [100:36] plateau on income did find that there is [100:41] no plateau for happy people. So for [100:43] happy people, people who are generally [100:45] happy their their their happiness set [100:47] point is higher, their happiness tends [100:50] to increase log linearly with more [100:53] income with no end. [100:56] Unhappy people do have a plateau where [100:59] their happiness increases up to a point [101:01] and then it stops increasing. So maybe [101:02] that maybe that does answer your [101:04] question. [101:04] >> Is there anything that you wish we asked [101:06] you that we didn't? And do you have any [101:08] questions for us? [101:09] >> No, I I think your questions were I [101:11] think your questions were great. Co [101:13] covered a lot of the stuff that I've [101:14] talked about on on my channel. Uh a [101:17] question for you guys would be, is there [101:18] anything that I have not covered on in [101:22] any of my content that you'd like to see [101:24] me cover? [101:24] >> I always find so these are the videos [101:26] that are doing really well right now. Is [101:28] these videos is2 to3 million enough? [101:32] the they're blowing up. I'm seeing [101:34] everyone making these videos and they [101:35] all do well. I'd like to get your [101:37] perspective on the ideal amount of money [101:40] to have and aim for and what that means [101:43] in terms of spending. [101:44] >> The other concepts are levels of wealth. [101:47] They always do well right now and it [101:50] seems to be a trend of like, hey, what [101:52] does a million buy? What is $5 million [101:54] by? What's $10 million in retirement [101:55] look like? And you cap it at like 10 to [101:57] 20 million. like what does a $20 million [101:59] retirement actually look like in [102:01] practice and what does that get you [102:04] >> and how does that differ from five [102:08] content I would love for you to pull [102:09] some of the people that have their [102:12] wealth with you [102:13] >> and you could then have your own data [102:15] >> oh yeah [102:15] >> about happiness as it relates to [102:17] different amounts of wealth that would [102:19] be really interesting because I know [102:20] that Dave [clears throat] Ramsey pulls a [102:22] lot of the people that [102:23] >> listen to him and he says oh we've made [102:25] this amount of millionaires you could do [102:27] something similar with happiness and [102:29] wealth. [102:29] >> I'd also like to see you do investment [102:32] breakdowns. Like Humphrey Yang has [102:34] recently been doing subscriber portfolio [102:36] reviews. [102:38] >> I think the money guys have also done [102:40] portfolio reviews. I'd like to see you [102:42] take someone's portfolio and break it [102:45] down and say, "This is what you're doing [102:46] right, this is what you're doing wrong. [102:48] Here's the age. Here's what I'd be [102:49] improving on." I think that could do [102:51] quite well. I'd like to see those videos [102:53] from you. [102:54] >> Those are good ideas. And then more [102:56] flames in the thumbnail, preferably [102:58] >> and more hey videos about Graham. [103:01] >> All of those things that is that makes [103:03] >> yet to see flames in your thumbnail. And [103:04] they do that [clears throat] does [103:06] increase CTR substantially. [103:08] >> You know what's funny? Back in the day. [103:09] Yeah. Uh this is back like Santa Monica [103:12] time period when I was living in [103:14] Graham's guest house and we would meet [103:16] up every single day and discuss titles, [103:18] thumbnails, strategy, what's go what's [103:20] working on YouTube, what's not working. [103:22] And the term that we used for thumbnails [103:24] was Armageddon [laughter] [103:26] is what we would call it. And if you [103:27] look back in like 2020, 2021 at Graham's [103:30] thumbnails, like there was a a very [103:33] popular image we would use and we would [103:34] use it as a background and it'd be like [103:36] red flames and blue flames like hitting [103:38] colliding colliding and it was just like [103:40] the battle of good versus evil. And it's [103:42] like why I'm cutting up my credit cards. [103:44] It's like you know why I'm canceling my [103:46] Chase Sapphire Reserve and then in the [103:48] background it's just like some atomic [103:50] bomb going off. No one was doing that at [103:53] the time. And I remember we did this and [103:55] we're like, "Holy