Afford Anything - Ask Paula - When is Lifestyle Inflation a Smart Business Decision?

Episode Date: July 31, 2017

#88: Former financial planner Joe Saul-Sehy and I answer 4 questions from the Afford Anything community. We chat about how to control lifestyle inflation, how to break up with a financial planner, how to invest your first $10,000, and whether or not sector-specific or theme-specific funds are a good idea. #1: Laura is transitioning to a new job, and she's discovered that her new responsibilities require some lifestyle inflation. She needs work-appropriate clothing, for example; she can't wear leggings everyday anymore. She and her husband are going to need two cars, instead of one. And she's ordering restaurant delivery more often, because she doesn't have time to cook. She recognizes that lifestyle inflation is unavoidable, and she's curious: what's legitimate and what's not? What's the difference between healthy lifestyle inflation vs. over-the-top upscaling? #2: Nakia wants to "divorce" her financial planner. But she's not sure how to break the news gently. Her financial planner is a friend and neighbor; their kids are friends. What should she say? #3: Megan and her husband both want to retire early. They have saved $10,000, which they'd like to invest in the Vanguard Total Stock Market Index Fund, Admiral Shares (VTSAX). This fund requires a minimum of $10,000 as an initial investment. Should they put this money into a taxable brokerage account, so that they can access this in early retirement? Or should they save more and then each open an IRA? #4: Nancy is a single mom with a five-year-old son. She recently transitioned into a lower-stress lifestyle, but as a result, her income dropped significantly. She's a beginner investor without much money, and she's curious about Motif Investing, a platform that focuses on sector-specific and thematic investments. Would this platform be right for her? Enjoy!  - Paula Resources Mentioned: FINRA website -- Broker Check https://brokercheck.finra.org MadFientist article on how to access retirement funds early http://www.madfientist.com/how-to-access-retirement-funds-early Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every decision that you make is a trade-off against something else. And that's true, not just of your money, but also your time, energy, focus, attention, what you eat, what you wear. Everything is a trade-off. You can only do so much. So what decisions are you going to make? And how do you align your day-to-day actions in a way that reflects your priorities, your values, the life that you want to create? Answering those questions is a lifelong practice, and this podcast is here to help you explore it.

My name is Paula Pant, host of the Afford Anything podcast, and today I am answering questions that you, the listeners, this Afford Anything community has sent in. And I am here with my buddy Joe Saul C. High from the Stacking Benjamin's podcast. Paula! Hey, what's up? You like I just broke in? Yeah, actually. It's good radio. Enough of that.

Enough of the preamble. I know, right? Get to the point. Get to the point. All right. So let's get to it, dude. Our first question comes from Laura. Hi, Paula, in your show, you've talked about avoiding lifestyle inflation, but what if you want

or need some lifestyle inflation? My husband and I have been talking about how, as your work life changes, you sometimes end up spending more money because you have fewer free hours or less flexibility. For instance, when we get busy, we often end up ordering out or buying convenience food, which is more expensive than cooking ourselves. We've also always shared one car, but now my new job outside. the city and having a one-year-old makes sharing a car increasingly difficult and we're thinking about buying a second. There's also things like new work clothes that you might need if you're given a promotion.

For me, I've been a graduate student for the past five years and now I'm going to be a professor, so I can't exactly wear leggings anymore to work. So when you have some of these lifestyle inflations mandated on you, how do you keep other areas of inflation in check? And how do you recognize the ones that are legitimate? And relatedly, when there's opportunities to make money that come up that may cause lifestyle inflation or extra personal expenses, like if you have to pay for extra child care or if you are going to end up buying dinner out because you have less free time to cook for yourself, how do you make sure that you are considering those costs into the rates that you're willing to accept extra work for? Thanks so much for your thoughts.

