Afford Anything - Ask Paula: Should I Invest in Index Funds More Actively?

Episode Date: January 8, 2022

#358: Where is the balance between the risks and potential returns of actively and passively investing in index funds?Where do you place your savings after you max out your retirement and HSA accounts? How do you finance building a rental unit when there’s already a home on the lot? Is it more beneficial to buy back pension time with post tax deductions or a 457b plan? Or should I not buy back pension time at all? In today’s episode, former financial planner Joe Saul-Sehy and I discuss the purpose and practice of mindful money. Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode. Enjoy! Subscribe to the show notes at https://affordanything.com/shownotes Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else. And that doesn't just apply to your money. That applies to any limited resource that you need to manage. Like your time, your focus, your energy, your attention, saying yes to something implicitly means. Turning away, all other opportunities. And that opens up two questions. First, what matters most?

Second, how do you align your decision-making around that which? matters most. Answering these two questions is a lifetime practice. And that's what this podcast is here to explore and facilitate. My name is Paula Pant. I am the host of the Afford Anything podcast. Normally, we air one episode per week, but once a month on the first Friday of the month, we air a first Friday bonus episode. So happy new year. Welcome to the January 2020, first Friday bonus episode. By the way, in case you missed it, just two days ago, we air a an interview with the guy who you're about to hear in today's episode, Joe Saul See High, former financial planner, my buddy, my co-host on half of these episodes.

We flip the tables and put him in the interviewee seat, and it turns into an intellectually robust episode that has the least clickable title in the history of podcasting. We named it practical investing and the efficient frontier. No one is going to click on a title like that, so I figured I'd give it a shout out. Anyway, but now that I've just told you to listen to a different podcast episode, welcome to this one. Welcome to the first Friday, January 2020, first Friday episode. Every other episode, the even-numbered episodes, I answer questions that come from you, the community. And my buddy, Joe Saw-Chi, former financial planner, recovering financial planner, I believe is the term, joins me to answer these questions. What's up, Joe? You know, hanging out and you know why I'm on the even-numbered episodes is because I'm not odd. I'm not odd. No matter what they say, I am not odd.

And you're even keeled. Yes. I've never been called that before either. But, hey, we'll go with it. We're not here to talk about that. We're going to answer questions, Paula. We got some good ones. We've got some great ones.

Our first question comes from Adam. Hi, Paula and Joe. This is Adam from Nashville. I'm a big fan of both your podcast. They've been really helpful in building my financial literacy since I started listening in early 2020. My question today is related to something I like to call active, passive investing. I'm totally on board with the passive investing approach that involves buying low-cost index funds and holding them for years. This is what I've done in my Roth account where most of my holdings are VTI, Vanguard's total stock market index ETF.

I'm currently 33 and hope to retire by 50. In order to reach retirement even sooner, I'm wondering if I can beat VTI. return by taking a more active approach when it comes to the index funds I purchase. I know what you might be thinking. Active investing strategies rarely outperform passive investing over the long run. However, I don't plan on picking individual stocks. Instead, my approach would be to change which index funds I own based on observed market trends.

For instance, since large cap growth stocks have led the market during the last several years, I'd move my assets into something like MGK, Vanguard's mega-cap growth index fund, which is still quite diversified. Then, if trends began to shift towards small-cap outperformance, I'd move into something like VB, Vanguard's small-cap ETF. To avoid market timing, I'd wait one to two years before making big changes to ensure that the trends I'm seeing aren't temporary. It's important to note that I'm not very concerned with volatility, since retirement is still more than 10 years away. In other words, I'd be okay with ETFs that are more concentrated than a total market fund and have higher standard deviations. The primary benefit of this active, passive approach

would be higher returns if it works. On the other hand, I can think of at least two risks. First, while I could easily move between funds and my retirement accounts, moving things around in my taxable accounts would trigger taxes, thereby lowering the net returns. Also, there could be a psychological cost to taking an active approach if I'm constantly worried about whether my portfolio is beating a total market fund or the S&P 500. I would love your opinion on all of this, since it's not something I see discussed much in the active versus passive debate. Thank you so much. Adam, that's a great question. So the first thing that comes to mind when I hear the suggestion that you've made, well, actually there are two things that come to mind immediately. One is

that you suggested watching trends to see which asset classes outperform. For example, do large caps outperform or do small caps outperform? Or, and you didn't say this in the question, but I could extend this to, does a certain sector like utilities? Not that I would ever imagine that utilities would outperform, but hey, let's go with it, right? Does a health care? Does a certain sector outperform? You would follow these asset classes, wait for a year or two to make sure it's not just a flash in the pan, and then tip more of your poor. that. That's the plan that you've outlined. However, number one, that is the opposite of a contrarian approach.

A contrarian approach is to sell your winners and use the proceeds to buy more of the losers. And we inherently do this every time we rebalance. So anyone who engages in periodic rebalancing is de facto embracing a contrarian management style. And what we've seen, statistically speaking, is that by virtue of embracing that contrarian approach, we are able to overcome our recency bias, the recency bias that says what happened in the past is likely to happen in the future. We tend to overweight the likelihood of things that have recently happened. That's recency bias. So by embracing a contrarian approach, which we de facto do through rebalancing, we're able to overcome that recency bias. and we know, statistically speaking, that that gives us a better likelihood in the long-term

aggregate average of having a portfolio that outperforms over the span of our lives. So the construct of what you're discussing is the opposite of that. It's the opposite of contrarian. It's buying more of the winners. That's the first thing that comes to mind. The second thing that comes to mind is tax efficiency. If you are trading, assuming that this is all happening in a taxable brokerage account, if you are trading in and out of a variety of holdings over time, there are going to be some

tax consequences to either the short-term or long-term gains that you're harvesting, and that will create some drag on your portfolio. You don't face that problem, or at least you mitigate that problem, when you concentrate your holdings into a few broad market index funds. There's less churn and therefore less performance drag. So those are the top two things that come to mind when I hear what you've suggested. Yeah, he had me. I got to tell you, Paula, he had me at first. And I thought, ooh, this is really interesting until he said, I will buy the winners.

When he said I'll buy the winners, I went, you lost me. Because I have learned over a long period of time from very smart people that with a population of 7.7 billion people in the world, U.S. population of over 330 million people, if I have a thought, it is not as unique as I think it is. And so if this were an approach that worked for many people, there would be lots of people doing it. And I'm actually even going to point you to a great resource. A guy named Jack Schweiger has written a book about the few people out there who have consistently beaten the market. He's actually written several books. The first The first one is called Market Wizards.