crap, this is we found [103:57] it. [103:58] >> We found it. We found the unlock the [104:01] cheat code of YouTube." And I remember [104:03] what we would do is we'd post it and [104:06] then I'd sit there and I'd scroll on [104:07] YouTube until my video comes up and it [104:09] would just you would see it. It was like [104:11] this nuclear radioactive bright blue and [104:14] red in your eyes. It was blinding. But [104:16] I'm like, "Oh yeah, people are going to [104:18] click on that." And they would. I love [104:20] you guys joke about that. So, [104:22] >> some something you guys didn't ask me [104:23] about. I don't know if you guys want to [104:24] talk about this or not. [104:25] >> You can obviously edit out if you don't, [104:27] but uh [104:28] >> my hesitation to come on this podcast. [104:31] Uh yeah, we we said we might talk about [104:34] that, but we haven't. So, I don't know [104:35] if you would love to talk about that. [104:36] Yeah, because we're open. You know, I I [104:38] had commented on a podcast before that I [104:40] watched your video about money and [104:41] happiness and that I loved it. And then [104:43] I don't know if that was you or a member [104:45] of your team that had commented back, [104:46] oh, this is great. sort sort of got into [104:48] contact from there, got into a group [104:50] chat, and then everything was good, but [104:52] then you had messaged us, hey, I I think [104:54] my team has some reservations about me [104:56] coming on the podcast. We would love to [104:57] know why. Hey, by the way, really quick, [104:59] if you want extra content just like [105:01] this, as well as early access and a [105:03] bonus post show posted every single [105:05] week. Feel free to join as a channel [105:07] member to get immediate access to all of [105:09] that, as well as early access to [105:11] everything else that we post along with [105:13] priority responses to all of your [105:14] comments. So, if that sounds cool, feel [105:17] free to join. Would love to have you on [105:18] board. Thanks so much. We'll get back to [105:20] the podcast now. [105:21] >> Everything was good, but then you had [105:23] messaged us. Hey, I I think my team has [105:25] some reservations about me coming on the [105:27] podcast. We'd love to know why. [105:28] >> Yeah. So, I' like you, like I've known [105:30] you, your videos at least for as long as [105:32] I've been making content because like we [105:34] talked earlier, we started around the [105:35] same time [105:36] >> and I I always thought you were fine. [105:38] Like the clickbait title, the flame [105:40] titles for sure. That that was that was [105:42] a thing. [105:43] >> Thrilled about that either. But my my my [105:45] team at at PWL when I said, "Hey, I [105:47] think I need to go on this podcast." [105:49] There there was a lot of like, "Whoa, [105:50] like wait, wait a second." And a lot of [105:52] it was [105:54] the the clickbay stuff is a little bit [105:56] of the issue. I agree with you on 100%. [105:59] You think I like I hate it. I absolutely [106:04] hate it. And I've been upfront about [106:06] this. I do not like my titles and [106:08] thumbnails at all. But I look at it also [106:11] from a perspective of what are people [106:13] watching? What are they clicking on? [106:15] What's getting reach? And I have to do [106:17] it. I have tested at this point probably [106:21] across three channels, maybe four [106:23] channels, [106:25] >> three to four or 5,000 videos over 9 [106:27] years. And I constantly AB test. And if [106:30] I see something perform better, I go [106:32] with that. Like by default, I just want [106:34] the video that has the highest CTR [106:35] possible. And so I've consistently found [106:38] unfortunately [106:40] the flames in the thumbnail, sensational [106:43] title gets the highest CTR. And I hope I [106:45] balance that out in the video content [106:47] itself where I'm really balanced. Like [106:50] if you actually watch the video to the [106:51] end, it's never, okay guys, we're going [106:53] to sell here and we're going to buy [106:54] here. It's always here's the pros, [106:56] here's the cons. And my thought is just, [106:58] and people joke about it, it's dollar [107:00] cost average into an S&P 500 index fund [107:02] with international diversification. Save [107:04] as much money as possible. doing like [107:06] every video ends with that, but the [107:10] packaging is so much to be able to get [107:12] people to watch the video to get to that [107:14] point. That's how I justify it. So, [107:17] >> so I I I my experience is the same. I [107:19] don't maybe go as far as you do, but I [107:21] do get comments from my audience as [107:23] well. They're like, I can't believe [107:24] you're doing this clickbait stuff, and [107:25] I'm just like, listen, [107:26] >> I AB tested two thumbnails. Yes. [107:28] >> And this one, I hate it, too, but this [107:30] is the one that got clicks. Like, I'm [107:31] sorry. [107:32] >> Like, don't hate the player. Hate the [107:33] game. Basically, [107:34] >> that is what it is. know with a lot of [107:35] that, you know, I I I see certain [107:37] comments and I take some into [107:38] consideration, but I constantly AP test. [107:40] I test three thumbnails and then usually [107:42] I'll test like five different titles and [107:44] I find the package that works. [107:46] >> That all makes sense to me. And [107:47] obviously I I came so like I [107:49] >> I'm comfortable with with all that even [107:51] before hearing you guys explain it. Um [107:53] what what I ended up doing was going to [107:55] my we have a community. It's free. I [107:58] mean we're not very good at monetizing. [107:59] We don't monetize at all really. It's [108:01] it's all the financial benefit of our [108:03] content channels is that it raises [108:05] awareness about our business and we [108:06] occasionally get clients from it. We've [108:08] never taken sponsorship money anyway. [108:10] So, we have a community around our [108:11] podcast. It's got maybe 20,000 people in [108:13] there. Super active. It's a it's on a [108:16] discourse like the forum platform. [108:19] >> Uh but it's a very like tight-knit [108:21] community of people who are like you [108:22] mentioned longtime viewers like a lot of [108:24] those. [108:25] >> So, I posted in there like, "Hey guys, [108:26] I'm thinking about going on this [108:27] podcast. What do you guys think?" [108:29] There's a whole debate and everyone had [108:30] their opinion but I think the consensus [108:32] was like listen [108:33] >> regardless of what you think about the [108:34] podcast even if we say even if we agreed [108:37] and they didn't but even if we agreed [108:38] that it's a a bad podcast if you go on [108:42] and spread good information it's a net [108:44] >> good thing and I was like you know what [108:46] man that's and I don't think this is a [108:47] bad podcast I've listened to it [108:48] >> yeah that's fair [108:49] >> um but I was like that's that's enough [108:50] like I'm so I went back to the team and [108:52] I was like all right guys we're doing it [108:53] >> I appreciate we try to be as balanced as [108:54] possible and I worry even that some of [108:56] the guests we have on paints us in a [108:59] certain light because just like you [109:01] coming on here is a representation of [109:03] you, the guests that we have on are [109:05] representation. [109:06] >> Yeah. To [109:07] >> of us. [109:08] >> So like like we'll bring you on and then [109:09] we'll bring to [109:11] >> the way the way I see it is it's the [109:14] same thing as like a journalist having a [109:16] conversation with someone. I like to [109:18] think that the people that we bring on [109:19] the show, it doesn't mean that we [109:21] endorse what they have to say. It just [109:23] means that we're curious and we think [109:25] that it could be entertaining some and [109:28] some we think it could be beneficial. I [109:29] think this one is a nice hybrid of both [109:32] entertaining and beneficial. But a lot [109:33] of the ones that we bring on are just [109:35] straight up entertaining and we have [109:36] clvicular on. Do I think that people [109:38] should be following clviculars? No. You [109:40] know what I mean? And we're upfront [109:41] about that. Like we'll respectfully [109:43] challenge our guests when we think it [109:44] makes sense and sometimes we we don't [109:46] when we kind of agree. But, you know, no [109:49] one neither no one here is proclaiming [109:51] to be some sort of a guru. Like I, you [109:53] know, just a random 27y old guy, you [109:56] know, random 45year-old guy. Uh, so [109:59] yeah. [109:59] >> 70-year-old guy. [110:00] >> Yeah. So, I I I wouldn't take anything [110:01] that we say for the gospel, but if you [110:03] can tune in every Sunday and