I love this question. I also don't have a problem with lifestyle inflation. Here's what I have a problem with lifestyle inflation that you didn't realize. Like stamps cost how much not? Or what? Am I, is that an old guy analogy? Does anybody use stamps anymore? Well, I think, Joe, that's, you know, the rising cost of goods is actual inflation. But lifestyle inflation is when you yourself make the decision, whether it's a conscious decision or just something that you kind of accidentally do in the, not accidentally, but something that you mindlessly do. Lifestyle inflation is when you raise your standard of living to reflect your means. Yeah, but there is a fantastic commercial on right now about retirement. I don't remember which one of the big firms has it, but it's this financial advisor sitting on a sofa with a woman. He says, so what do you want to do now? And she said, well, we're talking about retirement, I thought.

He's like, yeah, we are. What do you want to do now? She said, well, aren't we supposed to be talking about what I want to do later? Yeah, we'll get to that. But what do you want to do now? And I think that too many people put off the now stuff because they're so worried about later. There's a simple equation that I like, which is your future goals cost X amount of money times Y return equals the goal. So once I know what the goal is and I know how much money I'm saving toward it, I can then solve for the rate of return that I need, which by the way, then takes this huge amount of investments that are out there that I might have to research and all of a sudden it becomes this really, really small group of investments that I need to look at.

And all of a sudden, this huge problem that I had looking at my investment strategy becomes much, much easier. But in this case, you know, if she knows that equation for her future goals, then she'll be able to know how much she can raise her lifestyle by and not have it, you know, not have a problem and not have to worry about. Is she mortgaging her future, which I think is a big part of her question. Right. Exactly. Laura, the other way that you could approach this is to determine, you know, if you aren't sure exactly what your future goals are, and you know that you generally want to be saving money. You don't know exactly why.

You don't know if you are going to want to take a sabbatical in 10 years or buy a second home. You don't know what that is, but you know that it's a good idea to give yourself more options and choices. Then the approach that you could take is to decide that any raise that you get, you will save X amount of that raise and then spend the other X amount of that raise. So for example, and I'm just pulling numbers out of thin air, you could decide that if you got some type of a raise, a half of that raise would go into savings automatically. And then the other half you can just spend and live on and relax about. So that is one of many possible approaches. The way that I would approach each of those

individual decisions is by asking yourself if there is some, if there's an alternative approach that would not take up too much of your time or mental bandwidth. Because remember, time and mental bandwidth are in extremely short supply. And I often argue that time is more valuable than money. It's more limited. It's a much more limited asset. And so depending on where you live and depending on the public transportation in your area, going from one car to two may make a ton of sense in terms of the time and hassle that you would save. But ordering food in from a restaurant as compared with, say, batch cooking on Sunday, that might be a way to, you to circumvent ordering food from restaurants often, which can get very expensive.

Laura, to the other part of your question, which is how to calculate the cost of lifestyle inflation when you have a side hustle. I love that aspect of your question because absolutely, when you start a side hustle, your time becomes even more compressed. And that means that you do have to spend money on additional conveniences, like that extra car, or that. child care. I don't think that there is a specific equation that I would use. If you were to just use a straight equation that looked at the present amount of money that you are making as compared to the present amount of money that you are spending, you could run that equation and you could say, hey, I'm spending X amount more and I'm making Y amount more and the spread needs to be

Z. But here's the problem. That equation does not take into account. your potential to increase the variable why. In other words, it doesn't take into account your potential to start your side hustle earning Y and eventually grow your side hustle to the point where you're earning A, B, C, D. Yeah. If, of course, if that is your goal, if your side hustle is something that excites you enough that you want to grow it and almost treat it like a secondary career. Yeah. Good stuff. Yeah. That's one thing that took me a long time to figure out. It took me a long time to like really connect with that idea because, well, I'll just give an example for my own life. You know, when you start a blog or you start a

podcast or you start any type of creative outlet like this, in the beginning you don't make, I mean, in the beginning you make zero. Like in the beginning you lose money as you're pouring your time and your resources into it. And then eventually you get to zero and then eventually it grows. But if I were just looking at that, if I were judging it based on what I was making from hour one, it would be a terrible idea. Heck, if I were judging it from what I made at hour 100, it would still be a terrible idea. I had a mentor one time who used an analogy, and I don't know that it's a great analogy, but it's visual, which I like. And he says, you know, you're at a casino and you're playing for X number of chips. And you can either take your chips, horrible analogy, right?