He's had books called Market Wizard, Stock Market Wizards. He recently had a new one out called Unknown Market Wizards. And it was really neat. I got to interview him and reading his stuff for a long time. I think it's interesting. But this is not an approach that any of these market wizards use. And I think the reason Paula is specifically because if you get to the point that you think it's a performer, it's too late. And I'll give you an example that's very current.

The hottest investment manager of all recently is a woman named Kathy Wood at ARC Investment Management. The ARC investment management ETF, the ARC ETF has been super hot, has done phenomenally well. But guess when they garnered the most assets of all, Paula? I'm guessing in the last one to two years. completely when they hit the top. And right now, Kathy Wood's getting smoked. And that sector of the market's getting smoked. And Kathy Wood got a ton of assets when everybody thought she was hot,

which is specifically the time that you shouldn't have purchased her product. Now, I'm not saying she won't be hot again. And I certainly hope that that approach does well again. But here's what's about to happen. Oh, darn, I put some money into ARCA a year ago and I haven't checked on it. Thanks, Joe. A lot of investors who only live by their statements, if they still get paper statements, are selling it right now. And the reason they're selling it right now is why?

Because they now deem it to be a loser because they lost a bunch of money. So this is far more difficult than you think. And I would have been much more excited. And this is where I thought he was going. Much more excited with more of a Dogs of the Dow strategy where you take things historically, last year that were crappy, that were really, really bad, and buying those. There is a table that I wish more people saw, and they haven't. We call it the investment periodic table, and it tells all these wonderful stories of how

investment asset classes respond against each other. And you don't know when an investment class is going to take off for a long period of time. you don't know how it's going to, how an investment class that Stinks is going to do the following year. But historically, if you're buying the thing that is hot now, while that worked the last several years, because one thing's been hot for a long period of time, that's not the long term story. It isn't at all the long term story. It sounds far easier than it is. When I was a financial advisor, anybody that wanted to have a more active strategy, your strategy was exactly the same one all these people had and it doesn't work and if it does work

let's say for a second that it does work your ability to create something called alpha alpha is where you're beating the index that you're competing against your ability to create alpha versus the time that you spent on that strategy when you could have been earning more money to simply play the I'm going to do what the index does game. Exactly. Your contributions are the single biggest determinant of your investment returns. I think there's a great case to be made for spending that time doing that versus doing this. I'm sure he might say, this isn't going to take me much time.

The second piece that comes into play are your emotions because I'll tell you when you sell one thing to go buy another. Selling it isn't that hard. Buying the new thing is the hard piece because when you're not invested, think about the times in your life when you're not invested, you're deciding what to invest in. I've had one of two approaches. Either at the gunslinger approach, which happened after a couple foamy beverages and I accidentally had my phone in my hand, which is not good. Drunk investing? Yeah, not great. Maybe better than drunk social media. right but not by it hurt me and not a bunch of other people the way that I invest most of the time is I do a ton of research and I have a ton of second guessing and I worry my head off about is

this the right thing to do with my money or the wrong thing to do with my money and to simply think that I'm going to put it in the thing which I think at the time has the most momentum that's right that's what I mean fundamentally he's talking about momentum investing he's talking about the idea that what's high will continue to rise. Which, the last several years, you talked about recency bias. Great strategy. The years before that, if people look at this periodic table, if you just Google periodic table of investments and you see what I'm talking about, the opposite of that, buying the

thing that was low the year before in many years was the best way to play that. Right. Exactly. Which, if you think about it intuitively, it makes sense. If something is cheap, then more capital flow. flows into it, capital allocators seize on undervalued assets, pour their money into it, and create excess returns. And then once those excess returns are created, the value of that asset has risen such that the profits have been squeezed out, which means that capital then flows

elsewhere. So I definitely would not do this. Right. I would not do it. If you want to see how excellent traders go about their work, and you want to dig into how advanced their approaches are. You know what I like reading Jack Schwager and Market Wizards is because I often, Paula, have this thought. And when I read what these people do to beat the market, I realize for me, for me, and what I want to do, it isn't worth it. It just, it is so difficult. And they're living this 24-7 and they often have access to information that while we say we all have access the same information, we do not. Correct.

They have access to information I don't have access to. I realized that when I had this idea how way too simplistic this was to create alpha in my portfolio, this simplistic idea I had was not what was going to cut it in a market where there's so many people that know exactly what. what's going on. Right. Exactly. Analysts and companies with reams and reams of excellent information in real time who have teams of people dedicated to finding Alpha and even they can't find it. It's a fascinating read. There are people who have found it. Paul and I debate this all the time. If you can find it, there are people that have, the biggest problem is, are they going to do it next year?

Right. That's your problem. Are they going to do it? again. But there are people that have done it year after year. And there are people that are doing it right now. But are you that next person with this strategy based on what I've read from all these Jack Schwerger books? I honestly don't think so. Well, and one of the things that he says in his books that really resonated with me, Joe, when you told me about it, was that we often underestimate how big the market is and how little we are, each of us. The scale is too large for a human. brain to comprehend in any meaningful way. Like our brains can't comprehend 8 billion people on the planet. Our brains can't comprehend 330 million people in the United States, right? The numbers are

just too vast. And the market and all of the factors that influence it are too vast, too complex. And we are so small. Right. Yeah. To be boiled down into a few back of the envelope. trading rules. Yeah, yeah. And I love the second half of that. Just because my brain thought this right now, and there's 7.7 billion people out there, am I not unique? Is this really a thing?

Right. Well, not just the people. There are a lot of algorithms trying a lot of things. Sure. And when one of them catches on. Well, that's my point. Think about how easy it would be for an algorithm to wipe out this advantage, right? An algorithm is going to wipe out this advantage in a hurry in seconds.

And are there people doing that? Yes, there are who are doing arbitrage trading with high-speed computers. And if you're using Robin Hood, congratulations, because you're helping them do that. Right. Good for you. Keep using that. Payment for order flow. Sorry.

Getting a snarky on Robin Hood. Yeah. No, but it's true. The market makers have access to information that we don't. and they use it to derive advantages that we cannot because we don't have the same information. That's what payment for order flow is. We're going to actually be talking about this more in an upcoming episode where we're going to be going over. We're approaching the one-year anniversary of the Reddit takedown of Wall Street, the GameStop saga.