be [110:04] entertained or sometimes educated when [110:06] someone says something smart, then I [110:07] think that that's good. [110:08] >> I I'll tell you guys, I I I had not [110:10] heard of your podcast. Uh, someone sent [110:11] it to me. It was an email exchange, not [110:13] a comment that uh that I ended up here [110:15] from. Someone sent it to me, a friend of [110:17] mine, hey, you're on Ice Coffee Hour. [110:19] And I was like, cool. I knew I knew who [110:21] you were, but I I'd never heard of the [110:22] podcast. And since starting that [110:25] conversation, I've listened to, I don't [110:27] know, maybe 12 episodes, which is a a [110:30] serious time commitment because they're [110:31] long episodes. [110:32] >> Uh, and I think you guys do a great job. [110:34] Some of your guests are like I'm like, [110:35] man, this the stuff this person is [110:37] saying is crazy. [110:38] >> But like you said, I think you guys do a [110:40] pretty good job of being balanced and [110:42] asking good questions. We try to go in [110:44] so neutral, but there's also only so, [110:46] you know, so much that we could also [110:48] account for, too. Like, we've had a lot [110:49] of people on uh politically that are on [110:51] the right, but we've really tried to [110:53] balance it out with the left. It's just [110:55] the ratio of [110:57] >> the type of to go on a podcast [110:59] >> tends to lean right. And so, like, we [111:00] try to balance it out, but at a certain [111:02] point, it's like, are we not going to [111:03] have this guest on because we can't get [111:04] the equivalent on the other side? No. [111:07] Would we like the other side? [111:08] Absolutely. So for me it's not about [111:11] it's not about I don't want to be on a [111:12] on a right-leaning podcast or a left [111:13] leaning podcast. For me it's more like I [111:15] don't know if I want to be associated at [111:17] all with people who are that divisive on [111:19] either on either side. [111:20] >> I see your perspective but the [111:22] difference is that like how are you to [111:24] learn if you don't put yourself up [111:25] against adversity which is why we bring [111:28] on people that have different opinions. [111:30] If we had every single Sunday we we [111:32] rotated between you and the money guys [111:33] and Jordan Hamill then it's like what [111:35] are we really learn? Like I'm not [111:36] learning anything at that point and [111:37] neither is the viewer. And so I think [111:39] what's great is for this podcast, not [111:41] just trying to pat ourselves on the [111:42] back, but like a viewer can tune tune in [111:44] and be enjoy the very few of them enjoy [111:48] Graham and my our presence. Meanwhile, [111:50] we introduce them to a wide range of [111:52] opinions. And this is great because a [111:54] lot of the people if you tune in to a [111:56] conservative podcast or a liberal [111:57] podcast or you tune tune in to just [112:00] Grant Cardone who tells you to leverage [112:02] everything and spend everything on, you [112:03] know, you're increasing your education [112:05] or you tune in to George Camel who says [112:07] you shouldn't, you know, borrow money to [112:09] buy an investment or whatever it is. [112:10] Like if you pigeon hole yourself with a [112:13] certain ideology, then you you never [112:15] actually grow. You need to challenge [112:17] your beliefs. And that's what I think is [112:18] great about this podcast is that we [112:20] don't proclaim to have like any super [112:23] super strong beliefs. I mean, I do, but [112:25] I generally don't show it because I [112:26] think it's more about the guest and [112:28] understanding a diverse range of [112:30] opinion. And so that's why I think it's [112:31] it's really interesting to have to be [112:33] kind of like at the core of letting [112:35] people hear out a bunch of different [112:37] opinions to decide which ones they align [112:39] with and which ones they don't. [112:40] >> Yeah, it's an interesting perspective. I [112:42] think I I view I view my role in running [112:44] our podcast as being more of a curator [112:47] of what people should listen to, [112:49] >> which is a different perspective, but I [112:50] I respect everything you said. [112:52] >> Yeah. And we, like I said, we always try [112:54] to balance it for a while. We had fun [112:57] because we were so far ahead. We would [112:58] post Grant Cardone and