You can either take that number of chips and go home, or you can push those chips back. across the table and say, nope, I'm playing a bigger game than this. And I've always thought about that in the early days of creating, you know, whatever, whatever business it is that I've created, because I've had five different businesses I've created. And every time I think, is this a level I want to play at? Or do I want to reinvest more to play on a bigger stage? And I push those back and say, nope, we're going to play, we're going to play bigger ball than this. Right. And that's the thing is, you know, and this does get a little slippery slope, but to an extent, the additional money that you spend on giving yourself the time and energy to have a side hustle

is in some way an investment that you are making in the growth of that company. And again, it is a judgment call how slippery slope you get because you don't want to reach the point where you're justifying every convenience purchase. Right. You have to look at the ROI on the decision, the return on investment, right, ahead of time. I think you have to apply some math ahead of time. Except I don't know how you could. I mean, because I don't think it's right to apply that math based on what you would currently make. So, you know, okay, one of the ways that I think of it is if I realize I'm going to have to up my spending game, I start to think of what would it take within this business for me to earn that back. So for example, I have a membership to a co-working space. And right now the membership that I have is $100 a month and that gives me access from 8 a.m. to 5 p.m. I want to increase that membership up to the next level, which costs $250 a month, and that will give me 24-hour access to that co-working space. Now, what I have found is that I am much more productive in the co-working space, far more productive than I am at coffee shops or at libraries.

And, of course, being naturally frugal, I'm resistant to the idea of spending an extra $150 a month. I'm resistant to the idea of spending that just to have like evening and weekend access to this space. It feels like it doesn't make sense when I could easily just go to a coffee shop during those hours. Or it especially feels like it doesn't make sense when I look ahead at months where I'm hardly even going to be home anyway. You know, I'm going to be going to conferences or going to this or that. And I won't even be home for a big part of that month. And I know that that money will, you know, largely not be used. But the way that I kind of came to peace with that decision is I thought to myself,

all right, what would it take to earn an extra $150 in my business? Not that much. And so that was when I realized I was unnecessarily sweating the small stuff. Right. Our next question comes from Niki. Hi, Paula. My name is Nicaia, and I need some advice on how to divorce my. financial planner. We started with her years ago before we were more educated

about the fees associated with managed funds. We would like to not pay them anymore and we are paying quite a bit. The trick is it has to be an amicable divorce because she's a good friend and our kids are friends and she's a neighbor. So I would like to be armed with some sound bites, some bullet points, maybe a specific study or article, so that I could calmly and confidently hold my ground when she has very specific questions she asks. I know she's going to want to understand why we're leaving and quitting. And I want to be able to hold my position without getting flustered. And of course, keep it kind and simple as well. If you have any advice

on how to do that, I would really appreciate it. Thank you so much. I love your podcast and your blog and your perspective. Thanks. Bye. I guess I'll take this one because this is what I did for 16 years. And it's so difficult when you have a friend and a neighbor and now we have to, I feel like this is surgery, Paula. Joe, were you ever the financial planner to any of your friends or neighbors? Yes, yeah, absolutely. Did any of them ever break up with you? Yes.

Yeah. Ooh, story time. Hey, and it's fine. I just never talk to them again. I still curse their grave and it's fine. No, I'm kidding. I am kidding. But seriously, listen, if a break needs to happen, and I want to talk about a few things here, but let's directly answer the question first. The first thing that I think is rather than, quote, studies and have a bunch of make it longer, you know, when I first had to fire people, when I've been either a manager someplace or at any of the businesses that I owned, I started off very compassionate, wanted to sit down, wanted to seek to understand, have a big long discussion. Never, ever, ever, ever worked.