And so we'll be doing an episode that deep dives into all of this. But pulling back a little bit and widening the lens, the core message here, is finding alpha, seeking alpha, is substantially more difficult than it may appear, like objects in the mirror are closer than they may appear. Finding alpha is more difficult than it may appear at first blush. The assumption that an asset class that is outperforming will continue to outperform indefinitely, making that assumption and then concentrating your chips on that bet doesn't seem like the most wise use of capital.

This is how strongly I believe this, that this isn't the right approach. I would rather tell this person to use one of these new fintech apps that gives the average person the ability to purchase hedge funds that super wealthy people are able to buy into, then I would do this approach. And the reason is, at least then, you are in with some of the people that have reams of data. And by the way, do I believe in these trading ideas in this scheme for people listening to the show?

Nope, not at all. But I'd rather see you do that than do this strategy. And I think your chance of winning is bigger, or at least, Paula, not getting smoked is bigger. Adam, thank you for the question because I love the discussion that it provoked. And I think it's a discussion that many of us have had in our head at least once. Exactly. So thanks for asking. Thank you for calling in.

And best of luck with your investments going forward. All right. We're going to take a quick break for a word from our sponsors. And when we come back, we're going to answer a question from Chris. The holidays are right around the corner. And if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens. Maybe you need serveware and cookware.

And of course, holiday decor. all the stuff to make your home a great place to host during the holidays, you can get up to 70% off during Wayfair's Black Friday sale. Wayfair has Can't Miss Black Friday deals all month long. I use Wayfair to get lots of storage type of items for my home, so I got tons of shelving that's in the entryway, in the bathroom, very space saving. I have a daybed from them that's multi-purpose. You can use it as a couch, but you can sleep on it as a bed.

It's got shelving. It's got drawers underneath for storage. But you can get whatever it is you want, no matter your style, no matter your budget. Wayfair has something for everyone. Plus they have a loyalty program, 5% back on every item across Wayfair's family of brands. Free shipping, members-only sales, and more. Terms apply. Don't miss out on early Black Friday deals.

Head to Wayfair.com now to shop Wayfair's Black Friday deals for up to 70% off. That's W-A-Y-F-F-A-R.com. Sale ends December 7th. Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient. They're also powered by the latest in payments technology built to evolve with your business. Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the fintech hustle that got them named one of America's most innovative companies by Fortune magazine. That's what being a fifth third better is all about.

It's about not being just one thing, but many things for our customers. Big Bank Muscle, Fintech Hustle. That's your commercial payments of fifth-third better. Our next question comes from Chris. Hi, Paula and Joe. My name is Chris, and I'm 32 years old. I ran into your show a couple months ago and would like your thoughts. I used to retirement calculator to determine how much I would need to maintain my current lifestyle

of about $40,000 a year and came up with about $1.5 million needed to retire at 50 with the 8% average yearly return. My fire number came up to $1.3 million at age 47, but I rounded up for more when life would throw me a curveball. I started investing late seriously about three years ago and I have $9,000 to $5,000 in my retirement accounts, not included in emergency and cash. I have $18,000 in the money market account for emergencies,

15,000 for down payment, 5,000 sinking fund for a car that I will need in the future. No loans and any other debt. I maxed out my 401k, Roth IRA and HSAs for this year. The $95,000 is invested in total market funds. I am a saver and single with no kids but plan to have a family in the next five years. My rent is about 1,500 a month from about $90,000 gross salary. in DC. My goal is to reach fire at 50, but continue working optionally. To reach fire, I will have to invest about 3,000 monthly to meet that goal. I plan to move either to Houston or

Dallas for family and for the lower cost of living and no income tax compared to DC. That lower cost of living will open up more to save towards fire. My question is, because I am maxed in my Roth, my 401k and HSAs. My next logical step is to open a taxable account and pour in about 3,000, but frankly, I'm sure where to place that money since I'm already invested in total market index funds. Should I repeat this same type of funds in the taxable account? I also have reads in my Roth. Side note, I have interest in the Houston real estate market, but I don't really have any experience. I'm slowly learning what to do about real estate investing, either for personal consumption, aka stay for a couple months or years and then rent out the property or consider properties that

would require a facelift after inspections and using a management company. So a question two would be which would require less effort? Would you advise using a management property for the first rental property or create a LLC? I can do it alone but my cousin is interested in buying a rental property together and we agree on the type of properties that we want. The type of properties would include face leaves and quick turns once in the market. Please help and thank you for all you do. Chris, thanks for the question.

And wow. Wow, Paula. Investing for, I think he said he's investing for three years. Yeah. $95,000 in retirement accounts in three years. That alone should get like a Steve something or other. You know what? Yeah, we haven't done a round of applause or a.

This is phenomenal. Exactly. Steve. And I'll tell you something else I like, the fact that he has his emergency fund in order. I think that all the arguments that we had pre-COVID about the efficacy of an emergency fund, hopefully are gone. Are they gone? I hope they're gone. So I love that. I love the fact that he is a separate fund for a down payment.

Like that, he's not commingling his funds, which is also incredible. And then last, and this is the big cool one that I think a lot of people. can do. This is an awesome hack that I used to use all the time. And I apologize to people that don't like the word hack, but there it is. It is just a cool technique. Instead of having a car payment, build a fund month after month. So what we used to do when I was a financial planner is we would take cash and buy a car. And I lived in Detroit. And there were a lot of people supporting the new car industry there, even though they knew that a used car would get rid of the depreciation. A lot of people that are car lovers, as you can believe, in Detroit, Michigan.

So we would figure out what the payment structure was on a five-year loan for a car. And instead of, and these were always at 0% or 1% or 2%, they were always at some small percentage. So we would use that. We would pay cash for the first car. And then we would have a car payment to ourselves. Yep, I love that. Make a car payment to yourself. It was so cool to have a car payment that went into the separate fund.

And I'll tell you, it was great, is that there's so many unexpected things that come up. And from time to time, something bad would come up. And we had this extra bunch of funds. Right. And the other thing is, you know, instead of driving the car for five years, people go, well, I'll just drive it for six or I'll drive it for seven. And it was so wonderful to, instead of being an asset on somebody else's balance sheet. by being a debtor, by having the asset on yours until you were ready to deploy the money. So I love the fact, Chris, that you're doing that.