then Dave Ramsey [113:02] right now [113:02] >> back tobacks. We did we did Peter Schiff [113:06] and Michael Sailor [113:07] >> back to back. So, so we got opposites. [113:10] And then I remember we also had someone [113:12] from the Daily Wire. I think it was like [113:13] Ben Shapiro and then [113:15] >> and Destiny [113:16] >> right after it was Destiny. And so it's [113:18] like back toback. But what what happens [113:20] we find it funny. We pissed off [113:22] everyone. Like the people who didn't [113:24] like Ben [113:25] >> uh would comment on that one and then [113:27] the people that didn't like Destiny [113:29] would comment on that one. And so you'd [113:31] always like every But you know what? At [113:33] that point it's like come on. Like we [113:35] just try to show everything and we're [113:37] not there to like debate or push [113:38] anything. We just want to talk to the [113:40] people who we think would be an [113:42] interesting conversation [113:43] >> and I think you guys do a good job. I [113:45] guess I'm I'm like I view myself as so [113:47] far away from all of those people that [113:49] you just named. I'm like do I do I even [113:50] want to be Anyway, I'm here. [113:53] >> I appreciate it, man. And [113:54] >> we appreciate you coming and also thanks [113:55] for like expressing the concerns with [113:57] coming on the show. Like I wish at the [113:59] end of the day, if anything, that people [114:00] would just be more honest with the ways [114:02] that they [114:03] >> So then we can learn from it and we [114:04] could try to to to grow. [114:06] >> Yeah. And we're always open to feedback [114:08] is the other thing. There's there's [114:10] nothing I'll take personally. [114:11] >> And all of these things are concerns [114:13] that we should be made aware of because [114:15] it impacts guests in the future and and [114:17] our ability to really deliver the best [114:18] show possible [114:20] >> except if the feedback is to tell me to [114:22] stop doing cover calls. In that case, [114:24] cut. [114:24] >> I do not agree. [114:26] >> But I think now is the time, by the way, [114:28] you to review our portfolios, [114:30] >> okay? [114:30] >> And I'd like your honest thoughts and uh [114:33] this is for the channel members. So, I [114:34] really hope you appreciate it. For [114:36] everyone else, thank you so much for [114:37] coming. I'll link to all of your [114:38] information down below in the [114:40] description. This has been such a joy [114:41] because like I said, I've I've watched [114:43] you now for pro it'll almost be 10 years [114:45] at the end of this year. I think it'll [114:47] be almost 10 years. [114:47] >> Crazy. [114:48] >> So, that's nuts. I really appreciate [114:50] everything that you do. I highly [114:51] recommend for everyone to subscribe as [114:53] well. [114:53] >> Thanks so much. [114:54] >> Thank you to all of Ben's fans that are [114:56] tuning into this episode. We hope that [114:58] you enjoyed. Thank you to everyone that [115:00] watches us every Sunday and sometimes on [115:02] a Wednesday. Really appreciate. Would [115:04] not be here without you. Till next time. [115:06] The bulk of my wealth is Robin Hood [115:08] shares. [115:08] >> Do you keep your Robin Hood shares in [115:10] Robin Hood? [115:11] >> Uh, no. Um, we're building a financial [115:14] super app. [music] [115:15] >> Are you setting them up in a situation [115:17] where the odds are are stacked against [115:19] them to [music] actually make money? [115:21] >> A lot of people criticize us because [115:23] they think we incentivize active trading [115:25] and prediction markets. [music] That's [115:26] when you can kind of get into trouble. [115:28] >> Get this. The richest 1% controls more [115:30] wealth now than at any time in more than [115:33] a half century. Alarm bells have started [115:35] [music] ringing. There's a small circle [115:38] of wealthy insiders that's benefiting [115:40] from all the growth. [115:41] >> How much has [music] AI changed the [115:42] game? [115:43] >> Humans overseeing agents, seeing how [115:45] many agents [music] you can actually [115:47] employ, including when you're sleeping. [115:49] >> So, do you think though with Robin Hood [115:50] eventually you could [music] have just a [115:52] few people running the entire company? [115:54] >> Um, it's that's just dangling the [115:58] carrot, huh? [laughter] [116:15] Heat.