The best thing to do, do it quickly, drop the knife, and just go on with other stuff. And I think the discussion is decided to go a different way. I have a lot of different reasons for this. We can go into it if you want to, but I really think that this isn't going to work. And so even though I value your friendship, and I definitely think that we should talk about a lot of other things, you're just going to see me begin moving my money so that I go a different. way with my money. That's it. I think that's all they really need to know. I know, so I'm a smart guy. I know the more that you, that's not egotistical, didn't it? No, that's just an honest assessment of your intelligence level. I'm, I'm brilliant. But here's the way I'm brilliant. I've been in

this conversation a long time. I know the smoke. I know the mirrors. I know the dogs. I know the ponies. So the more meat you give me about why you're leaving, the easier it is for me to put doubt in your head. And if it's time to go, it's just, it's time to go. I wouldn't give, I wouldn't give somebody that goes into as many meetings as I went into with past clients any more meat than they need, because I will, I can work very hard at reeling you back in. I'll make you doubt yourself. And that's not, that's not what you need to do. Well, and within the world of sales, any objection that a person voices is considered a buying signal. So if a person gives you, If a salesperson is talking to a potential customer, and that potential customer, let's say it's a salesperson at a mattress store.

And the potential customer says, yeah, no, I don't think I want this mattress today. The mattress salesperson is like, well, why not? If the potential customer starts listing reasons, those are actually buying signals. Because essentially what the customer is saying is, I would buy this, but I have specific doubts about X and Y and Z. And that's not the message that you want to send to your financial planner that you're breaking up with. You want to send the message that, no, this is over. This is a breakup. So, yes, so I agree.

Don't give any reasons. That would also be better for the friendship as well. Like any reasons that you give could only largely be used against you. So it's best to focus the conversation on yourself and just simply say, hey, thank you. you so much. I really appreciate everything that you've done for these past number of years. I've decided to go in a different direction. But I do still want to hang out and you should, you know, come to dinner while our kids play next Saturday. I'll make some chilly and we'll watch Game of Thrones and have a good time. And by the way, and for the friendship, if you've validated

friendship, I would do that several times very quickly. Yeah. Get back together as many times socially as possible. Otherwise, the friendship will die. It's going to feel awkward no matter what. So make sure that you get back in that trench three or four or five times in a couple weeks because then you can bury it quicker. Our next question comes from Megan. Hi, Paula. I've been listening to your show for about a year now and I really like the diversity of financial topics you cover. I also follow the Afford Anything Facebook page and all the pictures of you out doing awesome things. Keep me motivated to stay focused on my goals so someday I can be out hiking on a random Tuesday afternoon too.

Anyway, my question has to do with tax optimization on investment accounts. My fiance and I have saved $10,000 to start our FI journey using the Jim Collins method of investing in the VTSAX Admiral shares. Should I just open a joint taxable brokerage account and be done with it, or should we wait until we have doubled the $10,000 to $20,000 in order to each open a tax-sheltered IRA? You always say don't let the tailwire the dog when it comes to taxes, so I think I know your answer, but it took us the better part of our four-year relationship to save this money, so I want to make sure I'm being as smart as possible with our initial investment.

Ultimately, we want to have the flexibility to use this money before retirement age, which narrows it down to a Roth IRA or taxable brokerage account. I'd love to hear your thoughts as well as any additional factors we should take into consideration. Thanks. First of all, thank you. I'm super flattered, and thank you so much for listening to this show for the past year and for following the Facebook page. The whole reason, the whole reason that I'm here is I want to go hiking with you on a random Tuesday.

Oh, Joe, yeah. Well, just fly out. You can do that. We can totally do that. We'll record this show during a hike. That'd be great. So, tax ramifications. I know, right?