That's fantastic. Paula, let's you and I, we're going to split this in two. You obviously are going to know much more about the real estate question than I do. So I'll take the does he invest in the total market index again outside of his retirement accounts because he already has it. The reason he thinks this, Paula, is diversification, right? I mean ostensibly. Chris didn't say this, but the reason I would think that is, okay, I own a lot of this asset. So should I own this again?

And the answer is absolutely own it again because of the fact that this is not one asset. You own the total market. So by owning this, you own thousands of stocks. You own thousands of different things. So by owning more of this thing, you're still just diversified. I mean, if you look into the guts and the guts. of it, okay, we're buying more Apple stock, we're buying more Facebook, we're buying more Netflix, we're buying more of those than anything else.

The Fang companies? Yeah, we're still buying those. But is that good if we're buying the total market? Absolutely. Right. So I don't know if I'm Chris. I don't know that I overthink this. I do think there's a point when you graduate from VTI or VTSAX.

I think your portfolio gets big enough that if you explore something, the efficient frontier, I obsess about the efficient frontier the same way that many of our listeners obsess about fees, right? They obsess about the fact they're losing money by sitting in an account that is overcharging them. I get obsessive when I see somebody with a ton of money in VTSAX that if they actually had their money along the efficient frontier and rebalanced once a year, would pick up some easy money by doing that. Same thing. It's another easy money move. But at this point in the game, I think if he talks about anything, he talks about how do I get on the efficient frontier. But that's not the question he asked.

Right. I think the question he asks is, is there danger in doing the same? Should I invest in something different? Nope. Doing great. But I'll tell you where there is danger. So I heard a couple of red flags, Chris, in the way that you asked the question about real estate. There were two that stood out to me.

There were a few that stood out, but two in particular. One was the phrasing of which would be the easiest. You presented two different options. You asked which one would be the easiest. That question inherently is a bit of a red flag. Because there is a misperception that I think occasionally forms when people view real estate through the lens of passive income, there can be the temptation to believe that passive income is a euphemism for free money or easy money. And it is not. It's more accurate

to call it residual income, right? You frontload the workload. And by virtue of frontloading that workload, you receive passive residuals down the road. In that regard, it is comparable to writing a piece of software or writing a book, as you just did, Joe, or writing a piece of music that gives you ongoing royalties. I mean, Joe, your book, let's hope, will give you ongoing royalties 10 years into the future, right? In the year 2032, hopefully, if things go well, that book will continue to provide a stream of passive income, a stream of residual royalty income. But writing the book itself was a giant albatross born on your shoulders, right? It was a huge, huge, huge pain in the butt. The hourly rate was not good. Right. Exactly. And that's how

real estate is also. It's frontloading a massive amount of work so that ideally you can enjoy the residual income 10 years, 20 years, 30 years into the future. So when a person who is a relative beginner who's new to the scene begins with a question of what would be the easiest, and I understand that there are many very legitimate reasons to ask that question. You're busy, you know, you've got a day job, you've got other priorities that you're balancing, you need to make sure that you can do this in a time-efficient manner, that you have sufficient scheduling bandwidth and mental bandwidth to be able to take this on. Certainly, I get that.

But if you're looking for something easy, real estate is not that. The second thing that I heard you say, you talked about going into business with your cousin. If you search through the archives of this podcast, go to afford anything.com slash podcast. We've got a very robust search tool there. You can look through all of our archives. Also in the top header of the website, if you hover over podcast, there will be a drop-down menu. There's a tab called binge.

You can look at a glance through all of our old podcast episodes. We have more than 350. fit 358. We've spoken on a number of episodes about the risks associated with partnering with someone on a real estate investment. And so I won't rehash all of those in this answer, but particularly as a beginner who doesn't have, you know, based on your question, it sounds as though you don't have an investor policy statement written out. It sounds as though you don't have a strategy for how real estate fits into your overall portfolio or for the type of investment that you want to pursue? Are you pursuing real estate as an alternative to bonds? Are you pursuing it because

you think that it can provide an income stream, a quote unquote fixed income stream? So in that regard, it becomes a bond alternative. Is that the approach? Or is it a different approach? I mean, there are a number of styles of real estate investing that you can opt for based on the way that it strategically maps in with the broader picture of your portfolio, right? Like, real estate is a pixel and your portfolio is the picture. So how does this pixel fit into the larger picture? That question needs to be answered first. And so I would start there because you can't choose.

a property without having a strategy, and you can't have a strategy unless you have very clearly defined objectives, and that's what the investor policy statement is for. Go to our archives. We've talked on previous episodes about investor policy statements as well. Go to our archives, check out some of those episodes. I would give that a start, and I would also seriously reconsider whether or not you want to do this with a partner. Not trying to talk you out of it. I'm obviously a big fan of real estate in the same way that I'm a fan of podcasting or starting a digital business, a digital entrepreneurship. If a person wants to do it, I will give them as much support and knowledge as I possibly can. But if somebody came to me and asked me what's the easiest type of podcast

to start, I mean, if that's the question, then I would tell them not to start a podcast. I would totally say don't start a podcast. Well, as you know, there's just a moat that you really have to swim. And you have to maintain that moat for a long time. Yeah, you got to be a strong swimmer. Yeah, unless you're a celebrity doing something else. It is a long, difficult process. Yeah.

But a fun one. I mean, if you're doing it because you have something to say, that's great. But I wouldn't invest. Or my first question with the podcast wouldn't be, how do I monetize that? Which is what I hear all the time. Oh, that drives me nuts when people open with that question. Oh, my goodness. Hey, I made like six episodes. How do I monetize this? Right. Seriously. Here's how you monetize it. Take the time you were podcasting and open a Netsi shop.

Not that that's easy either. That is not easy. No, that's not easy. I think that was my point, Paul. So thank you, Chris, for asking that question. And best of luck with everything that you're pursuing. We're about to take a break for a word from our sponsors. And when we come back, you will discover that my microphone has completely crapped out. Like, what a way to start the new year. I don't know what happened, but my microphone apparently crapped out in the middle of the recording.

So if my voice is totally different for the second half of the show, that's why I'll be using some of this sponsor money to buy myself a new mic. Anyway, enjoy this break for a word from our sponsors. And when we come back, we're going to hear from a caller named Yvonne, who has a complicated question. Our next question comes from Yvonne. Hi, Paula and Joe. Love your show. I'm a physician living in California in my mid-30s, married to a beautiful wife and have a gorgeous three-year-old daughter. My wife stay home.

Do you know anything about personal finance until finished residency? Become a doctor was my sole and only priority and nothing else matter. No plan on retiring early. just one financial optimization. In September 2019, after residency, I had zero saving, $540,000 in federal student loan, $30,000 in private student loan, $12,000 in car loan, $10,000 in personal loan, $6,000 in credit card. My county hospital base salary was $220,000 plus $20,000 to $35,000 in bonus, with pension contribution 9.97% of base salary with employer-to-employee match of 3-1,

4-1-A plan with 10% percent. of base salary of $6,000 match. After three months, I've reached to a new contract with $242,000 base plus the bonuses. However, no pension and no foreign income. By summer of 2020, I was debt-free except for a student loan, had three to six months of emergency fund, and since then been invested 19,500,000, $547B plan, $6,000 in backdoor off annually, and $6,000 annually in HSA plus employer match of $1,200. Currently, I have to $1,000. Currently, I have $55,000 in taxable account, total stock market index fund. Also have $125,000 for down payment on a new bill that I'm closing on next month, $625, $3,000 a month, $125 down deposit. I also receive $50,000

in NHSC student loan repayment. That's non-taxable money. I will continue to receive $20,000 annually. Paid off $30,000 in private loan and student loan and using the rest to pay monthly payment $2,000 a month as part of the income-driven repayment program with prepay since the 10-year plan is close to $6,000 a month. I'm five years away from PSLF. Thinking of going back to the original contract with the pension and continue $457, backdoor off, and HSA contribution as well. I could just use $4.57 to buy back the pension time, or I can just do post-tax deduction over one year or post-text deduction over two years. to buy back the time, which one is best? Thank you very much.

Thanks, Yvonne, for that question. And man, he's got a lot going on, Paula. Exactly. A lot of detail. Which brings up a couple of things. I'm going to peel back the banana just a little piece at a time. One question here was, do I use the 457 to buy back my pension time, to buy down my pension time so that he can retire earlier, or should he use post-ax deductions over one or two years from his paycheck to pay it down? Or should he stay on the current contract? The quick answer, which I'm going to answer much more of later, is, I don't know. And I'll explain why.

The longer answer is a 457, if you can use pre-tax dollars, and I don't know how this would work, but I do know that many of these esoteric programs that physicians are involved in can involve some weird, I won't say loopholes, but some weird parts of the tax code to be able to buy into their business. But if he can use 457 pre-tax money to buy back pension time and incur no penalties and have it be a pre-tax withdrawal from his paycheck, by all means that beats a post-tax deduction. I'm not sure how that works. I don't understand it. But given those three options, what I heard is, hey, Paula and Joe, should I use pre-tax money or post-tax money?

I'm going to go pre-tax because then we can do it much more efficiently. But I don't understand it. Now, if he's going to use some pre-59.5 rule where he can put it into the 457 and then it gets taken out, there's no penalty, but there are. taxes withheld, I kind of think it doesn't matter then because, well, on one hand, this is interesting. Because if we assume that the market's going to go up, because over time, it goes up more often than it goes down, then he might be a little bit more efficient over a short time doing that. But the fact that he wants to do this over one or two years makes me think that that,

putting money in the market or putting it into tax shelter and then taking it right back out doesn't make a lot of sense. And if he's pulling it out without penalty, but he's going to be taxed on it later all at one time, that money's all going to be taxed at the highest bracket. So if for some reason he goes into a different bracket because he's lump summing the money out toward paying down this pension, then I think that that is, uh, that that's a worse idea because he'll pay more tax doing it that way than he would if he did it slowly over time in even increments. So that piece is also interesting. Current contract versus the other contract. My feeling is this. And with all the other things that he is going on,

and he may not have enough money to do with this. This is, since Paula, you've been nice enough to invite me to do these. This is the longest question we've answered. It took him three minutes to ask this question. And he was doing it very quickly, right? He had a lot of data. This is when I would completely hire a financial planner. Because I think asking two people on a podcast that much stuff versus having someone who knows you, knows much more about your risk tolerance, about your uncertainties, about other things going on in your family

and can lay all this stuff out in a much more succinct manner, I think is going to be able to have you make a much better data-driven decision than Paula and I are going to be able to do here. So while I like, and everybody starts with fees, so why don't I do that? Not the place I think you should start, but let's start there. I would make sure it's a fee-only planner.

I wouldn't be worried about them investing your assets, meaning you're not hiring this person for asset management. You're hiring them for complex financial planning questions. So this may be hiring them for just a few hours, not even on an ongoing basis. Don't get me wrong, if you had advisors in your corner on an ongoing basis that you respected and you thought they had your back, you could add that on. But I'm not looking for that. I'm looking for somebody that I can hire for a couple hours to just.

help me solve this question. So that's my thing. Also, when you are interviewing advisors, there's some interesting things to watch out for, and I'll give you a few. Number one is, does your advisor work with people like you? There are many advisors that work with other physicians and understand this. I would want to make sure that this person is conversant, not just with physicians, but also is conversant with pensions. And those are two areas that I think there are a lot of advisors that don't know those two populations. The second thing, and this is just a hint for anybody who hires advisors, this is kind of a look behind the curtain, a little bit, Paula. I would also pay close attention to everything when you're first meeting with the advisor, whether you

call them or you're meeting them face to face. And this is going to seem bizarre. But I'm really going to pay attention to how the person the answers, the phone treats me. And I say that because when I was a financial planner and when I was working in media with American Express, I would go to a lot of offices. And I will tell you, the worst financial planners also had the worst receptionist. And the reason was everything comes from the top. Everything comes from the top. The motivation to work, the excitement for work. And all the great financial planners had phenomenal people in their customer service section of their operation.