Yeah. Completely out of breath. No, don't worry. I'm not like a hard charging hiker. Oh, good. Yeah, I like to keep a moderate, moderate pace. You can't spill your beer. Exactly. Camelback full of beer. But to your question, so VTSAX does require a minimum investment of $10,000. However, VTSAX, which by the way for the listeners who are wondering what we're talking about, just a little bit of background, so VTSAX is the Vanguard Total Stock Market Index Fund. And that Vanguard Total Stock Market Index Fund actually has two different iterations. It has two different manifestations. One,

is called investor shares and the other is called Admiral shares. Basically, the difference between the two is the expense ratio. The investor shares version of this fund has a higher expense ratio. But the investor shares version of this fund also requires a lower minimum investment, a minimum investment of only $3,000. So what you could do is each of you could open a Roth IRA and I'm assuming that I don't know within your relationship how that 10,000 would break up, but assuming that it would be 5,000 per person, you could each open a Roth IRA and make each make investments of $5,000 in that Roth IRA in VTSMX, which is the Vanguard Total Stock Market Index Fund investor shares version. Now, that one has an expense ratio of 0.15.

while the Admiral shares version has an expense ratio of 0.04. So once you build it to 10,000, you could then switch it over, but that'll at least get you into the index fund that you want to be in and enable you to do that in a tax-advantaged account in a Roth IRA so that all of the capital gains and the dividends that you make on that investment can grow tax-exempt. That being said, there's also an ETF as well that tracks, you know, a very similar thing, the Vanguard total stock market ETF. The ticker

symbol is VTI. Offhand, I don't recall if Vanguard allows you to buy ETFs in a Roth account. I don't remember that offhand. But if they do, that would be the other option because that one also has a 0.04 expense ratio. So if you're allowed to buy an ETF through your Roth account, that would be ideal. There's no means. investment there. Joe, any thoughts? Yeah, when it comes to the Roth IRA, remember that only the contributions are before, you know, she talks about wanting the money available. So the contributions are available, but the money that it earns is going to have some hoop she's going to have to jump through. So if she wants it all available, the Roth isn't the way to go, which is why I was like

starting off with when approximately, because you don't know for sure, but when approximately you're going to want to spend the money and about how much you're going to want to spend. Because You know, part of me, if she thinks she's going to want all of it, says forget the Roth, like you've said before, don't let the tax tail wag the dog and just go with the flexible account. I mean, the turnover and the total stock market index isn't egregious. How about that for a billion dollar word? It's not too horrible. So, you know, she's going to pay a little bit of tax, but she'll have it available whenever she wants. So directionally, it's the right thing.

And she doesn't have to worry about which hoops she jumps through to get her money. Yeah. But see, my thinking, though, is that if her goal is early retirement, Let's assume that that's within 10 to 20 years. We'll say 20 years. The principal contributions, assuming that she maxes out the Roth IRA every year or even assuming that she doesn't, the principal, over a 20 year time span, I think the principal contributions made to a Roth IRA account will be significant, you know, when compared to the capital gains of dividends that you'll make over a 10 to 20 year time span. and assuming that she goes with the 4% withdrawal rate, I don't think she'll really need to tap the capital gains and dividends. She can withdraw the principle and live on that while the remainder of the principle, as well as the capital gains and dividends, stay in the account.

Again, I'm assuming that your strategy is entirely index fund based with a 4% withdrawal rate. So I'm basing this on that assumption. What's interesting for me about the Roth IRA, just a little bit of a tangent, is that, Roth IRAs are better the longer you leave the money in there because, you know, you have this tax-free withdrawal. So if I can build up a huge pot of money just using the rule of 72, you know, compounding interest, Roth IRAs get more and more delicious the longer you leave them alone. So, and I know that's not the goal, right?

I mean, the goal is to have the money available sooner. But one thing I really like is that if you've money in, let's say, a 401k that's pre-tax and you have a Roth IRA, Let's say in the future, the tax bracket line is it, I don't know, we'll say $50,000 and you're trying to live a $70,000 lifestyle. You take the first 55 out of that 401k where you paid tax go, or you didn't pay any tax going in, and now that's at the lower tax bracket. Then you take the other $15,000 out of the Roth, and now you're living midway up in the next tax bracket because you had both instead of one of the other.