All the horrible financial advisors had one of two things disgruntled people answering the phone. Or number two, they answered the phone themselves. And if you're thinking, that's really great. I'm thinking the opposite. it. I want my advisor working on high level stuff not answering the phone every time it rings. So if you're calling them, I think that that's important. The second piece, I also would not be offended if the advisor tells me that they have a team that they work with and they're not going to be the only person. And I can't tell you the number of people that got frustrated when I told them that's like,

no, no, no, I want to work with only you. I don't want to work with other people. No, you don't want me helping you open up your Roth IRA with Charles Schwab. Like it like that is a waste of your advisor's time when there are people in the advisor's office who can do that. And by the way, if I do it, the cost I need to charge you to cover that time versus the cost I need to charge you to have somebody else in the office, because that's a fairly easy task to have to have somebody else in the office walk you through it and help you do that is a whole different thing. So I actually want my advisor to have a team. I want to make sure they have other people that are helping them do some of the other tasks. So I kind of vote against the team. But those are a few things I would look

for. And there's there's many, many, many more, including heading to the certified financial planner, the CFP organizational website. And you can find infractions. If they have licenses to trade securities, you can also find on broker check, a great site that's run by FINRA, which will tell you everything, anytime anybody's having to complain on broker check. The reason I say check the CFP website as well is because the way many advisors have licenses, they won't show up on broker check. They'll actually show up elsewhere. So you need to check both of those places. You spend a lot of time in your answer explaining how to hire an advisor. Can you elaborate on in the context of Yvonne's question, why that's the right step for him?

I mean, certainly he presented a lot of data and a lot of information, so much so that it took him three minutes to get to the actual question. And then when he did get to the question, that question is a very big question. You know, like here's all of his data, here's all of his financials. And then here is a question that's going to make a pretty big dent in the information that we've just learned. Given that, why is it that a person in his situation would want an advisor? And specifically what I'm asking, zooming out is when, for the sake of everyone listening, when does a person know if they need one or not? What are the delineating factors that separate someone who needs one from someone who doesn't?

and why is Yvonne falling into the side of the category that he is? I have so many answers to this question, but I'm going to start off by zooming out first, which is when you're talking to people in financial media, and I'm going to go right to Susie Orman and Dave Ramsey. The reason why Susie Orman and Dave Ramsey get a lot of flack, well, there's many reasons, but a very big reason is because they talk in absolutes a lot when they shouldn't. But the reason they talk in absolutes is because Dave Ramsey's audience, colloquially, he doesn't disclose his numbers, but many people have said is around maybe two million people per episode.

When you're talking to two million people, he can believe that 1.6 million of those people, it's going to be the right thing to say do X, right? You and I and Dave all know that for a portion of his audience, that advice is not going to fit. Right. But it is much, much easier. to understand that that advice fits the vast majority if he keeps it simple. Right. So it also, it just plays better in media. Absolutely.

Oh yeah. You know, nuance does not play well in media. It doesn't give you the audience growth that. No, and think of the story. Planting your stake in the ground does. There's a great book, Paula, that I think you and I both read called Storybrand.

And in the book, Story Brand, what you are doing in our business is you are providing certainty in an uncertain world, right? Right. You are someone's Yoda. You're their guide. And how great a guide are you when you say certainly do this, do not do that?

And the second that you and I bring up complexity, which we do often in the show, we're not quite that we don't sound like the Yoda that old Dave in Tennessee sounds like or that Susie sounds like. But that's also not our MO. I mean, we have a whole different thing that we're trying to help people do, which is go ahead. We're here to promote nuance. Yeah. We're going to get more granular.

and I believe that that's actually a better guide. So if I'm a good guide here, and Paul, I think if you're a good guide here, you realize that this decision about the pension time, all I'm seeing is a complex spreadsheet based on many different variables. And when I do that, I want to make sure that it's right. So I want to have, and this is where my definition of advisor, by the way, and a lot of people's definition part ways. my definition is somebody who's been through this before often enough that they can check my work or do the work for me because they've done it so many times I can do the work myself but they can do it so much faster that it's worth the cost a good financial advisor does what Yvonne is asking and has done it a bazillion times and I'm obviously exaggerating but has done it a lot

they've done it enough that I'd feel comfortable. They also have not only licenses, but insurance that protects them from making sure that if they, if something is wrong, that you are protected and that decision is protected. They're also, if you're hiring the right advisor, fiduciary, that they're working on, working on your best interest. Now, that does not mean that Yvonne should just delegate the decision to that person. This is, this is what I don't like. When people say, well, I don't hire advisors because I don't want to delegate this because

I can do it myself. Yes, you can. But Mary Barrow running General Motors goes to all the meetings, understands how cars work, gets everything about a car, knows all the nuance involved and still surrounds herself with these really smart people around her that have her back to make sure General Motors runs well. And I think that's a great analogy for all of us. It is fantastic to fire your advisor when they've cut you out of the decision making process. But to delegate, things to someone or to ask someone to check your work that's conversant in that area much more than you are and they've done it many, many, many times is a fantastic idea. So I'm not even really worried, frankly, Paula, that they're a CFP. I'm not really worried that they are a fiduciary.

I want them in practice to be a fiduciary. If I've got a friend who's an engineer who's done this for 10 other people and he's been right every time, that might be a fantastic person to have in my corner, even if they're not a licensed person. It's just somebody who I know has my back, who's smart in this area, who can help me make a better decision than I will on my own. That to me is what a real advisor is. So I agree that an advisor, i.e. a mentor, is what you've just described. Adding my own two cents here, I would also certainly run it by all of your your network of advisors formal and informal, but I would certainly also have a formal licensed advisor with a fiduciary duty. I think that is the safest thing to do, but I think as a guy who used to be

an advisor, people think that that's what I'm gunning for when I say have an advisor. And I just want to be clear on mine. And maybe I am clear too far the other way that I believe being the dumbest person in the room in many, many of life's activities is phenomenal if you're trying to find more success. So thank you, Yvonne, for asking that question and best of luck as you move forward. Our final question today comes from an anonymous caller, Joe, we give every anonymous caller a nickname. What nickname should we give her? It's the start of a new year. Well, January is after the God Janus, correct? Because we're looking back at last year and forward to next year. Right. So I think, I think let's color.

Jan. Jan. I like that. That's clever. Our next question comes to Jan. Once an episode, Paula. I'm clever. Once an episode. Hey, Paula. I've got a question that I'd really love to hear your thoughts on. I own a home in a desirable neighborhood in Southern California. And part of the reason I bought this home is that it's sewn for multiple units, even though it's a single family home. And it has quite a large lot. I'd like to build a rental unit on the back. of the property so that I can generate some income. What I'm looking to build is not an ADU because I don't need to adhere to those for footage requirements because of my zoning. I'm looking to build probably something around two-bedroom and two-bathroom. And I expect that I would be able to get $2,500 to $2,500 in rent. And part of the reason I'm assuming that is because the one-bedroom, one-bath units next

store rent for $17 to $1,800 a month. And when vacancies come up, they're filled very quickly by my neighbors who own the property. So I've been looking around for information on doing this kind of build-to-rent project. And it's been kind of hard to find good resources. There's a lot of stuff about building teeny-tiny-tiny ADUs and renting them out short-term or great resources like yours for buying to rent. But I haven't found very much on building to rent. So my questions to you are, what is your opinion of building to rent on a property that you already own? Secondly, I'd love to know if there's some kind of rule for construction of this type, like the 1% rule, like comparing the construction costs to what I can reasonably assume to be able to recuperate and rent each month.

And then the third question is, do you have any recommendations around financing? I expect I'll have to take out some kind of loan for about a hundred, hundred thousand dollars for construction, but I'm not sure if the best way to do that is a home equity line of credit or to take out a construction loan and then reappraise and refinance once the construction project is complete. Love to hear your thoughts on this. Thanks so much. Jan, thank you for the question. This sounds like a very exciting project. Let's dive into the answers. Number one, in terms of a bill to rent, your biggest challenge is going to be Controlling costs. New construction tends to be expensive. The cost per square foot of new construction

tends to be higher than the cost per square foot of buying an established property. Today's environment with the cost of both labor and materials being significantly higher than they were pre-COVID, we have a labor shortage, which means workers are harder to find and worker compensation is higher than it was even two years ago. And in addition to that, we also have an upstream supply chain. shortage, which means materials are harder to acquire. And most materials, from from lumber to copper to HVAC units and water tanks, you know, there can be, depending on what part of the country you live in, and depending what time of the year you place these orders, there can sometimes be waits for months to acquire some of the supplies that you need. And so working

with a great general contractor and a great architect, and you'll have a general contractor. And you'll have a GC architect team, working with a great GC architect team to design this property and to handle all of the permitting necessary to begin this project. That's going to be instrumental as you pursue this journey. And while when you work with them and as you drop designs, you'll get a good sense of what the cost per square foot of construction is going to be. You'll learn the total cost of construction. You'll learn depending on the level of finishes that you put into the space, what the estimated cost per square foot is going to be. And so to the second question that you asked, which was, are there any generalized rules analogous to the 1% rule that could help guide you

through the decision about whether or not this is a viable use of time, look at cost per square foot of construction as compared with cost per square foot to rent. That's a generalized rule. Well, that's a generalized proportion that you can take a look at. But similar to the answer that you had for Yvonne, you know, where when people engage in complexity, then it's a mistake to look for simplistic answers, right? Don't look for simplistic answers to complex questions. Same here. You know, what Jan wants to do is a new construction build with all that that entails.

And so she needs a very sophisticated spreadsheet or a very sophisticated calculator. She needs to be running some detailed formulas to calculate whether or not this is worth it. You know, sure, back of the napkin, what's the cost per square foot of construction as related to rent, that's a model that can help her make apples to apples comparisons between a variety of different options. but it's not a model that is supposed to be applicable to one individual unit. And the mistake that people make, and by the way, this is also true for the 1% rule. People try to apply the 1% rule to an individual unit, to an individual property. The 1% rule is not designed to be applied to a specific property.

The 1% rule is designed to be a filtering mechanism that allows you to reduce a basket of 1,000 properties down to a basket of 20 properties so that you can then take a more detailed look at those 20 properties. But once you're looking at those 20 properties, you want to be running real numbers about their operating costs. You don't want to be using a crude blunt instrument that's designed to be a filtering mechanism. It's top of the funnel, not bottom of the funnel. Exactly, exactly. And this is where so many people make that error. They take this crude blunt instrument that's meant for top of funnel and they apply it to the very, very bottom of the funnel, which is one particular property, one, two, three, main street.

they apply it to a specific unit and that's not what it was designed to do. And when you take a formula and you misapply it, you apply it for a use case that it was not designed for, you end up with a junk result. Can we, can we divert for a second? Because this is a nice segue for those of us that don't have large real estate portfolios outside of REITs because it is the same in the stock market. And I don't know, I don't know if you know where this came from. You've certainly heard when you're buying individual stocks, buy what you know, right?

You've heard that? A gentleman named Peter Lynch said that a lot of people credit him as being, I'm sure somebody said it before him. But it became very popular from his book, Beat the Street. And back when, back before exchange traded funds, everybody gathered around while Uncle Joe tells you some stories about the old days. But around the turn of the century, Peter Lynch ran a mutual fund that everybody loved, Fidelity Magellan.

and he was known as the man when it came to running funds. And he said in his book, Buy What You Know. And it's funny because I've heard him in so many interviews since then, Paula, say, I get misquoted on that all the time. When I say, buy with you know, that's the top of the funnel.

Start off with companies you know. Don't say, oh, yeah, I use ketchup. So I'm going to invest in ketchup companies. Start with that at the top of the funnel, what you know. And then you still have to do rigorous. homework on your fundamental analysis, right? Does this company have debt? Do they have free cash flow? How are they growing sales? And you have all these other things. But it's very much the same

what you're saying to Jan. It's very much the same for stock investors. If you're looking at an individual stock and you go, oh yeah, I play Xbox, so I'm going to invest in Microsoft. That's a place to start. Right. Exactly. So, Jan, to your question, I would not, while I have given you a generalized comparison tool, I would not you, I would use it to make comparisons between, let's say, your GC slash architect team gives you a variety of different blueprints that have different square footages, different numbers of bedrooms, different numbers of bathrooms. Sure, you can use that to make comparisons between different models to see which one of those, you know, do you want the one one or the three two? Sure, absolutely. But don't, don't,

use it beyond that. Don't apply it to a specific one. Instead, run the numbers based on that, the operating costs of this new unit that you plan on building. So, Jen, the first things that I would do is I would work with a GC architect. It's going to cost you a few thousand dollars, but get some blueprints drawn, get some rudimentary designs, get some price estimates from them, see how much this is going to cost. And then to your third question, How should you obtain financing? At this point, you don't even know what it's going to cost. And so the question of, do I get a HELOC, do I take out a home equity loan, do I get a construction loan and then refi?

I mean, the first question really is how much money are we even talking about? You know, you estimated maybe $100,000. But I would be very curious to know once you account for the permitting, the utilities, like once you account for, for all of the costs, that 100,000 that you mentioned, is that a guesstimate or do you have that as a written quote? I would wait until you have that as a written quote and until you know what that represents in terms of the number of square footage and bedrooms and bathrooms that build would entail and what that would rent for at the high, medium and low ends of the the normal rent range for the area.