I really, really am a fan of that. When people ask me about, and this wasn't the question at all, But when people ask me the question about which one's better the Roth or, you know, traditional, which way do I go? I really like having them both so that later on I can play those games. Right. I mean, and that's the other thing is with a, since your goal is early retirement, you can if you had money in a traditional, any type of traditional account. After you retire early, assuming that you will be in a lower tax bracket upon entering early retirement than you are now, that's when you can do a Roth conversion. that's when you can roll over those funds. So if you make those contributions to a trad account now and then roll over upon retirement,

you will be paying a lower interest rate on those. That said, however, it sounds as though the, I mean, it sounds as though the chief concern is how do I put this money into an account that will allow me to withdraw it with relatively, into an account that will allow me to withdraw it easily and without risk of penalty. And, yeah, a taxable brokerage account is the best for that. However, you know, you're not going to get any kind of tax benefit. So that's why I like the Roth. It's simple. You can withdraw the principle whenever you need. And then you can move on with your life and enjoy your early retirement. There's a great article on Mad Scientist's website. I'll link to it in the show notes. And this article

on his site walks through various ways to access retirement funds early. He talks about the Trad-D-Roth rollover. He also talks about the 72-T rule. What's it called? S-E-P-P-72-T. Yeah. Yeah. Yeah, you know me. Yeah, exactly. You down at 72T. We got to do that. So we will, I'll link to that article in the show notes because that is the best, that is the most comprehensive. Outside of the IRS's website itself, it is the most comprehensive guide to accessing retirement funds early that I have ever encountered. Hey, hey, we'll be back to the show in a second. But first, I want to give a shout out to Fresh Books. They have signed on as one of our main sponsors in 2017.

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So check it out. That's blue apron.com slash afford, a F-F-O-R-D. Our final question comes from Nancy. Hi, Paola. Your blog and podcast has been an eye-opening and encourage me to take responsibility of my financial life. I love it. I am a single mom of a five-year-old son who three years ago made life changes in pursuit of a more stress-free life, but with it I have lost significant income. Right now, I am living in a tight income, I'm focusing mostly in reducing expenses,

but I am still far from becoming a frugal weirdo. I have promised myself, to save and invest the daycare expenses, which are going to end in September. Overall, I consider myself as financial ignorance and still don't trust my own judgment to make informed financial decisions. I know that you are fan of Vanguard Funds, but my question is, what do you think of motive investment, MOTI, T.O.T. It sounds easy, but is it really that good? Thank you, Paula. Nancy, congratulations on number one, making a conscious decision about how you want to live your life and then acting on it. I think that's fantastic. So congratulations to you for having a more stress-free life and enjoying this time with your young son. I think that's amazing. Number two, congratulations on paying attention to your finances. You're reading financial blogs and you're listening to financial podcasts.

So you've described yourself as financially ignorant. I would not say that. I mean, you may be a beginner, but the fact that you're reading blogs, listening to podcasts, calling into a podcast, that puts you ahead of the game. That puts you ahead of most people. So that's awesome. As to your specific question about motif investing, no, I would not go that route for you. Now, I will give the disclaimer. Like, yeah, I myself have an account with them.

I do not consider that those investments to be part of my portfolio, the little bit of money that I have, or I might have even closed it down, actually. But even when I had some money with them, it was not that much. And it was what I refer to as dumpster fire money. Literally, money that I would otherwise just throw into a raging dumpster fire, like literally money that I am willing to burn. is the money that I put into my motif account. Dumpster fires and casino references. Yeah, exactly. I mean, I have some money there that's just play money for because I'm, I'm such a

financial nerd that my idea of like playing around and having a good time is like trying out some investment. It's like when you're on a diet or not a diet, but you have a particular like eating plan that you stick to and six days a week you eat healthy. And then one day a week you have cheat day where you eat. drink whatever you want. I consider my motif account to be cheat day. Like that is the donuts and beer of my investing strategy. There is good things about motif. I mean, I think it's, no, I think it's interesting. And I also think that there are straightforward core portfolios

at motif that could be the hull of the ship of your portfolio. It could be. So they do have some straightforward stuff that's not dumpster fire. That's what they have that. However, it overly complicates something that doesn't need to be that complicated. You know, we just answered the letter about using the total stock market index. Much, much better place to start. You're buying one investment. You're buying the entire index.

You're buying the entire stock market with just one thing. A motif, by its definition, may have four or five, six different things inside. Looks a little complicated. They do some things inside of there that are cool. cool and neat, but not anything that if you're just starting off, you need. So I think they can do Paula. It doesn't have to be a dumpster fire, but it is way more complicated than what she probably should be looking for. Yeah, absolutely. Well, and part of the, so the reason that I call it my dumpster fire allocation is, so the way that motif is structured, especially for the listeners

who are not familiar with it, they create funds around different concepts. So, you know, in a motif investing, you might have a fund that's based around various sectors like health care or oil. But it goes beyond just sectors. It's like they create these funds that are sort of sector specific, but really based on ideas or trends that are happening within society. And so they say, hey, if you want to get in on this trend, then here's a fund that allows you to do it. And what that does is depending on which motifs you choose, It increases your sector-specific risk. And that's why, for me, it's dumpster fire money. Because when I get a wild hair and I'm like, ooh, that looks like kind of a cool trend. Artificial intelligence? Yeah, I want to get in on that. Sure, yeah, I'll get a wild hair and throw a little bit of like fun money there.

But in terms of an actual disciplined portfolio, no, I shouldn't be making heavy sector bets on AI. I don't know enough about it to be able to intelligently do that. So I, as an amateur investor, as a person who does not study, who does not read quarterly reports and who does not study balance sheets of companies and who does not put in the time to be able to choose individual stocks or even to be able to intelligently choose specific sectors, I am much better off just sticking with a broad market index fund strategy, as is the case for. you and for the vast majority of people listening to this podcast. The cool thing I like about motif is if you are going to, you know, just go after artificial intelligence or water or health, whatever the thing is that you're going after, you can track how well the person has done who created the motif. So they have a little bit of a track record.

Instead of just throwing your money at one stock, you're buying several different ones. So in that way, you have a little bit of, it's not protection, but you do have a few more checks and balances when you have, when Paula has her, quote, wild hair moment. Yes, that is true, but I also would not, typically, if a fund manager outperforms the market, over time this thing happens that's referred to as reversion to the mean. That doesn't necessarily, you know, motif, people who create motifs are not fund managers and have not been studied. But I guess the broader point that I'm making is that just because somebody may have outperformed

to the market for the past year or two does not necessarily mean that they will continue to do so in the next year or two. I agree with that. But if I've got a motif that's made by person who's made 12 of them and they all seem to be performing fairly well versus one that it's Billy Bob. It's his first try. He did it with duct tape. I'm taking the person who's created 12 and seems like they might know a little bit about

what they're doing. Maybe. But what percentage of your portfolio would you put there? Close to zero. Yeah. I'm just saying that if you do have that wild hands, hair and it's dumpster fire money, it's much better dumpster fire money than saying, ooh, the person next to me at work said this was a good stock. So I'm going to do zero research

and put my money into it, which is what usually happens, right? Right, right, exactly. Yeah, it's, it's, uh, it is better than blindfolding yourself and throwing a dart at a list of stocks. It is better than that. I'm sure that motif is going to use that as their next tagline. Motif investing, better than blindfolding yourself. You know I did that, Joe. In a couple of previous years past blog posts, I literally blindfolded myself. I threw a dart at a list of stocks, and I bought, like, I forget how many maybe 10 or so stocks that those darts landed on, something like that. And?

Eh, me, did okay. Would have been better off in index funds, but it was a fun blog post to create. That's a good time. Gave me, as I sometimes say, it gave me something to do while I was waiting for the early. earth to spin around the sun again. Which can be so boring. It can be so boring sitting there waiting for that. Like, oh, again?