I would wait until you have gone a little deeper into the math before you think about what type of financing to obtain. Because the type of financing that you choose is going to very heavily depend on how much you need to borrow. If it's only a little bit, if you're going to build something tiny, sure, a helock might be fine. But if this ends up being a much bigger project than you anticipated, then you might want to steer clear of a HELOC and go for something that's built as an installment

loan rather than as a revolving loan. So start with the cost estimate first and make your financing decision based on that. So thank you, Jan, for asking that question. Joe, we did it. We did it. And you know what? That was how is this so much different every week? I know, right? The questions that we received, I remember somebody telling me once that there's really only, you know, six things to think about in finance. And they boiled it down. And man, feels to me like there are the afford anything audience is proving there's far more than that. Well, do you remember what the six things were?

No. Slash art? No, no. No. I just went, yeah, I don't think so. What you earn, what you spend, what you save, what you invest. your financial and investor psychology? Don't know.

Wish I remembered. And you're giving? I know who said it. I won't say who said it. And maybe I can just refer you to them after we finish. Ooh, mystery. Look at that. Yeah.

So, Joe, tell us where can people find you if they would like to hear more of you? I am found at the Stacking Benjamin show where last week we kicked off the new year, number one with Paula, our friend Len Penzo and OG with our usual magic eight ball episode where Len Penzo purchased a Walmart magic eight ball and we asked it questions. And for a long while, Paula, that eight ball was rocking. It was rocking. And then it went through a couple of years of not so good. And last year it returned to form. It was pretty good again last year. Has the eight ball found a way to predict the future again? We ask it. questions. And while we're doing that, we're actually having some really good discussions about

what's going on in the market, the economy. And so we take this foolishness and actually turn it into something that's pretty educational and usable. But earlier than that in the week, Aaron Sky Kelly has a great book called Get the Hell Out of Debt. And she's helped so many people get out of debt. That's fantastic. And people are struggling with this basic foundational stuff and really want to kick off the year, great. But to kick off the year, our first episode was with the guy that you and I know, Paula, is the, is the man that will get you pumped up to start a new year. We meet Sadie. Oh, fantastic.

Fantastic. It's excellent. Good week on the stacking Benjamin show. Awesome. And the magic eight ball episode is my favorite episode of the year to record. Every year. Yeah. And as we sit here.

Monkey, monkeys throwing darts to choose a list of stocks except it's podcasters shaking a magic eight ball. Yeah. I don't even remember how we came up with the idea for that episode, but I'm so glad we did because that's a long-running tradition. That's our show for today. Thank you so much for tuning in. And thank you for tolerating my terrible microphone. This is a throwback. Any of you who were here for our early episodes back when this was still called The Money Show, you remember how our first six episodes, we quite literally dropped the mic. What can I say? History doesn't repeat, but it rhymes. Anyway, if you enjoyed today's episode or, any, of our other episodes, please share it with a friend or a family member. If on any of these episodes you have heard us talk about some concept that somebody in your life needs to learn about, maybe it's retirement planning, maybe it's buying real estate, investing in index funds, not being scared of the market when it drops, or not being scared of new market highs,

thinking long term, metacognition, thinking about how to think, refining your critical thinking skills. I mean, everything that we cover in this podcast, there's got to be someone in your life, a friend, a sibling, a family member who could benefit and who could pass that benefit along and pay it forward to the people in their lives. So, whenever you hear anything on this show that makes you think, ah, you know what? I bet my buddy would love to hear about this. Pass it along, because that's how you spread the message, the ethos, the drive. The drive. The drive. The drive. The drive. The drive. for financial independence and smart money management. Personal finance is a game changer.

It is a life changer. Once you have the money aspect of your life dialed in, so much more opportunity flows from there. What better thing can you share? So please share any episode of this show with a friend or a family member. It's the single most important thing that you can do to spread this message. Now, if you want to find me, I'm on Instagram at Paula Pant. That's P-A-U-L-A, P-A-N-T.

There is someone spoofing me on Instagram, so make sure that you're following my account. P-A-U-L-A, P-A-N-T. I've been imitated by some spoofers in the past, so make sure you're interfacing with the account that's actually me. As of the time of this recording, it's got about between 30,000 to 31,000 followers. make sure that it's that account. I've been battling the spoofer on Instagram for literally months that started right around Halloween. And here we are into the new year. And as soon as Instagram takes one spoof account down, two more pop up.

So P-A-U-L-A-P-A-N-T on Instagram. If you want to chat with other members of the community, you can find them at affordanything.com slash community. And we have some awesome community virtual events, community challenges, planned for this new year. So kick off 2022 by finding your village, finding like-minded people, totally free and here for you. Affordanything.com slash community. Thanks again for tuning in. My name's Paula Pant.

This is the Afford Anything podcast. And I will catch you in the next episode. Here is an important disclaimer. There's a distinction between financial. media and financial advice. Financial media includes everything that you read on the internet, hear on a podcast, see on social media that relates to finance. All of this is financial media. That includes the Afford Anything podcast, this podcast, as well as everything Afford Anything produces. And financial media is not a regulated industry. There are no licensure requirements.

There are no mandatory credentials. There's no oversight board or review board. The financial media, including this show, is fundamentally part of the media. And the media is never a substitute for professional advice. That means anytime you make a financial decision or a tax decision or a business decision, anytime you make any type of decision, you should be consulting with licensed credential experts, including but not limited to attorneys, tax professionals, certified financial planners, or certified financial advisors, always, always, always consult with them before you make any decision. Never use anything in the financial media, and that includes this show, and that includes everything that I say and do, never use the financial media as a substitute for actual

professional advice. All right, there's your disclaimer. Have a great day. That's your ARKKK. Oh, Joe just sent me a chart. of the ARC ETF, the thing I put money into a year ago that I haven't checked on its performance. Bye-bye, money. It was nice knowing you. If it was on January 1st, you've only lost about a quarter of your money. Aw.

Could have had it in Bitcoin, you'd be back up that in a day. Two hours. This was the podcast episode where I learned how much I lost. It's better not looking at it, Paula. I know, right? It's ignorance is bliss. You didn't lose a dollar until just now. I know, seriously. Well, you know, technically I still haven't. I haven't converted the paper losses to real losses, so it's all just noise. There it is.