Awesome. So those are the, that's all the time we've got for today. Thank you so much to everyone who called in and asked a question. Thank you so much to all of you who are listening. And Joe, for the listeners who would like more of you, where can they find you? Oh man. Every Monday, Wednesday, Friday, you'll find us at stacky Benjamin's.com or wherever finer podcasts like this one are distributed, you go to afford anything to learn something about money, you go to Stacky Benjamin's to just have fun and have some surrounds on. We generally

have six or seven different topics we talk about in an average show, and we'll have people, cool people like Paula on every week. So a lot of different voices, fast-paced episodes. Come join us. Awesome. Thanks, Joe. Thank you. This is great as always. It was not a dumpster fire. Oh, that should be the motto of this show. The Afford Anything podcast, not a dumpster fire. I'm going to Twitter with that right now. Thank you so much for listening to this episode. And by the way, I want to give a shout out to everybody who's listening through podcast addict. I know Apple iTunes is the number one podcast player for those of you who are listening to this. podcast addict is number two. And there's a significant number of you out there who are podcast

addicts using that player. There are also a whole bunch of you listening through Stitcher and Overcast. So I'm a data nerd. I like digging in through this stuff. So I just thought it was really kind of cool, really interesting to see how you all are listening to this podcast, what brings you, what platforms bring you here. So big shout out to all of you, however you are listening, whether it's through the website or through your favorite podcast player. Thank you. you so much for joining me on this adventure while we figure out our priorities and our money in our life. This is, this is awesome. Please head to your favorite podcast player, hit subscribe, and leave a review. These are super helpful in allowing us to find great guests and just and keep the

show growing. You can also follow the fun on social media. I'm on Instagram at Instagram.com slash Paula Pant or on Facebook or Twitter under the names Afford Anything. By the way, it's been a while since I've read some of these reviews online, so I just want to read out a few and say thank you to all of you who've taken the time to write an amazing review. This one by A-N-G-K-A-T-E-L. I don't know how you pronounce that. Ang-Cattle?

Ang-Cattle? It says, great, accessible podcast for novel personal financiers. Love Paula's willingness to engage with her audience. Thank you so much. This one by Natalie Cardo says, Afford Anything Podcast is an exceptional personal finance and productivity show with valuable educational content, highly perceptive insights shared by Paula and her guests, not to mention Steve's finely tuned editing and sound quality.

Paula is skillful in presenting information in a clear, concise manner, and her knowledge and intelligence shine through in each episode. Wow. Well, I hope I deserve that. Thank you. Thank you, Natalie. So Natalie from WalletSage.com was the one who left that. So thank you so much, Natalie from Wallet Sage.

Erin B says, I first heard Paula on the Stacking Benjamin's Show. I like the other guests on that show too, but Paula is always so funny and witty and provides really thoughtful insight on personal finance and real estate investing. In fact, I think insightful is the best way to describe the podcast. Paula provides helpful information that's easy to digest. Her sentences sound eloquent while also being seriously fun. Another thing I really like is that she comments on the guest interview at the end of the episode. I feel like I get a lot more out of the information this way, and it feels more authentic to me when she comments on things a guest said that she didn't totally agree with and explains why. That shows she has strong principle she isn't afraid to stand behind.

Thank you so much, Erin. I've actually, I've heard from a number of listeners that many people enjoy that portion of the show the best, the commentary that I leave about the interviews. So I'm really glad to hear that. So thank you so much. I will continue to do that. I will continue to leave outros at the end of the interview episodes in which I talk about some of the takeaways that I got from that interview. The good, the bad and the in between, the stuff that I agreed with, the stuff that resonated, the stuff that I disagreed with. This is awesome.

I'm going to keep doing it. Thank you so much. I really appreciate all of you who have taken the time to join us here today. Again, my name is Paula Pant. This is the Afford Anything podcast. and I'll catch you next week.